A forward contract is not a wager contract if the parties have no intention to speculate or gamble on differences and the contract is not transferable to third parties.

JUDGMENT :- This Revision is filed against the decree and judgment in N.T.A. No. 28 of 1952 confirming the decree and judgment of the trial Judge in S.C.S. No. 6063 of 1951, on the file of the Small Cause Court, Madras.

2. The facts are : The parties to the suit Virjee Daya and Co. and Ramakrishna Rice and Oil Mills, Arakandanallur, entered into a contract Ex. P-1 dated 8-3-1951 for sale by the defendants to the plaintiffs of 50 candies of groundnut oil at Rs. 325/- per candy. Two of the material terms of the contract were (a) that the plaintiffs have to despatch to the defendants good, sound and well-cleaned drums to enable the latter to fill them with oil and sell them to the plaintiffs; and (b) that the delivery of the oil was to be effected on or before 31-8-1951.

The oil contracted for was not supplied each blaming the other for creating circumstances making it impossible the performance of the contract. It is stated that the plaintiffs had entered into a contract with a third party for the supply of the oil to be purchased from the defendants and the latter had to be compensated for non-performance of the undertaking by the plaintiffs.

It is in these circumstances that the present suit had been filed by the plaintiffs claiming compensation for Rs. 1900, constituting the difference between the market rate of the oil on the relevant date and the contract rate.

3. The defendants raised three pleas viz., that the plaintiffs failed to supply well cleaned drums as agreed to in the contract and hence the defendants were unable to perform the same secondly, the defendants dispute the correctness of the amount claimed and characterised it as excessive and thirdly, that no compensation as damages is due from them as the contract in question was one prohibited by law.

Both the Courts below negatived the first two contentions but upheld the third contention and hence this Revision Petition by the defeated plaintiffs.

4. The Vegetable Oils and Oilcakes (Forward Contracts Prohibition) Order, 1944, provides by Cl. 3 as follows :

"No person shall, after the specified date for any article to which this Order applies, enter into any forward contract in that article." By Cl. 2, sub-cl. (iii) of the said Order "forward contract" has been defined as a contract for the delivery at some future date of any article to which this Order applies. By Cl. 5 of the said Order, it is provided as follows :

"The Central Government may, by Notification in the Official Gazette, exclude any contract or class of contracts from the provisions of this Order".

By a Notification, Government of India, Department of India, Department of Commerce, No. P. and S.C. 1 (A)/44, dated 8-1-1944 (Government of India Gazette, Part I, p. 32), it is provided as follows :

"In exercise of the powers conferred by Cl. 5 of the Vegetable Oils and Oilcakes (Forward Contracts Prohibition) Order, 1944, the Central Government is pleased to exclude the following class of contracts from the provisions of the said Order, namely :

Forward contracts for specific qualities or types of any article to which the said Order applies and for specific delivery at a specified price. Delivery Orders, Railway Receipts or Bills of Lading against which contracts are not transferable to third parties."

5. A forward contract is an executory contract consisting of two reciprocal promises between two parties viz., the buyer and the seller. In substance, it is an agreement to sell or buy by one person to another to be performed on a subsequent date fixed by the parties. Delivery and payment are concurrent conditions. The contract is a contract of goods by description for the purchase or sale of a fixed number or quantity say 100 drums of oil, etc.

It is presumed that on the day of performance the buyer shall be ready and willing to pay and shall apply for delivery and the seller shall procure the goods of the contract description and quantity and deliver them on receiving payment. It is presumed that the prim