1967 (9) TMI 144 - SC - Indian Laws

Summary

Issues Involved:
1. Membership of the Association.
2. Compliance with Section 15(4) of the Forward Contracts (Regulation) Act, 1952.
3. Validity of the contract.
4. Admissibility of additional evidence.

Issue-wise Detailed Analysis:

1. Membership of the Association:
The appellants claimed they were members of the East India Jute and Hessian Exchange Ltd. at the time of the contract. The respondents initially denied this, but later, in their plaint filed in the City Civil Court, Calcutta, they admitted that the appellants were members of the said Exchange. Consequently, counsel for the respondents did not support the High Court's decision on this ground, and it was established that the appellants were indeed members of the Association at the relevant time.

2. Compliance with Section 15(4) of the Forward Contracts (Regulation) Act, 1952:
Section 15(4) mandates that a member of a recognized association must secure the consent or authority of the non-member and disclose in the contract that the transaction is on the member's own account. If the consent is not in writing, written confirmation must be obtained within three days. The appellants failed to produce evidence of written consent or confirmation from the respondents. The "sold" note, which should have included a confirmation slip, was not produced before the High Court. The appellants' attempt to introduce this evidence at the Supreme Court stage was denied as it did not meet the criteria under Order 41 Rule 27 of the Code of Civil Procedure for admitting additional evidence.

3. Validity of the Contract:
The appellants contended that the lack of written consent or confirmation did not invalidate the contract, arguing that the non-compliance only rendered them liable to a penalty under Section 20(2) of the Act. However, the Supreme Court held that the requirement for written consent or confirmation is a condition precedent for the enforceability of the contract. The absence of such documentation meant there was no enforceable contract. The Court emphasized that the prohibition in Section 15(4) aims to protect the public from potential malpractices by members of recognized associations and is not merely a revenue measure.

4. Admissibility of Additional Evidence:
The appellants sought to introduce a confirmation slip signed by "M.L. Bahati" as additional evidence. The Supreme Court declined this request, noting that the document was in the appellants' possession and could have been produced in the High Court. The appellants failed to provide a rational explanation for not presenting it earlier, and the Court did not find any substantial cause to admit additional evidence at this stage.

Conclusion:
The Supreme Court upheld the High Court's decision, concluding that the contract was invalid due to non-compliance with Section 15(4) of the Forward Contracts (Regulation) Act, 1952. The appeal was dismissed with costs.