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Suganchand Vs. Fulchand Gyanchand and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtMadhya Pradesh High Court
Decided On
Case NumberFirst Appeal No. 16 of 1952
Judge
Reported inAIR1957MP194
ActsContract Act, 1872 - Sections 30 and 211; Evidence Act, 1872 - Sections 101 to 104 and 114
AppellantSuganchand
RespondentFulchand Gyanchand and ors.
Appellant AdvocateG.M. Chafekar, Adv.
Respondent AdvocateK.A. Chitale, Adv.
DispositionAppeal dismissed
Cases Referred(E). In Kong Yee Lone and Co. v. Lowjee Nanjee
Excerpt:
- - 12,257-4-0 but failed to pay the balance, viz. even if therefore the plaintiff's explanation as regards his failure to produce it in court is not satisfactory, there is no room to assume that the kachchi chopadi was being kept back with any ulterior motive. this pukki bahi and all other account books have been shown to the defendant and as there is no suggestion of any fabricating much significance cannot be attached to the plaintiff's failure to produce the kachchi chopadi. from all these facts and circumstances, i am satisfied that the view taken by the lower court that the defendant did maintain account books and had kept them back is not unwarranted. i have already discussed the effect of failure of the plaintiff to produce the kachchi chopadi and have come to the conclusion.....1. this appeal is filed by the defendant.2. the plaintiff-respondent filed a suit against the appellant to recover a sum of rs. 10,046-14-0 alleged to be due on account of losses sustained by him in some forward transaction of gold. it is alleged in the plaint that the forward transactions in gold are carried on under the aegis of an association known as the 'bullion exchange'; that the plaintiff firm is a certified broker and a member of the said association; that these transactions are negotiated through brokers who occupy the position of pukka adtiyas and become responsible for payment of profits to either contracting party.the transactions are carried on from month to month and the waida matures fortnightly on sudi 15 and badi 30 of every month. delivery notes are given on sudi and.....
Judgment:

1. This appeal is filed by the defendant.

2. The plaintiff-respondent filed a suit against the appellant to recover a sum of Rs. 10,046-14-0 alleged to be due on account of losses sustained by him in some forward transaction of gold. It is alleged in the plaint that the forward transactions in gold are carried on under the aegis of an association known as the 'Bullion Exchange'; that the plaintiff firm is a certified broker and a member of the said association; that these transactions are negotiated through brokers who occupy the position of Pukka adtiyas and become responsible for payment of profits to either contracting party.

The transactions are carried on from month to month and the Waida matures fortnightly on Sudi 15 and Badi 30 of every month. Delivery notes are given on Sudi and Badi 14 of every month and delivery is actually effected on the date of maturity. The Balan (payment) is made on Sudi and Badi 4th of every month.

3. The plaintiff has then alleged that the defendant entered into gold transactions for purchase and sale of 132 lots, i.e., 3,300 tolas of golden various dates for Savan Sudi 15 S.Y. 2002 Waida; that in these transactions he sustained cases to the tune of Rs. 21,244-2-0 inclusive of brokerage and committee expenses; that towards these losses the defendant paid a sum of Rs. 12,257-4-0 but failed to pay the balance, viz., a sum of Rs. 8,986-14-0. The plaintiff therefore brought this suit for recovering the aforesaid sum and interest.

4. The defendant filed a written statement, in which he admitted that the plaintiff firm was a certified broker and a member of the Bullion Exchange; that it occupied the position of a Pukka Adtiya in the forward contracts relating to gold. He however denied the transactions of 132 lots of Savan Sudi 15 Waida and the losses as alleged by the plaintiff. The defendant in his special pleading, contended that in the month of Savan, Samvat 2002 he used to enter into Teji-Mandi and Gali-Nazrana transactions of gold every day; that he sustained a loss of about Rs. 12,500 in these transactions which he fully paid off.

He further contended that the gold transactions referred to by the plaintiff and the transactions which are carried on in Indore Market are all wagering transactions inasmuch as no delivery is given or taken and if at all it is effected, it is on a very small scale as compared to the volume of the transactions; that tile volume of transactions is so huge unit it is not possible to give and take delivery of large quantity of gold due thereunder, nor are the parties financially able to pay the price. The forward contracts are thus wagering transactions and the profits and losses sustained in these transactions are not recoverable through a Court of Law.

5. The trial Court framed five issues and proceeded with the trial. In the end it overruled the contentions raised by the defendant and decreed the plaintiff's claim. Aggrieved by this decree the defendant has preferred this first appeal.

6. It may be stated at the outset that the findings on Issues Nos. 1 and 5 were not impeached by Mr. Chafekar the learned counsel for the appellant. His main attack was (i) that the plaintiff did not prove the transaction in suit or losses alleged to have been sustained by the defendant: and (ii) that the forward contracts were wagering transactions and the suit to recover the losses sustained therein could not be maintained.

7. Before dealing with these contentions, it will be useful to bear in mind that the plaintiff is admittedly a Pukka Adtiya and is entitled to substitute its own goods towards the contract made for the principal and to buy the principals goods en its personal account. Even when the transactions arc made with third parties, they are recorded in the broker's own name and there is no privity of contract established between the actual contracting parties. In other words the Adtiya figures as principal to principal and is responsible to both the contracting parties.

8. According to the plaintiff 132 lots, i.e., 3,300 tolas of gold was purchased and sold by the defendant between 3rd August 1945 and 21st August 1945, the date of maturity being 23-3-1945. The plaintiff and the defendant admittedly compared accounts in the month of Bhadava, i.e., in September 1945. It is not suggested by the defendant that the plaintiff has altered his books or has interpolated any items thereafter.

9. On 24th November 1045, the plaintiff served a notice of demand to which admittedly there was no reply given. Along with the said notice the plaintiff enclosed a statement of account but no objection was raised by the defendant either to the correctness of the account or to the sum claimed by the plaintiff. After the summons of the suit was served but before filing the written statement the defendant applied for inspection of the plaintiff's account books and desired to see how it had entered into various contracts in the market and made payments to third parties in respect of the defendant's contracts. In this application the defendant has not denied having made any forward contracts as alleged in the plaint though he has stated that nothing is payable by him to the plaintiff.

10. It is a common case of the parties that all the relevant account books excepting one Kachchi Chopadi were shown to the defendant by the plaintiff on this occasion. After inspecting the plaintiffs account books the defendant filed his written statement in which he generally denied the transactions in suit and vaguely alleged that in the month of Savan he had Gali transactions with the plaintiff every day and suffered a loss to the tune of Rs. 12,500 which was paid partly from the profits earned by him and partly by cash payments. No details are given about these transactions by the defendant on the ground that be has maintained no account.

11. The defendant has nut admitted the transactions. But be has not contested the correctness of the plaintilf's account books nor has he challenged any particular item recorded on the debit or credit side in those books. The defendant has admitted having paid Rs. 12,500 but has nut disclosed either the particulars of these payments or the transactions in respect of which these losses were sustained. When the plaintiff demanded these particulars, he refused to give them and added that he could be able to show them from the plaintiff's own account books.

12. The plaintiff has produced all the account hooky excepting one Kachchi Chopadi. The defendant has not produced his account books at all. He has contended that he has not recorded the transactions in the account books. Each party has charged his opponent for having suppressed the books with ulterior motive.

13. According to the plaintiff Gyanchand he had shown all the account books including the Kachchi Chopadi to the defendant when the latter expressed a desire to see them before the suit was filed. He has stated that the Kachchi Chopadi was taken by the defendant at that time and was never returned. The defendant has denied this. The trial Court has not believed this explanation of the plaintiff but has refused to draw any inference against it. The question that is left to be considered is, whether the Court was justified in doing so, and, whether the defendant is really prejudiced in the absence of the Kachchi Chopadi. The defendant has admitted that he had compared the account with the plaintiff in September 1945, and it is not suggested by him that there have been subsequent interpolations by the plaintiff thereafter.

He has also not suggested that the Kachchi Chopadi was not shown to him on that occasion. Even if therefore the plaintiff's explanation as regards his failure to produce it in Court is not satisfactory, there is no room to assume that the Kachchi Chopadi was being kept back with any ulterior motive. According to the evidence on record, this Chopadi is maintained for the purpose of recording transactions when they are made in the hall of the association by the persons who enter the delivery. Subsequently either on the same day or early morning on the following day the entries from it are carried over in the Pukki Bahi. This Pukki Bahi and all other account books have been shown to the defendant and as there is no suggestion of any fabricating much significance cannot be attached to the plaintiff's failure to produce the Kachchi Chopadi.

14. The trial Court has also not believed the defendant statement that the transactions of gold and silver which he admittedly carried on, are not recorded in the books and that no account has been maintained by him with respect to them. The defendant has a cloth shop and it is not disputed that he maintains regular account books with respect to the dealing of that shop. Those account books have not been produced in Court by the defendant.

15. The defendant is a business-man. He has admitted in his statement on oath that be was carrying on business in forwarding contracts relating to gold and silver from Samvat 2000 to 2003 and that he earned a profit amounting to Rs. 1,00,000 or 1,25,000. He has also stated that in these transactions he purchased and sold about fifty or sixty thousand tolas of gold and used to sell and purchase about 4,000 or 5,000 silver bars every month; that he used to carry on these dealings through certified brokers and used to receive profits and pay losses to them. Considering that the defendant is a business-man and carried on such extensive dealings ex-lending over a period of about four years, it cannot be believed that he did not maintain any record with respect to them.

It is also significant to note that the defendant has admitted that he compared the account with the plaintiff some time in Bhadava, Samvat 2003. This would not have been possible unless some record relating to these transactions was maintained by the defendant with himself. In cross-examination the defendant had to admit that he did maintain some record in respect of these transactions but he tried to explain away his omission to produce it by adding that this was kept on loose papers which were not later on preserved.

Two facts emerge from this: (i) that the defendant had maintained a record of the transactions and had compared the account immediately after the transactions were made; and (ii) that it is not the defendant's grievance that in the year 1945 when the accounts were compared, there was any dispute regarding any particular item between the parties and it is even not suggested that the plaintiff had not shown the Kachchi Chopadi to the defendant then. From all these facts and circumstances, I am satisfied that the view taken by the lower Court that the defendant did maintain account books and had kept them back is not unwarranted. In my opinion, the defendant has maintained an account of these transactions and has kept it back apprehending that if produced it would demolish his defence.

16. To prove the various transactions the plaintiff has produced the Souda Nond. Copies of entries from it are produced from Exs. P-48 to P-52. These extracts from the Souda Nond show that the various transactions recorded therein were made by the defendant with the plaintiff. The plaintiff Gyanchand has pledged his oath that these transactions were made as per instructions of the defendant himself. He has also proved the entries from P-48 to P-52. The plaintiff has also examined the persons with whom it had made most of the corresponding transactions. The general criticism that was directed against this evidence was two-fold. It was urged that the transactions are not proved by the plaintiff by producing the Kachchi Chopadi and secondly that many of the transactions recorded in P-48 to P-52 have not been proved.

I have already discussed the effect of failure of the plaintiff to produce the Kachchi Chopadi and have come to the conclusion that in the instant case the failure of the plaintiff to produce it in Court does not materially affect its case. As regards the second contention of the defendant it may be stated that it is common case of both the parties that the plaintiff is a Pukka Adtiya and it is for this reason not obligatory upon him to prove that he had entered into corresponding transactions with third parties for and on behalf of the defendant. In this case the plaintiff has no doubt examined witnesses with whom he had made the bulk of the corresponding transactions but that evidence helps to corroborate the plaintiffs case.

17. The first of the series of the transactions is the transaction of purchase by the defendant of 1,750 tolas of gold. This transaction is recorded in P-48 which is proved by the plaintiff Gyanchand to be in his own handwriting. Out of these 1,750 tolas of gold, 450 tolas wore sold by the plaintiff himself whereas the remaining 1,300 tolas were purchased from third parties. The plaintiff has examined P.W. Poonam Chand, P.W. Chhappanlal, P.W. Suganchand Katariya and P.W. Daulal to prove the corresponding transactions.

18. Mr. Chafekar, learned counsel for the appellant, criticised the evidence of Chhappanlal and Suganchand as being vague and not of much use to the plaintiff. He submitted that Poonamchand's evidence suffered from an inherent defect inasmuch as in his deposition he has stated that 1,000 tolas of gold were sold by him to the plaintiff on Savan Sudi 3 at the rate of Rs. 75-12-0 whereas P-48 indicated that it was at the rate of Rs. 77-12-0. It was further urged that so far as 450 tolas of gold which the plaintiff alleged Was sold by himself, there was no reference to it in P-48 nor was there any documentary evidence to support it.

19. It is true that the evidence of P.W. Chhappanlal and Suganchand Katariya is vague and is not sufficient to prove the transactions recorded in the name of Hirachand Dhannalal and Suganchand Katariya. But this lacuna in the plaintiffs evidence does not in the instant case help the defendant as the plaintiff being Pukka Adtiya was not bound to prove the corresponding transactions. The evidence of these witnesses cannot also be described as inconsistent with plaintiff's version.

20. As regards Poonamchand Johari, it is significant to note that he has produced an entry from his account book at P-8 and this entry shows that 1,000 tolas of gold was sold by the witness at the rate of Rs. 77-12-0 as alleged by the plaintiff. Poonamchand has no doubt stated in his examination that this transaction was made at the rate of Rs. 75-12-0; but in the next breath he produced the entry P-8 which is a written record and therefore entitled to greater weight.

The witness seems to have made a mistake in his oral statement which he was called upon to make years after the dealings were made and at any rate the defendant cannot make much capital out of it since he has not asked the witness to explain how he could reconcile his oral statement with that of the entry in the account books. Under the circumstances I do not attach much weight to the statement of Poonamchand which appears to have been made under some kind of misapprehension.

21. As regards the absence of the entries showing plaintiff's personal transactions, the plaintiff Gyanchand has stated that according to the practice of his shop, personal transactions are not recorded in the Souda Nond and are ascertained on the basis of the total purchases and sales made by the firm. In my opinion how personal transactions are made and how they should be ascertained would in each case depend upon the system of maintaining accounts is the particular establishment and no hard and last rule can be laid down in regard to that matter. As Adtiya, the plaintiff was bound to find goods for money and money for goods and it is not suggested that it failed to perform its part in this respect.

22. The last criticism on this point was that the plaintiff had admitted in his cross-examination that the transaction of 1,750 tolas emanated from a Gali transaction entered into by the defendant on Savan Sudi 1. It was contended that the plaintiff Gyanchand had stated that there were corresponding Gali transactions but Poonamchand and other witnesses who are examined to prove these corresponding transactions have not been asked any questions about the Gali.

In the first place, it is a common case of both the parties that the transaction of 1,750 tolas emanated from Gali transaction and the defendant himself has produced extracts from the plaintiffs books which bear out this part of the case. The, defendant had seen the plaintiff's account books and had known from them the names of the persons who had made the corresponding Gali transactions. When these persons were in the witness-box, it was open to him to ascertain from them whether the had in fact entered into these transactions. But this was not done. Apart from this, it was in my opinion quite unnecessary for the plaintiff to ask these witnesses how the transactions had emanated.

23. The defendant has then admitted that he accepted premium for the Gali transactions of the rate of Rs. 2/- per 100 Tolas of gold. He himself has produced D/6 an entry from plaintiff's books which shows that Rs. 85/- were received by him for Mandi transactions. The defendant has no doubt fried to show ignorance in his cross-examination as regards the amount of premium that he had received but that was obviously due to his anxiety to get out of an inconvenient position. His own evidence and the entries produced by him from the plaintiff's account books amply corroborate the plaintiff's evidence and 1 have no hesitation in holding that the transaction of 1750 Tolas is satisfactorily established by the plaintiff.

24. The next transaction is a transaction of sale of 3000 Tolas of gold by the defendant. Plaintiff Cyanchand has proved that he sold for the defendant 3000 Tolas of gold on Savan Sudi 6 on instructions from him. He has produced the entry P/49 from his Souda Nond in which this transaction is recorded. He has also examined witnesses to prove that he had made corresponding transactions in the market. The plaintiff's evidence is corroborated by the defendant himself. He has admitted in cross-examination that he had instructed the plaintiff to oversell on his account though he has refused to disclose what was the quantity purchased by him and to what extent he had oversold.

25. Mr. Chafekar, learned Counsel for the appellant criticized the plaintiff's evidence and particularly the evidence of P.W. Pannalal Jhanjhari as being not sufficient to prove the corresponding transactions. The learned counsel referred to Exs. P/32 and P/33 which show that 400 Tolas of gold was purchased by the witness from the plaintiff on Savan Sudi 9, when the entry in P/49 showsthat it was a day earlier. The difference in dates is explained by the plaintiff Gyanchand himself as being due to use of different calendars by different parties and there is no reason to disbelieve him on this point.

26. The further transactions made by the defendant a.e similarly proved by the plaintiff Gyanchand by producing Exs. P50, P/51 & P/52 which are extracts from the Souda Nond and by examining the parties with whom the transactions were entered in the market. No serious criticism was offered, as regards this evidence. As I have already observed on an earlier occasion the defendant had compared the accounts with the plaintiff at least more than once and had not challenged any specific transaction as being incorrectly recorded.

He has also not replied to the plaintiff's notice Ex. P/53. He has kept account with respect to these dealings but has not produced them. It is also significant that the defendant admits having suffered losses to the tune of Rs. 12,500/-, but has not cared to explain how they were sustained. Considering all these circumstances 1 am of opinion that the plaintiff has proved Issue No. 2 and that the lower Court was light in recording a finding in plaintiff's favour on that issue.

27. The next question to he considered is, whether the plaintiff has proved that the defendant sustained losses as alleged in the plaint. In considering this matter it ought to be borne in mind that the defendant who tiled his written-statement after an exhaustive and detailed examination of the plaintiff's books has not disputed any particular transaction or the rates at which the sales and purchases were made. The denial of the losses is based on the denial of the transactions themselves.

If therefore the transactions arc held to be proved, the amount claimed to be due to the plaintiff can be determined by calculation only. The plaintiff Gyanchand, has stated in his deposition that the total loss on account of transactions entered into by him with other parties was Rs. 19,530/1/6 and this he had paid to them; that there was a further loss of 1711/0/6 on account of the personal transactions which were made by himself. The total loss according to the plaintiff's statement was Rs. 21,244/2/-.

The plaintiff also stated that this sum of Rs. 21,244/2/- included Rs. 264/- on account of brokerage and Rs. 8/4/- on account of committee expenses. The plaintiff Gyanchand who made this statement has not been cress-examined on this point at all and his statement remains unchallenged. It is not shown even in he course of arguments before, us that on the basis of the transactions as they prerecorded in the plaintiff's books this sum could not be due to it.

28. The plaintiff had served a notice on the defendant as far back as 20th November, 1946 and had claimed therein an amount of Rs. 10550/-. There was no reply or denial of the claim by the defendant. These circumstances speak for themselves and help the plaintiff. In my opinion there is no force in the contention raised by the defendant that the amount claimed by the plaintiff is not proved to be due from him. The contention of the defendant in this respect is untenable and must be rejected.

29. Mr. Chafekar, learned Counsel for the appellant next contended that the transactions in suithad emanated from Gali transactions and were in thy very nature of things wagering contracts. In Sukhram v. Baldeodas Manilal and Co., C. F. A. No. 23 of 1954: (AIR 1957 MP 138) (A), we have examined the nature of Gali and Nazrana transactions and have held that these transactions are by themselves not necessarily wagering transactions and that the party who pleads that these transactions are wagering in nature has to prove this fact.

30. The test to determine whether a particular transaction is a wagering contract is laid down by the Privy Council in Sukhdevdoss Ramprasad v. Govindoss Chaturbhujadoss and Co., 55 Ind App 32: (AIR 1928 PC 30) (B). At page 36 (of Ind App): (at p. 32 of AIR) their Lordships observed :

''This being so, it was contended on behalf of the respondents that the contract in question was a wagering contract. There can be no doubt that these various contracts were in character highly speculative; but, as was pointed out by the trial judge and by the judges on appeal, that is insufficient in itself to render them void as wagering contracts. The authorities cited show that to produce that result there must be proof that the contracts were entered into upon the terms that performance of the contracts should not be demanded, but that differences only should become payable.'

31. There must be evidence that the common intention of both the parties was to deal in differences and not to insist on delivery of goods under any circumstances. It is not enough that one of the parties is known to be a speculator or even a gambler as intention to gamble must exist on the part of both the parties to the contract. The intention may however be express or may be implied from the course of dealings and the other circumstances on record. The question therefore is, whether the suit transactions were made on the express or implied understanding that actual performance by giving and taking delivery will not be demanded by either party and that the outstanding contracts would always be settled by paying or receiving differences.

31a. The defendant has in his written statement nowhere alleged that the transactions were commenced on any specific understanding, express or implied, that no delivery would be given or taken and that all these transactions will be settled by payment of difference. The plea of wager has been raised in paragraph 9 of the written-statement and appears to have been based in the impression of the defendant as regards what happened in the Indore Market in such transactions.

The defendant has stated in this Paragraph that the transactions referred to in the plaint by the plaintiff and all the transactions in gold which are carried on in Indore Market are transactions of wagering nature because no delivery is either given or taken, and if at all it is effected, it is on a very small scale compared to the bulk of the contracts. Similarly the volume of the transactions is so large that it is neither possible to give delivery of the quantity agreed to be sold, nor can the buyers pay the required price for taking delivery.

32. Mr. Chafekar, learned Counsel for the appellant contended, that the evidence on record fully established the plea of the defendant that no delivery is either given or taken in these transactions in Indore Market and if at all it is given, it is on such an insignificant scale that it cannot satisfy the test of genuine commercial contracts. The learned Counsel referred to the evidence of P.W. Babulal who has stated in cross-examination that in some Waida transactions one Lakh Tolas of gold is sold and purchased. Reference was also made to that part of the statement in which the witness has stated that when the transactions are commenced, it is not necessary to warn the constituents that the delivery will be insisted upon because from the beginning the idea is to pay the losses and receive the profits.

33. Mr. Chafekar also referred to the statement of P. W. Keshrimal which is more or less to the same effect. The learned Counsel also relied upon the statement of P. W. 5 Sundarlal who has in his cross-examination stated that there is a practice in the market of taking margin money of Ks. 5/- per Tola to safeguard against losses if any. On this evidence the learned counsel argued that there was an implied understanding between all the persons who dealt in forward contracts relating to gold that delivery would not be insisted upon but only the profits will be received and the losses will be paid.

34. Before considering these contentions, it is necessary to bear in mind that rules on the basis of which transactions are conducted in Indore Market provide that all the contracts outstanding on the date of maturity will be performed by giving and taking delivery of gold and that Chitthi containing necessary details would be issued through the association and delivery will be received by the holder of this Chitthi on the date of maturity upto 6-O P.M;. P.W 17 Martandrao has produced an extract from the books relating to, delivery of gold in these transactions which is maintained by the association.

Ex. P/47 is the extract showing the delivery of gold made through the association in Savan Sudi 15 Waida. No doubt compared to the volume of the transactions which are entered into by the various contracting parties, the quantity of gold delivered appears to be small but from this fact alone it cannot be stated that the parties deal in these transactions on an implied understanding that no delivery will be demanded by any party.

35. The other important aspect which ought to be taken notice of is that the transactions are negotiated through brokers who occupy the position o Pukka Adtiyas and the real contracting parties do not come face to face. When the transactions are made through brokers who are mostly interested in earning their commission and are not concerned with the ultimate result the clement of wager is absent. As observed by their Lordships of the Privy Council in Ismail Lebbe Marikar v. Bartleet and Co., AIR 1942 PC 10(C),

''The essence of a bet is that both parties agree that they will pay and receive respectively on the happening of an event in which they have no material interest. The transactions may be cloaked behind the forms of genuine commercial transactions; but to establish the bet, it is necessary to prove that the documents are but a cloak and that neither party intended them to have any effective legal operation.

Where the documents show an ordinary commercial transaction, and, in conformity with them, one of the parties incurs personal obligations on a genuine transaction with third parties so that he himself is not a winner or loser by the alteration of price, but can only benefit by his commission, the inference of betting is irresistibly destroyed. In such cases the fact that no delivery is required or tendered is of practically no value.'

36. In the present case the witnesses who are examined by the plaintiff are certified brokers and members of the association and these persons are interested in their commission rather than in the performance of the contracts; When the questions were put to these witnesses, whether they had warned the contracting parties that they will have to give and take delivery, they naturally replied in the negative. P.W. Babulal has clearly stated that he, looked to the financial position of the party for whom ha made the contracts in order to ascertain whether if any losses are incurred, he would be in a position to pay them. From this however, it cannot be argued that he intended to deal in differences only and the same may be said about other witnesses also.

The plaintiff's witnesses are certified brokers and members of the association and deal mostly for their constituents and from their failure to ascertain whether their constituents, i.e., parties for whom they enter into transactions in the market, have got stock of gold to give actual delivery and the necessary means to take it, no inference can be drawn that the dealings are carried on the understanding that the contracts will be settled by payment of differences only.

37. The question of giving or taking delivery of gold can arise only with respect to such contracts as are outstanding on the date of maturity and cannot arise in regard to contracts which are squared up before this date. In the Waida of Savan Sudi 15, Samvat 2002 the defendant had himself bought 3300 Tolas of gold and had sold an equal quantity before the Waida day leaving no contract to be performed by giving or taking delivery. Unless therefore it is shown that in the bulk of the outstanding contracts delivery is not made, the mere fact that the quantity of gold delivered is small as Compared to the volume of business transacted cannot advance the defendant's case much further.

38. From the course of dealings and the nature of the business, it cannot be said that the contracts in gold are made in the Indore Market on terms that that no delivery would be demanded by either party or are as a rule wagering contracts.

39. As regard the contracts in suit, it has already been noticed that out of a total transaction of 3300 Tolas of sales and purchases by the defendant, only a small portion represented plaintiff's personal transactions. The bulk of the contracts were made by the plaintiff with third parties and in these transactions the plaintiff was interested only as broker and commission agent. In the bulk of the transactions the plaintiff had no personal interest, and intention to bet which is the very essence of these transactions, is lacking in respect thereof.

40. The defendant has not alleged that he had commenced dealings with the plaintiff on any understanding express or implied, that the contracts will be settled by payment of differences and delivery will not be demanded by any one. The plaintiff was employed as broker by the defendant but it is not even suggested that it had agreed to project him from the liability to make delivery, The plea raised fey the defendant is general and vague and he has examined no witnesses to make good this plea. In my opinion the evidence on record is not sufficient to prove that the transactions in suit were wagering contracts.

41. Mr. Chafekar, learned Counsel for the appellant relied 011 the decision of the Bombay High Court in Talakshi v. Sh. Ujamsi, ILR 24 Bom 227 (D), and the decision of the Privy Council in Kong Yee Lone and Co. v. Lowjee Nanjee, 28 Ind App 209 (E). In Kong Yee Lone and Co. v. Lowjee Nanjee (E), the plaintiff was a rice trader and the defendants were rice millers having a small mill capable of putting out 30,000 bags in a month. The defendants entered into several contracts with the plaintiff for the sale to him of 1,99,000 bags of rice aggregating upwards of five crores of rupees.

The rice was to be delivered from a number of specified mills among which the defendants' mill was not included. In the same years, by 14 contracts the defendants sold to the plaintiff 22,250 bags to be delivered from their own mills. The latter contracts were duly fulfilled but none of the former contracts was performed and the defendants passed to the plaintiff a promissory note. The defendants raised the plea of wager. The plaintiff succeeded in the trial Court but the decree in his favour was reversed by the Privy Council in appeal. Their Lordships observed :

'Now the output of the firm itself would not be much over 60,000 bags during the currency of the contracts; and they had dealings with other persons besides the plaintiff. The capital of the firm, as stated, was a trifle more than a lac of rupees. The cost of the goods would he that amount multiplied five hundred fold. It is possible for traders to contemplate transactions so far beyond their basis of trade, but it is very unlikely.

In point of fact they never completed, nor were they called on to complete, any one of the ostensible transactions. The rational inference is that neither party ever intended completion. When the two classes of contracts are compared--the one class suitable to traders such as the defendants and fulfilled fey them, the other extravagant by large and left without any attempt at fulfilment -- the rational inference is strengthened into a moral certainty.'

42. In ILR 24 Bom 227 (D), certain contracts were entered into at Dholera fur the sale and purchase of cotton, a commodity which, it was admitted, never found its way either by production or delivery to Dholera. The contracts were made on terms contained in a printed form which incorporated the rules framed by the cotton merchants of Dholera. These rules expressly provided for the delivery of cotton in every case and forbade all gambling in differences. The course of dealing was however such that none of the contracts were ever completed except by payment of difference between the contract price and the market price on the Waida day. It was held on these facts that the contracts were by way of wager within the meaning of Section 30 of the Contract Act.

43. In both these cases the transactions were made between the parties and it does not appear that any brokers had intervened. The conduct of the parties who dealt in the market and the actual results were sufficient to warrant an inference that the transactions were wagering in nature. The modus operandi in the present case is however different and the employment of brokers minimises the possibility of there being any intention to wager between the real contracting parties. The transactions in gold are no doubt highly speculative; but all speculative transactions are not wagering contracts. The cases cited by Mr. Chafekar, learned Counsel for the appellant are therefore not of much assistance.

44. It was lastly contended that the lower Court was wrong in allowing in plaintiffs claim for interest. It was contended that the plaintiff had charged interest on the basis of a custom in the market, but this custom is not at all established. He referred to the evidence of P. W. 6 Mishrilal and P.W. 3 Sundarlal who have deposed that there was no particular 'rule as regards interest.

45. In Para 4 of the plaint the plaintiff has claimed a sum of Rs. 1660/- on account of interest at 6 p.c. p.a. from Bhadwa Badi 4 Samvat 2002 until the date of the suit. The defendant has in his written-statement nowhere specifically denied the plaintiff's claim for interest. No issue is consequently raised on this point. It was under the circumstances not necessary for the plaintiff to adduce any evidence and to prove its claim for interest.

46. P. W. 5 Sudarlal has no doubt said that he docs not know if there is any custom or usage in the market as regards interest to be charged by the broker. He has however stated that in his shop interest at 6 p.c. p. a. is charged on the balance due to the broker from his principal. This evidence thus goes to support the plaintiff's claim and does not help the defendant in any manner. The evidence of P. W. 8 Mishrilal is also not inconsistent with the plaintiff's claim.

He has not said anywhere that no interest is payable but has only deposed that there is no specific rule as regards charging of interest by the broker on the sums paid for the constituent. There is then the statement of the plaintiff Gyanchand that he had claimed interest according to the usage of the market and this statement has not been subjected to any cross-examination. Under the circumstances there is no reason to reject the plaintiff's claim for interest.

47. No grounds are made out for interference inthis appeal. The appeal thus fails and is herebydismissed with costs.


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