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Firm Bankey Lal Nanhey Mal Vs. Bhagirath Mal - Court Judgment

LegalCrystal Citation
Subject Contract
CourtAllahabad
Decided On
Reported inAIR1940All95
AppellantFirm Bankey Lal Nanhey Mal
RespondentBhagirath Mal
Excerpt:
..... 1. this is an application in revision by an unsuccessful plaintiff against the decision of a small cause court judge. 469. in the plaint it was distinctly stated that the defendant entered into these forward contracts through the agency of the plaintiff's firm. it may be assumed, as has been found by the court below, that bhagirath mal, defendant, did intend to and did as a matter of fact, enter into wagering contracts for the purchase and sale of wheat, but if those contracts were entered into by him not directly with the plaintiff but through the plaintiff's agency, the plaintiff would undoubtedly be entitled to recover the losses on those contracts, provided the plaintiff proves that either he paid those losses to the persons with whom those contracts were entered into or to their..........of the issues raised at the trial was in these terms: 'whether the transactions in question were wagering contracts; if so whether the plaintiff's claim is maintainable.' on this issue the learned small cause court judge found that the contracts set up by the plaintiff 'were duly entered into by the parties.' but he held that no delivery of the goods was intended and that the contracts were entered into upon the terms that no delivery should be demanded but that differences only should become payable. on these grounds he concluded that the transactions in question amounted to wagering contracts. he therefore held that the contracts were void and the plaintiff's claim on the basis thereof could not be maintained. he however observed that, if the decision of the issue noted above was in.....
Judgment:

Iqbal Ahmad, J.

1. This is an application in revision by an unsuccessful plaintiff against the decision of a Small Cause Court Judge. The plaintiff is a firm of commission agents carrying on business at Moradabad. The plaintiff's case was that Bhagirath Mal, defendant, entered into forward contracts for the purchase and sale of wheat through the agency of the plaintiff's firm and that there was a loss in those transactions to the extent of Rs. 398-13-6. This amount included the commission charges to which plaintiff's firm was entitled. The plaintiff accordingly claimed a decree for the said amount and for Rupees 70-2-6 as interest, viz. in all a decree for Rs. 469. In the plaint it was distinctly stated that the defendant entered into these forward contracts through the agency of the plaintiff's firm. There was however no allegation in the plaint that the losses consequent on those contracts were actually paid by the plaintiff's firm. Bhagirath Mal, defendant, filed a written statement contesting the claim. There was a general denial in the written statement of the allegations contained in the various paragraphs of the plaint. In the additional pleas, it was alleged that the transactions forming the subject of the suit were fictitious and it was pleaded that the transactions on which the plaintiff's claim was based were by way of wager. In view of this defence one of the issues raised at the trial was in these terms: 'Whether the transactions in question were wagering contracts; if so whether the plaintiff's claim is maintainable.' On this issue the learned Small Cause Court Judge found that the contracts set up by the plaintiff 'were duly entered into by the parties.' But he held that no delivery of the goods was intended and that the contracts were entered into upon the terms that no delivery should be demanded but that differences only should become payable. On these grounds he concluded that the transactions in question amounted to wagering contracts. He therefore held that the contracts were void and the plaintiff's claim on the basis thereof could not be maintained. He however observed that, if the decision of the issue noted above was in favour of the plaintiff, the plaintiff will be entitled to a decree for the amount claimed. As a result of his finding that the contracts were void, he dismissed the plaintiff's suit.

2. It is argued on behalf of the plaintiff-applicant that the mere fact that the forward contracts entered into by the defendant were by way of wager was no ground for dismissing the plaintiff's claim. In this connexion it is pointed out that the forward contracts were entered into by the defendant not with the plaintiff's firm but through the agency (Arhat) of the plaintiff and that therefore the contract between the plaintiff and the defendant was enforceable in law. In support of this contention reliance has been placed on the decisions in Thacker v. Hardy (1878) 4 QBD 685, Shibho Mal v. Lachman Das (1901) 23 All 165, Jagat Narain v. Sri Kishan Das (1911) 33 All 219, Bisheshar Dayal v. Jwala Prasad (1914) AIR All 321 and Bhagwandas Parasram v. Bhurjorji Ruttonji (1917) 4 AIR PC 101. These cases are authorities for the proposition that though a wagering contract is, in view of the provisions of Section 30, Contract Act, void, a contract collateral to such a contract is not necessarily unenforceable, and the fact that a person has constituted another person his agent to enter into a wagering contract in the name of the latter, but on behalf of the former, the principal, amounts to a request by the principal to the agent to pay the amount of the losses, if any, on those wagering transactions.

3. In the English case noted above the plaintiff, a broker, who was employed by the defendant to speculate for him upon the stock exchange, was aware of the fact that the defendant did not intend to accept the stock bought for him, or to deliver the stock sold for him, and that the defendant merely intended that the differences should be paid. The plaintiff actually entered into contracts on behalf of the defendant upon which the plaintiff became personally liable; and he sued the defendant for indemnity against the liability incurred by him and for commission as broker. It was held that the plaintiff was entitled to recover for the employment of the plaintiff by the defendant was not against public policy, and was not illegal at common law, and, further was not in the nature of a gaming and wagering contract.

4. To constitute a wagering contract an intention to wager by both parties is essential. It may be assumed, as has been found by the Court below, that Bhagirath Mal, defendant, did intend to and did as a matter of fact, enter into wagering contracts for the purchase and sale of wheat, but if those contracts were entered into by him not directly with the plaintiff but through the plaintiff's agency, the plaintiff would undoubtedly be entitled to recover the losses on those contracts, provided the plaintiff proves that either he paid those losses to the persons with whom those contracts were entered into or to their assignees or incurred a pecuniary liability to make good those losses and that liability is still enforceable against him. On the other hand, if the forward contracts referred to above were entered into by the defendant directly with the plaintiff and the relation of principal and agent did not exist between them the fact that the contracts were by way of wager would disentitle the plaintiff to claim a decree for the losses on those contracts.

5. The questions just mentioned were not debated and discussed before the Small Cause Court Judge nor was there any specific issue on the point. I therefore consider it desirable, before deciding this application in revision, to have findings from the learned Judge on the following issues: (1) Whether the forward contracts for the purchase and sale of wheat were entered into by the defendant with third person through the agency (Arhat) of the plaintiff? or (2) Whether the forward contracts were entered into directly between the defendant and the plaintiff? (3) Whether the plaintiff paid any losses consequent on those transactions to third persons? (4) Whether the plaintiff incurred pecuniary liability with respect to the losses, if any, and whether that liability was still enforceable on the date of the suit against the plaintiff? Parties will be allowed to adduce further evidence. The finding will be returned to this Court within three months from today's date. On receipt of the finding usual ten days will be allowed for filing objections.


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