1. The plaintiffs are a firm of stockbrokers carrying on business in Madras. They are Nattukottai Chetties; and so is the defendant. The plaintiffs sue for moneys due to them from the defendant arising out of a course of dealings, beginning in December, 1934 and ending in March, 1935. The dealings concern Government promissory notes mill shares and silver. The defence of the defendant is that this money is irrecoverable, it being a gaming transaction and therefore within the mischief of Section 30 of the Contract Act. It seems to me that the first thing that I have to do is to discuss the nature of the transactions and the relations of the parties to each other and find definitely what those relations were and what the transactions were. Personally I have not any doubt in my mind about the true facts. The defendant pleads that he (a resident of Pallathur which is quite near to the village from which the plaintiffs come) entered into an arrangement with them by which dealings should take place in stocks, shares and securities, but that those dealings should be so arranged that the defendant should have to pay differences only and should not be expected to take delivery or what is known as to take up stocks or shares concerned. He says that he arranged that, with Mr. Palaniappa Chetty, a partner of the firm. That I may say is denied by Mr. Palaniappa Chetty who wants me to believe that he entered into dealings, and considerable dealings, with the defendant in this case purely on the strength of enquiries he made from persons in Madras, enquiries directed towards the financial' state of the defendant. My own view is that that story is not true. I am prepared to accept the defendant's story that there was some arrangement or understanding at least with the plaintiffs as to the course of business between them and my reasons are as follows. I do not believe that a firm such as the plaintiffs' firm would at a few hours notice enter into transactions with a man about whom they knew nothing. They must have known nothing because the first order is dated 11th December 1934, and we find them replying the next day, the 12th December, and it is extremely unlikely that satisfactory enquiries would have been possible in such a short time. Moreover, the tone of the correspondence suggests some previous arrangement. A first order usually meets with some form of comment or something to suggest that it was the beginning of dealings and a welcome to, a new client. There is nothing of that sort here. I think there was an arrangement between the plaintiffs and the defendant by which the defendant intimated that he did not intend to pay anything more than differences, namely, that he was not prepared to take delivery of shares but to pay up differences only. There is another reason why I believe that story. The defendant, is obviously a man of very little means, but I think he is better off than he thinks he is. According to his own admission he would be good for about Rs. 5,000 at least because he has got a share in a house worth that money and I think it is very probable that it is worth more because his attitude here is to make his means as small as possible. That probabilises the fact that the plaintiffs were prepared to enter into a transaction for differences only. I am afraid I cannot accept that they made enquiries and found him worth half a lakh of rupees. They never found any source for that information and it does not appear to-day that it is possible for them to produce any material before me to show that such information was ever before them. But in my opinion it was totally unnecessary for the plaintiffs to take up this attitude because I think that this was a very ordinary stock exchange transaction. One is entitled sitting here as a judge of fact to have at least as much intelligence as a juryman and one knows perfectly well that there is a great deal of gambling on the stock exchange and that that is not limited to any one particular town or to any one particular country and that, although it is permitted, there is now rather an exceptional amount of it in India. My findings of fact, there-fore are that the plaintiffs and the defendant understood that these transactions were to be on differences, namely, that the plaintiffs would close any particular transaction by settling day, so that the defendant should not have to pay or receive anything more than the differences in price. The plaintiffs knew quite well that the defendant could not possibly pay cash for these stocks, shares and Government and other securities which he purported to buy, that if he had been called upon he would have been quite unable to do it and that what he was trying to do was to make some money by catching a rise or fall in the market according to whether he was a bull or a bear of shares at a particular time. In other words, I think this case comes almost exactly within the facts decided in the case of Thacker v. Hardy (1878) 4 Q.B.D. 685. My view is that the plaintiffs were acting as brokers, that is, as agents for the defendant. All the cases and there are many which have been cited in which gambling transactions have come before the Courts and in which the defence of Section 30 of the Contract Act has succeeded have been as far as I can see, with the exception of one or two Bombay cases, cases of dealings between principals and principals and they have nearly all been dealings not in stocks and shares but in commodities - cotton and commodities of that description. Now the marked difference in such transactions, is, as pointed out by the Bombay High Court in a decision reported in Chimanlal v. Nyamatrai : AIR1938Bom44 , this that in transactions where a broker intervenes especially in stock exchange transactions, it is extremely difficult to prove that the two parties to the contract, namely, the buyer and the seller, have got any agreement that the transaction in question should be in the nature of a gamble. Neither are known to the other and it is essential that in these transactions in order to make a gamble there should be two; that one side is attempting to gamble and the other side is not, is not enough. There is ample authority for that. It is put in the head note of the Bombay case mentioned above as follows:
The common intention of both parties at the time of entering into the contract must be not to call for or give delivery from or to each other. Such intention is a question of fact. There can hardly be any direct evidence of it, and though an agreement in writing may ostensibly be for the purchase and sale of goods deliverable on a certain day, oral evidence is admissible to prove that the intention of the parties was only to pay the differences Where transactions are entered into through the medium of a broker according to the usage of a particular market, there is a very strong presumption against the existence of a common intention to wager. The presumption can be rebutted by evidence of a common intention to wager, even though the contract was brought about by a broker.
2. There is no doubt on the correspondence and the bought and sold notes that have been put before me that the defendant was employing the plaintiffs as his agent for the purchase and sale of shares. The very wording of the bought and sold notes shows that:
We have this day bought by your order and for your account, from selves for principal, the undernoted securities.
We have this day sold by your order and for your account, from selves for principal, the undernoted securities....
3. It is impossible in this case, in my opinion, for the defendant to suggest that the plaintiffs were not his agents. The letter (Ex. A-6) dated the 13th February, 1935, runs thus:
Please let us have your instructions regarding the above (that is, outstanding purchase of Rs. 50,000 4 per cent. 1960-70) within the 15th instant 10-30 A.M. In the absence of any instructions from you, we are carrying over the same to the next settlement....
4. On the 1st February, 1935, the plaintiffs are advising the defendant with regard to the future of Tata Ordinaries. In another letter of the 10th February, 1935 (Ex. A-5} the defendant writes to the plaintiffs: 'Please inform me whether it is advisable to hold or to sell 31/2 per cent. G.P. Notes.' I have had the whole of the books of this firm put before me and it will be seen from Ex. B-2 with regard to Government securities and Ex. B-3 with regard to shares that in practically every case there was definitely another party to the contract, and all these particulars were entered in the plaintiffs' books. To take any one example from Ex. B-2, the buyer in the first place was the defendant and the seller was Padmanabhan, a person unknown to him. In the box he has been quite clear - and it could hardly be otherwise - that he at no time knew who it was from whom these people bought those shares. When theft instructions were to buy, they went out into market and they bought from anybody who was a seller; when their instructions were to sell, they sold to anybody who was a buyer. It is impossible in those circumstances to suggest that as between the defendant and any of these numerous persons who he now knows were selling or buying shares to or from him as the case may be, there was any possible agreement that the transaction should be in the nature of a gambling transaction.
5. I have referred to the case of Thacker v. Hardy (1878) Q.B.D. 685. I will refer also to the case of Forget v. Ostigny (1895) A.C. 318, where the Judicial Committee whose advice was delivered by the Lord Chancellor, points out, quoting Cotton, L.J., that:
The essence of gaming and wagering is that one party is to win and the other to lose upon a future event, which at the time of the contract is of an uncertain nature...But that is not the state of facts have. The plaintiff was to derive no gain from the transaction; his gain consisted in the commission which he was to receive, whatever might be the result of the transaction to the defendant. Therefore the whole element of gaming and wagering was absent from the contract entered into between the parties.
6. A number of cases have been cited to me, I propose to refer to one or two. There is a decision of this High Court in Eshoor Doss v. Venkatasubba Rau I.L.R. (1895) Mad. 306, but it will be seen in that case at p. 309 that although there was a broker in that particular case, there was a direct contract between the plaintiff and the defendant. There was a direct contract between the plaintiff and the defendant because each was making enquiries about whether the other was able or not to pay differences and they emphasize very much the exceptional circumstances where it is possible, when there is a broker, to say that the transaction is a wagering transaction. There is another decision of the Bombay High Court Perosha Cursetji v. Manekji Dossabhoy I.L.R. (1898) Bom. 899. In that case there was unquestionably in the ordinary sense of the word, a gambling transaction because there is no doubt that all that the defendant intended was to make a profit, if possible, on differences between the contract price and the price at the date of settlement. There again it was held that the defendant was no party to the contracts with the third parties with whom the plaintiff entered into contracts in order to satisfy his instructions given by the defendant, and the result was that, whatever may have been the intention of the defendant, it was not a gambling transaction because, as I have said before it takes two to make a gamble.
7. I only desire to allude to one more matter in this case. It was, suggested, but not very strongly, that the plaintiffs in this case are really principals because of their form of remuneration. Again, taking the first transaction in Ex. B-2, it would be seen that the notes are sold to the defendant at Rs. 97 but actually bought at Rs. 96-15-0 and the difference of one anna is taken by the plaintiffs as their brokerage. That appears to be according to the custom in the stpck exchange - personally it is no new matter to me. I think it is quite impossible in view of the books which have been produced to suggest that that incident makes the real principals dealing with the shares the plaintiffs themselves. It will be well in future transactions to define that position more clearly by perhaps exhibiting the real principals on the contracts; but I think an examination of the books and letters show that what actually happened was - and I have not the slightest doubt with regard to this - that the plaintiffs were buying in the-market for their client the defendant and that the method of remunerating them was by a small difference in the price. There never was any exception taken to this certainly by the defendant and as far as I know by anybody else and I am quite unable to accede to the suggestion that in these transactions the plaintiffs were really the principals. The books, the latters and all the documents in the case are wholly opposed to that. The position shortly comes to this. This matter comes almost exactly within the decision of Thacker v. Hardy (1878) 4 Q.B.D. 685 and on my findings of fact that case mutatis mutandis may be applied to this case. The result, therefore, is that the defence must fail and there will be judgment for the plaintiffs with costs for the amount claimed but with interest at 6 per cent, only from the date of demand, which is the 23rd of May, 1935.