BHAGWANDAS PURSHOTTAMDAS KAPADIA Vs. CHUNILAL DAHYABHAI

JUDGEMENT

(1.) THIS is an application in revision against a decision of the full Court of the Small Cause Court, which reversed the decision of the trial Judge.

(2.) THE plaintiff is a broker and a member of the Native Share and Stock Brokers' Association. In November, 1937, the plaintiff purchased on behalf of the defendant fifty ordinary shares of the Tata Iron and Steel Company Limited, the price being approximately Rs. 350. Nothing turns on the exact price. THE purchase was made for December vaida. By December the shares had fallen heavily in value, and the primary obligation of the client was to take up and pay for the shares which he had bought through his broker, and the broker would have to carry the transaction through on the Exchange. If the client did not desire to pay for the shares, he could, of course, close the transaction by selling the shares at the December price and paying the difference to his broker. He, however, wanted to carry the shares over through a different broker and, therefore, entered into a havala transaction with another broker called Rajaballi.

(3.) THE Board of Directors did alter the price in respect of Rajaballi's transactions by reducing the price to Rs. 257, and the plaintiff was called upon to pay, and did pay through the Clearing House, another Rs. 500 representing the additional loss due to the reduction in the making-up price from Rs. 267 to Rs. 257, and it is for that Rs. 500 that he is suing in the present suit. THE trial Judge decreed the claim, but the full Court reversed his decision and dismissed the plaintiff's claim on the ground that the pay-out day was on December 15, and the Committee could not after that day alter the making-up price under Rule 297. I am not altogether satisfied that that is a correct view of the matter, because, according to the evidence of Mr. Shroff, the Chairman of the Association, I am inclined to think that there was a later pay-out day fixed some time before December 18 under Rule 324, though his evidence is not very clear on the subject. What he says in respect of the alteration of price is : As far as the banks were concerned we did not alter the price for December settlement. We paid at the rate of Rs. 267 to the banks. So far as Rajaballi's shares were concerned as he had failed we altered the rate to Rs. 257. We did not alter in the case of others as we had received full payment. Rate is altered if a member fails and all parties concerned with that member have to make readjustment at that altered rate. THE alteration has to be made before the pay-out day. I do not remember the pay-out day of December settlement. So that Mr. Shroff admits that the alteration must be made before the payout day, and that seems obvious. THE directors could hardly alter the rate in respect of a transaction which had been completed. But I rather gather from Mr. Shroff, though he does not remember the exact date, that the pay-out day in respect of Rajaballi's transactions was postponed. But a more serious difficulty in the way of the plaintiff seems to me to be that, although the Board of Directors may alter under exceptional circumstances the making-up. price, there is nothing in the rules to justify them in altering the making-up price in respect of one broker's transactions, and not in respect of the transactions of other brokers. THE making-up price is settled for the whole market, and if it is to be altered, it must be altered, in my opinion, for the whole market. If there is to be power to alter the making-up price in respect of a particular broker, that power must be conferred very clearly by the rules, and I can find no such power.