Sitaram and others vs Chamanlal

Shripatrao, J.—This case has been referred to me due to the difference of opinion between Srinivasa Chari J. and Qamar Hasan J. The judgments of Srinivasachari and Qamar Hasan JJ. are in Urdu and are not reported here as the points are suffieiently clear from the judgment of Shripatrao J. which is being reported here-Ed. While Srinivasachari J. held that the appeal should be dismissed Qamar Hasan J. held that the case should be referred to a Full Bench. As a preliminary point it was argued before me that the difference in opinion was not in accordance with S. 8 of the Hyderabad High Court Act which lays down that in the case of difference of opinion between the members of a Division Bench, every Judge will write his opinion with grounds therefor. It was argued that the "opinion" in this section means "opinion" on the merits of the case, and that opinion to refer the case to a Full Bench is not an opinion within the ambit of S. 8. Be that as it may. Though the argument appears to be prima facie correct I cannot as a Single Judge refer the case back to the Division Bench. Parties have not pressed the point further. I will there lore content myself with delivering judgment on the merits of the case.

This is an appeal on behalf of the defendants. The facts of the case briefly are that the plaintiff (respondent) filed a suit for the recovery of Rs. 25282/- and odd stating that the plaintiff''s firm at Bombay had dealings'' with the defendants'' firm at Latur with, respect to Hundi business & purchase of grain & seeds for a period of about one year and nine months covering sumvat 1995 and sumvat 1996 (Guzrati). Finally accounts were taken with regard to the Bombay shop on 6th Dai 1349 F. (11th November 1939) corresponding to Ashvin Bad Amavas Guzrati sumvat 1995, and an amount of Rs. 8476-2-6 (I.G.) was found due to the plaintiff by the defendants. With respect to the Latur shop, accounts were drawn up to 16th Meher 1349 F. and a sum of H.S. Rs. 15393-7-0 accrued due to the plaintiff from defendants. This amount it is stated has nothing to do with the transactions relating to sumvat 1996 i.e., month of Bahadwan (Guzrati). Finally defendant No. 1 in his capacity as representing the defendants'' shop entered into an agreement with the plaintiff for payment of the said amount by instalments and also agreed that the said documents would be duly executed and wrote an Ekrarnama on the 22nd of August 1940 containing these terms in favour of plaintiff. The plaintiff also agreed by an Ekrarnama to abide by the said instalments if duly executed documents were delivered to him. Plaintiff further states that on the basis of the above Ekrarnama dated 22nd August 1940 defendant No. 1 wrote on a duly stamped paper a document and signed and executed the same, and said that he would obtain the signatures of defendants Nos. 2 and 3 at Latur and send it up to him. He also agreed that further documents as agreed will also be written by all the defendants and sent to the plaintiff. But the defendants did not, as agreed, abide by the conditions and defendant No. 1 only sent from Latur the document executed at Gulbarga with some additions and interpolations in the same without the signatures of the other two defendants. As defendants did not abide by the terms of the agreement as shown in Ekrarnama, plaintiff has filed this suit for the whole of the amount due.

The purport of the written statement shortly is that there were dealings between the plaintiff''s shop and the defendants'' shop, but these transactions were in the nature of Satta, and in that connection defendants drew certain hundis on plaintiff''s shop. Whatever accounts were taken were with respect to the profit and loss due to the Satta dealings of which "Ankadas" (accounts of the amount due) were given by one party to the other and that the plaintiff is not entitled to recover any amount due to the Satta or wagering transaction. Defendants have admitted execution of Ekrarnama referred to by the plaintiff but state that as plaintiff threatened to file a suit and attach their property and assured them that in the next season some profit may accrue to the defendants due to similar transactions they had to write the Ekrarnama. They also admit the execution of the document signed by defendant No. 1. It is clear from the written statement that the main defence is with regard to transactions being in the nature of wagering transactions prohibited under S. 30 of the Indian Contract Act corresponding to S. 31 of the Hyderabad Contract Act.

The lower Court framed certain issues out of which issue No. 4 relates to the allegation of Satta and is as follows:

Whether the transaction between the parties '' is a Satta as asserted by the defendants and what is its effect upon the suit?

Account books of the parties were produced in the lower Court. Seven witnesses were produced on behalf of the defendants and plaintiff produced four witnesses. After discussing the facts in detail, the lower Court came to the conclusion that the transactions were not in the nature of a Satta and that the intention of the parties was to deal with goods and take delivery of the same. There was no intention merely to deal in differences. The lower Court therefore decreed plaintiffs suit for Rs. 25282-7-0 (H. S.) with costs and future interest.

Against this decision, the defendants have filed this first appeal. The main point to be decided is whether the dealings between the parties were in the nature of Satta and how far the defendants have succeeded in proving the same. Section 31 of the Hyderabad Contract Act which corresponds to S. 30 of the Indian Contract Act is relevant in this respect. The Section lays down that 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. I have to decide from the vast number of transactions and dealings between the parties whether they were by way of wager and whether parties intended that they should be in the nature of wager. About 35 exhibits have been filed by the plaintiff. They are all admitted by the defendants. Plaintiff has also filed the detailed Bahi Katha with respect to the dealings. Defendants have also filed 43 exhibits all of which have been admitted except with certain variations by the plaintiff. Hence as has been written by both of my learned brothers the facts of the case are not disputed and the dealings entered into by the parties have also been admitted. It is to be noted that the defendants do not allege that all the dealings between the parties were by way of wager. They admit that certain dealings were bona fide commercial transactions and forward contracts but with regard to only certain dealings they allege that they were in the nature of wager. I will therefore discuss only such of the dealings as have been alleged on behalf of the defendants to be by way of wager and have to arrive at a conclusion taking all the dealings between the parties into consideration whether the allegation of wager is proved. The defendants allege that the transactions shown in Ex. 41 regarding the delivery of 5700 bojas of ground-nut are commercial but they maintain that the transactions shown in Ex. 42 with regard to 8900 bojas are by way of wager, and that plaintiff''s claim for recovery of Rs. 4245-15-9 by way of difference cannot be decreed. This Ex. 42 for all practical purposes tallies with plaintiff''s Ex. 15 and gives details of various purchases of bojas from day to day beginning from Margasira Bad 2 & ending with Pos Baddi 14. It is alleged on behalf of the defendants that there was no actual delivery with regard to these bojas of Seng Phalli because in the accounts there is no mention of cartage, hamali and packing charges etc. But at the same time we have to see that when accounts were taken some amounts were deducted towards Adath (commission), Dallali and Dharmaday which would not be there if it was merely a wagering transaction. This exhibit relates to the sales of Magh Vaida.

Defendants also allege that the transactions of 11600 bojas relating to Vaisak Vaida are also by way of wager, and that no actual delivery was given of these bojas. As against this, the allegation and explanation of the plaintiff is that the Magh and Vaisak Vaida sales were made to the plaintiff by the defendants, that plaintiff also sold during Magh and Vaisak Vaidas certain number of bojas of seng-phalli as shown in Exs. 16 and 17, and that all these and subsequent transactions were bona fide transactions between the parties. It was not necessary to give actual delivery with regard to all the bojas shown in Exs. 15 and 18 as after purchasing stocks from defendants towards his Magh and Vaisak Vaida sales. But the intention of the parties is very clear as actual delivery was given by the plaintiff on various dates as is clear from Exs. 18 and 19. Defendants also admit that they received delivery from the plaintiff of 5700 bojas of seng-phalli from time to time. Hence, there is no ground to infer that the intention of the parties was not actual commercial business but to do business by way of wager. This is further clear by the evidence in the file which shows that the plaintiff had his go-down of seng-phalli at Latur and had large quantities of ready goods therein and that as against these ready goods plaintiff used to effect forward sales to various merchants including the defendants. This is clear from the report of the Commissioner who inspected the account books of the parties. It is clear from these accounts and report of the Commissioner that for the Vaisak settlement the plaintiff had sold to the defendants about 17300 bojas of ground-nut and that there were further transactions whereby on different dates the plaintiff purchased from defendants 11600 bojas in aggregate. The relevant fact to be noticed in connection with the Vaisak settlement is that as referred to above 5700 bojas which were in excess of the plaintiff''s sales to the defendants over the plaintiff''s purchases from the defendants were actually delivered by the plaintiff to the defendants and the defendants accepted the said delivery and became liable to pay to the plaintiff the value of the said bojas. Moreover, looking to the defendants* account books it is clear that the amount due towards the two impugned transactions of 8900 bojas and 11600 bojas has been paid by the defendants to the plaintiff and now what remains to be paid is not with regard to those two impugned transactions but with regard to the price of 5700 bojas of which actual delivery was given and the present claim is towards part of that price and therefore the question of wagering transaction does not arise. Looking to the evidence and the report of the Commissioner, it is clear that defendants also from time to time gave actual delivery of seng-phalli bojas to the plaintiff under various transactions. Defendants used to draw money by hundis on the plaintiff''s shop at Bombay against the goods which they supplied from time to time. From these transactions it is clear to my mind that the dealings entered into by the plaintiff with the defendants were not by way of wager. Mr. Sadashivarao the learned Advocate for the appellants has contended that the intention of the parties must be determined from the evidence of the case and I agree with his contention. In Bhagwandas Parasram v. Burjorji Buttonji 42 Bom 373 PC the Privy Council has discussed the question of wagering transactions and at page 378 their Lordships observed:

Speculation does not necessarily involve a contract by way of wager and to constitute such a contract a common intention to wager is essential

It was held in that case that even if one party to a contract were a speculator whomever 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.

Having regard to the facts before me there is no evidence in the case that the parties did not intend to give or take delivery. During the vast number of transactions parties have actually given delivery and taken delivery. Hence, if towards some part of the goods there was no delivery but an adjustment of claims that does not vitiate the transactions in this case as being by way of wager. In ''Motilal Partabchand v. Govindram, Jeychand'', 30 Bom. 83, the question has been discussed as to how the Courts should try to discover the common intention of the parties and should do all that is possible to see through the ostensible and apparent transaction into the underlying reality of the bargain. Even after looking to the underlying reality of the bargain I do not see any reason to infer that the transaction is by way of wager. In ''Mohamed Valli Patel v. East Asiatic Co. Ltd.'', 14 Rang 347, it was held that contracts for the purchase and sale of goods may be highly speculative in character but that is insufficient in itself to render them void as wagering contracts. To produce that result there must be proof that the contracts were entered into upon the terms that performance of the contract should not be demanded but the difference only should become payable. I do not find, after a careful scrutiny of the evidence in the case before me that the intention of the parties was that difference should only become payable and that performance of the contract should not be demanded.

In conclusion, I agree with my learned brother Srinivasachari J., and dismiss this appeal with costs.