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Leicester and Co. Vs. S.P. Mullick - Court Judgment

LegalCrystal Citation
CourtKolkata
Decided On
Judge
Reported in80Ind.Cas.498
AppellantLeicester and Co.
RespondentS.P. Mullick
Cases ReferredHyams v. Stuart King
Excerpt:
contract act (ix of 1872) sections 23, 30 - contract by way of wagering, nature of--betting losses--defaulter reported to r.c.t.c.--hundi in consideration of with--drawing report--suit on hundi, whether maintainable. - .....to be won upon any wager, without in any way limiting the application of the provision to the wagering contract itself. in other words, it provides that 'wherever the obligation under a contract is or includes the payment of money won upon a wager, the courts shall not be used to enforce the performance of that part of the obligation.17. this case is not unlike bubb v. yslverton (1870) 9 e.q. 471 : 39 l.j. ch. 428 : 22 l.t. 258 : 18 w.r. 512 referred to in the judgment of the learned l.j.'s in hyams v. stuart king (1908) 2 k.b. 696 : 77 l.j.k.b. 794 : 99 l.t. 424 : 24 t.l.r. 675 and that case lord justice fletcher moulton dealt with, apart from its special circumstances, as they appeared to him, by the observation that the bond constituted an agreement to pay money on wagers, and by.....
Judgment:

Buckland, J.

1. There is not much dispute about the facts of this case and they are simple. The plaintiffs sue as a firm and are described in the cause-title as carrying on business in co-partnership as Turf Accountants, a business otherwise known as that of bookmakers, which consists of gambling on horse races, the profits of which they share. The defendant engages in horse racing; he owns race horses and bets on horse races in considerable amounts. On the 20th October 1920 he owed the sum of Rs. 8,500 which he had lost to the plaintiffs at the Barrackpore races. As he did not pay, the plaintiffs reported him to the Barrackpore Turf Club, by the Secretary of which he was, it has been stated, though no formal proof has been given of the fact, reported to the Royal Calcutta Turf Club. On the 6th December, the defendant received a letter signed by the Secretary of the Royal Calcutta Turf Club referring to the report received from the Secretary, Barrackpore Races as to considerable sums owing from the defendant to several book-makers, among whom the plaintiffs are included, amounting to Rs. 45,220 in all, and informing him that if that sum was not paid into the office of the Royal Calcutta Turf Club by the 22nd February he would be posted as a defaulter and notice to that effect would be published in the Sheet Racing Calendars. Pending settlement of his account he was informed that the entries of his horses for certain races had not been accepted and that in the mean time he was not to bet or enter the race enclosures. The authority for such a letter or that the Royal Calcutta Turf Club was entitled so to deal with the defendant upon such a report, has not been questioned and the hearing has proceeded upon the basis that the letter and the penalties prescribed were in order. On the 20th December the defendant went to the Albert Club, which I am informed is an institution to which persons carrying on the business of book-makers resort, and there he found the plaintiff and his other book-maker creditors. He executed Hundies in favour of his several creditors for the amounts of his losses, among them one for Rs. 8,500 in favour of the plaintiff and at the same time wrote letters addressed to them, in a form drafted by Mr. Goodman of which the letter addressed to the plaintiffs is in the following terms:

The Albert Club, Ltd.,

'Grosvenor House,'

Calcutta, 20-12-1920.

To

Messrs. Leicester & Co.

Dear Sir,

2. In consideration of your withdrawing my name from the R.C.T.C. and thereby preventing my becoming posted as a defaulter, I agree to pay you the sum of Rs. 8,500 (rupees eight thousand five hundred only) and hand you my promissory note herewith for the amount named.

Yours faithfully,

S.P. Mullick.

3. Subsequently the defendant's name was withdrawn and he has boon able to enter the race enclosures and to bet, and has done so, but he has not paid the amount for which he drew the Hundi in suit. The only dispute on the facts is as to how the defendant came to write that letter and to draw the Hundi. The plaintiff's account of the matter is that the defendant came of himself and wanted (sick) have his name withdrawn from the Royal Calcutta Turf Club and the defaulters' list, and in consideration of the plaintiff promising to take stops to have that done, the defendant signed the Hundi and letter. The defendant assarts that what was done was done at the suggestion of the plaintiff and that the Plaintiff said ho wanted the Hundi and letter to keep his account in form, and that ho had no intention of instituting any suit against him. There is not much to choose between the versions given, by the two witnesses and the letter makes it clear what was intended. The plaintiffs now sue to recover the amount of the Hundi, and in order to succeed they rely for consideration on that stated in the letter and not on the original debt. The suit was filed under Order XXXVII of the Civil Procedure Code and the plaint states that the defendant promised to pay the sum in question 'for value received.' The defendant in his written statement says that the Hundi was excuted for a debt due on betting transactions. It is not till the suit comes to a hearing that the real question of fact is raised, and that is done in reply to the defendant's contention that there was no consideration. For this the parties cannot be held responsible, it is the result of a system of pleading which does not admit of a reply. This suggests that in cases where the real contest will follow from the nature of the defence, due to that being one which the defendant has to prove and the plaintiff did not anticipate, the plaintiff should be required to place on record his pleas in answer. In this particular instance no difficulty arises, but that is not always the case and it is at times embarrassing that pleas may legitimately be taken in reply which are not on record until they find their place in the issues.

4. The issues settled were:

1. Is the plaintiff firm entitled to maintain this suit.

2. Was there consideration for the Hundi in suit and was such consideration legal?

3. Was the Hundi executed by the defendant by reason of undue influence exerted by the plaintiff firm?

4. To what relief, if any, is the plaintiff entitled?

5. The third issue does not strictly arise on the written statement but objection to it was not pressed. I will first state the provisions of law which in my opinion are applicable to the case.

6. The first is Section 30 of the Indian Contract Act, the material portion of which is in the following terms:

Agreements by way of wager are void, and no suit shall be brought for recovering anything alleged to be won on any wager, or entrusted to any person to abide the result of any game or other uncertain event on which any wager is made.

7. Section 23 which states that: 'The consideration or object of an agreement is lawful unless it is forbidden by law, or is of such a nature that, if permitted, it would defeat the provisions of any law' has also been referred to.

8. Reference has also been made to the Bengal Public Gambling Act, 1913, which amended Section 1 of the Bengal Public Gambling Act, 1867, by excluding from the definition of gaming, wagering or betting on a horse race when such wagering or betting takes place, (a) on the day on which the race is to be run and (b) in an enclosure which the stewards controlling the race have with the sanction of the local Government set apart for the purpose.

9. The Bengal Amusements Tax Act, 1922 which imposes taxes on certain forms of betting including that of the kind carried on by 'licensed book-makers,' who are defined in the Act as persons who carry on the business or vocation of or act as book-makers, etc, was also referred to in the course of the argument. But that statute was only passed this year and its effect, if any, upon a case such as this is a matter for future consideration.

10. It has also been contended that certain statutes of Anne which deal with gaming apply to India, and in support of this proposition I have been asked to refer to the preface by Mr. Whitley Stokes to the collection of Statutes relating to India. That only shows the obscurity in which the whole question of the application to India of English Statutes passed prior to the year 1726 is shrouded, and the contention has not been supported by argument. This, I think, exhausts the statutory provisions of the law on the subject which obtain or obtained at the time with which I have to deal.

11. Before applying them to the case, I will briefly dispose of the only disputed question of fact, which is whether the defendant signed the Hundi and letter at the solicitation of the member of the plaintiff firm who has given evidence, or whether on receipt of the letter from the Secretary of the Royal Calcutta Turf Club, he went to see him in order to make arrangements which would prevent the consummation of the penalties with which be was threatened. On the evidence I am satisfied that it was the defendant who sought the meeting. The penalties to which he had rendered himself liable are severe, especially to an owner of race horses, and he had a powerful motive for seeking relief. I will ignore the stigma attaching to a person who does nob pay bets and is consequently debarred from betting or entering the race enclosures. The defendant says that it was a matter of no concern to him to be posted as a defaulter, and it is nob for me to provide him with a standard of honour higher than that which he sets up for himself. The plaintiff said that the defendant came of himself. That statement I accept. He had already reported the defendant and from that report the substantial penalty to the defendant would ensue: I know of no reason why he should have asked the defendant to meet him when he could do no more and the meeting might prove infructuous. The outcome of the meeting was the agreement contained in the letter of the 20th December and upon that letter being signed and with that letter the defendant gave the Hundi in suit.

12. I now turn to the issues of which the second is the most important and involves the substantial point to be decided.

13. The argument of the learned Counsel on behalf of the plaintiff is founded on the well-known case of Hyams v. Stuart King (1908) 2 K.B. 696 : 77 L.J.K.B. 794 : 99 L.T. 424 : 24 T.L.R. 675 in which the facts were that a cheque was given for lost bets. The loser paid part of the amount of the cheque which was held over for a time by the payee. Subsequently the parties came to a fresh verbal agreement by which in consideration of the plaintiff forbearing to sue and forbearing to declare the defendant a defaulter the defendant promised to pay the balance of the cheque. Such consideration was held by the Court to be a good consideration and the plaintiff was held to be entitled to recover. Fletcher Moulton, L.J., delivered a dissentient judgment and it has been strongly pressed by Sir Benode Mitter on behalf of the defendant that I should follow the judgment of Fletcher Moulton, L.J., as representing the law applicable to this case in preference to the judgment of the Court.

14. The learned late Lord Justice's judgment depends upon his interpretation of that portion of Section 18 of the Gaming Act, 1845, which is in the following terms:

All contracts or agreements whether by parol or in writing, by way of gaming or wagering, shall be null and void: and no suit shall be brought or maintained in any Court of law or equity for recovering any sum of money or valuable thing alleged to be won upon any wager or which shall have been deposited in the hands of any person to abide the event on which any wager shall have been made.

15. This, it will be observed, is in language almost identical with Section 30 of the Indian Contract Act. The learned late Lord Justice's views are expressed, among others, in the following passages:

16. In my opinion too little attention has been paid to the distinction between the two parts of this enactment, and the second part has been treated as being in effect merely a repetition of the first part. I cannot accept such an interpretation.'... The language of the later provision is in my opinion much wider. It provides with complete generality that no action shall be brought to recover anything alleged to be won upon any wager, without in any way limiting the application of the provision to the wagering contract itself. In other words, it provides that 'wherever the obligation under a contract is or includes the payment of money won upon a wager, the Courts shall not be used to enforce the performance of that part of the obligation.

17. This case is not unlike Bubb v. Yslverton (1870) 9 E.Q. 471 : 39 L.J. Ch. 428 : 22 L.T. 258 : 18 W.R. 512 referred to in the judgment of the learned L.J.'s in Hyams v. Stuart King (1908) 2 K.B. 696 : 77 L.J.K.B. 794 : 99 L.T. 424 : 24 T.L.R. 675 and that case Lord Justice Fletcher Moulton dealt with, apart from its special circumstances, as they appeared to him, by the observation that the bond constituted an agreement to pay money on wagers, and by Section 18 of the Gaming Act an action could be brought upon it. In the cases of this kind in which the plaintiffs have succeeded, it has been alleged that the sum is not 'won on any wager' but due in respect of another consideration. The sum may be, and it would be affectation to pretend that it is not, fixed with reference to the amount of a lost wager, but where at the desire of the promisor the promisee promises to do or to abstain from doing something [Contract Act, Section 2 (d)], the sum of money which the promisor reciprocally promises to pay, whatever it may be and however it may be determined, is a good consideration for the promise of the promisee. To say that because that sum is fixed with reference to a lost bet the amount of the lost bet, therefore, is the consideration for the promise of the promisor, seems to me to involve a lacuna in the logical sequence of the argument. Farwell, L.J., puts with the utmost lucidity what I have endeavoured to express in terms of the Indian Contract Act:

Here the agreement sued on is an agreement to pay a sum of money in consideration of forbearance to post the defendant as a defaulter: the sum of money may be equal to or less than the lost bet, but it is not payment of the bet, because that was payable on settling day, and non-payment on that day made the loser a defaulter and liable to be posted. The day of payment is most material, for non-payment involves the winner in a similar default; the contract not to post is a new contract quite distinct from the contract of wager and is sufficient to support a promise to pay money, which, though equal to the amount of the bet, is not in fact the bet, but is compensation for its non-payment and the action cannot be said to he brought for recovering any sum alleged to have been won on any wager within 8 and 9 Vict., c. 109.

18. Apart from the contentions based on the dissentient judgment in that case, it was contended that the effect of Sections 30 and 23 of the Indian Contract Act is to make agreements by way of wager illegal. But this point is covered by authority, for so long ago as in 1883, in Juggernath Sew Bux v. Ram Dayal 9 C. 791 at p. 796 : 8 Ind. Jur. 42 : 4 Ind. Dec. (N.S.) 1175, it was decided in the briefest but clearest possible language by two very distinguished Judges of this Court that a contract by way of wagering and gaming is void and not illegal.

19. There is a very material distinction between the facts of Hyams v. Stuart King (1908) 2 K.B. 696 : 77 L.J.K.B. 794 : 99 L.T. 424 : 24 T.L.R. 675 and this case, a distinction which adds to the strength of the case before me. In that case the cheque sued upon had been admittedly given in payment of a bet, and it was held that the forbearance of the Plaintiff to sue coupled with his forbearance to declare the Defendant a defaulter constituted a good consideration for a fresh agreement and that the Plaintiff was entitled to recover on the cheque. Here the Hundi was not given till the agreement of the 20th December was made; there is no question of a new agreement and a new consideration for a Hundi given in the first instance in circumstances which would prevent its being sued upon in the absence of a new agreement. This disposes of much of the argument that the real consideration was the bet itself. It is true that the Plaintiff himself said that the Hundi represented the amount of the Defendant's losses, a statement on which reliance has been placed. But the terms of the agreement are in writing and though the actual sum may represent the amount of the losses, it does not follow that the consideration for the Hundi was the amount of the lost bets.

20. Another contention based on the evidence, to which I must refer, is that as the matter had passed out of the hands of the Plaintiff and it was discretionary with the controlling authority, the Royal Calcutta Turf Club, whether or not the defendant should be relieved from the penalties stated in the Secretary's letter, there was no consideration, or that it failed. To this, I think, the answer is that the letter shows what the Plaintiff had to do. The Plaintiff says that ho could have the name withdrawn by going and explaining the reasons to the Secretary. He does not say in so many words that he did so, but I infer that that was what he did, and nothing else has been suggested, for the Defendant said that since his name had been withdrawn he had been to the races and made bets. The plaintiff did all that it lay in his power to do, and the relief from the penalties which She Defendant has since enjoyed is in my judgment the result of what the Plaintiff did in that behalf.

21. I find that the consideration for the Hundi in suit was the Plaintiff's promise to withdraw the Defendant's name from the Royal Calcutta Turf Club in order to prevent the latter from being posted as a defaulter, which, in fact, I find that he did with that result. I also find that such consideration was legal consideration. I also find that the Hundi was not executed by the Defendant by reason of undue influence exerted by the Plaintiff firm.

22. The only other point that has been argued is that since the Plaintiff firm is a firm of book-makers, the Plaintiff cannot sue as a firm since the business of book-makers is not one which the law will recognise.

23. For this proposition the authorities cited are the judgment of Lord Justice Fletcher Moulton in Hyams v. Stuart King (1908) 2 K.B. 696 : 77 L.J.K.B. 794 : 99 L.T. 424 : 24 T.L.R. 675, and O'Connor v. Ralston (1920) 3 K.B. 451 : 36 T.L.R. 786. In the former the learned Lord Justice said: 'In my opinion no such partnership is possible under English law. Without considering any other grounds of objection do its existence, the language of the Gaming Act, 1892, appears to me to be sufficient to establish this proposition.' I need not go further, for considerations based upon the Gaming Act, 1892, can have no application in this country where the legislature has not only not passed any similar Statute, but there are decisions founded upon legal conditions to alter which in England that Act was passed.

24. In so far as the Gaming Act, 1892, was relied upon by Darling, J., in the second of the two oases cited in support of the proposition, the point is not thereby advanced. But the observation--'Persons associating in such a business as this cannot come into a Court of law and claim that money is due to the firm on a transaction of this kind. The inclination of the law is not to favour but to discourage betting. True it does so in a partial, confused and illogical fashion, but the law upon this point is correctly stated by Fletcher, L.J.'--supports the contention that since the law discourages betting, persons whose partnership business is to bet cannot come into a Court of law as a firm. Lord Justice Farwell on this point observed that he was not prepared to overrule the decision of Chitty.J., in Thwaites v. Coulthwaite (1896) 1 Ch. 496 : 65 L.J. Ch. 238 : 74 L.T. 164 : 44 W.R. 295 : 60 J.P. 218. That was an action the object of which was to obtain the usual partnership account of profits of a bookmaker's business, and the learned Judge holding that it had not been made out that the plaintiff intended that the business should be carried on illegally, by which he meant in contravention of the Betting Act, 1853, directed an account.

25. I have stated all the provisions of the law applicable to the case. Section 30 of the Contract Act makes agreements by way of wager void and not illegal. It was pointed out by the learned President in Hyamns v. Stuart King (1908) 2 K.B. 696 : 77 L.J.K.B. 794 : 99 L.T. 424 : 24 T.L.R. 675 that nothing prohibited was done by the parties and the cheque and the bets were merely unenforceable. It would, he said, probably have been different if the bets were illegal and the giving of the cheque was an illegal act. There is nothing illegal in the agreements which it is the business of the partnership to make, nor are such agreements prohibited by law. Under the Bengal Public Gambling Act, 1913, not only are bets on horse races no longer penalised in the circumstances stated in the Act, but the local Government has been given power by the legislature to sanction an enclosure to be set apart for the purpose by the stewards of controlling races in which betting on races may take place on the days on which the races are to be run.

26. General propositions as to what the law discourages in England have to be taken with reserve when they are sought to be applied in this country, of which the law as to champerty is an instance. The law of England whereby betting is discouraged is the Statute law. As Fletcher Moulton, L.J, observed in his judgment in Hyams v. Stuart King (1908) 2 K.B. 696 : 77 L.J.K.B. 794 : 99 L.T. 424 : 24 T.L.R. 675, 'By Common law wagers were not illegal, and the nature of a wager is such that from the point of view of jurisprudence-there is ample consideration for a valid contract. The distinction which English law makes between wagering contracts and others is therefore entirely the creation of statute.' This disposes of any argument based upon the provisions of the law of England.

27. I am not prepared to say that the Statutes in force in Calcutta to which I have referred, discourage betting. The Public Gambling Act at least recognises it. Nor am I prepared to hold that persons who enter into a partnership for the purpose of making agreements not forbidden but recognised by the law, though unenforceable at law, are persons who conduct a business, the very nature of which disentitles them to have recourse to Courts of law to recover claims otherwise sustainable. For these reasons I hold that the suit is miantainable.

28. There is no question as to the amount which the Plaintiff firm, if successful upon the issues other than the last, should recover, and I give judgment for lis. 8,500 with costs, and reserved costs, if any, on Scale No. 2.


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