B PANDURANGAIAH CHETTY Vs. ULCHALA ILLURI HANUMANTHAIAH

JUDGEMENT

(1.) The two appeals arise out of O.S. Nos. 9 and 35 of 1954 on the file of the Subordinate Judge's Court, Kurnool. The suits were instituted by Illuri Hanumanthaiah Chetty. The defendant in O.S. No. 9 of 1954 is B. Pindurangaiah Chetty, examined as D.W. 1 while the defendant in O.S. No. 35 of 1954 is Chakka Narasimhaiah Chetty, examined as D.W. 2. The suit O.S. No. 9 of 1954 was instituted by the plaintiff for recovery of a sum of Rs. 4,000 with interest at 12 per cent, per annum on foot of a promissory note marked as Exhibit A-1, executed by Pandurangaiah Chetty on 3rd January, 1951. O.S. No. 35 of 1954 was filed for recovery of damages of Rs. 3,816 with interest thereon at 12 per cent, per annum on the basis of two agreements entered into by the defendant Chakka Narasimhaiah Chetty on 23rd November, 1950 and 6th December, 1950 respectively, and maked as Exhibits A-2 and A-3. According to the plaintiff, he lent a sum of Rs. 4,000 to Pandurangaiah Chetty on 3rd January, 1951 and he was entitled to recover that sum with interest on the basis of the promissory note marked as Exhibit A-1. In the other suit, he contended that as the defendant pleaded inability to perform the contract, the contract was settled at Rs. 219 per candy, and that he was entitled to recover the sum of Rs. 3, 816 by way of damages with interest thereon. The defence in both the suits was common. The defendants contended that the contracts entered into between the parties under Exhibits A-2 and A-3 were wagering contracts and were not enforceable under section 30 of the Indian Contract Act. It was further contended that the contracts were governed by the provisions of the Oilseeds (Forward Contract Prohibition) Order, 1943, and were therefore not liable to be enforced. 'The market rate of Rs. 219 per candy as claimed by the plaintiff as on the date of the performance, i.e., 31st January, 1951 was also disputed. The defendant in O.S. No. 35 of 1954 Chakka Narasimhaiah Chetty pleaded that both the contracts were entered into on behalf of the partnership business carried on by B. Pandurangaiah Chetty and' Chakka Narasimhaiah Chetty. The defendant in O.S. No. 9 of 1954 contended that no cash consideration was paid by the plaintiff on 3rd January, 1951 and that the amount for which the promissory note was executed was the amount due as a result of the settlement of differences based on the clearing system prevallent in Kurnool district, under the two contracts Exhibits A-2 and A-3- It was contended that as the contracts were wagering contracts, the promissory note was unenforceable. The learned Subordinate Judge tried the two suits together and recorded evidence in O.S. No. 9 of 1954. He found that the plaintiff's case that the promissory note was supported by cash consideration was not true. He came to the conclusion that the contracts were not wagering contracts and that therefore the promissory note executed in respect of the differences as per the clearance system in vogue in Kurnool district -was validly supported by consideration. In the suit for damages he held that the contracts were enforceable and that the plaintiff was entitled to recover damages on the basis that the market rate prevailing on 31st January, 1951 was Rs. 219 per candy. He rejected the contention based on the provisions of the Oilseeds (Forward Contract Prohibition) Order, 1943. In the result, he decreed the two suits. In the suit for damages, however, he disallowed interest which was claimed by the plaintiff. The defendants in the two suits have preferred the appeals as against both the decrees.

(2.) Sri N. Ramamohan Rao, the learned Advocate for the appellants in both the appeals raised the following contentions : (1) that the two contracts evidenced by Exhibits A-2 and A-3 are wagering contracts and are consequently unenforceable under the provisions of section 30 of the Indian Contract Act; (2) that the two contracts are governed by the provisions of Oilseeds (Forward Contract Prohibition) Order of 1943 and are also unenforceable by the provisions of the said Order ; (3) that even assuming that the two contracts are enforceable, the suit for damages was not maintainable as the plaintiff did not aver his readiness and willingness to perform the contract and did not demand delivery of the goods ; (4) that the contracts were discharged by reason of the earlier settlements of differences evidenced by Exhibits A-12 to A-16 ; and (5) that the quantum of damages fixed by the Subordinate Judge was excessive.

(3.) In order to appreciate the contentions raised by the appellants, it is necessary to set out the relevant facts. According to the plaintiff, Chakka Narasimhaiah Chetty entered into two contracts on 23rd November, 1950 and 6th December, 1950, respectively to deliver a total of 100 tons of good shelled groundnut seeds (50 tons under each of the two contracts) on or before 31 st January, 1951, at the rates of Rs. 189-12-0 and Rs. 195 per candy respectively. The two contracts are marked as Exhibits A-2 and A-3 They provide that the parties were governed by " Kurnool local clearing system ". The clearing system is described in paragraph 4 of the plaint in the following words, viz., for every rise of Rs. 5 in the market, clearance is made". It is further stated that " also, at the end of each month, clearance is made." Reference is next made to the various clearances that were effected between the parties. It is alleged that as on 31st January, 1951, the last date for the performance of the contracts, they were settled at Rs. 219 per candy "leaving a balance of Rs. 9 per candy due ", which worked out at Rs. 3,816 for both the contracts. It was alleged that as the defendant had failed to pay the amount of Rs. 3,816 in spite of repeated demands, the suit had to be instituted for recovery of the said sum with interest at 12 per cent, per annum. The defendant contended that the clearing system prevalent in Kurnool district amounts to gambling in differences and that the contracts entered into under that system are all hit at by the provisions of section 30 of the Indian Contract Act. It was further contended that in the instant case, there was no common intention for both the parties to enforce the contracts and to obtain delivery of the goods specified in the contracts.