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Nidumukkala Venkata Rangayya Vs. V. Narayana - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai High Court
Decided On
Reported in(1951)2MLJ393
AppellantNidumukkala Venkata Rangayya
RespondentV. Narayana
Cases ReferredKhumaja SareMal v. Nagappa
Excerpt:
- - 4. a series of decisions of courts in india as well as of the judicial committee of the privy council have laid down in very clear and unmistakable terms that if a contract is to be construed as a wagering contract, there should be a definite allegation proved to the effect that it was understood and agreed between the parties that the parties should merely pay the difference in price and not make actual delivery of the commodity contracted. such dealings are perfectly legitimate. if really there existed an agreement between the parties at the time when the contract was brought about between them by the broker, the broker was the best person to give the best evidence as to what exactly were the terms of the contract, whether it was speculative or merely a wagering one......of the same place. the plaintiff filed the suit on a contract claiming the difference in the contract price and the market price for non-delivery of the contracted goods. the contract is covered by exhibit p-1 in the case. the contract was for 700 tins of oil, prepared and expeller white quality at the rate specified therein. the time and place of delivery are also mentioned as also the rate per maund. the first court held in favour of the plea of the appellant that the contract was a wagering one and therefore dismissed the suit. but on appeal the learned subordinate judge held that the contract might be a speculative one but not a wagering one.2. elaborate arguments have been advanced before me by counsel on both sides and a series of authorities were also cited by the learned.....
Judgment:

Basheer Ahmed Sayeed, J.

1. This second appeal is against the decision of the learned Subordinate Judge of Vijayawada, who in turn reversed the decree of the learned District Munsif of the same place. The plaintiff filed the suit on a contract claiming the difference in the contract price and the market price for non-delivery of the contracted goods. The contract is covered by Exhibit P-1 in the case. The contract was for 700 tins of oil, prepared and expeller white quality at the rate specified therein. The time and place of delivery are also mentioned as also the rate per maund. The first Court held in favour of the plea of the appellant that the contract was a wagering one and therefore dismissed the suit. But on appeal the learned Subordinate Judge held that the contract might be a speculative one but not a wagering one.

2. Elaborate arguments have been advanced before me by counsel on both sides and a series of authorities were also cited by the learned counsel for the respondent in support of his contention that the contract was not a wagering one and that he was entitled to the suit claim. The evidence recorded on both sides has also been read to me by the learned counsel. With regard to the evidence it has to be noted that the plaintiff's clerk has gone into the box while the defendant has himself deposed to what took place. Other witnesses are merely called in to show what the market-price was at the time the non-delivery took place.

3. The question for determination in the face of the evidence is whether this contract is both speculative and wagering or it is merely a speculative and not a wagering contract. For the contention that it is a wagering contract the burden was heavily upon the appellant to show that it was a wagering contract by unimpeachable evidence for, however speculative a contract might be, it cannot be characterised as a wagering one unless it is conclusively established that at the time the contract was entered into, it was the intention of the parties that there should be no actual delivery of the goods but that only the difference in the price should be paid.

4. A series of decisions of Courts in India as well as of the Judicial Committee of the Privy Council have laid down in very clear and unmistakable terms that if a contract is to be construed as a wagering contract, there should be a definite allegation proved to the effect that it was understood and agreed between the parties that the parties should merely pay the difference in price and not make actual delivery of the commodity contracted. In J.M. Tod v. Lakshidas Parasotham Das I.L.R. (1892)Bom. 111, it has been held that contracts are not wagering contracts unless it be the intention of both the contracting parties at the time of entering into the contracts, under no circumstances to call for, 01 give delivery, from, or to, each other. In Sassoon v. Tokersey I.L.R. (1904)Bom. 616, a Bench of the High Court, Bombay, held that in order that a transaction may fall within Section 30 of the Indian Contract Act, there must be at least two parties, the agreement between whom must be by way of a wager and both sides must be parties to the wager. It is of the essence of a wager that each side should stand to win 01 to lose, according to the uncertain and unascertained event in reference to which the chance of risk is taken. In Sukdevdoss Ramprasad v. Govindoss Chathurbhujadas (1927) 54 M.L.J. 130 : L.R. 55 IndAp 32 : I.L.R. 51 Mad. 96 the Judicial Committee has held that for a wagering contract it must be proved that it was entered into upon the terms that only the difference should be paid, that the parties could not recover the goods sold and delivered and that therefore there was no actual delivery intended and that the plaintiff claiming damages should not require delivery of the contracted commodity. The making of the contract, according to their Lordships' opinion, should result in an agreement that the obligation to deliver the goods should not remain effective, that the price of them should neither be demanded nor paid but merely the resulting difference should be paid. In Arjuna v. Mohanlal , a Bench of the Nagpur High Court has held that there was nothing illegal in speculating, that it was a common place of the stock exchange and that the method of doing business was by no means confined to stocks and shares but was of every day occurrence in respect of all commodities. As far as the distinction between speculation and gaming was concerned, the learned Judges observed that it makes but little difference whether the commodities are actually paid for and held with a view to selling again at a profit or whether the matter is arranged by a resale before the time of delivery. Such dealings are perfectly legitimate. Gaming and wagering contracts, on the other hand, are not really dealings at all. They may take the form of purchases and sales but they are in fact mere bets on the market-prices on commodities at a future date. For a contract to be gaming and wagering contract there must not only foe no intention on the part of either party to deliver or to take delivery of the commodities, but also no obligation on either to do so. There must be an agreement or understanding that all that the buyer has to do is to receive from or pay to the seller the difference between the price of the bargain and the price at some future date. The essence of gaming and wagering is that one party is to win and the other party to lose upon a future event which at the time of the contract is of an uncertain nature. To a similar effect is the decision in Chimanlal v. Nyamatrai : AIR1938Bom44 Coming to our own High Court in Khumaja SareMal v. Nagappa (1947) 60 L.W. 39 (Journal) (short notes) Wadsworth and Govindarajachari, JJ. have held that there must not only be a state of things in which both parties contemplated that delivery in fact was not likely to be demanded but there must be a definite agreement that delivery could not in any event be demanded without a breach of the undertaking between the parties. The mere fact that parties unnecessarily proceeded to provide for the consequence of the breach namely, payment of loss by one party to the other in the case of fluctuations in the market price would be no indication that there was a wagering transaction. The whole transaction and its nature have to be looked at for the purpose of determining the question whether the contract is one by way of wager.

5. Applying the test laid down by these decisions referred to above to the facts of the case, I am of opinion that it has not been proved to my satisfaction that the contract in question is a wagering one. In the first place, it has to be remembered that the defendant is a dealer in oil and has also dealt with the plaintiff in this commodity on several previous occasions. In the second place, it is in evidence and it has not been contradicted that the contract in question has been brought into existence by the mediation of a broker; and it is significant that this broker has not been examined as a witness. If really there existed an agreement between the parties at the time when the contract was brought about between them by the broker, the broker was the best person to give the best evidence as to what exactly were the terms of the contract, whether it was speculative or merely a wagering one. It was the duty of the defendant-appellant to have examined this witness in order to prove his case that the terms of the contract were in the nature of a wager. The learned counsel for the appellant would no doubt emphasise upon the evidence of the defendant himself in the witness box to the effect that there was an express talk that no delivery should be made but in the absence of any corroboration, I do not think much reliance could be placed upon the evidence of the defendant-appellant in order to conclude that the contract was a wagering one. It is also in evidence that the defendant himself was not present at the time the contract was concluded, because the plaintiff's clerk would say that the broker went to the defendant and brought the signature of the defendant on the contract in question. In such circumstances it is difficult to hold that the burden lay heavily upon the defendant to prove the agreement to the effect that the contract was merely for the payment of the price without reference to the delivery of goods, i.e., a wagering one and not otherwise has been discharged by the appellant. The learned Subordinate Judge in my opinion has appreciated the evidence rightly and has held that the necessary facts to establish the contract to be one of a wagering nature have not been proved. I do not think that the learned Subordinate Judge has erred in law in having come to that conclusion. In the circumstances, this appeal will be dismissed with costs of the respondent.


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