JUDGMENT

Iqbal Ahmad, J. - This is a defendant's appeal and arises out of a suit for recovery of a sum of Rs. 2,400 on account of the loss suffered by the plaintiff-respondent in certain forward contracts for the purchase of grain-pits entered into by the plaintiff firm on behalf of the defendant firm. The plaintiff firm carries on the business of commission agents in Ghaziabad and the defendant firm carries on business in Lucknow. The business of commission agency carried on by the plaintiff firm is admittedly on what is known as the pakka arhat system. The position of a pakka arhatia is analogous to that of a del credere agent who incurs only a secondary liability towards the principal, and whose legal position is partly that of an insurer and partly that of a surely for the parties with whom he deals to the extent of any default by reason of any insolvency or something equivalent: Champa Ram and Another Vs. Firm Tulshi Ram-Jai Lal, AIR 1927 All 617

2. The defendant firm entered into certain forward contracts for the purchase of grain-pits through the plaintiff firm and most of those contracts resulted in loss to the defendant. One of the forward contracts, that was entered into by the defendant for purchase of 5 grain-pits, formed the subject of the suit giving rise to the present appeal. This contract was entered into on November 14, 1929. The contract was for the purchase of approximately 3,000 maunds of wheat at the rate of Rs. 4-13-3 per maund, and the delivery was to be effected between January 15, and February 15 1930. After the purchase made by the defendant the price of wheat began to fall, and ultimately the plaintiff firm sold the grain-pits to certain persons on February 7, 1930, at the rate prevailing in the market, viz., at the rate of Rs. 3-13-6, and the present suit was for the recovery of the loss suffered by the plaintiff firm in consequence of the decline in the price of wheat since the date of the contract. A sum of about Rs. 750 belonging to the defendant was in the hands of the plaintiff and, in claiming damages, the plaintiff credited the defendant with the said amount.

3. It was stated in the plaint that in the Mandi at Ghaziabad delivery of grain-pits is made according to the wishes of the seller in the month in which the delivery has been stipulated to be made and that as soon as the parcha of the delivery of grain-pit is received, the commission agents have to make payment of the margin money. The plaintiff firm, therefore, alleged that it was bound to take delivery of the goods when the same was offered by the seller and, as the price of the wheat had fallen since the date of the contract, the plaintiff asked the defendant firm to arrange for money and deposit the same with the plaintiff so that delivery might be taken. The plaintiff's case further was that the defendant neither put sufficient funds in the hands of the plaintiff to cover the losses incurred in the transaction, nor did supply sufficient funds to enable the plaintiff to take delivery and, accordingly, the plaintiff had to square up {he transaction by selling the grain-pits to third persons on February 7, 1930.

4. The suit was resisted by the defendant firm on a variety of grounds, but as in the present appeal by the defendant only three points have been raised, it is unnecessary to mention the other contentions of the defendant. The defendant urged that the sale of the grain-pits by the plaintiff on February 7, 1930, was without the consent or permission of the defendant and the defendant was, therefore, not liable to answer the plaintiff's claim for damages. It was further contended by the defendant that, in any case, the plaintiff firm was not entitled to dispose of the grain-pits and square up the transaction, without giving the defendant sufficient and reasonable notice of its intention to do so and that in the present case such notice was not given by the plaintiff. Lastly, it was contended that in the absence of the proof of the