Judgement

Appeal (No. 1 of 1926) from a decree of the High Court in its appellate jurisdiction (September 10, 1924) reversing a decree of the High Court in its original jurisdiction.

The respondent had acted as katcha adatia for the appellant in making forward contracts for the purchase of cotton and in dealings in options on cotton, called teji mandi transactions. These dealings resulted from time to time in losses which were paid by the defendant, and he claimed in the present suit to recover the amount paid from the appellant. The appellant, among other defences, alleged that all the transactions were illegal and void as wagering contracts under the Indian Contract Act and under Bombay Act III. of 1865.

The facts are stated in the judgment of the Judicial Committee.

The trial judge (Kemp J.) dismissed the suit. He found that there was an understanding between the appellant and the respondent that the appellant should not be called upon to give or to take delivery, and held that the transactions consequently were wagering contracts.

On appeal the decision was reversed and the suit decreed. The learned judges (Shah A.C.J. and Kincaid J.), while agreeing with the trial judge that there was the understanding above mentioned, held that as it had not been shown that the third parties with whom the plaintiff made agreements were parties to that understanding the transactions were not wagers.

1926. July 12. Hon. Geoffrey Lawrence K.C. and E. B. Raikes for the appellant. Having regard to the concurrent findings that there was an understanding between the appellant and the respondent that the appellant should neither give nor deliver any cotton, the whole of the transactions were wagering, and void under the Indian Contract Act, 1872, s. 30, and Bombay Act III. of 1865. The teji mandi transactions were in effect the purchase of double options ; there is a presumption that dealings of that nature are wagers. For the present purpose there is no distinction between a katcha adatia and a pakka adatia. [Reference was made to Universal Stock Exchange v. Strachan ([ 1896] A. C. 166.); In re Gieve ([ 1899] 1 Q. B. 794.) ; Motilal v. Govindram (( 1905) I. L. R. 30 B. 83, 100.) ; Manubhai Premanund v. Keshavji Ramdas (( 1922) 24 B. L. R. 60.) ; Manilal Dharamsi v. Allibhai Chagla (( 1922) I. L. R. 47 B. 263.); Manilal Raghunath v. Radhakisson Ramjiwan (( 1920) I. L. R. 45 B. 386.); Bhagwandas Parasram v. Burjorji Ruttonji. (( 1917) L. R. 45 I. A. 29.)]

Clauson K.C., Sir George Lowndes K.C. and R. K. Chappell for the respondent. It was established that the transactions as between the respondent and the third parties were not wagers, and that he was to receive only his commission whatever the result. That being so the view of the High Court was the view taken by English Courts since Thacker v. Hardy (( 1878) 4 Q. B. D. 685.), and applied by the Board in an Indian case—namely, Bhagwandas Parasram v. Burjorji Ruttonji (( 1917) L. R. 45 I. A. 29.) ; the decision was in accordance also with the decisions of the Courts in ; India.

July 26. The judgment of their Lordships was delivered by

LORD JUSTICE WARRINGTON. The question in this appeal is whether the contract between the appellant and the respondent sought to be enforced in the suit was a wagering contract, and therefore, under the provisions of s. 30 of the Indian Contract Act, void and incapable of being enforced.

The respondent (the plaintiff in the suit) carries on business in Bombay as a merchant and agent on commission.

The appellant (the defendant in the suit) is a merchant and at all material times resided in the native state of Bhopal.

During the years 1914 and 1917 the respondent acted in the transactions in question as commission agent for the appellant on what are known in Bombay as katcha adatia terms, the appellant being his up-country constituent.

There is no dispute that as regards katcha adatia transactions the course of business and the relative positions of the parties are as f