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Harcharan Das Somparkash Vs. Jai Jai Ram - Court Judgment

LegalCrystal Citation
Subject Contract
CourtAllahabad
Decided On
Reported inAIR1940All182
AppellantHarcharan Das Somparkash
RespondentJai Jai Ram
Excerpt:
- - 9. the terms of the contract in the case before me clearly show that the plaintiff and the defendant were entering into a contract as principals. 2 clearly provides that the defendant will have no right to call for delivery......of kachcha arhtiyas. the other class of cases are those in which the contracts are made with pakka arhtiyas. the position of a kachcha arhtiya is that he acts as an agent with personal liability on himself, so far as the third party is concerned. his remuneration consists solely of commission and he is in no way interested in the profit or loss made by his constituents on the contracts entered into by him on his constituent's behalf: see fakir chand lal chand v. doolub govindji (1905) 7 bom lr 213 at pp. 215 and 216. the position of a pakka arhtiya is totally different. where there is a contract between a pakka arhtiya and a constituent, the pakka arhtiya is himself responsible to his constituent. the fact that he did or did not enter into a contract with a third party in pursuance.....
Judgment:
ORDER

Rachhpal Singh, J.

1. The plaintiff, a firm, instituted a suit against the defendant in the Court of Small Causes at Moradabad to recover a sum of money. The defence was that the contract on the basis of which the plaintiff sued was a wagering contract. This defence has been upheld by the learned Judge of the Court below and the suit has been dismissed. The plaintiff firm has come up in revision before this Court. The defendant firm carries on business as commission agents at Moradabad, while the plaintiff firm are grain dealers at Meerut. In February and March 1934, the defendant firm purchased grain from the plaintiff. In connexion with those purchases the plaintiff claimed to recover profits together with interest. The important question which requires consideration in this case is whether or not the contract set up by the plaintiff was a wagering contract. The rule laid down by their Lordships of the Privy Council in Sukdev Doss Ram Prasad v. Govind Doss Chaturbhuja Doss & Co. (1928) 15 AIR PC 30 is that the mere fact that the contracts are highly speculative is insufficient in itself to render them void as wagering contracts; to produce that result there must be proof that the contracts were entered into upon the terms that the performance of the contracts should not be demanded but that differences should only become payable. Our own High Court in Ramdin Hazari Lal v. Mansa Rarn Murli Dhar : AIR1929All890 held that the true test in cases of this type was whether or not the parties to the contract had agreed that there was to be no delivery. If there was an agreement that there was to be no delivery then the contract would be a wagering one. The question has to be decided with reference to the terms of the contract and the evidence produced in each particular case. If in a case two parties enter into an agreement and it is mutually agreed that there is to be no delivery, then the contract is void under the provisions of Section 30, Contract Act.

2. In cases of this kind the question of importance is as to who are the parties to the contract. I would divide cases of this description into two classes. One class relates to cases in which contracts are made through the agency of kachcha arhtiyas. The other class of cases are those in which the contracts are made with pakka arhtiyas. The position of a kachcha arhtiya is that he acts as an agent with personal liability on himself, so far as the third party is concerned. His remuneration consists solely of commission and he is in no way interested in the profit or loss made by his constituents on the contracts entered into by him on his constituent's behalf: see Fakir Chand Lal Chand v. Doolub Govindji (1905) 7 Bom LR 213 at pp. 215 and 216. The position of a pakka arhtiya is totally different. Where there is a contract between a pakka arhtiya and a constituent, the pakka arhtiya is himself responsible to his constituent. The fact that he did or did not enter into a contract with a third party in pursuance of the order of his constituent makes no difference. For all practical purposes, the pakka arhtiya himself and his constituent act as principal parties. In case of a kachcha arhtiya if he does not enter into a contract with a third party in pursuance of the instructions given by his constituent then the order of the client remains unexecuted order. But, as already stated, a contract between a pakka arhtiya on one side and his constituent on the other is a contract between them as principals and the pakka arhtiya does not act, in such cases, as an agent of his constituent. In the case before me we have a contract between a pakka arhtiya on one side and his constituent, the defendant, on the other. There is no question of agency in such cases. It is true that in para. 1 of the contract between the parties the plaintiffs style themselves as agent. But that does not make any difference because in the same paragraph it is stated that the plaintiffs are pakka arhtiya. In para. 2 of the agreement it is stated:

3. Pakka arhtiya ko akhtiyar ho ga ki woh sauda karne wale ke sauda ki bakat delivery mal ki chahe woh kahin se ai ho, kar de,lekin sauda karne wale ko arhti se delivery mangne ka akhtiyar na hoga.

4. Then in para. 4 it is stated:

5. Nafa ada karne ka zimedar aur nuksan wasul karneka mustahaq pakka arhti hoga. Woh yeh batlane ka paband na hoga ki usne kis kis khas admi ko nuksan ada kiya hai.

6. In Harnarayan Jodhraj v. Radhakisan Chandrabhan (1923) 10 AIR Nag 324 it was laid down in a Nagpur case that relationship between pakka arhtiya and his constituent is not that of principal and agent but of principal and principal. In Chhogmal v. Jainarayan Kanyia Lal : (1913)15BOMLR750 it was remarked:

There are in fact no parties to the selling Contract but the client and his arhtiya who is the buyer. The arhtiya is not the disinterested broker. He is a party to the contract....

7. In Moti Chand v. Keshav Appaji (1920) 7 AIR Bom 88 at p. 89 a Bench of two learned Judges of the Bombay High Court observed:

The position of a pakka arhtiya differs in this respect from that of an ordinary commission agent...all that could be said is that the common intention of the two contracting parties (i.e. the plaintiff and defendant) must be proved....

8. Learned counsel appearing for the plaintiff-applicant has very strongly contended that the position of a pakka arhtiya is that of an agent. One of the rulings on which he relies is Tika Ram v. Daulat Ram (1924) 11 AIR All 530. From a perusal of that case it appears that it was held that pakka arhtiya while entitled to charge against his principal his expenses and entitled also to an indemnity against all losses resulting from carrying out his duty, is under an obligation to pay to his principal the amount due after the accounts have been settled. The terms of the contract between the parties to that suit cannot be ascertained from the judgment and therefore it is difficult to hold that that ruling is against the defendant of the present case. Learned counsel for the applicant also relied on Bisheshar Dayal v. Jwala Prasad (1914)1 AIR All 321 and Bidhi Chand v. Kacchhu Mal (1923) 10 AIR All 585. Those cases were cases in which the kachcha arhtiya was acting as agent and they can have no application to cases in which the plaintiff and the defendant act as principals.

9. The terms of the contract in the case before me clearly show that the plaintiff and the defendant were entering into a contract as principals. The terms of the contract show that there was a mutual understanding that there was to be no delivery and that only differences would be paid by one party to the other. Para. 2 clearly provides that the defendant will have no right to call for delivery. Para. 4 of the contract provides that the defendant will have no right whatsoever even to inquire from the plaintiff his pakka arhtiya as to whom he had to pay any losses in respect of the transaction in question. The case in Bankey Lal Nanhey Lal v. Bhagirath Lal (1910) 27 AIR All 95 is not applicable to the present case, because in that case the agent was kachcha arhtiya and the plaintiff had been able to prove that he had paid losses on behalf of the defendant. In the case before me there was an express agreement between the parties that the defendant would not be able to claim to know whether there had been any losses or to whom they had been paid. After a consideration of all the circumstances of the case I agree with the view taken by the Court below that the contract between the parties was a wagering contract which the plaintiff cannot enforce in view of the provisions of Section 30, Contract Act. I hold that there was no intention to give delivery and the parties mutually agreed to pay the differences only. The result therefore is that the application stands dismissed with costs.


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