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High Court Of Rajasthan
Judgename : L.N.Chhangani
RAM SINGH - Appellant
Versus
JETHANAND WADHUMAL - Respondent
Second Appeal 179 Of 1959
Decided On : 03/30/1964
FORWARD CONTRACTS - VEGETABLE OILS AND OILCAKES (FORWARD CONTRACTS PROHIBITION) ORDER, 1944 - NOTIFICATION NO. P. AND S. C. I (A)/44 - INTERPRETATION - TRANSFERABILITY OF BENEFITS UNDER CONTRACT - DOCTRINE OF PARI DELICTO - APPLICABILITY.
Fact of the Case:
The plaintiff and defendant entered into a contract for the purchase and sale of 500 tins of hydrogenated ground-nut oil. The defendant advanced Rs. 1,000/- to the plaintiff as an advance payment. The contract was not implemented, and the plaintiff filed a suit for damages. The defendant contested the suit on the ground that the contract was illegal being in contravention of the Vegetable Oils and Oilcakes (Forward Contracts Prohibition) Order, 1944 (the "Order"). The trial court and the appellate court dismissed the plaintiff's suit and decreed the defendant's counterclaim for Rs. 1,000/-.
Finding of the Court:
The court held that the contract was illegal being in contravention of section 3 of the Order. The court also held that the contract was not within the exemption provided by Notification No. P. and S. C. I (A)/44 dated 8-1-1944 (the "Notification"). The court further held that the defendant was entitled to a refund of Rs. 1,000/- paid by him to the plaintiff as an advance payment.
Issues: 1. Whether the contract was illegal being in contravention of the Order? 2. Whether the contract was within the exemption provided by the Notification? 3. Whether the defendant was entitled to a refund of Rs. 1,000/- paid by him to the plaintiff as an advance payment?
Ratio Decidendi: 1. The court held that the contract was illegal being in contravention of section 3 of the Order. The court relied on the language of the Order and the Notification to conclude that the contract was not within the exemption provided by the Notification. 2. The court held that the contract was not within the exemption provided by the Notification. The court held that the expression "against which contracts are not transferable to the third parties" governs and qualifies only delivery orders, railway receipts or bills of lading, and cannot in any way limit forward contracts for specific qualities or types of any article to which, the said order applies or for specific delivery or at a specified price. 3. The court held that the defendant was entitled to a refund of Rs. 1,000/- paid by him to the plaintiff as an advance payment. The court held that the parties were not aware of the Notification prohibiting forward contracts in hydrogenated ground-nut oil and there is nothing to show that the defendant was really in pari delicto.
Final Decision: The appeal was dismissed with costs.
L. N. CHHANGANI, J.
( 1 ) THIS is a plaintiffs second appeal from the judgment and decree of the Senior civil Judge, Ajmer, dated the 14th November, 1958, affirming the decree of the second Additional Sub-Judge, First Class, Ajmer dated the 31st January, 1956. By these decrees the plaintiffs suit for damages amounting to Rs. 1,875/- was dismissed and the defendants counter claim of Rs. 1,000/-, was decreed.
( 2 ) THE material facts leading to this appeal may be briefly stated as follows: on 21st of May, 1954, the defendant M/s Jethanand Wadhumal and Co. Ajmer through on of his managers Shri Lachman Dass contracted to purchase 500 x 36 Ibs. tins of Prabhat Brand Hydrogenated Ground-nut and Til Oil (Vegetable Ghee) on some terms and conditions, the material conditions being as follows:
(a) Quantity and quality: 500 x 36 lbs. Prabhat Brand hydrogenated Ground. nut Oil and Til Oil. (b) Period of delivery; from 1st July 1954 to 31st July 1954 on any day at the option of sellers. (c), (d) and (e) relate to rate, octroi and advance payment, and are not material. (f) Terms of the payment shall be made as payment : soon as the delivery is tendered at the purchasers godown or his nominees godown. (g) and (h) relate to sales-tax and other terms which are not material. .
The defendant advanced Rs. 1,000/- to the plaintiff under a cheque in pursuance of the contract. The contract was not implemented. The plaintiff accordingly filed a suit for the recovery of Rs. 1,875/- as damages. His case was that he was always willing and prepared to perform his part of the contract but the defendant failed to take delivery in sp-;te of requests, registered notice and a telegram. According to him the contractual rate being Rs. 32/- per tin and the market rate on or about 3ist of July, 1954 at Ajmer being Ks, 26/4/- per tin, the plaintiff suffered damages to the extent of Rs. 2,8757 -. Giving credit for Rs. 1,000/- deposited by the defendant in advance, he filed a suit for Rs. 1,875/ -.
( 3 ) THE defendant contested the suit on various grounds. The main plea with which we are concerned in this appeal relates to the illegality of the contract. The defence was that the contract being a "forward contract" was in violation of the forward Contracts (Regulation) Act of 1952. The defendant also filed a counter claim for Rs. 1,000/-paid to the plaintiff in pursuance of the contract. It appears that at the time of arguments on certain preliminary legal issues relating to the illegality of the contract, the defendant did not rely upon the provisions of the forward Contracts (Regulation) Act of 1952 but took shelter under the provisions of the Vegetable Oils and Oilcakes (Forward Contracts Prohibition) Order, 1944 (hereinafter referred to as the "order" ).
( 4 ) THE trial Court held that the contract was illegal being in contravention of section 3 of the said order. The trial Court eventually dismissed the plaintiffs suit and decreed the defendants counter claim for Rs. 1,000/-,
( 5 ) THE plaintiff filed an appeal in the Court of District Judge, Ajmer. It was, however, transferred to the Court of Senior Civil Judge. At the appellate stage the plaintiff relied upon a notification No. P and S. C. 1 (A)/44 (hereinafter referred to as a notification) excluding certain classes of contract from the provisions of the order. The appellate Court held that the appellant was not entitled to the benefit of the exemption given by the notification. The appellate Court accordingly upheld the decision of the trial Court and dismissed the plaintiffs appeal. The plaintiff has filed the second appeal.
( 6 ) MR. Rastogi contended in the first instance that the notification does apply to the contract is question and the lower Courts committed an error in holding that the contract was not within exemption. It will be useful at this stage to briefly refer to the relevant law bearing on the question. The Government of India in the exercise of powers conferred by Sub-rule (a) o
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