N. H. BHAGWATI - (1.) THE following Judgment of the court was delivered by
(2.) THIS appeal with a certificate of fitness is directed against the judgment and decree passed by the High court,of Judicature at Bombay in appeal from its ordinary Original Civil Jurisdiction confirming, though on different grounds, the judgment and decree passed by a single Judge of that High court in Suit No. 468 of 1951 instituted by the appellants (Original Plaintiffs) to recover from the respondents (Original Defendants) a sum of Rs. 1,80,099-8-0 with interest and costs. Since the year 1932 the first appellant has been a member of the East India Cotton Association Ltd., (hereinafter referred to as ` the Association ` ) as the sole 'proprietor of the firm of Messrs. Narrondass Manordass There in after referred to as `the member firm`). The first appellant along with other partners carried on business in partnership in Bombay inter alia as Cotton Merchants and Commission Agents in the name and style of Messrs. Narrondass Manordass, the 2nd appellant (hereinafter referred to as ` the partnership firm `). The respondents are a partnership firm and also a member of the Association. Between 23/09/1947, and 10/12/1947, the member firm sold to the respondents 2,300 bales of Broach Vijay Fine 3/4` Navsari and/or Bardoli 7/8` Cotton for March/April 1948 Delivery. Out of these 2,300 bales, 1,100 bales were disposed of by means of ` Havalas ` and in respect of the remaining 1,200 bales, there were crosscontracts. In the result when the time for ` Delivery ` arrived, sales in respect of 700 bales remained outstanding and the member firm was liable to give delivery of 700 bales to the respondents. As however, the member firm failed to give delivery of the said 700 bales to the respondents, under the relevant by-laws of the Association, the respondents ` Invoiced Back ` these 700 bales to the member firm on 3/05/1948, and as a result of this ` Invoicing Back ` a sum of Rs. 1,07,530.80 became due and payable by the member firm to the respondents and with regard to the transactions of all the 2,300 bales taken together an aggregate sum of Rs. 1,79,749.80 became due and payable by the member firm to the respondents. In respect of this sum of Rs. 1,79,749.80, the respondents sent to the member firm eight separate ` Debit Notes ` in respect of varying amounts and finally a consolidated debit note for Rs. 1,79,749.80. It appears that the contract notes in respect of these transactions had been signed by one Ramanlal Nagindas who had been employed as a salesman in the Ready Cotton Department of the partnership firm. The appellants contended that the said Ramanlal Nagindas had no authority to enter into the said transactions or to sign contract notes in respect thereof on behalf of the appellants and also that the said contracts were not in accordance with the by-laws of the Association and they therefore denied their liability in respect of the said transactions. The partnership firm, however, as the beneficiary under the said contracts decided to pay the amounts claimed by the respondents without prejudice to the rights and contentions of both the parties. On 7/05/1948, the said sum of Rs. 1,79,748.80 was paid by the partnership firm and was received by the respondents in terms of the letter addressed by the respondents on the said date:`The payment is made by you and accepted by us without prejudice to the rights and contentions of both the parties in respect thereof. ` A further sum of Rs. 350.00 being the amount of penalty for the alleged failure to tender the aforesaid 700 bales of the said contracts of Broach/Vijay March/April 1948 Delivery, was also paid by the partnership firm to the respondents on 6/06/1948, without prejudice to their aforesaid contentions. The said Ramanlal Nagindas had entered into similar transactions with several other merchants and some of them claimed arbitration under by-law 38-A of the Association. Petitions were thereupon filed by the member firm in the High court at Bombay being Petitions Nos. A/51, A/52, A/55 and A/56 of 1949 under s. 33 of the Indian Arbitration Act inter alia for a declaration that there existed no valid and enforceable arbitration agreement between the parties. Mr. Justice Shah delivered judgment in the said petitions on 20/08/1950, holding inter alia that the said contracts were void as being not in accordance with the by laws of the Association and allowed those petitions. The respondents to the petitions thereupon filed petitions under Art. 136 of the Constitution for special leave to appeal to this court against the said judgment of Mr. Justice Shah. These petitions were, however, dismissed by this court on or about 6/04/1951.
(3.) THE appellants thereafter by their attorney's letter dated 2/05/1951, called upon the respondents to return the said sum of I-Is. 1,80,099-8-0 (being the aggregate of the said two sums of Rs. 1,79,749.80 and Rs. 350.00.) with interest thereon at the rate of 6 per cent. per annum. THE respondents failed and neglected to pay to the appellants the said sum or any part thereof with the result that on 7/05/1951, the appellants filed the suit against the respondents for repayment to them of the said sum with interest and costs. In the plaint as filed the appellants averred that the said contracts were void under the Bombay Cotton Contracts Act, 1932, as being not in accordance with the by-laws of the Association inter alia in the following respects: (1) The contract notes produced by the respondents omitted to state the difference of Rs......... above or below the settlement rate of hedge contracts for the purpose of periodical settlements as required by by-laws 139 and 141; and (2) no provision was made in any of the aforesaid contract notes with regard to the measurement of bales as required by the official form for delivery contracts prescribed in bylaw 80. The respondents in their written statement contended that there was no by-law which required any person to agree upon any difference above or below the settlement rate of hedge contracts for the purpose of periodical settlements and to state the same. They further contended that the relative provisions contained in the official contract form had become obsolete as at all material times therewere no hedge contracts bearing different numbers and in practice the said contracts were not put through periodical settlements. They also contended that at all material times there was no by law which required any person to agree upon any specific measurements in respect of the bales agreed to be purchased inasmuch as the operation of by-law 101 in regard thereto had been suspended by the Board since 30/11/1942. ;