BODDU SEETHARAMASWAMI AND ORS Vs. BHAGAVATHI OIL COMPANY

JUDGEMENT

(1.) The defendants are the appellants. The suit which has given rise to this appeal was instituted by the respondent to recover damages in a sum of Rs. 7,392 for breach of the contract to sell 2,800 tins of ground-nut oil. The plaintiff is a firm of merchants with their registered office at Calcutta, but they have a branch also at Vizianagararn. The defendants are brothers being members of an undivided Hindu family and carry on business at Vizianagaram under the name and style of Boddu Pydanna and Sons. They deal in ground-nut oil and other commodities. On the 9th November, 1944, the defendants agreed to sell to the plaintiff 2,800 tins of ground-nut oil at Rs. 148 per candy, the delivery of goods to continue from 8th December, 1944. The plaintiff's case was that they had applied for the delivery of the goods on the 8th December, 1944, but the defendants wanted more time, and ultimately as the market was rising the defendants with a view to escape from their liability under the contract alleged in their reply notice that the contract was cancelled at the instance of the plaintiff. The plaintiff claimed in the suit the difference in the market rate and the price stipulated in the contract, and it is on that basis he arrived at the damages claimed by him. There were various defences to the suit, the primary question of fact being whether the plaintiff was in default or the defendants. There was also a legal objection raised by the defendants based upon the Vegetable Oils and Oil Cakes (Forward Contracts Prohibition). Order, 1944. According to the contention of the defendants the suit contract was invalid and unenforceable by reason of the provisions of the said Order. The learned Subordinate Judge disagreed with the contentions put forward on behalf of the defendants and granted a decree to the plaintiff for a sum of Rs. 2,548 together with interest thereon at 6 per cent, per annum from the date of the plaint till payment. He arrived at this sum by reducing the claim for damages, as, according to him, the market rate was lower than what was claimed by the plaintiff.

(2.) In this appeal by the defendants the sole point that arises for consideration is whether in view of the Vegetable Oils and Oil Cakes (Forward Contracts Prohibition) Order, 1944, the contract is enforceable. The Order in question was promulgated by the Government of India on the 8th January, 1944, and came into force immediately. Clause 3 of the Order prohibited a person from entering into any forward contract in respect of any article to which the Order applied, and Clause 4 laid down that notwithstanding any custom, usage or practice of the trade or the terms of any contract or any regulation of an Association relating to any contract, the contracts already entered into should be settled in the manner provided in Sub-clauses (1), (2) and (3) thereto. They applied only to forward contracts entered into prior to the date of the Order. Under Clause 5 power was given to the Central Government by notification in the Official Gazette to exclude from the operation of the Order any contract or class of contracts. On the 12th January, 1944, the Central Government in the exercise of the powers conferred upon them under Clause 5 of the Order excluded from the provisions of the Order certain classes of contracts. The exclusion read as follows :Forward contracts for specific qualities or types of any article to which the said Order applies, and for specific delivery at a specified price, delivery orders, railway receipts or bills of lading against which contracts are not transferable to third parties.

(3.) While the defendants contend that the forward contract in suit was unenforceable by virtue of the provisions of the Order, the plaintiff claims that he is within the exclusion set out above, and that therefore the contract is enforceable.