BHAGVANDAS PARASHRAM Vs. BURJORJI RUTTONJI BOMANJI

JUDGEMENT

(1.) In this suit the plaintiffs, a firm trading under the style of Bhagvandas Parashram, sue the defendant Burjorji Ruttonji Bomanji for the sum of roughly Rs. 90,000 odd on account of losses said to have been incurred by him to them in the sale and purchase of 4000 tons of linseed.

(2.) The material facts for the purpose of introducing the points chiefly in controversy are that the plaintiff-firm claimed to be Pukka Adatias doing business in the Bombay market on a very considerable scale. The defendant is a Parsi gentleman of twenty-nine years of age, who, according to his own statement, has never done any settled business but has frequently dabbled, as he calls it, in stocks and shares and occasionally in cotton. Until this disastrous venture of his in linseed he never seems to have dealt in that staple. In September 1909 the defendant Burjorji won the St. Leger Sweep to the amount of a lakh-and-a-quarter and it was with the balance of this money after paying off debts he owned at the time that he entered the linseed market. He became acquainted with the plaintiffs Munim Hargopal as far back as 1907 but it was not until after he had won this considerable sum of money in 1909 that he ever appears to have entered into commercial transactions with him. On the 30th of June 1910 the defendant Burjorji bought 2000 bales of fine Broach cotton forward for the March delivery, 1911. At the same time he sold 1000 tons of linseed for the September delivery, 1910. On the 6th of July he sold 800 more tons of linseed for the same September delivery. These three contracts the defendant admits. On the nth of July the plaintiff contends and the defendant denies that he sold a further 2200 tons of linseed for the September delivery. On the 30th of June or the 1st of July the defendant deposited a sum in two instalments of varying dates amounting in all to Rs. 61,000 with the plaintiff-firm. This sum was to carry interest at the rate of 7 as. per cent. per mensem. The plaintiff contends that the money was deposited as margin-money in respect of the forward contracts into which the defendant had entered with the plaintiff-firm for cotton arid linseed on the 30th of June, 1st of July, 6th of July, and nth of July. The defendant contends that Rs. 61,000 was a fixed deposit with the plaintiff (sic) having no connection whatever with his speculative forward dealings in cotton and linseed, and he now counterclaims for that amount. The market went in the defendant s favour, so far as the forward cotton transaction was concerned, and it was settled by the plaintiff firm either on the l0th or 11th of July. The gross profit which the defendant made on that speculation would have been about Rs. 8,000 but after deduction for commission and interest on the sum paid so many months in advance of due date, the defendant actually won some Rs. 5,000 odd on this transaction. But from the first the linseed market went against the defendant and by the 30th of September, which was the last date for giving delivery of the 4000 tons he had sold, the market had risen so high that the loss on this transaction was somewhere about Rs. 150,000. The defendant has suggested in the course of his evidence here, although I do not think that it had entered into his mind before, that the plaintiff- firm closed the cotton contract without consulting him. It is interesting to note that had the defendant left the contract to be settled on due date he would have won very nearly enough upon it to meet his loss on the linseed. However that may be, the plaintiff-firm, who as Pukka Adatias, contend that they had accepted the defendant s order to sell 4000 tons of linseed forward for the September delivery and had in fact sold them, began to call upon the defendant as the month of September approached either to increase their margin-money or authorise them to buy ready for delivery to their buyers or to settle these forward sales by cross contracts. I shall have to say a few words upon what occurred about the end of August and until the contracts were finally settled on the 30th of September or 1st of October when I deal with the evidence more in detail. The plaintiffs settled with the buyers by paying differences at the market rates of the day with the exception of 300 tons which they bought ready in the market for delivery ; that is to say, the forward sales for 3700 tons were settled by cross contracts and payment of differences to the amount which the plaintiff-firm now claim from the defendant. The plaintiff-firm have given the defendant credit for the amount of margin-money deposited and for the profits he made upon the 2000 bales of Broach cotton which he bought forward for the delivery of March 1911.

(3.) [After discussing the evidence on the defendant s minor defences, His Lordship arrived at these findings of fact]--I have arrived at these findings, first, that the plaintiffs are Pukka, Adatias. Next, that the defendant sold through them 4000 tons of linseed (of which he admits the sale of 1800 tons) bet ween the 30th of June and the 11th of July for delivery in September. I have also found that at the time of entering into these contracts he deposited Rs. 61,000 as margin- money with the plaintiff-firm. But. for the very extraordinary rise in the linseed market that margin-money should have been amply sufficient to cover all anticipated losses. Had it done so, we should have heard nothing more of this case. But owing to the rapid rise of the market, the defendant s losses not only swallowed up the whole of his margin-money, as well as his relatively small gains in the cotton transactions, but left him still indebted to the plaintiff-firm in a very large sum. When they seek to recover this the defendant meets the claim by a general defence that all these contracts were by way of wagering. He has said in his examination that but for the manner in which the plaintiff-firm deceived him about the fixed deposit he would have done his best to pay his losses and not fall back upon this technical defence. But he professes to have been so enraged and indignant at the manner in which he was duped and afterwards bullied by Hargopal that in the last resort he has taken the defence of wagering. Dealing with the main defence of wagering, I should like to make a few general observations. I have probably had more wagering defences to try, than any other Judge at present sitting in this Court. I am familiar with all the leading authorities and the passages which counsel almost invariably quote from them in argument. Used as admonitions, definitions or suggestions, the commonest citations from the books break into two main divisions: (1) attempts to define what the law means by wager; (2) attempts to lay down general rules for the conduct of the enquiry, when what has all the appearance of being an ordinary genuine commercial contract, is said to be a wager. The authorities are most prolific in the second part. It is possible that counsel engaged B from time to time in this or that particular case of the kind, come to them fresh and cull liberally from them, for their own purposes, without quite realizing that the Judge has heard them over and over again, from the lips of other counsel engaged in other similar cases. It is rare indeed for a wagering defence to go through, without the Judge s attention being invited, as though to something new, striking and useful, to half a (sic) core of weightily worded and impressive dicta of eminent Judges, who have in this manner sought to afford guidance to those who come after them. Without meaning the least disparagement of these efforts, I own that by now, I sometimes think it almost a pity, if for no other reason than that it swells the volume of argument, that so much labour and ingenuity has been spent on the Bench along this line. Many of the favourite and most famous passages are so sonorous and ample that counsel, young counsel especially, can hardly be expected to resist the temptation of repeating them ore rotunda on every possible occasion. Great Judges who very likely sitting in appeal have but one or two at most of such cases to decide, and are, therefore, naturally anxious to expound as fully as possible what they conceive to be the true principles of all such enquiries, have generalized upon this topic with uncommon vigour. Courts are warned against trusting too readily the apparent rectitude of the documents; Courts are Warned to probe the surrounding circumstances; Courts are asked to be astute in unearthing what may prove to be turpitude masquerading in the dress of probity; they are exhorted not to believe the written contracts nor the sworn testimony of the plaintiff in support of them, but to go behind and beyond in quest of the truth. And counsel as far as my experience, which is large, has yet gone, never tire, and never seem likely to tire, of these well rounded, sometimes a little exuberant, but always dignified and impressive periods. I have studied, analyzed, even, I fear, contributed to the total; and the result has been, as I am certain it always must be, to show that the whole collection of "familiar quotations " on this particular topic means just this and nothing more. When what appears from first to last to be a genuine commercial contract is said to be a wager, the trying Court should do the best it can to find out whether it really is so or not. That is what every Judge of first instance, trying every disputed question of fact, wishes to do. But this grave and formidable array of 3 judicial dicta, the work of many great Judges, produces an impression that in trying a wagering defence, a Judge is faced with a very different and much more difficult task than in trying any other fact. It might indeed be thought that not only was a special attitude of mind enjoined, but virtually a special procedure. This is mainly due to the extremely elaborate diction in which many of these judicial utterances are clothed. But I say with all submission and complete confidence that this is not really so; that while a wagering defence to an ordinary forward contract is inevitably at (sic) by certain difficulties, neither in principle nor in practice ought the trial to differ from the trial of any other legal defence. As to not being misled by the apparent rectitude of the documents, this seems to me to mean no more than this, that subject to the law of evidence, a party to a written contract may show if he can that it is not enforceable against him. As to the rest of the stock phrases they yield, on analysis, nothing more than that a Court will have to decide on all the legal evidence available whether the repudiating party, really meant what he said or not, and whether the other party, supposing he did not mean what he said, knew that and assented to it. In other words whether the contract sued upon was the real contract or whether an undisclosed and altogether different contract was the real contract. I may presently say a word or two upon the general spirit of all these judgments and submit with respect that the subject may perhaps advantageously be looked at in a different light. But before doing that, I own I wish some good and complete definition of a wager could be framed, or that none had been attempted. Those most in vogue, the definitions of Cockburn C. J., of Cotton L. J., and of the acute text-book writer Anson, fit with nice exactitude about ninety per Cent, of all forward speculative commercial business. Yet gains and losses in that business would probably be decreed by any English Court. A real wager, that which the law meant to repress and against which the Judges have spoken so strongly and consistently, is usually easy to recognize and ought to be easy to define. But a definition of a wager, intended to cover everything which the law will not enforce, which fits thousands of contracts which it will enforce as well as one or two which it will not, is for its own purposes a bad definition. It is not perhaps so much the fault of the definitions as of the fact; for the truth is that a very large percentage of speculative commercial transactions are in essence as much wagers, as any book-maker s bets. But B as they are a part of mercantile usage and custom, and the law merchant recognizes and approves them so long as they remain decently disguised in the right commercial dress, j the Courts here take them all to be what in appearance they are, and are by no means astute to look round the corner, or pry into the minds of the parties. It is easy enough to define a wager, but where the applicability of the definition to any case or number of cases depends upon the ascertainment of a mental state, unexpressed or more often the direct opposite of what is expressed in the actual form of the agreement, the practical difficulties which beset the enquiry must always be formidable, and usually prove insurmountable. I am speaking now exclusively of cases of alleged wager which take the form of regular commercial forward buying and selling contracts. So far as the form goes, there is no wager discoverable. And if the proper formalities are observed from the beginning to the end of the transaction, it is almost impossible to say in a majority of cases, whatever the Court may suspect, that one at least of the parties, if not both, had not good honest trade intentions. Every attempt to embroider upon the definitions of wager, criteria for discriminating a genuine forward, or speculative contract from a pure wager, to be found in the case-law, has so far been defective or unsuccessful. I should suggest (if I thought that any definition were really of much use) that a true wager is where two persons agree to pay and receive respectively money or money s worth, merely upon the happening or not happening of an uncertain future event, and for no other consideration whatever. Unfortunately, even supposing that to be a valid definition, it does not remove the practical difficulty with which all Courts have to deal when a . wagering defence is set up against the enforcement of a mercantile contract. For, as I have said, the form of the contract does not disclose any element of wagering at all. And it is only by getting rid of the form altogether and convincing the Court that the real contract or agreement between the parties was quite different and fulfils all the terms of the definition that a defendant can hope to succeed at all. A contract between A and B, dealers in cotton, may be identical from first to last in form, and, in fact, with a contract between C and D, cobbler and a clerk, yet the former is almost certain to be held not, while the latter may be held to be, a wager. And this shows the utter uselessness of attempts at definition, if those attempts are meant to help Courts in answering the single question of fact which, in all such cases, has to be tried.