MEGHJI VALLABHDAS Vs. JADHOWJI MORARJI

JUDGEMENT

(1.) This is a suit to recover damages for non delivery of 7000 cwts. of linseed, the due date being the 10 May 1910. Out of the total 7000 cwts. 2000 cwts. were settled by resale somewhere in March at Rs. 10-4-0; but as the defendant has not paid the amount due upon that cross-sale it is included in the plaintiff's claim in this suit.

(2.) The defence is that these contracts were wagering and the defendant has principally relied upon the case of Kong Yee Lone and Company V/s. Lowjee Nanjee (1901) 28 I.A. 239 : 3 Bom. L.R. 476 decided by their Lordships of the Privy Council, as exhibiting facts very similar to the facts in this case, which their Lordships there decided gave rise to a necessary inference that the transactions were by way of wagering; secondly, upon a dictum of Muttusami Ayyar J. in the case of Exhoor Doss V/s. Venkatasubbd Rau (1894) I. L. R. 17 Mad. 480 to the effect that if one party to a contract intends only to gamble, while the other party intends and believes that he is doing genuine business the minds of the contracting parties are not ad idem upon a material factor of the contract and therefore, within the meaning of Section 30 of the Contract Act, there is no contract to be enforced in law.

(3.) Now, I think we may accept the defendant's evidence so far as to presume that he at any rate neither intended to give nor take delivery but merely to pay differences. So that while on the other hand it appears to be conclusively proved that the plaintiff intended to do and believed that he was doing genuine business with the defendant, we have the requisite facts to which if Muttusami Ayyar J.'s view be correct his conclusion might aptly be applied, but that conclusion appears to me to involve very great confusion of thought. If it is to be literally applied without qualification it would effectually stop all trade and annul all contractual rights and obligations. Therefore carried to its logical conclusion it would reach this absurdity that any person might avoid a contract by merely declaring that it never was his intention to fulfil it should it not be to his disadvantage to do so. The other party to the contract would necessarily be obliged to say that it was his intention and belief that the terms agreed upon would be carried out without any such reservation; and it would therefore follow according to Muttusami Ayyar J.'s view that their minds had never been ad idem upon a very material point whether or not one of the parties meant to pay should it be to his disadvantage to be obliged to do so. Further, it appears to me that a very superficial consideration of the language of Section 30 of the Contract Act would suffice to show that that was not its intention quite apart from the utter havoc it would make in all commercial dealings. Nor indeed when we arrived at what its true meaning is would it be even applicable to contracts of the kind I have now to consider, for it is admitted on both sides that in all material respects, that is to say the goods to be bought and sold, the price to be paid for them, the date and place for delivery and so forth, the parties had consented upon the same matter in the same sense; and if we carried it one step forward and argued that either party had in mind the question of settlement in the event of a failure to carry out the contract literally, we should still find that their minds were ad idem to this length at least that failing the delivery of the goods the defaulting party meant to compensate the other party by paying the difference between the contract and the market rate, which is of course no more than saying in any genuine business he who failed to deliver the goods at the stipulated price must compensate his purchaser for the loss the purchaser incurs by being obliged to go and buy the same goods in the open market. There is nothing inherently illegal in a transaction of that kind, and it is only because the Courts have in rather general language treated what they call speculating in differences only as necessarily wagering that when one party alleges that it was no more than his intention to pay differences, while the other party alleges that it was his intention to give or take delivery that such a view as held by Muttusami Ayyar J. could become possible, namely that in this particular which is essential to the completion of the contract the minds of the parties are not ad idem. But this again displays what I respectfully think is a pretty obvious confusion of thought. Where the minds of the parties are really not ad idem in a contract of this kind is upon quite a different point, and that is that the defendant in the present case for example did not intend to pay differences or anything else; for assuming that the contract had been carried out to the extent to which it is admitted that the minds of both the contracting parties were ad idem, that is to say to the extent 0f the defendant paying the difference between his contract and the market rate, it plainly follows that the plaintiff would have had no grievance and there would have been no litigation. The defendant, therefore, cannot, I think, obtain any advantage from that legal technicality.