BHAGWATI TRADING CO. Vs. KRISHNADAS BHAGCHAND

JUDGEMENT

(1.) THIS is defendant's appeal under section 96 of the Code of Civil Procedure and is directed against the judgment and decree dated 30 -6 -1977, passed by Shri N.P. Mishra, IV Additional District Judge, Raipur in Civil Suit No. 14 -B of 75.

(2.) THE respondents -plaintiffs had filed their suit for damages amounting to Rs.15,500/ - and interest thereon for the alleged breach of two contracts by the appellants. There is no dispute between the parties that two contracts were entered into by them on 17 -2 -73 and 23 -3 -73. Both these contracts were oral. By the first contract, dated 17 -2 -1973 the respondents had agreed to purchase and the appellants had agreed to sell one wagon load of Kulthi weighing 220 quintals at the rate of Rs.91/ per quintal bilti cut, consigned to Poona (Maharashtra). From the facts on record there appears to be no agreement between the parties about the time during which the contract was to be executed. The second contract dated 23 -3 -1973 was for 3 meter guage railway wagons of Juwar weighing 165 quintals each at the rate of Rs.135/ - per quintal builti cut ex -Purl a Ki Mandi (Orissa) to Aasangaon (Maharashtra). There is nothing on record to indicate the period during which this sale was to be completed. It is not in dispute that the appellants were required to show the goods to the respondents' man who was to be satisfied about the quality and thereafter got the same weighed in his presence. It was the responsibility of the appellant thereafter to book the goods to the destination station and obtain payment of the goods at Raipur against railway receipt it is also not in dispute that out of 3 wagons of Juwar 2 wagons were supplied and dispute between the parties remains for one wagon only. The respondents plaintiffs claimed that since the appellants had failed to consign and give delivery of goods under contract they have committed the breach of those contracts resulting in damages. The respondents, therefore, claimed a sum of Rs.15,500/ - on this score. The appellants resisted the claim on several grounds, including the objection that contracts were forward contracts within the meaning of Forward Contracts (Regulation) Act, 1952 (hereinafter referred to as 'the Act') and were illegal. It was also their case that they were not guilty of any branch of contract and hence not liable to pay any damages. The learned trial judge held that the contracts were not forward contracts and therefore decreed the suit with costs. It is this judgment and decree which is impugned in this appeal.

(3.) SINCE forward contract has been defined as a contract for delivery of goods which term is broad enough to include almost every contract for delivery of goods, the transaction between the parties considered in the aforesaid context would certainly be covered by the aforesaid definition. It may, therefore, be necessary to consider whether the contracts between the pal ties can be treated to be a ready delivery contract which is excluded from the definition of forward contract. Where the transaction of sale of goods relates to ready delivery in respect of goods which are ready and available and with regard to which the buyer is to apply as soon as he can, the transaction would be a ready delivery contract and not a forward contract. A bare reading of the provision regarding ready delivery contract would indicate that for constituting a ready delivery contract not only the delivery of goods but also agreement and payment of price must always be immediate or within a period of 11 days. Indeed, a combined reading of two definitions would indicate that a forward contract is a contract for the sale and purchase of goods which post pones the delivery of goods and the payment of price thereof for a period exceeding 11 days. In State of Gujrat v. Manilal Joitram [AIR 1968 SC 653] it was noticed by the Supreme Court that effect of these definitions is to distinguish forward contracts from ready delivery contracts by limiting time in which ready delivery contracts must be completed by delivery and payment of price. It may therefore, be examined if the facts of the case would justify to conclude that the contract between the parties was the ready delivery contract. Terms and conditions of the two contracts dated 17 -12 -1973 and 23 -3 -1973 are alleged in para 4 of the plaint and provide no time limit either for delivery or payment of price thereof. On the contrary the contracts were bilti cut ex -Vijaynagram or such other station of the choice of the appellants and the price was to be paid against the railway receipt to be presented at Raipur. Bhagchand (P.W.1) has deposed that the bargain was of wagon load and payment was made on presentation of railway receipt including the expenses for gunny bags (para 9). It is true that the goods were available for ready delivery and the appellants could indent wagon immediately and supply them within 2 -3 days. From his evidence it is clear that the goods, as available with the appellants were not alone the subject matter of the contract. The goods had to be transported and loaded into railway wagons and railway receipt obtained. As long as the railway receipt was not presented, the respondents were not bound to pay price of the goods. Considering the delay involved in indenting and obtaining wagons, the parties did not fix any time limit for performance of the contract. It is therefore, clear that though according to the respondents plaintiffs goods were available in ready stock their delivery could not be affected immediately. In order to bring a contract between the parties within the definition of the ready delivery contract and availability of goods alone is not sufficient. It is the delivery of goods and the payment of price which are essential elements of ready delivery contracts. If the goods .which are available cannot be delivered and payment thereof cannot be made by virtue of some condition in the contract, the contract would not be a ready delivery contract. Under the circumstances, it is not possible to accept the submission of the respondents that simply because the goods were available the contract was a ready delivery contract. Since there was no stipulation that the delivery and payment of price would be affected within 11 days from the date of contract, the two contracts under consideration fall outside the definition of ready delivery contract. Since they are contracts for supply of goods and receiving payment in future, are covered by the definition of forward contract as appearing in section 2 (c) of the Act. Since a notification in respect of these contracts have been issued under section 17 (1) of the Act and conations of the notifications remain violated, these contracts must be held to be illegal under sub -section (2) of section 17 of the Act. This view of this Court is III accordance with the decisions of the Sup' erne Court in Khardah Co. Ltd. v. Raymon Co. [AIR 1962 SC 1810] Waverly Jute Mills v. Raymo and Co. [AIR. 1963 SC 90] and Modi and Co. v. Union of India [AIR 1969 SC 9]. Since the contracts are illegal even if a party has committed a breach thereof the process of this Court would not recognise the right of a party to claim compensation to be benefited by the illegality. The illegal contracts cannot be enforced through the process of the Court.