1953 Supreme(Cal) 213

HIGH COURT OF CALCUTTA
Bose
SOHANLAL PACHISIA - Appellant
Versus
BILASRAY KHEMANI - Respondent
Suit 1595  Of  1945
Decided On : DECEMBER 11, 1953

Headnote:

CONTRACT - Suit for recovery of damages for non-delivery of shares - Plaintiff firm acted as principal and not as broker - Contract dated 29-11-44 is not conclusive of the real relation of the parties - Evidence can be given to prove whether a party contracted as agent or in the capacity of seller or buyer in the transaction - Plaintiff firm entitled to maintain the suit - Suit not maintainable by reason of the fact that the plaint has not been signed by all the partners - Plaintiff firm was all along ready and willing to carry out its part of the contract and that there were applications for delivery by the plaintiff on the due date as also on the extended due dates - Plaintiff firm is entitled to claim the difference between the market rate on the extended due date for delivery and the rate at which the shares were purchased on 29th November 1944.

Fact of the Case:

Plaintiff firm, a registered partnership firm, entered into a contract with the defendants for the purchase of 4,000 shares of Barakar Coal Co. Ltd. The contract was subject to the rules and usages of the Calcutta Stock Exchange Association Ltd. According to the rule and usage, the defendants were to deliver the shares and the plaintiff firm was to pay for the same within 3 days from the date of the contract. The time for delivery was however extended from time to time by mutual agreement up to 20th December 1944. But although the plaintiff firm applied for delivery, the shares were not delivered by the defendants. By reason of such failure to give delivery, the plaintiff firm, on 21st December 1944 purchased the said 4,000 shares in open market for and on account of and at the risk of the defendants and thereby suffered a loss of Rs. 13,862/8/- being the difference between the price at which the plaintiff firm purchased the shares from the defendants and the price at which the plaintiff firm was compelled to buy the said shares from the market on account of the defendants.

Finding of the Court:

1. The plaintiff firm acted as principal and not as broker in the transaction in suit. 2. The plaintiff firm is entitled to maintain the suit. 3. The suit is not maintainable by reason of the fact that the plaint has not been signed by all the partners. 4. The plaintiff firm was all along ready and willing to carry out its part of the contract and that there were applications for delivery by the plaintiff on the due date as also on the extended due dates. 5. The plaintiff firm is entitled to claim the difference between the market rate on the extended due date for delivery and the rate at which the shares were purchased on 29th November 1944.

Issues: 1. Did the plaintiff act as principal or as broker in the transactions in suit? 2. (a) Was the plaintiff firm entitled to require performance of the contract by Bilasroy Khemani? (b) Is the plaintiff firm entitled to enforce any liability arising therefrom? 3. Up to what date was the delivery of the shares extended? 4. (a) Was the plaintiff ready and willing to carry out its part of the contract? (b) Was there any application for delivery by the plaintiff firm on the due date or the extended due date? 5. Are the defendants members of a joint family governed by the Mitakshara Law or partners or did they hold themselves out as partners as alleged in paragraph 1 of the plaint? 6. Was the plaintiff firm duly registered under the Indian Partnership Act at the date of the suit? 7. Is the suit maintainable by reason of the fact that the plaint has not been signed by all the partners? 8. To what relief, if any, is the plaintiff entitled?

Ratio Decidendi: 1. A Contract Note is not conclusive of the real relation of the parties to the contract and evidence can be given to prove whether a party contracted as agent or in the capacity of seller or buyer in the transaction. 2. If it was found that the defendant knew that the plaintiffs were really principals and agreed to their so acting, the decision would have been otherwise. 3. In order that a suit can be properly instituted to enforce a right arising from a contract by or on behalf of a firm against any third party, the firm must be registered and the persons suing must be shown in the Register of Firms as partners in the firm. 4. The difference is more properly that between the contract price and the market price 'on the day after the breach', where the defendant has the whole of the day fixed for delivery on which to deliver; but the express or implied terms of the contract must be given effect to.

Final Decision: Decree for Rs. 13,362/8/- in favour of the plaintiff firm with interest on decree at 6 percent as against the defendant No. 1 Eilasrai Khemani. The suit is dismissed as against the defendants Nos. 3 and 4. The defendant No. 1 will pay to the plaintiff the costs of the suit on scale No. 2 including reserved costs, if any. Certified for two counsel. The plaintiff will pay to the defendants Nos. 3 and 4 one day's costs of hearing. Certified for two Counsel.