1. This is a plaintiff's appeal and arises out of a suit brought by them for recovery of Rs. 3,346-6-0 alleged to be due to them from the defendant-respondents on account of certain khatti transactions.
2. The plaintiff's case was that they carry on the business of commission agents for the purchase and sale of khattis and that, on instructions received from the defendant-respondents by means of a telegram dated 12th March 1916, they, on 13th March 1916, sold on the defendants behalf, to certain persons 11 khattis and agreed to deliver the same to the purchasers in Jeth. They alleged that the defendants did not deliver the khattis in the month of Jeth inasmuch as the rate of grain had risen in the interval, and in order to carry out their business with the vendees of the khattis, they (the plaintiffs) had to pay the difference to the purchasers of the kattis between the market rate prevailing on 13th March 1916 and on Jeth badi 15th. The plaintiffs alleged that they had to pay to the purchasers of the khattis a sum of Rs. 3,046-5-6 and this they were entitled to recover from the defendants, their principals, with interest, and were also entitled to get certain amount on account of their commission.
3. The defence to the suit was that the transaction relating to the 11 grain-pits in dispute was by way of wager and, as a matter of fact, there was no intention to deliver the goods. It was further contended by the defendants that on account of certain amendments, to be referred to hereafter, in the Gambling Act, 1867, a commission agent cannot bring a claim in respect of losses sustained by him in connexion with badni transactions or wagering contracts.
4. Both the Courts below held that the transaction in dispute was by way of wager, and further, the plaintiffs were, because of the provisions of the United Provinces Act No. 1, 1917, disentitled to recover from the defendants the amount that the plaintiffs alleged they had paid to the vendees of the 11 khattis.
5. We are unable to agree with the decisions of the Courts below. Even if it be assumed that the forward contract entered into by the plaintiffs as agents on behalf of the defendants was a wagering contract, the defendants cannot, as against the plaintiffs, who were their agents, plead the illegality of that contract as a defence in an action brought by the plaintiffs to recover from the defendants, their principals, any money that the plaintiffs had to pay to the vendees of the 11 khattis in consequence of the breach of the contract committed by the plaintiffs in not delivering the khattis on the due date. The plaintiffs, as the defendants' agents and acting in accordance with their directions, made a certain contract on behalf of the defendants with third parties. Under the contract so entered into both the plaintiffs and the defendants were under an obligation to the purchasers of the 11 khattis to perform their obligations or to pay damages for their breach. The plaintiffs having entered into a contract with the purchasers of the 11 khattis as agents of the defendants, the defendants were prima facie liable to indemnify the plaintiffs against any liability incurred in respect of that contract. It is to be remembered that the plaintiffs in no way stood to gain or to lose anything by the contract which they entered into on the defendants' behalf. If the price of the grain had gone down in the interval between the date of the sale of the 11 khattis and the date on which delivery of those khattis was to be made to the purchasers, the benefit arising from the fall in the market rate would have gone to the defendants. The plaintiffs could not have been entitled to share in the benefit thus accruing to the defendants. Equally so, if there has been a loss because of the rise in the price of the grain between the date of the sale of the khattis and the date for the delivery of those khattis to the purchasers, that loss must be borne by the defendants, and if the plaintiffs have had to pay to the vendees of the khattis any amount on account of the loss occasioned by rise in the price of the grain, they are entitled to recover that amount from the defendants. As was pointed out by their Lordships of the Privy Council in the case of Sobhagmal Gianmal v, Mukand Chand, All India Reporter 1926, Privy Council page 119 as
between the plaintiffs and the defendants neither party stands to win from or to lose to the other according to the fluctuation of price or any other event. The very essence of a wager between them is thus absent.
6. In short even if the contract relating to the 11 khattis was by way of wager, there was no element of speculation so far as the plaintiffs were concerned. The plaintiffs were only entitled to get their commission for acting as agents of the defendants. In view of the decisions in the cases of Bidhi Chand v. Kachhu Mal A.I.R. 1923 All. 585 and Hardeo Das Nanak Chand v. Ram Prashad Shiam Sunder Lal : AIR1927All238 , we hold that if the plaintiffs actually sold 11 khattis as agents on behalf of the defendants and if they had to make good to those purchasers the difference between the market rate prevailing on the date of the agreement of sale and on the date of delivery, they are entitled to a decree for that amount as against the defendants.
7. But it is argued that a person entering into a wagering contract is guilty of an offence punishable under S 13, Act No. 3, 1867 as amended by United Provinces Act No. 1, 1917, and that a person who acts as an agent and enters into such a contract on behalf of the principal, is not entitled to recover any amount from his principal, inasmuch as an agent employed to do any illegal act is not entitled to be reimbursed by the principal for the loss that he has sustained in consequence of acting as an agent for the furtherance of an illegal act. We are unable to agree with this contention. It is true that it is provided by Act 1, 1917 that gaming includes wagering, and as such any person who is found wagering in any public street, place or thoroughfare situated within the limits to which Act No. 3, 1867 applies will be guilty of an offence punishable under Section 13 of that Act. But in the present case it is nobody's case that either the defendants or the plaintiffs were found wagering in any public street, place or thoroughfare and as such Section 13, Act No. 3,1867 has no application to the present case.
8. For the reasons given above we hold that if the plaintiffs really entered into a contract of sale of 11 khattis in pursuance of the defendants' directions, and if they actually paid any amount on account of difference in the market rate to the vendees of the 11 khattis, they are entitled to a decree for the amount so paid by them as well as for their commission charges. But on these points there is no definite finding by the lower appellate Court. Accordingly, before deciding this appeal, we must have findings from the lower appellate Court on the following points:
(1) Did the plaintiffs actually enter into a con-tract to sell 11 khattis on behalf of the defendants on l2th March 1916?
(2) Had the plaintiffs to pay the difference between the market rate prevailing on the date of the agreement of sale and the date of delivery to the purchasers of the 11 khattis, and if they had to pay, what amount did they actually pay?
(3) What is the amount that is due to the plaintiffs on account of their commission from the defendants?
9. Parties will be allowed to adduce additional evidence. On receipt of the findings ten days will be allowed for filing objections.