JUDGMENT

Bhide, J. - The plaintiffs, who were commission agents, entered into certain transactions for sale of cotton bales on the instructions of the defendants as follows:

(1) 25 bales to Charat Singh-Attar Singh at Rs. 35-6-0 per maund;

(2) 25 bales to Dayal Singh-Chamba Singh at Rs. 35-6-0 per maund; and

(3) 50 bales to Bashi Lal-Tirath Das at Rs. 35-7-0 per maund.

2. The transactions were entered into in June and July 1917, but delivery was to be made in January 1918. The defendants failed to deliver the bales on the due date and as a result the plaintiffs had to pay to third parties the loss suffered by them, the market rate on the due date being much higher than the rate at which the sales had been effected. The plaintiffs claimed Rs. 5,028-8-3 on account of the amount so paid.

3. The defendants admitted having instructed the plaintiffs to enter into sale transactions as alleged but pleaded that the transactions were badni and denied that the plaintiffs had actually suffered any loss. The learned Senior Subordinate Judge, who tried the suit, held that the transactions were badni, but that this made no difference as the defendants were liable to recompense the plaintiffs for the loss incurred by them as their agents. Finding Rs. 3,378-6-0 as the losses actually so suffered, he passed a decree for that amount in favour of the plaintiffs. From this decree the defendants have appealed.

4. The main points urges on behalf of the appellants were the following:

(1) The plaintiffs had entered into transactions of sales and purchases of cotton on behalf of a number of persons and settlement was made by setting off the total transactions of sales and purchases against each other and adjusting the balance, if any. It has not been shown that any loss was actually incurred in respect of the particular transactions which were entered into on behalf of the defendants and hence the plaintiffs' suit must fail.

(2) The losses, if any, were not actually paid or adjusted before the institution of the present suit. The transactions being of a badni nature, the plaintiffs had incurred no liability enforceable in law. According to the principles laid down in Behari Lal v. Parbhu Lal [1908] 79 P.R.1908, the plaintiffs had no cause of action.

(3) It has not been proved that the market rate of cotton on the due date was Rs. 45-11-0 per maund and hence the decree of the lower Court passed at this rate cannot, at any rate, be justified.

5. The first contention appears to me to be fallacious. It is clear from the evidence that, owing to the non-delivery of the cotton on the due date, the plaintiffs had become liable to pay to third parties losses on account of certain principals who had sold cotton, and had to realise profits from the same parties on account of certain other principals who had purchased the cotton. It was obviously convenient in the circumstances from a business point of view to set off the losses against the profits on the purchases and effect a settlement with the third parties. This is all that the plaintiffs are alleged to have done. As pointed out in Behari Lal v. Parbhu Lal [1908] 79 P.R.1908, such a settlement does not in any way differ in substance from actual payment and repayment in cash. The sales made on behalf of the defendants along with others are said to have been taken into account in making the settlement and this seems to be tantamount to saying that the actual losses incurred on their behalf were adjusted or paid up in the settlement.

6. The third contention also appears to have no force. The defendant Bhagwan Das (P.W. 3) has himself admitted that the market rate was higher on the due date than the rates at which the sales had been effected and that the plaintiffs therefore suffered losses. He gives the market rate at Rs. 40 or Rs. 41 but no reliable evidence has been given in support of this figure. The plaintiffs' witnesses on the other hand including Lala Girdhari Lal, a member of the Karachi Merchants' Association, appa