1904 (4) TMI 1 - HC - Indian Laws

Summary

Issues Involved:
1. Whether the plaintiffs duly executed the instructions of the defendants and made agreements for the purchase of cotton as requested by the defendants.
2. Whether the said agreements were contracts or agreements by way of gaming and wagering.

Detailed Analysis:

Issue 1: Execution of Instructions and Agreements for Purchase of Cotton
The plaintiffs, David Sassoon and Co., received instructions from the defendants, members of the firm of Tokersey Jadhawji, to purchase American cotton. The transactions involved multiple orders: on March 15, 1901, instructions were given to purchase 500 bales for July-August delivery; on March 26, 1901, to purchase 500 bales for August-September delivery; and on April 23, 1901, to purchase 2,000 bales for August delivery. The plaintiffs executed these instructions by purchasing the cotton through their London branch, as evidenced by the delivery contract of March 15, 1901, which incorporated the printed rules of the Liverpool Cotton Association.

The court found that the plaintiffs executed the instructions as requested, and the agreements were made in the ordinary form for future delivery, which was a common practice in the cotton trade. The evidence showed that delivery is ordinarily demanded and given under such contracts, and the contracts were in accordance with the terms agreed upon by both parties.

Issue 2: Whether the Agreements Were by Way of Gaming and Wagering
The defendants argued that the transactions were gambling and wagering transactions, making them void under Section 30 of the Indian Contract Act. The court clarified that for an agreement to be considered a wager, both parties must stand to win or lose based on an uncertain event. The court referred to precedents such as Hampden v. Walsh and Carlill v. Carbolic Smoke Ball Company to define a wager.

The court examined whether the agreements made by the plaintiffs in England were by way of wager. The delivery contract of March 15, 1901, did not suggest an agreement by way of wager, and the evidence indicated that the contracts were ordinary purchases for future delivery. The fact that no delivery was made under these contracts was due to the defendants' failure to deposit cover for the deficiency in price, not because the contracts were wagers.

The court also considered the defendants' argument that the plaintiffs never took delivery, suggesting an intention to wager. However, the court found no basis for this suggestion, as earlier transactions showed that tenders were made for delivery, and there was no evidence to prove that these tenders were not made in good faith.

The court concluded that dealing in American futures, although speculative, is not necessarily wagering. The evidence showed that a significant portion of such transactions are bona fide, with delivery being demanded and given under contracts incorporating the rules of the Liverpool Cotton Association.

The court rejected the argument that purchases for cover cannot be treated as bona fide business, noting that such purchases are a legitimate means of diminishing risks. The court found no sufficient materials to hold that the contracts between the plaintiffs and the defendants were agreements by way of wager.

Judgment:
The court held that the contracts in question were not agreements by way of wager and that the plaintiffs duly executed the instructions of the defendants. The plaintiffs were entitled to recover the amount claimed, with interest, and the usual mortgage decree in respect of the deposit of title deeds by way of equitable mortgage. The plaintiffs were also awarded costs throughout, which could be added to their security.

In the second suit, a similar decree was issued, with liberty to apply in the first suit for the application of the surplus proceeds of the sale therein decreed.