The main legal point established in the judgment is that the plaintiffs, as dubashes, did not have the right to maintain the suit against the 2nd defendant company as there was no privity of contract between them. Additionally, the court found that the 1st defendant company wrongfully failed to fix the exchange, entitling the 2nd defendant company to be reimbursed for the loss caused by the failure to fix up the exchange in time.

Kumaraswami Sastri, J.

1. This appeal arises out of a suit filed by the respondents who were the dubashes of the 1st defendant Company for the recovery of Rs. 73,117-5-7 from the 1st defendant or in the alternative to direct the 2nd defendant to pay either the plaintiffs or the 1st defendant the amount due by them.

2. The case for the plaintiffs is that by a dubash agreement dated the 21st of November 1912 entered into between them and the 1st defendant they were appointed banians or dubashes of the 1st defendant to push certain branches of the business of the 1st defendant; that the said agreement inter alia provided that the plaintiffs were to guarantee the due completion of all contracts entered into by merchants with the 1st defendant and covered by the agreement in consideration of the plaintiffs receiving certain rates of commission ; that the plaintiffs deposited a sum of Rs. 3,00,000 for the due performance by them of the terms of their agreement with the 1st defendant: that a sum of Rs. 1,25,000 is now in the hands of the 1st defendant, that during the subsistence of the said agreement the 2nd defendant entered into a contract in writing with the 1st defendant on the 13th of February 1920, by which the 2nd defendant agreed to purchase from the 1st defendant 25 tons of yellow metal sheets at the rate mentioned in the contract; that the plaintiffs as the dubashes of the 1st defendant guaranteed the due performance of the said contract by the 2nd defendant according to its terms; that under the contract between the 1st and 2nd defendants it was provided that cash must be paid against documents within 60 days of the arrival of the steamer and the 2nd defendant was to be entitled to a rebate of interest at 6 per cent. for moneys paid before maturity; that the rate of exchange for payment at Madras was to be fixed on the 2nd defendants account on or before the date when payment by the 1st defendant Company to the shippers fell due subject to the Banks in Madras operating for the period; that on the 14th of February 1920, the 2nd defendant asked the 1st defendant in writing to fix the exchange at once and the 1st defendant agreed to do so; that the 1st defendant failed to fix the exchange and the 2nd defendant again asked the 1st defendant, on the 3rd of May 1920, to fix the exchange immediately without any reference to him which also the 1st defendant agreed to do ; that the 1st defendant Company, however, failed to fix the exchange; that the 2nd defendant by his letter of the 20th of October 1920, cancelled the contract owing to the 1st defendants breach, but agreed to accept the goods by paying at the rate of exchange current during the 1st week of May 1920, if delivery was offered on those terms; and that on the 29th of March 1921, the 1st defendant told the 2nd defendant that they had fixed the exchange at 1sh. 3-3/4d., which was alleged to be the current rate on that date and required the 2nd defendant to pay a sum of Rs. 73,117-5-7. The plaintiffs state that under the circumstances mentioned above, the 1st defendant was bound to fix the rate of exchange at least in May 1920, as required by the 2nd defendant and that the 1st defendant not having done so, the 2nd defendant was not bound to pay at a higher rate of exchange than what was current on the 4th of May 1920, or accept the goods. They state that the 1st defendant was under an obligation to communicate to them the 2nd defendants application and fix the rate of exchange and that if the 1st defendant had done so and told the plaintiffs of their inability, the plaintiffs would have taken steps to settle the exchange and that the 1st defendant wrongly debited to the deposit account of the plaintiffs with the 1st defendants and deducted therefrom a sum of Rs. 73,117-5-7 alleged to be due by the 2nd defendant to the 1st defendant in respect of the contract made by the 2nd defendant and that the 1st defendant is bound to pay the plaintiffs that sum with interest a