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Pannalall Kishanlal Vs. Lal Chand Sohanlal - Court Judgment

LegalCrystal Citation
SubjectContract
CourtKolkata High Court
Decided On
Case NumberCivil Revn. Case No. 3527 of 1956
Judge
Reported inAIR1960Cal261,63CWN745
ActsContract Act, 1872 - Section 30
AppellantPannalall Kishanlal
RespondentLal Chand Sohanlal
Appellant AdvocateS. Majumdar, ;Anil Kumar Sett, ;K.K. Palit and ;Rebanta Krishna Majumdar, Advs.
Respondent AdvocateAmar Nath Banerjee, Adv.
Cases ReferredUniversal Stock Exchange v. Strachan
Excerpt:
- .....inter alia, on the ground that the contracts between the plaintiff and the defendant were wagering contracts and from the inception it was agreed that the plaintiff firm would not demand delivery and the defendant firm would not tender or deliver the goods but the difference in price only would be payable. the common intention of the parties, from the outset, was to speculate on the difference in price and not to demand delivery or to give delivery.4. the court of the first instance found that the contract on the basis of which the claim was made was a wagering contract and not enforceable in law. in that view of the matter, the court of the first instance dismissed the suit.5. the plaintiff petitioner applied for a new trial and such trial was ordered under section 38 of the.....
Judgment:
ORDER

B.N. Banerjee, J.

1. The plaintiff petitioner instituted a suit against the defendant opposite party, in the Court of Small Causes, Calcutta, claiming Rs. 1704-8-6.

2. The case made by the plaintiff petitioner was that by an agreement in writing between the plaintiff firm and the defendant firm entered into en September 28, 1951, through broker Makhanlal Jain and evidenced by a Bought Note (Ext. 1.), the defendant firm agreed to sell 25 tons of groundnutoil, loose in returnable drums, at the rate of Rs. 65/8/- per maund, the time for delivery being November 1951. Thereafter, the defendant firm, it is stated, expressed its inability to deliver the goods and requested the plaintiff firm to come to a settlement. Such a settlement was arrived at and io terms of the settlement the plaintiff petitioner resold the goods, covered by the Bought Note (Ext. 1), to the defendant firm at the rate of Rs. 68/- pet maund. The re-sale is evidenced by a Sold Note of broker Radheshyam Brothers (Ext. 2). The defendant firm thus became liable to pay to the plaintiff firm the difference in price at the rate of Rs. 2/8/-per maund, namely, a sum of Bs. 1704/8/6, but failed to pay.

3. The suit was contested by the defendant, inter alia, on the ground that the contracts between the plaintiff and the defendant were wagering contracts and from the inception it was agreed that the plaintiff firm would not demand delivery and the defendant firm would not tender or deliver the goods but the difference in price only would be payable. The common intention of the parties, from the outset, was to speculate on the difference in price and not to demand delivery or to give delivery.

4. The Court of the first instance found that the contract on the basis of which the claim was made was a wagering contract and not enforceable in law. In that view of the matter, the Court of the first instance dismissed the suit.

5. The plaintiff petitioner applied for a new trial and such trial was ordered under Section 38 of the Presidency Small Causes Courts Act. At the new trial the Court below arrived at the following findings :

'(a) The defendants' case is that the contract was in the nature of a wagering contract made with the common intention of both the parties for speculating the difference in price. In support of their case the defendants examined one of the partners of their firm. The learned trial Judge has placed reliance upon this witness. As against this the plaintiffs examined only a Karmachari, who has admitted that the contract was effected between the maliks. The learned trial Judge therefore has rightly observed that he could not place much reliance upon the evidence of this witness.

(b) Where the parties, by common consent, agree to speculate only in differences according to the rise and fall of the price in the market, and the delivery of the goods is not in the contemplation of either, the transaction is in the nature of wager or gamble; and a contract relating to the same is not enforceable in view of Section 30 of the Contract Act.

(c) It is also clear law that in order to determine whether a contract is a wagering contract the Court is to look not only to the terms of the written contract but also probe into the surrounding circumstances to find out the true intention of the parties.

(d) Even before the due date of delivery, the parties entered into another contract under which the plaintiffs purported to re-sell the goods to the defendants which, in our opinion, goes to show that the real intention of the parties when they entered into the contract on the 28th September 1951 was not to effect the sale of goods but to speculate in difference of price.

(e) The contract in question before us comes, within the category of wagering contracts and is void under Section 30 of the Indian Contract Act. Theplaintiffs therefore cannot recover any amount on the basis of the said contract'.

In the above view of the matter the Court below affirmed the decision of the trial Court.

6. The order passed by the Court below, in the new trial, is challenged before me in this Rule.

7. The learned Counsel for the petitioner urged, in the first place, that the transaction did not fall within the mischief of Section 30 of the Indian Contract Act and also urged, in the next place, that even assuming that the parties were speculating that by itself did not render the transaction a contract by way of wagering and therefore void. Now, wagering contract is not denned under She Indian Contract Act. A classical definition of wagering contract was given by Hawkins J. in the Case of Carlill v. Carbolic Smoke Ball Co., (1892) 2 QB 484 at p. 490, which is quoted below :

'A wagering contract is one by which two persons, professing to hold opposite view touching the issue of a future uncertain event, mutually agree, that dependant on the determination of that event, one shall win from the other, and that other shall pay or hand over to him, a sum of money or other stake; neither of the contracting parties having any other interest in that contract than the sum or stake he will so win or lose, there being no other real consideration for the making of such contract by either of the parties. It is essential to a wagering contract that each party may under it either win or lose, whether he will win or lose being dependent on the issue of the event, and therefore remaining uncertain until that issue is known. If either of the parties may win but cannot lose, or may lose but cannot win, it is not a wagering contract.'

8. Referring to the aforesaid judgment Anson In his Principles of English Law of Contract (19th Edition, page 207) observed as follows :

'There must therefore be mutual chances of gain and loss. But it is to be observed that the event may be uncertain, not only because it is a future event, but because it is not yet ascertained, at any rate to the knowledge of the parties. Thus a wager may be made upon the length of St. Pauls, or upon the result of an election which is over, though the parties do not know in whose favour it has gone. The uncertainty then resides in the minds of the parties, and the subject of the wager may be said to be the accuracy of each man's Judgment rather than the determination of a particular event.

The parties must contemplate the determination of the uncertain event as the sole condition of their contract.'

9. Another essential feature of wagering contract is that the only interest which the parties must have in the contract is the winning of the stake. If either party has any proprietary interest, e.g., an insurable interest in the contract it will not be a wagering contract. There must be no other real consideration for the making of such contract by either of such parties. Speculation is not wagering by itself. In delivering the judgment of the Privy Council in the case of Bhagwandas Parasram v. Burjorji Ruttonji Bomanji, 45 Ind App 29 at p. 33 : (AIR 1917 PC 101 at p. 102), Sir Lawrence Jenkins observed as follows :

'Speculation does not necessarily involve a contract by wagering and to constitute such a contract the common intention of wagering is essential.'

10. In the case of Bisseswar Lal Kedia and Co. v. Basir Ali, 33 Cal LJ 533 : (AIR 1921 Cal 362), Mookerjee J. restated the law on the subject, in delivering the judgment of the Court, as hereinafter quoted:

'Mr. Justice Greaves has correctly laid down the law on the subject. He states that to constitute such a contract, a common intention to wager is essential and that speculation does not necessarily involve a contract by way of wager, 45 Ind App 29 : (AIR 1917 PC 101). Whether the transaction is speculation or wagering, must be determined by the Court; we have to look behind the form of the contract to the real intention of the parties, which may be gathered from the oral evidence and the actual transactions between them. Universal Stock Exchange v. Strachan, (1896) AC 166. Now, the evidence in this case consists of the testimony of the defendant Basir Ali on the one hand and or Sridhar who deposes, on the other hand, on behalf of the plaintiff firm. Mr. Justice Greaves has approached the evidence from the proper standpoint, and we agree with him that when a defence of this nature is taken, the Court is bound to scrutinise the evidence of the defendant with a good deal of suspicion. This is all the more necessary, where, as in the present case, the defendant receives and accepts payments when the dealings are successful, but has recourse to the plea of wagering contract when the transactions end in loss'.

11. Bearing in mind the principle of law referred to above, I have examined the pleadings and also the evidence in the case. In my opinion, the Court below made a wrong approach to the question at issue.

12. On the side of the plaintiff petitioner there is documentary evidence in support of its claim, namely, the Bought Note and the Sold Note (Exts. I and 2). The aforesaid two documents are perfectly innocent pieces of evidence, on the face of them, unless it could be shown that the apparent was not the real state of affairs. For the purpose of ascertaining whether the apparent was the real state of affairs the Courts below were entitled to look to the surrounding circumstances and find out the true intention of the parties.

13. For this purpose the Courts below considered the oral evidence in the case and placed reliance on the only witness examined on behalf of the defendant firm, namely, Lalchand Agarwalla, one of the partners. I am quoting below the material portion of the evidence given by D.W. 1 Lalchand Agarwalla, and I am of opinion that the Courts below were in error in placing unmerited importance on that evidence for the purpose of its findings. In this evidence Lalchand stated as follows :

'In P. Ex. 1 the words within brackets 15 days were not there, the rest was there. Makhanlal Jain was the broker, the negotiation took place with him --there was no question of delivery. The contract was to be settled. The delivery was not to be given, so it was settled

Cross-examined -- My partner signed, not myself. That partner is not in Calcutta, but has gone to his native country. The brokers of these two contracts are where I cannot say ..... The market went up. It was settled. There was settlement.

Re-examined. I was present at the time of contract.'

14. It will appear from the extract quoted above that Lalchand admitted that the negotiationwith the plaintiff in respect of the contract for the purchase of 65 tons of groundnut oil was carried on through the broker. Therefore the broker only knew what was in the mind of the plaintiff petitioner, namely, whether he wanted to purchase 65 tons of groundnut oil or never intended to take delivery of the oil but only to trade in the difference of price. The broker was not examined in the case. In his re-examination, however, Lalchand stated that he was present at the time of contract. The contract in this case was effected by the exchange of Bought Note and Sold Note through the broker. What exactly Lalchand meant by saying that 'I was present at the time of the contract' is difficult to understand. According to him he was not present at the time when negotiations were going on between the plaintiff and the broker. Even assuming that he was present when the Bought Note and the Sold Note were being exchanged, it must be held that, he had no opportunity of Knowing the intention with which the plaintiff petitioner entered into the contract. I am, therefore, of opinion that in coming to the conclusion that the intention of the parties was not to effect the sale of the goods but to speculate in the difference of price the Court below failed to appreciate that the evidence of Lalchand was not such as would entitle the Court to come to the conclusion about the common intention on the part of both the plaintiff and the defendant to wager.

15. Then again, it was stated in paragraph 7 of the written statement that the common intention of the parties was to speculate on the difference in price at the outset. I have already referred to the authorities which hold that speculation does not necessarily involve a contract of wager and to constitute such a contract a common intention of wager is essential. Now if Lalchand's evidence is of no value on the point of common intention, and I am definitely of opinion that on this evidence alone the common intention of the parties at the inception of the contract cannot be established, then one essential ingredient to establish a contract of wagering must be said to be missing. With that ingredient missing the other findings of the Courts below will not make the contract a wagering contract. Then again, the contracts (Exts. 1 and 2) in this case were reduced to writing and have been proved according to law. That being so, to admit oral evidence of any agreement to wager for the purpose of contradicting or varying the terms of the written contract will not be admissible in evidence, tinder Section 92 of the Indian Evidence Act, unless, of course, it comes within the language or the five provisos to Section 92. I am of opinion that none of the provisos is attracted to the facts of the present case.

16. If Lalchand's evidence is out of picture, then the evidence led by the plaintiff stands un-rebutted and also is supported by documentary evidence.

17. The Courts below however relied on another circumstance, viz., that before the date of delivery, the parties entered into another contract under which the plaintiff purported to re-sell the goods to the defendant, which would go to show that when they entered into the contract their intention was not to effect the sale of goods but to speculate in the difference of price. On the side of the plaintiff evidence was given to explain why and in what circumstances the resale took place. It was definitely stated that the defendant was unable to supply the goods and therefore the matter was settled by agreement to pay the difference inprice. I am of opinion that the resale, evidenced by the Sold Note (Ext. 2), does not, by itself, lead to the conclusion as arrived at by the Courts below, the more so in this particular case because the plaintiff petitioner gave cogent reasons why and under what circumstances the resale took place.

18. Considering the matter in all aspects, I am of opinion, that the Courts below acted illegally and exercised jurisdiction with material irregularity in coming to the conclusion that they did. In my opinion, the Courts below were over-weighed by the uncorroborated testimony of D.W. 1 Lalchand Agarwalla and did not arrive at a proper judgment.

19. I, therefore, set aside the judgment of the Court of first instance as well as the judgment in the new trial and remand the case to the Court of first instance for a fresh trial. Regard being had to the lacuna in evidence, as pointed out hereinbefore, I give the parties liberty to adduce further evidence, if they choose to do so. The Court of first instance will hear this matter afresh bearing in mind the observations contained in this judgment.

20. This Rule is therefore made absolute and the matter is remanded to the Court of the first instance for trial according to law.

21. There will be no costs in this Rule. Futurecosts will abide by the final result of the suit.


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