Back
1927 Supreme(SC) 83
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
VISCOUNT CAVE L.C., LORD CARSON, AND LORD DARLING.
SUKDEVDOSS RAMPRASAD, FIRM - Appellant
Versus
GOVINDOSS CHATURBHUJADOSS AND COMPANY (DEFENDANTS) - Respondents
On Appeal from the High Court at Madras.
Decided On : November 17, 1927.
Solicitors for appellants :Pugh & Co. Solicitor for respondents: H. S. L. Polak.
A contract is not a wagering contract merely because it is speculative; it requires a definite agreement that performance will not be demanded. However, a trade custom to settle only price differences removes the right to claim the full price of goods.
Headnote:(A) Wagering Contracts - Speculative nature of a contract is insufficient to render it void as a wagering contract; there must be proof of a definite agreement or understanding that performance shall not be demanded and only differences in price shall be payable.
(B) Delivery of Goods - For an action for the price of goods to succeed, the seller must prove actual delivery or the transfer of a document of title that obliges the custodian to deliver the goods to the holder.
(C) Trade Custom - Where parties agree to a custom of settling only the differences in price resulting from sales and resales, the obligation to deliver the goods and the right to demand the full price are extinguished.
Facts of the case:
A seller sued a buyer for the price of yarn. No actual delivery occurred, but documents termed as delivery orders were exchanged. The goods were resold multiple times among various merchants and eventually re-purchased by the original seller. The parties had followed a trade custom where only price differences were settled rather than the actual delivery of goods or payment of the full price.
Findings of Court:
The court held that the contracts were not wagering contracts as there was no absolute agreement that delivery would never be demanded. However, the agreement to settle price differences meant the obligation to deliver the goods was no longer effective, and the full price could not be recovered.
Issues: Whether the contracts were void as wagering transactions and whether the delivery orders issued under a custom of settling price differences were equivalent to delivery of goods.
Ratio Decidendi: A contract is not void for wagering unless there is a clear agreement that performance will not be demanded. However, when a trade custom for settling price differences is adopted, it constitutes an agreement that the obligation to deliver the goods and the requirement to pay the full price are waived in favor of paying the resulting differences.
Result: Appeal dismissed.
Legal Category Hierarchy
-
contract law
-
sale of goods
- delivery of goods
- wagering contracts
-
sale of goods
Judgement
Appeal (No. 107 of 1926) from a decree of the High Court in its appellate jurisdiction (April 29, 1925) varying a decree of that Court in its original jurisdiction.
The appellant firm brought a suit against the respondent firm in the High Court claiming Rs.65,255, the price of yarn sold and delivered under three contracts made in Madras. As to part of the goods there
Law Rep. 55 Ind. App. 32 ( 1927- 1928) Sukdevdoss Ramprasad, Firm V. Govindoss C haturbhujadoss 234
had been actual deliveries, and the present appeal related only to a contract of November 21, 1922, by which the appellants sold 100 bales to the respondents. The defendants pleaded in effect (1.) that there had been no delivery ; (2.) that the contract was a wagering contract.
The facts appear from the judgment of the Judicial s Committee.
The trial judge (Coutts-Trotter J.) decreed the whole claim. c In his view the documents handed to the defendants were delivery orders, upon which delivery could have been demanded. He rejected the plea of wagering on the ground that it was not proved that there was a definite agreement or understanding that delivery should not in any event take place ; it was not sufficient that the parties should contemplate that delivery was not likely to be demanded.
On appeal the decree of the trial judge was varied, his judgment with regard to the contract for 100 bales being reversed. The learned judges (Kumaraswami Sastri and Krishnan JJ.) were of opinion that it was proved that the intention of the parties throughout was that no deliveries should take place, but that only differences should be paid, and that consequently the contract was void for wagering. Kumaraswami Sastri J. also expressed the view that there had been nothing which in law was equivalent to a delivery of the goods.
1927. Oct. 20, 24, 25. Stuart Bevan K.C. and Kenworthy Brown for the appellants.
Upjohn K.C., Miller K.C. and Narasimham for the respondents.
The arguments were chiefly as to the facts. On the question of wagering reference was made to Bhagwandas Parasram v. Burjorji Ruttonji (( 1917) L. R. 45 I. A. 29.); Universal Stock Exchange v. Strachan ([ 1896] A. C. 166.) ; In re Gieve . ([ 1899] 1 Q. B. 794.).
Nov. 17. The judgment of their Lordships was delivered by
LORD DARLING. This is an appeal against a decree of the High Court of Judicature at Madras, dated April 29, 1925, varying a decree of the same Court on the original side made by Coutts-Trotter
J. on October 4, 1923.
In the original suit the plaintiffs (the present appellants) claimed the sum of Rs.65,255, the price of goods sold and delivered by the appellants to the respondents.
In answer to this claim, the respondents pleaded as follows " The plaintiffs, defendants and certain other merchants formed a group, and it was agreed by and between the merchants of the group that the transactions had among them should take place on the footing that no deliveries should be intended or asked for, that patta pattis or delivery orders should be issued to the respective purchasers, that after the delivery orders were sent round and the same ultimately reached the hands of the original vendors, the patta pattis should be exchanged and hawala chits issued, that accounts should be taken thereafter on the footing of the exchange of patta pattis or delivery orders, and that the respective vendors should be entitled to the difference in prices from the respective purchasers."
The respondents also pleaded that there was no actual delivery of the goods of which the price was sued for, that appellants never were in a position to deliver them, and that it never was intended that delivery should take place. The respondents further pleaded that the contracts were void as being wagering contracts for the payment of differences only.
Law Rep. 55 Ind. App. 32 ( 1927- 1928) Sukdevdoss Ramprasad, Firm V. Govindoss C haturbhujadoss 235
It was proved or conceded that as regards the goods in question no delivery took place,
