a s.c.R. SUPREl\lE COURT REPORTS

~ ' I 541

1962 k We therefore see no reason to interfere wor men. ·. t with the order of the tribunal in this respec ·

We therefore allow the appels .in par~ and dismiss them in part in the manner md1?ated m the course of this judgment.

In . the mrcumstances parties will bear their own costs m both the appeals.

Managtment of the

D. c. M. Chmiical

Works

Appeals allowed in part.

PRATAPRAY MANMOHANDAl::i ·

BOMBAY BULLION AS~OCIATION LTD.

(J. L. KAPUR, K. 0. DAS GUPTA and RAGHUBAR

DAYAL, JJ.)

Bullion Association-Member owing amount to creditor- Pailure to submit Kapli (voucher) for amount - Committee declaring him a defaulter-Legality of -Giving of opportunity to •ubmit Kapli if denied-Bombay Bullion . Asaociation Bye Laws 155 (4).

The appellant was a member of the Bombay Bullion Association Ltd.

He entered into certain forward transactions with certain other persons.

According to the bye-laws of the Association the appellant had to submit a balance sheet and to give kaplis (vouchers) for the amounts due from him, but the appellant did not include the amounts due from him in the balance sheet nor did he give the kaplis on the ground that these transactions were fictitious and illegal.

On the settlement day the Clearance House committee called upon the appellant to appear before them.

Before the Committee the appellant took the stand that they had no jurisdiction to proceed with the matter as he was claiming arbitration. Th committee passed a resolution declaring him a defaultere The: appellant filed a suit challenging the resolution. inter alia. on the ground that the Committee, after its decision, was bound, under bye-law 155 (4) to give him an opportunity to give the kaplis before it could declare him a defaulter.

The bye-law provided:-

Tluir W •rkm1n

Wonohoo J,

March 2.

196t

PrJtdpr_, iy

.l anmohond as v.

Bomb<!Y Bullion

AuociotiOA lJd.

Kop., J.

542 SUPREME COUB.T REPORTS (1962] SUPP.

"Jf any member docs not submit a kapli in the prescribed form in respect of the amount found cla1mable from him to hi; party (creditor), the Clearing Ho"se Commi!lee shall call him and demand an explanatio; i from him and can there after, if such a kapli is not submitted the Clearing House Committee can declare him a defaulter."

lltld, that the resolution declaring the appellant a defaulter was , alidly passed.

Bye-la,. 155 (4) provides that if a member did not submit a kapli found clai.nable from him, the Committee shall cal\ him and demand an explanation from him and can thereafter if such kapfi is not submitted declare him a defaulter.

Under this byelaw first the explanation is rall('d and after it is given and some decision is arrived at 1 the person complained against can file the kapl-i, but no specific period is prescribed for doing so nor is the Com1ni1trc required to call him for this purpose. rhe period of titne depends upon the circumstances in each C"\se.

In the present case since the appellant had made it clear before the Committee that he ,, as not going to make the payment, the giviug of time was wholly unnecessary.

It is not a requirement of the bye-law that the clearing House Committee should call the person defaulting by telephone or by letter or by giving him notice.

Crv11. .APP}~LLATE Jmus1>ICTION : Civil Appeal No. 437/60.

Appeal by special le&ve from the and decree dated July 12, 1957, of the :sigh Court in Appeal No. 71 of 1956.

judgment Bombay

C. K. Da)lhtary, Soliciwr General of India, S. G. Patwardhan and Naunit Lal, for the appellant.

A. V. Vi.rwanatha Sa.tri, N. P. NatJiwani and K. L. flat/ti, for respondent No. I.

1962. ;\farch 2. The Judgment of the Court was delivered by

KAPUR. J.-This is an appeal against the judgment and decree of the High Court of Bombay con firming the decree passed in its original juris diction.

The appPllant. who waA the plaintiff in the suit, was trading under the name and style of

Messrs.

Pratapray Manmohandas as a bnllion merchant and trader in Bombay. He was a member of the Bombay Bullion Association Ltd., which was defen<:lant No. 1 in the suit and is respondent No. l in the appeal.

Respondents 2 to 7 were defendants 2 to 7 and at all material times were members of the Clearing House Committee appointed under the Bye-laws of the lst respondent. The appellant had also added as parties in the suit defendants 8 to 12 but they are no longer parties as their names were struck off in the trial court.

The appellant entered into certain forward transactions with defendants 8 to 12 during the period from May 30, 1949 to June 30, l94!l.

On June 13, 1949, the Hawala rate of these transactions was fixed and on June 14, 1949, the appellant "admitted a clearance sheet under bye-law 131 of the bye-laws of lst respondent in which outstanding transactions for the Valan day" (settlement) wern entered. They included the transactions which had been entered into with defendants 8 to 12.

All these transactions were Rajued (tallied) on the following day. According to the bye-laws of the respondent Association the balance sheet had to be submitted and money Kiplis (vouchers) had to be given. In this balance sheet which was submitted the appellant did not include the amounts which were due to defendants Nos. 8 to 1 :l or the transactions he had entered into on the ground that he disputed the transactions entered into with those defendants as they were fictitious and illega.L On June 21, 194!J, which was the .

Valan day (settlement day). the appellant claimed reference to arbitration in regard to those items under byelaw 38. On that day defendants 8 to 12 oomplained to the respondent Association that the appellant had not issued the necessary kapli8 (vouchers). At 3 Pm. on the same day the appellant received a notice from the Clearing House

Praeapray Manmohanfias ...

Bombay Bullion Association Ltd.

Kapur J.

Prtapray ;\l anmollandtu ..

BombC!)'.Bulli.n Aasociotion [, td

Kapur J.

Committee, respondents 2 to 7 calling upon him to appear before them. The appellant appeared with his solicitor and counsel and his cont<:ntion before the Clea.ring House Committee was that it had no jurisdiction to p1 occcd with the ma.ttor because he was claiming arbitru.tion and tho dispute betwe,<n him and defendants 8 to 12 had to be settled by the arbitrators. The Committee heard the explanation and passed a. resolution under bye

law 155 (4) declaring the plaintiff a defaulter and it io this resolution which is tho matter in controversy between the parties.

On Ju11e 20, 1952, the appellant brought a suit for declaration that the resolution in dibpute dated .June :!l, 1949, was bad in law, inopnrative, ultra vire,, and not binning on the appellant and also for damages against the respondents.

He also prayed for reinstatement as a member of the rcsponde11t Association.

The pica. tak<•n by the respondent was that tho transactions in dispute were not phatak ( fictitiou~ and i11opera.tive ); that at the meeting on June :! I, 1919. defendants 8 to 12 had complained that amounts of monev had become payable to them from th<i appellat; that at the said meeting the a.ppnlla.nt ha.d made it clear that he would not give any lcapliB (voucher~) and had therefore defaulted and they were therefore entitloo to declare him defaulter under bye law 155 (4) of the respondent Association.

The suit was triod by Tcndolkar .J. Several issues were raiBed but tho appellant led no evidence and respondents I to 8 examined Mr. Trikamdas Dwarkadas a solicitor of Bombay, who was pre- Bent at the meeting of the Clearing House Committee on June 21, 1949.

On June 6, l!.156, the suit was dismissed and a.n appeal was taken to the Appeal Court which was also dismissed and the appellant ha.B come in appeal by Special Leave.

~I ' !

The trial court had held that the plea taken by the appellant that after he and his counsel were heard they were made to. leave the meeting and the hearing proceeded in their absence was not established; that for bye-law 38 relating to arbitration becoming operative, it was necessary to have a genuine dispute between the parties and mere pretence of a dispute in order to evade or postpone the liability on the Valan Day is not sufficient, that where the defaulter appears before the Clearing House Committee and denies liability on some flimsy pretexts and thereby makes it abundantly plain that he does not wish to give a kapli giving him an opportunity for giving a kapli was a mere formality the failure to observe which does not lead to the conclusion that the decision of the Clearing House Committee is void.

Considering the evidence of Mr.

Trikamdas Dwarkadas it was clear that the appellant had no intention of admitting the liability or dischargmg it. He also held:

"Moreover, it is not the plaintiff's case that if time had been given he would have given the kaplis and therefore assuming that it is necessary under bye-law 155 (4)-a point which I did not wish to decide in this casein the present case to give such. time would have been perfectly futile and therefore failure to give such time does not invalidate the actioµ which was ta.ken. by the Clearing House Committee".

The Appeal Court concurred in dismissing the appeal. It held that on a proper interpretation of bye-law 155(4) it was necessary for the Cleltr ing House Committee to give an opportunity to the appellant to submit his kaplis because that was the meaning of the words "and can thereafter, if such. a ka pli is, not submitted, the Clearing House Committee can declare him a defaulter". In other

P., atopray M anmohandas

Bombay Bullion Associalion Ltd

KapurJ.

196~

Pratapry M .JnrtUJhat1d11s

Bombay Bu! lion Ars"iation Ltd.

KapurJ.

~46 SUPREME COURT REPORTS [1962) SuPP.

words the Committee had to ghe the member a Zo:us penitmtiae and that after giving his explanation a member could still rnbmit a kapli and escape the penalty of being a defaulter. From the conduct of the appellant. and his counsel however it appeared quite clearly t'hat having challenged the jurisdiction of the CommittPe and having told them that th"Y could not proceed in the absence of reference to arbitration the appcllent had no intention of giving the kaplis.

Two questions have been raised in this appeul; (I) the question of interpretation and ( 2 J that no opportunity was given after the decision was made against the appellant to give the k.aplw. The submission of the respondents on th<' other hand

was that the appellant had deliberately made a false allegation that after he made a submiEsion he was asked to leave. This was to buttersay his plea that the matter was decided in his a'bsence.

The court below have found that whether an opportunity had be1n given to the appellant or not, he had no inntion of giving his kaplis.

Issuo No. 5 was specific on this point. That issue was "whether the appellant and biB legal adviHers volun ta.rily left the meeting after indicating that the appellant was not going to give the kaplis'' and that was the principal question which has been raised throughout the course of these proceedings.

Even in the statement of the appellant's ca.se he has put in the fordront of the question for decision the question whether the appellant left the meeting dated June 21, 1949, voluntarily after indicating his unwillingness to submit the kapli,,, The finding of both the courts on this question wa.s

against the appellant. In our opinion that is fully justified hy the evidt•nce on the record.

According to the evidence dayH were fixed by the Association (or the settlement of all transactions which bad been entered into for that period.

,' =.\ .. ,,!

3 s.c.:R..

SUPREME UOURT REPORTS 547

According to the ohart of Born bay Bullion exchange settlement had to be made, i. e. the monies had to be paid by 3-30 p.m. on June 21, 1949. The appellant made it clear, however, that he was not going to make the payment in accordance with the requirements of the Valan day; on the other hand he stated that he will pay after the arbitration award was made. The evidence produced by the respondents makes it abundantly clear that the contention of the appellant was that no action should be taken unless the arbitration which he had asked for had been disposed of and after saying that he went away. This is clear from the Attendance Book of Mr. Trikamdas Dwarkadas solicitor.

The respondent Association was therefore justified in taking the action that it did. The minutes of the proceedings of the Clearing House Committee dated June 21, 1949, also show that the appellant and his legal advisers stated that they wanted to go to arbitration and that no action should be taken against them until the arbitrators had given their award. It is stated therein that the appellant admitted that the transactions which his solicitor said were fictitious were entered in his books and they had been rajued (tallied) and that he had shown the transaction in his •'olias" (clearance sheet). All this indicated that the contentions raised by the appellant were false and had been raised in order to gain time. In these circumstances it cannot be said that the respondent Committee acted without giving due consideration to the facts of the case or in any precipitate manner. .

Bye-law 155(4) reads:

"If any member does not submit a kapli in the prescribed form in respect of the amot found claimab!e from him to his party (creditor), the C!earmg House Committee shall call him and demand an explanation

rom him ad can thereater, if such a kapli 1s not submitted the Clearmg House Commit tee can declare him a. defaulter".

Prata; ray M anmohandas

Bombay Bullion

AssocitJlion Ltd.

Kaput" J.

196!

Pratopro1 .ll anmohdndaa ..

BollWay Bui/inn .A rsotialion LlJ.

Kopu> J.

That clause requires that in the event of default of submission of a kapli the Clearing House Committee shall call the dofa.ultor and demand an explanation and thereafter, if such kapli is not submitted, doclare him a defaulter. It was contended that the meaning of this is that first the C!earring House Committeo is to demand au explanation and after such an explanation is given, time has to be given for the purpose of enabling the person not giving the kapli to submit his kaplis. In our opinion the intorpretation of the learned Chief Justice of tho High Court is in consonance with the language used. i. e. first the explanatian is called and aft<ir explanation is given and some decision is arrived at in regard to the validity of the reasons for not giving the kaplis then the person complained against can file the kapli but it does not mean that the time to be given has to be one or half an hour or any other specific period.

As we have said above the appellant had made it clear that he was not going to make the

payment and had just left after making his submissions. It is not a requirement of the bye-law that the Clearing House Committee should r.a.11 the person defaulting either by telephone or by letter or by giving him a notice and considering the promptitude with which the payments have to be made and the dates fixed for the finishing of all the transactions it will he unreasonable to hold that such is the procedure oontemplated by cl.(4) of bye-law 155. The period of time, must, in oach oase, depend upon the circumstances, but where it is made absolutely clear that no payment is going to be made tho giving of time is wholly without utility.

In our view tho High Court has given a correct decision and we therefore dismiBS this appeal with costs.

Appeal dismi.se, d.