Firm Sanehiram Baijnath and others vs Surajmal Marwari

Jwala Prasad, J.—The defendants have filed this second appeal No. 982 of 1920 as well as an application in revision No: 79 of 1921 against the decree passed against them on 22-11-1920. by the Subordinate Judge of Ranchi, reversing that of the Munsif, dated 23-1-1920.

The plaintiff sued the defendants for recovery of Rs. 462-8-0 besides interest, Rs. 512-6-0 on account of a breach of contract caused by the defendants. The suit was of the nature cognizable by a Court of Small Causes and as such the second appeal to this Court is barred by S. 102 of the Code of Civil Procedure. The second appeal is therefore incompetent and must be dismissed.

This Court entertain the civil revision No, 79 of 1921 only under S. 150 of the Code of Civil Procedure, that is, upon the grounds mentioned in that section affecting the jurisdiction of the Court below or showing that the Court acted in the exercise of its jurisdiction illegally or with material irregularity, Mr. Nandkeolyar, appearing on behalf of the defendants, says that the contract alleged by the plaintiff, upon which his action is founded, is "by way of wager," and that such a suit is not entertainable by reason of Section 30 of the Indian Contract Act (IX of 1872). That section runs as follows:-

"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."

The present case as laid in plaint was the defendants entered into a contract with the plaintiff on the 14th of October, 1918 to supply to the latter at Ranchi 100 maunds of fine Sargunja (oil seeds) on the 16th of January 1919 at the rate of Rs. 4-14-0 per maund and the plaintiff agreed to purchase the same at the said rate; that the defendants "did not deliver" to the plaintiff the oil seeds in accordance with the aforesaid contract, and just after the expiry of the due date, the 16th of January, 1919, the plaintiff served a notice upon the defendants on the 19th of January and subsequently another notice on the 13th of February to deliver to him the goods in question, failing which to pay the difference in value. But the defendants did not reply to the said notices. Consequently the plaintiff suffered loss which he estimated at the difference in the contract price and the price prevailing on the due date. The suit was instituted on 25-2-1919. The defendants denied the contract and also pleaded that the contract was illegal and the plaintiff was not entitled to recover the difference in price by reason of S. 30 of the Contract Act.

The principal issue raised at the trial was whether the contract was illegal and void on account of the same being a wagering contract only. The Munsif answered this in the affirmative. The learned Subordinate Judge differed from the Munsif and held that the contract was a valid one and was not wagerous as was pleaded by the defendants. Both the Courts below, in arriving at this divergent view, referred to the evidence and circumstances of the case. The Munsif drew an inference from the consideration of the various circumstances set forth in his judgment, that there was no contract of sale but only an agreement of bargain upon the fluctuating price of the oil seeds. The learned Subordinate Judge has also referred to certain circumstances and the evidence in the case in support of his view. He says:

"In the present case it is in evidence that Surguja seeds which are locally produced, are often sold and purchased in the local market, The appellant pressed (or actual delivery of 100 mds., failing which he demanded the difference between the contract price and the market rate. He had dealings in Surguja and cannot be held to have intended to pocket the profit without actual transfer of the goods."

Here the contract was with respect of 100 mds., of oil seeds at the rate of Rs. 4-14-0 a md., that is, the contract was with respect to a sum below Rs. 500. Both the plaintiff and the defendants have firms at Ranchi and deal in grain. The plaintiff in his evidence stated that he carries on trade to the value of Rs. 10,000. Considering this circumstance the learned Subordinate Judge held that the contract entered into between the parties was not beyond the means of the parties, and it cannot be said to be too extravagant to be "capable of compliance" or the parties never intended to sell and deliver the goods but to profit by the difference of price on account of the rise and fall of the market. Thus he distinguished the present case from that covered by the decision of their Lordships of the Privy Council in Kong Yee Lone and Co. v. Lowjee Nanjee (1902) 29 Cal. 461 = 28 I. A. 239 = 8 Sar. 101 (P.C.). In that case their Lordships found that the capital of the firm was a trifle more than a lakh of rupees and the cost of the goods covered by the contract would be that amount multiplied five hundred fold. Their Lordships observed: " It is possible for traders to contemplate transactions so far beyond their basis of trade, but it is very unlikely. In point of fact they never contemplated nor were they called on to complete any one of the ostensible transactions. The rational inference is that neither party ever intended completion." From these data their Lordships of the Privy Council say:

"It is unreasonable to draw any other conclusion than that the description which the larger promissory note gives of the consideration for it is the correct one. It is for "difference on rise" not as now contended, for the price of rise re-sold by the plaintiffs to the defendants."

In the present case the means of the parties are, as observed above, not so trifle, and the contract entered into by them was not exorbitant and extravagant. The intention of the parties was that the goods would be delivered as the plaintiff expected it, inasmuch as just after the expiry of the due date he persistently demanded the defendants to deliver the goods to him. Similarly the case of Firm of Lal Chand Gela Ram v. Nathu Ram (1916) 74 P.L.R. 1916=36 I. C. 48=226 P. W. R. 1916 was decided upon the facts and circumstances of that case. His Lordship, Shadi Lal, J., observes:

"The mode of entering into these transactions as set out in the judgment of the lower Court, the fact of their value being far beyond the means, of the parties, the absence of any attempt to complete any of the transactions and other circumstances, warrant the inference that the agreement in question was not a commercial transaction, but a wager, pure and simple. The plaintiff, no doubt, as observed above, expected that the goods would be delivered to him and he entered into the contract with that expectation, and not only in the hope of making some profit upon the difference in price. The defendants might or might not have intended to deliver the goods, but that would not make the contract as a contract of wager. In order to bring a contract u/s 30 of the Contract Act it is necessary to show that both parties intended that no delivery or acceptance shall take place and agreed that the mere difference between the price at the time of the bargain and the price at some later time shall be paid; but if only one of the parties intends that no delivery shall take place the contract is not vitiated."

In the present case at best the defendants only might not have intended to deliver the goods; but the plaintiff, on the other hand, did enter into the contract with the intention of enforcing the delivery of the goods. This has been made clear by the latest pronouncement of their Lordships of the Privy Council in the case of Bhagwandas Parasram v. Burjorji Ruttonji Bomanji AIR 1917 P. C. 101 = 42 Bom. 373= 45 I. A. 29 (P.C.), where their Lordships held that speculation does not necessarily involve a contract by way of wager, and to constitute such a contract a common intention to wager is essential. Even if one party to a contract were a speculator who never intended to give delivery, and that fact was known to the other party, yet in the absence of any bargain or understanding, express or implied, that the goods were not to be delivered, that would not convert a contract, otherwise innocent, into a wager; nor would the mere fact, that as to the greater part of the goods there was no delivery but an adjustment of claims, vitiate the transaction.

My attention has been drawn to a number of authorities in both ways, but each case was decided upon its own case. The Court below was, therefore, entitled to draw a legal inference from the facts set forth by it that the contract in the present case was a valid and legal contract and was not affected in any way by S. 30 of the Indian Contract Act. There was no want of jurisdiction in the Court below nor has the decision been arrived at in any irregular or illegal manner. It is a question only of the difference of opinion between the ourt below. Therefore the defendants are not entitled to invoke the revisional jurisdiction of this Court to set aside the decree passed against them.

The Court below has, however, failed to exercise the jurisdiction vested in it in not deciding Issues Nos. 4 and 5 raised in the trial Court. Those issues are :-

"Are the defendants, Sukhdeo and Nand Lal, minors and can the suit proceed against them in this form."

(Issue No. 4).

"To what relief, if any, is the plaintiff entitled."

(Issue No. 5).

The contract is said to have been entered into between the plaintiff and defendant No. 1. Neither in the plaint nor in the evidence is there any reference to the other defendants having entered into any contract with the plaintiff. The Court below has not given any reason for making his decree against the defendants other than defendant No. 1. Two of the defendants are minors, and no reason has been given by the Court below as to how these defendants are bound by the contract set forth by the plaintiff. The decree passed against the defendants other than defendant No. 1 is illegal and without jurisdiction. The trial Court held that the contract was illegal and the plaintiff was not entitled to enforce it against any of the defendants. Consequently it was not necessary for that Court to come to a definite finding upon Issues Nos. 4 and 5. The learned Subordinate Judge while holding that the contract was proved, ought to have gone further and held to what relief was the plaintiff entitled and against which of the defendants. This he failed to do and therefore the decree passed by him is liable to be set aside in revision as against defendants Nos. 2 to 5.

The decree of the Court below is confirmed as against defendant No. 1 and is set aside as against the remaining defendants. In the circumstances of the case each party will bear his own costs.