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Ram Singh Vs. Jethanand Wadhumal and Co. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtRajasthan High Court
Decided On
Case NumberSecond Appeal No. 179 of 1959
Judge
Reported inAIR1964Raj232
ActsVegetable Oils and Oilcakes (Forward Contracts Prohibition) Order, 1944; Code of Civil Procedure (CPC) , 1908 - Sections 100 to 101 - Order 6, Rule 17; Contract Act, 1872 - Sections 65
AppellantRam Singh
RespondentJethanand Wadhumal and Co.
Appellant Advocate J.S. Rastogi, Adv.
Respondent Advocate S.B.L. Sharma, Adv.
Cases ReferredOnkarmal v. Banwarilal
Excerpt:
.....had an option to receive delivery himself or to get delivery made to his nominee. nominee could very well be the defendant's vendees, purchaser or transferee. this circumstance in the absence of any other evidence to the contrary is sufficient to show that the benefits of the contracts were transferable and the plaintiff has failed to prove that the1 benefits were not transferable. but this principle is subject to well known exceptions, one of which is that it will not apply where the parties are not or cannot be said to be really in pari delicto......available under the notification. the only controversy is whether the contract is the same in terms of the notification.mr. rastogi contended that the expression 'against which contracts are not transferable to the third parties' governs and qualifies only delivery orders, railway receipts or bills of lading, and cannot in any way limit forward contracts' for specific qualities or types of any article to which, the said order applies or for specific delivery or at a specified price. according to him, forward contracts for specified qualities or types of any article and for specific delivery at specified price are exempt from the notification irrespective of the question whether the rights and the liabilities under the contract are transferable or not. according to him, the latter.....
Judgment:

L.N. Chhangani, J.

1. This is a plaintiff's second appeal from the judgment and decree of the Senior Civil Judge, Ajmer, dated the 14th November, 1958, affirming the decree of the Second Additional Sub-Judge, First Class, Ajmer dated the 31st January, 1956. By these decrees the plaintiff's suit for damages amounting to Rs. 1,875/- was dismissed and the defendant's counter claim of Rs. 1,000/-, was decreed.

2. The material facts leading to this appeal may be briefly stated as follows:

On 21st of May, 1954, the defendant M/s Jethanand Wadhumal and Co. Ajmer through on of his managers Shri Lachman Dass contracted to purchase 500 x 36 Ibs. tins of Prabhat Brand Hydrogenated Ground-nut and Til Oil (Vegetable Ghee) on some terms and conditions, the material conditions being as follows:(a) Quantity & Quality:500 x 36 lbs. Prabhat Brand Hydrogenated Ground. nut Oil and Til Oil.(b) Period of delivery;From 1st July 1954 to 31st July 1954 on any day at the option of sellers.(c), (d) and (e) relate to rate, octroi and advance payment, and are not material.(f) Terms of payment :The payment shall be made as soon as the delivery is tendered at the purchaser's godown or his nominee's godown.(g) and (h) relate to sales-tax and other terms which are not material..

The defendant advanced Rs. 1,000/- to the plaintiff under a cheque in pursuance of the contract. The contract was not implemented. The plaintiff accordingly filed a suit for the recovery of Rs. 1,875/- as damages. His case was that he was always willing and prepared to perform his part of the contract but the defendant failed to take delivery in sp-;te of requests, registered notice and a telegram. According to him the contractual rate being Rs. 32/- per tin and the market rate on or about 3ist of July, 1954 at Ajmer being Ks, 26/4/- per tin, the plaintiff suffered damages to the extent of Rs. 2,8757-. Giving credit for Rs. 1,000/- deposited by the defendant in advance, he filed a suit for Rs. 1,875/-.

3. The defendant contested the suit on various grounds. The main plea with which we are concerned in this appeal relates to the illegality of the contract. The defence was that the contract being a 'forward contract' was in violation of the Forward Contracts (Regulation) Act of 1952. The defendant also filed a counter claim for Rs. 1,000/-paid to the plaintiff in pursuance of the contract. It appears that at the time of arguments on certain preliminary legal issues relating to the illegality of the contract, the defendant did not rely upon the provisions of the Forward Contracts (Regulation) Act of 1952 but took shelter under the provisions of the Vegetable Oils and Oilcakes (Forward Contracts Prohibition) Order, 1944 (hereinafter referred to as the 'order').

4. The trial Court held that the contract was illegal being in contravention of Section 3 of the said order. The trial Court eventually dismissed the plaintiff's suit and decreed the defendant's counter claim for Rs. 1,000/-,

5. The plaintiff filed an appeal in the Court of District Judge, Ajmer. It was, however, transferred to the Court of Senior Civil Judge. At the appellate stage the plaintiff relied upon a notification No. P and S.C. 1 (A)/44 (hereinafter referred to as a notification) excluding certain classes of contract from the provisions of the order. The appellate Court held that the appellant was not entitled to the benefit of the exemption given by the notification. The appellate Court accordingly upheld the decision of the trial Court and dismissed the plaintiff's appeal. The plaintiff has filed the second appeal.

6. Mr. Rastogi contended in the first instance that the notification does apply to the contract is question and the lower Courts committed an error in holding that the contract was not within exemption. It will be useful at this stage to briefly refer to the relevant law bearing on the question. The Government of India in the exercise of powers conferred by Sub-rule (a) of Rule 81 of the Defence of India Rules made an order called 'The vegetable Oils and Oilcakes (Forward Contracts Prohibition) Order, 1944. This order prohibited forward contracts in certain articles. It is not in dispute that Prabhat Hydrogenated Ground-nut Oil and Til Oil is one of those articles. Clause 5 of the order authorises the Government to exclude any contract or class of contracts from the provisions of this order. In the exercise of powers, conferred by Clause 5 of the order the Central Government passed a notification No, P. and S.C.I(A)/44 dated 8-1-1944 excluding the following classes of contract from the provisions of the said order, namely:

'Forward contracts for specific qualities or types of any article to which the said order applies and for specific delivery at a specified price, delivery orders, railway receipts or bills of lading against which contracts are not transferable to third parties.'

There is no dispute that the order and the notification were in force at the time when the parties entered into the contract which has led to the present litigation. The order originally made under the Defence of India Rules was continued under subsequent laws. There is also no disputed that the contract between the parties was a forward contract. It is also not in dispute that the contract is ordinarily hit by section 3 of the order in the normal course if it cannot be brought within the exemption available under the notification. The only controversy is whether the contract is the same in terms of the notification.

Mr. Rastogi contended that the expression 'against which contracts are not transferable to the third parties' governs and qualifies only delivery orders, railway receipts or bills of lading, and cannot in any way limit forward contracts' for specific qualities or types of any article to which, the said order applies or for specific delivery or at a specified price. According to him, forward contracts for specified qualities or types of any article and for specific delivery at specified price are exempt from the notification irrespective of the question whether the rights and the liabilities under the contract are transferable or not. According to him, the latter part of the notification contains other clauses of contracts other than the one mentioned above and they are exempt only on proof of non-transferability of delivery orders, railway receipts or bills of lading.

7. I have very carefully considered the language of the notification, and find myself unable to agree with the contention advanced on behalf of the appellant. In support of my view, I may refer to shop Baboolal Mangilal v. Firm Mangilal Balkishan, AIR 1957 Madh Pra 90. In that case there was a forward contract between the parties in Alsi. The Government of India had granted exemption to contracts in Alsi in the following terms:

'Forward contracts for......... limited...... of specific qualities or types and for specific delivery at a specified price, delivery orders, railway receipts or bills bf lading against which contracts are not transferable to third parties.'

The language granting exemption is exactly similar to the language of the notification with which the present litigation is concerned. The learned Chief Justice and Choudhuri, J., after examining the language of the notification and noting obvious deficiencies in the language and considering same cases, recorded the following conclusion:

'The intention, however, is clear viz., that the transactions which are saved should be for specified qualities and types, for specified deliveries at a specified price, with no possibility of third parties intervening.'

With respect, I agree with the view expressed in Madhya. Pradesh case, AIR 1957 Madh Pra 90 (supra) and hold 'that in order to claim exemption the plaintiff besides establishing a contract for a specified quality or article and for specified delivery must also prove that the benefits in the contracts were not transferable. The contention of Mr. Rastogi based on the notification is without force and must be dismissed.

8. It was next argued by Mr. Rastogi that the Courts below were not justified in holding that the contract was, transferable. According to him, the very nature of the contract suggests that the parties did not contemplate any transfer of the benefits under the contract. In this connection he relied upon certain observations made in Khardah Co. Ltd. v. Raymon and Co., (India) Private Ltd., AIR 1962 SC 1810. In that case their Lordships after carefully examining the terms of the contract and after referring to the import license, came to a conclusion that the terms in the contract had been inserted with a view to give effect to the conditions on which licenses were granted and that it was an understanding of both the sellers and the buyers that the rights under the contracts were not to be transferred. Even so, it was argued before their Lordships that in the absence of any clause in the contract prohibiting transfer a plea that it was not transferable was not available to a party. Dealing with this contention their Lordships observed that :

'On the question whether there was an agreement between the parties that the contract was to be non-transferable the absence of a specific clause forbidding transfer is not conclusive. What has to be seen is whether it could be held on a reasonable interpretation of the contract, aided by such considerations as can legitimately be taken into a court that the agreement of the parties was that it was not to be transferred.'

It is true that the absence of a clause in the contract that the contract is non-transferable is not decisive or conclusive but it is equally true that there should be | no presumption also against the transferability of a the contract. The actual decision of the Supreme Court as to the, non-transferability of the contract was based upon the peculiar terms of the contract considered in conjunction with terms of the import license. The Supreme Court case therefore does not help the appellant to any appreciable extent except that the question of the transferability or otherwise of the contract has to be examined on the facts and the circumstances of the present case. A reference to condition No. 6 of the contract as given in the plaint as also in the plaintiff's letter dated 21-5-54 clearly shows that the defendant-purchaser had an option to receive delivery himself or to get delivery made to his nominee. Nominee could very well be the defendant's vendees, purchaser or transferee. This circumstance in the absence of any other evidence to the contrary is sufficient to show that the benefits of the contracts were transferable and the plaintiff has failed to prove that the1 benefits were not transferable.

9. Next, it was argued by Mr. Rastogi that the plaintiff had no knowledge of the order as also of the notification at the time of his entering into contract with the defendant nor at the time of the institution of the suit. He could not accordingly plead in the plaint that the contract was not non-transferable, and that he should be now given an opportunity to lead evidence on this point. The legal position came to the plaintiff's notice in the trial Court when the preliminary issue regarding illegality was argued. The plaintiff did not even at that stage referred to notification at all. In the ground of appeal filed in the Court of District Judge he did not rely specifically on the notification and prayed for no opportunity to lead evidence. On the other hand, he mainly 'relied upon the fact that the Contract was not a forward contract. I do not see any adequate reason to permit the plaintiff now to amend the plaint and to lead evidence so as to bring his case within exemption.

10. Lastly, it was contended that the Courts below did not act -properly in decreeing the defendant-respondent's counter claim for Rs. 1,000/-. It was contended that the defendant was also a party to the illegal, contract and, therefore, on the doctrine of pan delicto he was not entitled to claim the refund of Rs. 1,000/-. Reliance was placed upon Onkarmal v. Banwarilal, ILR (1962) 12 Raj 202: (AIR 1962 Raj 127). In that case the doctrine of pan delicto was expressed in the following terms:

'The principle behind the doctrine of pari delicto is that where each party is equally at fault, the law favours him who is actually in possession, or that where both parties are equally culpable, the law will leave them where it finds them and will not engage itself to determine the rights as between them. But this principle is subject to well known exceptions, one of which is that it will not apply where the parties are not or cannot be said to be really in pari delicto.'

In the present case, it is clear that the parties were not aware of the notification prohibiting forward contracts in hydrogenated ground-nut oil and there is nothing to show that the defendant was really in pari delicto. The contract between the parties having been discovered to be void at a later stage the defendant was entitled to refund of Rs. 1,000/- paid by him to the plaintiff.

11. The decree passed by the trial Court and affirmed by the first appellate Court is fully justified on the materials on record and no case has been made out for interference. The appeal consequently fails and is hereby dismissed with costs.

12. Mr. Rastogi prays for leave to appeal. Leave to appeal is granted.


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