Case: Hemraj Keshavji Vs. Shah Haridas Jethabhai

1. The appellant instituted Suit No. 250 of 1950 in the Court of the Civil Judge (Senior Division), Junagadh for a decree for Rs. 72,693/11/- alleging that the appellant had a personal account with the respondent in respect of drafts, cheques, hundis and cash, and at the foot of that account Rs. 58,000/- as principal amount and Rs. 5,793/12/- as interest remained due and payable by the respondents, that beside the amount due on the said personal account an amount of Rs. 8,899/15/3 was due to him in respect of a transaction of sale of 1300 bags of groundnut sent by him between January 16 to January 28, 1950 and the price of gunny bags and groundnut oil-cakes delivered to the respondent. Appellant further alleged that forward contracts were prohibited with effect from November 19, 1949 by the Saurashtra Groundnut and Groundnut Products (Forward Contracts Prohibition) Order and that the said contracts being illegal the appellant was not subject to any liability arising from adjustment of credits and debits or differences in rates relating to forward contracts and the respondent was not entitled nor authorised to make credit and debit entries in the appellants account and that nothing was due by him in respect thereof. The respondent by his written statement contended that in the appellants personal account an amount of Rs. 1,58,000 stood initially credited but at the foot of the account only a sum of Rs. 18,000/- was due and this sum was credited in the current account of the appellant in the name of Hemraj Keshavji Oil Mills and Ginning Factory and therefore nothing was due in the personal account, that the transactions effected by the appellant through the commission agency of the respondent in groundnut seed of December-January (Samvat 2006) settlement did not contravene the order dated November 19, 1949 of the United States of Saurashtra and that the respondent has not committed any breach of the order, that all the transactions for the December-January settlement were in ready goods of specific quality and that there was a condition relating to giving and taking of delivery on fixed dates and the same were all effected at the direction of the appellant and that the appellant was legally responsible for all payments made in respect of those transactions by the respondent as the appellants pucca adatia. He then contended that in samvat year 2006 the appellant had sold 9000 bags of groundnut through the agency of the respondent and had purchased 2300 bags through him, that the appellant thereafter gave delivery of only 2000 bags of groundnut and did not deliver the balance and on that the account there resulted a loss of Rs. 9,221/7/9 which the appellant was bound to reimburse. The respondent admitted that the appellant had sent 1300 bags of groundnut but these bags were delivered towards the sale of 2000 bags of December-January settlement and the price thereof and of the balance of 700 bags was credited in the account of the appellant, and that the appellant was not entitled to decree for any amount except the amount found due at the foot of the account.2. The Trial Court decreed the claim by awarding Rs. 30,589/3/- and interest. Against the decree of the Trial Court the respondent as well as the appellant appealed to the High Court of Saurashtra. The appeals were transferred for trial under the States Reorganization Act to the High Court of Judicature of Bombay at Rajkot. The High Court allowed the appeal of the respondent and dismissed the appeal of the appellant. The appellant has, with certificate issued by the High Court, appealed to this Court against the decree passed by the High Court.

Court's reasoning:
12. On a careful review of the rule we are of the view that under the rules and regulations of the Veraval Merchants Association pursuant to which the contracts are made, the contracts were not transferable. The contracts were undoubtedly for delivery of groundnut at a future date, but they were contracts for specific quality for specific price, and for specific delivery under the rules of the Association under which they were made. The contracts were, for reasons already mentioned, also not transferable to third parties, and cold not be regarded as forward contracts within the meaning of the order. It is unnecessary therefore to consider whether the respondent who claimed to have acted as Pucca Adatia and therefore as Commission Agent was entitled to claim reimbursement for any amount alleged to have been paid by him on behalf of the appellant for losses suffered in the transactions in dispute.13. We are therefore of the view that the High Court was right in modifying the decree passed by the trial Court and in dismissing the appellants suit.