Kanji Govindji vs Ruttonjee Jeevandas

P.B. Mukharji, J.—This is an appeal from the judgment and decree of G.K. Hitter, J., decreeing the Plaintiff''s suit for the sum of Rs. 12,796-14 with interest and costs. The Plaintiff sued for recovery of damages for non-delivery of what are called Zanzibar cloves.

There were a number of issues before the trial Court which are no longer material for the purposes of this appeal. The only point virged in this appeal is a point under the Spices (Forward Contracts Prohibition) Order, 1944 and the Government Notification No. P and Schedule 10(a)/44 issued under Clause 5 of the said Prohibition Order. The short point in the appeal for decision is whether under the said Spices (Forward Contracts Prohibition) Order, 1944 and the Government notification thereunder, the contracts in suit are invalid and illegal. No other point has been urged by the Learned Counsel for the Appellant and in fact he has abandoned the question whether there was at all a contract between the parties, which was one of the main issues and over which there was a good deal of evidence.

This point under the Spices (Forward Contracts Prohibition) Order, 1944 was not originally taken as a defence in the writteen statement. It came in by way of an amendment of the written statement by para. 8A where the Appellant pleaded that the purported contracts, if any, were in the nature of forward contracts and were invalid and illegal by reason of the Rules and Regulations of the Calcutta Kirana (Spices) Herchants'' Association and/or the provisions of the Spices (Forward Contracts Prohibition) Order, 1944, made formerly by virtue of the Defence of India Rules and later validated by the Essential Supplies Act, 1946. The Plaintiffs filed an additional written statement in answer to this new plea and pleaded that they came within the exception notified by the Government notification excluding the contracts in stilt from the operation of the Spices (Forward Contracts Prohibition) Order, 1944. The reasons for excluding the contracts from this Prohibition Order are stated in the Plaintiff''s additional written statement to be:

(1) that the contracts were for specific qualities or types of cloves alone, being Zanzibar cloves of Grade 2, wrapped in chatais or mats, each package having a specific weight and bearing a rectangular shape;

(2) that the contracts were for specific delivery at specific prices;

(3) that the goods were to be delivered only at the Defendant'' sodown; and

(4) that the delivery orders, railway receipts and bills of lading against the said contracts were never transferable to third parties. This plea for the exclusion of the contracts in suit from the operation of the Spices (Forward Contracts Prohibition) Order 1944 is based on the Government Notification No. P and Schedule 10(a)/44 issued under Clause 5 of the said Prohibition Order.

The learned trial Judge came to the conclusion that the contracts did not offend against the Spices (Forward Contracts Prohibition) Order. 1944.

The contracts in this case are oral and not in writing. There is no delivery order in respect of the goods under these contracts. There are. however, certain documentary entries on the Plaintiff''s side. The entries in the Ankra book for the Sambat year 2006, dated August 26, 1950 show the debit against the Appellant in respect of the sale of "Chatai Cloves". There are also the entries in the Plaintiff''s Sowdah Book for the Sambat year 2006. These entries in the Sowdah Book do not give the details of the contracts but show that the account is debited on August 26, 1950 according to the Rules of the Kirana Association. The other documentarv entires are to be found in the Sowdah Book of the broker Dhirailal. These entries in the broker''s Sowdah Book show the transaction of "Zanzibar cloves in chatais". A price is quoted there as at 3-9, 3-8 and 4-2 per seer, a rate which also appears in the Plaintiff''s Sowdah Book.

From this, it appears that there are really three contracts for 300 chatais of Zanzibar cloves. One is dated June 26, 1950 at the rate of Rs. 3-9 per seer, whose delivery date was September 26, 1950. The second contract is, dated June 30, 1950 for 100 chatais of cloves at Rs. 3-8 per seer whose delivery-date was October 25, 1950. The third contract is, dated July 5, 1950 for 100 chatais of cloves at Rs. 4-2 per seer whose delivery date was also September 26, 1950. It is, therefore, clear having regard to the dates of delivery that these were all forward contracts for spices, namely, Zanzibar cloves because by Clause 2(iii) of the Spices (Forward Contracts Prohibition) Order, 1944:

Forward contract means a contract for the delivery at some future date of any article to which this Order applies.

Cloves appear in the Schedule as one of the articles to which this order applies. Prima facie, therefore, the Appellant buyer establishes that these contracts in suit are forward contracts to which this Order applies. The effect of it is stated in Clause 3 of the Spices (Forward Contracts Prohibition) Order, 1944 which provides:

No person shall, after the specified date, for any article to which this Order applies, enter into any forward contract in that article.

The Plaintiff wants to avoid the operation of this Spices (Forward Contracts Prohibition) Order, 1944, by taking the plea that these contarcts in suit are excluded by the Government Notification. It will be necessary, therefore, to examine that Notification. Now, Clause 5 of the Spices (Forward Contracts Prohibition) Order, 1944 provides:

The Central Government may, by notification in the official Gazette, exclude any contract or class of contracts from the provisions of this Order.

In exercise of the power conferred by Clause 5 as aforesaid, the Central Government excluded the following classes of contracts from the provisions of the said Order by Notification No. P and Schedule 10(a)/44:

(1) Forward contracts for specific qualities or types, of any article to which the said Order applies, and for specific delivery at a specified price, Delivery Orders, Railway Receipts, or Bills of Lading against which contracts are not transferable to third parties.

While the onus of establishing that the contracts in suit are hit by the Prohibition Order, 1944, lies on the Appellant which we think has been discharged, the onus for establishing that the contracts in suit come within the exception of the excluded contract under the Government Notification lies upon the Respondent. The Respondent, in our view, has not satisfied or established that the contracts in suit come within the four corners of the exempted contract.

S.B. Sinha, J. pointed out four following conditions in Ganapat Roy Gupta v. Moody Brothers Ltd. (1949) 85 C.L.J. 136, 139 while construing a similar exception couched in similar language and in pari materia with the one that we are concerned in this appeal, and there relating to the Vegetable Oil Cakes Control (Forward Contracts Prohibition) Order, 1944 and the Central Notification thereunder:

In order to attract the benefit of the Notification, four conditions have to b satisfied, namely -

(a) the contract must be of specific quality or type;

(b) it must be for specific delivery;

(c) it must be for specified price ;

(d) delivery order, railway receipt, or bill of lading against the ccntiact mus not be tranferable to third parties.

The first enquiry is to find out whether the contracts in suit are contracts for specific qualities or specific types. The Plaintiff''s entries in the Ankra book and in the Sowda book only describe these cloves as "Chatai cloves". They do not even indicate that they are Zanzibar cloves. The broker''s Sowda book describes the quality to be both "Zanzibar" and "Chatai". It is said in evidence that Chatai cloves always mean cloves from Zanzibar. If that be so, then why both the words "Zanzibar" and "Chatai" should be used by the broker in his Sowda book remains inexplicable.- Evidence has been led by the Plaintiff to prove that cloves from Zanzibar always come in Chatais. That is the evidence of the brokers Dhirajlal and Chhabildas as well as Swailal K. Shah of the Plaintiff. The question even then remains whether "Chatai cloves" or even "Zanzibar "cloves" are a sufficient description to be within the meaning of the words "specific qualities or types" in the Government Notification. It must be remembered that this particular Order was passed with the object of preventing speculation in, forward contracts in spices. Therefore, the object of the exclusion was directed to protect actual non-transferable contracts with specific qualities and specific deliveries at specific prices, because in such cases, there is no scope left under these conditions for speculation in a forward contract.

It transpires in the evidence that Zanzibar cloves are of three different qualities being known as quality Nos. 1, 2 and 3.J Jhirajlal admits this in answer to Q. 124, but he says that quality Nos. 1 and 3 of Zanzibar cloves never come to India. In this, unfortunately, he is flatly and directly contradicted by Swailal K. Shah, a member of the Plaintiff firm. In his answer to Q. 145 he savs that even qualitv No. 1 is also available and is imported from Zanzibar to India. There is significant absence of all evidence even to suggest that the price per cliatai stated in the contract in suit indicated any particular quality 1, or 2 or 3. Shah also admits that cloves are also imported from Madagascar, Singapore, Hongkong and Zanzibar although he says that Zanzibar cloves always come in mats, Madagascar cloves come in bags and cloves coming from Singapore are of two qualities, namely, Madagascar quality and Zanzibar quality. It appears that it has not been established, even assuming that all cloves coming from Zanzibar come in chatais or mats, that cloves imported from Singapore and Java may also come in chatais. This was the very specific question Shah was asked in Q. 103 that cloves from Singapore and Java are imported in chatais. He had to admits in answer that he did not know anything about Java at all and so he could not give any reply.

This analysis of the evidence on the question of specific qualities proves two things. The first is that even assuming that Zanzibar cloves always come in chatais, there are different qualities of Zanzibar chatai cloves like quality Nos. 1, 2 or 3 and it is also proved that qxiality No. 1 is also imported from Zanzibar to India. Therefore, the test for "specific quality" within the meaning of the Government Notification is not satisfied by the present contracts in suit. Evidence of Dhirajlal and Swailal IV. Shah was directed to show that the usual quality is the quality No. 2 and chatai cloves meant normally Zanzibar cloves of quality No. 2. Even then the "specific quality" test does not appear to be satisfied in any of the entries on which the Plaintiff himself or his brokers have relied.

The next important test is one of "specific delivery". Specific delivery is an important characteristic of the excepted contract under the Government Notification. Whether "specific "delivery" means delivery of ascertained or unascertained goods, this much is certain that there must have to be delivery. Indeed, that is the very object for preventing speculation. Specific goods of specific quality with specified price for specific delivery were excluded from this operation on the ground that they were actual contracts between parties for fulfilment of the needs intended to be served by the contract and therefore could never encourge speculation in the market. Although the entries which I have mentioned show that there is a due date of delivery in each one of these contracts, it has been urged on behalf of the Appellant that in fact these were contracts not to be performed by delivery at all but only by settlement of differences. A significant point is made by Mr. G.P. Kar, Learned Counsel for the Appellant, by urging before us that the incontestable proof that the contracts in suit were never intended to be followed by delivery of goods is contained in. the two bills which the Plaintiffs themselves made and alleged to have submitted to the Appellant. Now there are two bills, one being Bill No. 2860, and the other is No. 2862, both dated 26-8-50. Bill No. 2860, dated 26-8-50, debited the: Appellant with the sum of Rs. 5,478-9 a month before even the due date for delivery of the goods under the contract had arrived. Bill No. 2862, dated 26-8-50, debited the Appellant with a sum of- Rs. 3,253-15 long before the respective due dates namely, 25-9-50 and 25-10-50. The only excuse of the Respondent on this point is that they did so because the Calcutta Kirana (Spices) Association wanted that the rates should be settled on those dates. Assuming that they did so, that will not help the Respondent to clear the charge that these contracts in suit were really not intended to be performed by delivery of the goods at all but by payment of the differences. If control of rates by the Association was intended to prevent fluctuation in the market, then that control could be made on the due dates of delivery under the different contracts. But to permit all contracts to be settled by differences alone long prior to the due dates of delivery, when it could be known what exactly would be the condition of markets on such due dates, is, in our view, to make this contract not one for "specific delivery" at all within the meaning of the Government Notification.

On specific delivery one would expect also sufficient indication of the place from where the delivery is to be made and also of the weight of the goods to be delivered. Here again, on both these points the question is left at large. In none of the book entries of the Plaintiff or the brokers any indication is given about the place of delivery of the goods. That gap is intended to be filled up by oral evidence of the broker and the Plaintiff that the delivery was intended to be made from the Plaintiff''s godown at Amratolla Street. That is disputed by the Appellant. If the Plaintiff has other godowns, then one would expect at least in his Sowda book or in his brokers'' book some entry to indicate from where these particular goods under the contract in suit were to be delivered. But no such indication is forthcoming. Again there cannot be a specific delivery unless there is a specific weight of the goods to be delivered. The evidence on this point is most unsatisfactory. The bill and the entries in the Sowda books and Ankra book only show so many chatais of cloves at a particular rate per seer. Unless, therefore, it is known what weight of cloves each chatai has, it is difficult to find out what will be the actual specific quality that will be involved in a specific delivery. Divergent testimony even on the Plaintiff''s side makes the situation on this point most unreliable. The broker Dhiraj in answer to Q. 29 spoke of the gross weight of a chatai as 2 mds. 15 srs. and that it could only vary to the extent of 1/2 seers or thereabout and that the nett weight would he 2 mds. 10 srs. His colleague and partner, another broker Chhabildas says that the gross weight might be 2 mds. 15 or 16 srs. and the nett weight 2 mds. 10 or 11 srs. Swailal K. Shah himself however says that the nett weight will be about 170 lbs. (equivalent of only 2 mds. 5 srs.) and gross weight would be about 180 lbs. and that if the mats came half a pound tffis way or that way, that difference could be ignored, but if there was greater difference, then that was not accepted (Q. 42). He apparently seemed by his answer to Q. 42 to contradict his subsequent answer that Zanzibar cloves in mats were imported with a nett weight of 140 lbs. (i.e., 1 md. 30 seers) only later on and not at the time of the contract. Scanning the evidence on the point it is difficult to find indication of the weight with any precision. We are therefore satisfied that the contracts in suit do not satisfy the test for specific delivery within the meaning of the Government Notification and we are also satisfied that it has not been so established by the Respondent.

Thirdly, comes the important question whether delivery orders in the present case are transferable or not. Now the difficulties on this important branch of the case are increased by the linguistic infelicity and grammatical omission in the terms of the notification itself. We have quoted the actual language of the notification above. This point was commented upon by Hidayatullah, C.J. and Chaudhuri, J. in Shop Shop Baboolal Mangilal and Another Vs. Firm Mangilal Balkishan and Others, although that again was a case under Oil seeds (Forward Contracts Prohabition) Order, 1943, but where also a similar notification in parimateria with the language of the notification that we are considering was discussed.

It is said that in this case delivery orders were not transferable to third parties. The difficulty, however, is that there was in fact no delivery order in respect of any of the contracts in suit. The result is that it is not possible for this Court to find out whether the delivery order in this case was transferable or not. System or practice in the market was the subject of evidence by the broker and Swailal K. Shah. Except oral testimony no delivery order in respect of cloves has been exhibited to indicate the trend or tendency or the practice or the custom or usage in the cloves market. Somehow two delivery orders came to be exhibited, although we do not see how. These two delivery orders are marked Exts. 1 and 2. One is dated 5-12-49 and the'' other is dated 7-9-49. One deals with camphor, the other deals with cassia. Exhibit 2 of September 7, 1949, is in favour of the Plaintiff himself. If that he any proof, it is proved that they are transferable. It is difficult to see how the learned trial Judge came to be convinced the other way. The delivery order Ext. 2 on its face bears the following clause:

Goods will be delivered to anybody who will present this delivery order. Seller is not responsible for the same.

If anything, this clause indicates that the delivery order is itself transferable to third parties. There is a notice in it showing expressly that the goods will be delivered while presenting the delivery order. We need only add here that this cassia is one of the prohibited articles under the item cinnamon under the Spices (Forward Contracts Prohibition) Order, 1944.

The evidence on this point is most unsatisfactory. According to Dhirajlal there are two kinds of delivery orders. One contains the words "not transferable" and the other does not contain those words (Q. 114''). If that be so and if the delivery orders could be either transferable or not transferable then in this case where no delivery order was used at all it could be the one or the other and again if that is so, then it will come within the mischief of the Prohibition Order and not within the protection of the exception.

We, therefore, hold that the contracts in suit do not fall within the exempted contracts under the Government Notification, because they are not of (a) specific quality, (b) for specific delivery, and because (c) they are also transferable to third parties or, at any rate, there is nothing to prevent or prohibit their transferability.

Before discussing the law and the cases cited at the Bar on this point, we shall refer to one other aspect of the case arising from the membership of the Kir ana Association.

In the plaint it is admitted that the Appellant Defendant was all along a member of the Calcutta Kirana (Spices) Merchants Association and that the Appellant is bound by the Rules and Regtilations and Circulars of the said Association. It is also admitted in the plaint that the Plaintiff joined as a member of the Association in July, 1950. This is pleaded in paragraph 2 of the plaint. The actual date of the Plaintiff''s joining the Association in July is not stated. It is admitted, however, by the Plaintiff''s own bills for differences, dated August 26, 1950, that they were making up these bills on the basis of rates settled by the Circular No. 7050, dated 25-7-50 of the Calcutta Kirana (Spieces) Association. The membership clause is the Rules and Regulations of the Association shows that there is special rate for broker members. Dhirajlal, the broker, admita that he is one of the registered brokers of the Calcutta Kirana Association and he also admits that the Association has got prescribed contract forms in respect of transactions in spices. He also admits in answer to Q. 59 that these printed contract forms are signed by the sellers and the buyers at the time when the contract is effected through a broker, but he wants to avoid the effect of this Rule by saying that it is not mandatory for the broker to supply such contracts to the parties and the parties only get them if they ask for them. This attempt to evade the Rule of the Association will be found from his answer to Q. 61. It will, therefore, be necessary to refer to the relevant Rules of the Association on this point. Rule III provides, inter alia as follows:

(1) The transaction betwoen a buyer and a seller shall be complete and final "when the quality and quantity of the stuff and the rate have been agreed upon.

(2) The business can be transacted for (i) goods on spot and (ii) goods to arrive. In the latter case the contract of sale must show the name of the ship and the Bill of Lading or the Railway receipt and the approximate time of arrival. Otherwise it will be treated as Fatka deal. The members are prohibited to do Fatka.

(3) When the transaction is finished through a broker it must be recorded by him in the Associations prescribed contract forms which are to besigned by the seller and the buyer and a copy of it furnished by both of them.

It is, therefore, clear under Rule III(3) of the above Rules that a transaction concluded through a broker must be in the prescribed contract form of the Association and must be signed by the seller and the buyer and a copy of it must be furnished by both of them. The Rule is plainly mandatory. In this case, the transaction was completed by a broker. That is admitted. In this case, it is also admitted that there was no written contract. That is clear breach of Rule III(3). In order to avoid the effect of the breach, it was contended on behalf of the Respondent that at the time when the contracts in suit were entered into, the Plaintiff was not a member of the Association and, therefore, was not bound by these Rules. This argtiment misses the essential point. The Defendant was, at all material times, a member, of the Association. What is more important-thel broker who was a registered broker of the Association was clearly under an obligation to use the contract form and get it signed by the seller and the buyer. It is not disputed that the broker was a registered broker of the Association. Under Rule III(3) it is not even said that the broker is to be himself a member of the Association, but in fact in this case he is a registered broker of ibis Association. It is, therefore, inconceivable that the Appellant or the broker would take the risk of violating this Rule and ancur the penalty of being suspended or expelled from the Association under Rule XI(1). Under the general provisions under Rule XI there is also a Sub-rule (7) which provides:

Brokers should use the contract forms supplied by the Association office and provide buyer and seller as well with copies of the contract.

It is, therefore, clear that the contracts in this case, if intended for specific delivery or for specific qualities, were to be in writing in the printed contract form of the Association.

That also appears consistent with Clause (4) of the Spices (Forward Contracts Prohibition) Order, 1944. which recognises the bye-laws and Rules and Regulations of the Association. Clause (4) of the Prohibition Order, 1944, provides as follows:

Notwithstanding any custom, usage or practice of the trade or the terms of any contract or any regulation of an association relating to any contract-

(1) every forward contract in any article to which this order applies outstanding at the close of the business on the specified date shall be deemed to be closed at such rate as the Central Government may by Notification in the official Gazette fix in this behalf, and different rates may be fixed for different classes of contracts ;

(2) all differences arising out of any contract so deemed to be closed out shall be payable on the basis of He rate fixed us aforesaid and the seller shall not be bound to give, and the buyer shall not be bound to take delivery

(3) payment of all differences legally due from a member of an association to another member of such association in respect of any forward contract closed out under this clause shall be made to the Clearing House of the Association, and for the purposes of calculating such differences the rate fixed by the Central Government under Sub-clause (1) shall be deemed to be the settlement rate fixed by the Associalion under it bye-laws or other regulations which shall, for the relevant purpos continue to have effect subject to the provision of this order.

The scheme of Clause 4 of the Order is to close the forward contracts on the specified date and permit payment of difference at the rate fixed by the Central Government. The rate fixed by the Central Government is also expressly deemed to be the rate fixed by the Association under its buy-laws. The Scheme for payment of these differences was through the Clearing House of the Association. Reading the bills in this case which the Respondent himself sent it is clear that the Association by its circular settled those rates. It can be presumed that the Association as an authorised body was acting legally and in due course and that the rate fixed by the Central Government was the rate fixed by them, as otherwise under Clause 4(3) such fixation of rates by the Association against the Government rates would be unenforceable and invalid. There is in this case no evidence of the actual rate fixed by the Central Government, but it can be presumed that the rate indicated in the circular mentioned in the bills was such rate for the reason we have just stated. That being so, it seems clear that the very fact of the issue of the bills on the basis of this settlement shows that the contracts in suit were not the excluded contracts hut the contracts on which this Prohibition Order operated. If the contracts in suit were excluded contracts under the Government Notification, then there was no question of settling these run-tracts by payment of differences as contemplated under Clause 4 of the Order, which only applied to contracts hit by the Prohibition Order, and not exempted by the Government Notification.

This is an additional and compelling reason why we consider (hat the contracts in suit cannot he the contracts excluded by the Government Notification.

Now for the law and the decisions cited at the Bar. There is actually no decision on this particular Spices (Forward Contracts Prohibition) Order, 1944, and on this particular Government Notification excluding certain classes of contracts. But the decisions cited at the Bar and to which reference has been made by us, relate to Government Notifications under other Orders but these Government Notifications excluding contracts from those Orders are in pari materia with the one that we are considering in this appeal.

The first decision is one of this High Court by S.B. Sinha J. in Ganpatrai Gvptn v. Moodn Brothers Ltd. (supra) already noticed elsewhere in this judgment. Thai case was concerned with the Vegetable Oil Cakes Control (Forward Contract> Prohibition) Order, 1944, and the Central Government Notification thereunder excluding certain contracts from the operation of that Order and that Notification is exactly similar totidrm rerbes with the Notification before us. The Notification iu that case will be found set out at p. 138 of that report. If was contended in that case that specific delivery was delivery of specific goods as distinguished from goods to be ascertained in future after the contract by appropriation or otherwise. S.B. Sinha, J. referred to Chiranjilal Jhirnjhvniralla v. Narsingdas Biswanath Unreported decision of Banerjee J. where it was held that the words "specific "delivery" meant actual delivery to definite persons who originally contracted to purchase and not delivery to third parties to whom delivery orders could be transferred or railway receipts or bills of lading endorsed over. S.B. Sinha, J. at p. 139 of that report came to the conclusion:

In my judgment, the words mean delivery of specifio or- ascertained goods, that is to say, goods identified and agreed upon at the time a contract for sale is made or thereafter ascertained where the delivery is to be made by the sellers mentioned in the contract to the buyers mentioned therein and not to third parties.

In support of that conclusion S.B. Sinha, J., referred to the context of the World War in which the Order was promulgated for maintaining supplies essential to the life of the community and then observed at p. 140:

For that purpose it was essential to prevent trafficking in certain essential articles by transfer of documents of title to the goods from hand to hand which led to inflation of prices.

In Uma Satyanarayanamurthy v. Kothamasu Sitaramayya and Company (1950) Mad. W.N. 389 a Division Bench of the Madras High Court of Rajamannar, C.J. and ''Krishnassamy Nayudu, J. came to the conclusion on the same Vegetable Oils and Oilcakes (Forward Contracts Prohibition) Order, 1944, and the Notification thereunder, that before any forward contract could fall within the notification excluding certain contracts from the provisions of that Order, it must be established that one of the terms of the contract was that the delivery order was not transferable. It was held in that case that the contracts which did not contain any stipulation as regards such documents could not fall within the exclusion under the notification. On that view the Respondent''s contention in this appeal before us must fail because here the contracts did not contain any stipulation in fact as regards such documents, Bajamannar, C.J., at p. 391 observed:

The intention underlying the notification appears to be to grant the exemption only to cases of forward contracts in respect of which there could be some guarantee that they would not be subject to speculation. In our opinion before any forward contract could fall within the notification, it must also be established that one of the terms of the contract is that a delivery or railway receipt or bill of lading relating to it is not transferable. In this case, it may be that none of these documents was contemplated, but it cannot be said that they were prohibited. There was nothing to prevent the buyers sending the delivery order in respect of the goods covered by the contract and in that case there is no provision in the contract to make such a delivery order non-transferable. The result would be that the very mischief sought to be prevented by the Order and the notification would occur.

These observations apply with great force to the facts in this case as found by us.

Another Division Bench of the Madras High Court of Satyanarayan Rao. J. and Chandra Reddi, J., in Boddu Seetharamasvavri v. Bhagawathi Oil Company (1950) Mad. W.N. 679 followed the decision which we have just quoted. It also came to the conclusion that, unless there was a prohibition in the contract preventing the parties from transferred a delivery order, even though the contract on its face did not contemplate such delivery order and was a contract only for specific delivery of goods at a specified! price, the benefit of the exclusion did not apply and the contract was unenforceable. We respectfully agree with that view.

These Madras decisions were followed by one other in Hussain Kasam Dada, represented by Sakoor Dawood, agent and Another Vs. Vijayanagaram Commercial Association (Regd.) and Another, . Dealing with the Oil Seeds (Forward Contracts Prohibition) Order, 1943, and a Government Notification thereunder also exactly on similar terms as the one in this appeal before us. Govinda Menon, J. in that case after holding that where in the contracts the delivery is not "eo instanti" the contract itself but is intended to take place some days or mouths later, the contracts are forward contracts, proceeded to lay down the following construction at p. 529 of that report:

Unless it. is shown that one of the terms of the contract is that n delivery order or a railway receipt or a bill of lading relating to it is not transferable, contracts which do not contain any stipulation as regards such documents cannot fall within the oxclusion clause of the notification. In the present case it is undoubted that there is no such clause apparent on the face of the, contract or even deducible from its terms.

There also the notification was on similar terms although unfortunately in the report the notification has not been fully and correctly set out.

The next case to which reference was made at the Bar is Shop Baboolal Mangjilal v. The Firm Mangilal Balkishan (supra). This case also dealt with the Oil Seeds (Forward Contracts Prohibition) Order. 1943. and the Government Notification of its exemption in similar terms, Hidayatullah. C.J. and Choudhuri, J., at p. 91 of that report after criticising the words of the notification as not being happy and ungrammatical and troublesome observed as follows:

The intention, however, is clear, viz., that the transactions which are saved should be for specified qualities and types, for specified deliveries at a specified price, with no possibility of third parties intervening. In the present case there is nothing 1o show that the Alsi which was to be delivered by the Defendant firm could not be ordered to be delivered to a third party. We think that any other interpretation would undo the scheme of the order completely, and an interpretation advancing the spirit of the Order must be accepted in preference to a doubtful interpretation enlarging the exemption granted by the Government of India Notification. We accept the view expressed in the Madras and Bombay cases and we hold that in this case there was nothing to show that the delivery was only to the vendee and not to any other persons.

If third parties could have been assigned the benefits of the contract then the exemption cannot apply. The Respondent was required to show that the benefits of the contract were not assignable to others. This, the Plaintiff-firm neither pleaded nor proved.

We respectfully agree with the opinion so expressed by the Madhya Pradesh High Court.

On behalf of the Respondent reference was made to Renchord Das Jecvandas v. Shah Ilreralal Chapai AIR 1955 N.U.C. 1656. This case mentions about traffic in contracts but cannot help the Respondent.

In any event, in our view the better judicial opinion are those expressed in Bombay, Madras and Madhya Pradesh and they are against the Respondent.

Mr. Roy on behalf of the Respondent also relied on the decision of the English Court of Appeal in Laurie and Morewood v. Dudin and Sons (1926) 1 K.B. 223. This case has no application to the facts of the present case before us. This English decision was concerned with the construction of Section 16 of the English Sale of Goods Act and with the question ''that where there was a contract for the sale of unascertained goods no property in the goods was transferred to the buyer unless and until the goods-were ascertained.

The attempt of Mr. Roy in the last report was to come within the rule that these delivery orders were really not delivery orders as representing title to or possession of the goods. The difficulty with Mr. Roy on this question is not so much what exactly delivery orders are in mercantile law, but on the fact what, if any at all, was the delivery order in this case. It is really on the facts a mythical delivery order because none existed in the present case and none was produced. It is, therefore, unnecessary for us to embark on a discussion on the nature of a delivery order in mercantile law for purposes of this appeal.

A reference may also be made to the decision of the Supreme Court in Duni Chand Rataria Vs. Bhuwalka Brothers Ltd., . This however, was concerned with the West Bengal Jute Goods Future Ordinance, 1949. The words there used were not in pari materia with the words we are interpreting in this appeal. The words which the Supreme Court was considering in that case were "involving the actual delivery of possession". The facts in that case concerned intermediate and chain contracts. The Supreme Court there held in that context those included not only actual delivery but also symbolical or constructive delivery. But even then the Supreme Court did not say there there was no need for delivery at all and payment of mere differences wink! do, as was the intention in the appeal before us by reason of the two Bills for differences before due dates of delivery.

For these reasons we allow the appeal and set aside the judgment and decree of the learned trial Judge. We hold that the contracts in suit are prohibited by the Spices (Forward Contracts Prohibition) Order, 1944. and that they do not come on the facts of this case within the contracts excluded under the Government Notification thereunder. The suit, therefore, must be dismissed and the appeal allowed with costs.

Certified for two Counsel.

Bose, J.

I agree with the conclusion of my learned brother that the appeal should be allowed with costs as directed by him.