SITA RAM JHUNJHUNWALLA Vs. BOMBAY BULLION ASSOCIATION LIMITED

JUDGEMENT

(1.) This appeal, by special leave, raises for consideration a very short point regarding the proper construction of Bye-law 137B of the Bombay Bullion Association Ltd. which will hereafter be referred to as the 'Association' and in particular whether on the facts established in this case the requirement of the said bye-law has been satisfied.

(2.) The appellant is a member of the first respondent-the Association and carries on business as a bullion merchant. By a notification dated March 14, 1949, the Government of Bombay in exercise of the powers conferred by S. 6 of the Bombay Forward Contracts Control Act, 1947 (Bombay Act LXIV of 1947), sanctioned the bye-laws framed by the Association. Under the said Act the members of the Association were permitted to carry on forward dealings in bullion subject to the said bye-laws. The appeal is concerned with the regularity of a purchase effected by the Association purporting to act under its bye-laws, of a quantity of silver at the risk of the appellant, on the footing that he had defaulted in performing his contract as a seller on February 3, 1953 which was a settlement day. The Association made this purchase treating the appellant as a defaulter and claimed from him the difference which amounted to Rs. 1,37,880-120. The appellant paid this sum when demanded on the 5th February under protest but on the next day he filed the suit out of which the present appeal arises against the Association and its Directors for its refund on the ground that the purchase at his risk by the Association was invalid as contrary to the bye-laws and was, therefore, not binding on him. The appellant did not dispute that he defaulted in performing his obligation to tender the bullion of which he was the forward seller on the settlement day as he was bound to do under the relevant bye-laws but the point on which he attacked the purchase was that no purchase could be made unless the forward purchasers for that settlement had fulfilled the terms of their obligations under the bye-laws and that as they had failed to do so, the Association had no right to effect a purchase on behalf and for the benefit of such defaulting purchasers.

(3.) The suit was tried before Coyajee, J., on the Original Side of the Bombay High Court. The learned Judge recorded a finding that there had been no default on the part of the purchasers and he, therefore, dismissed the suit. An appeal preferred by the appellant to a Division Bench also failed and it is the correctness of this decision of the High Court that is challenged in this appeal.