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TMI Blog1955 (8) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... t void the Court must strictly construe the provisions of that law. The contract came to be entered into under the following circumstances. One Pillani wanted to convert the International Bank of India, Ltd., into a finance corporation and he wanted the sanction of the District Court for the purpose, and he wanted the co-operation of the plaintiff in this behalf and the defendant was asked to approach the plaintiff to give his assistance. The plaintiff agreed to give his assistance, and as the plaintiff was the holder of 1000 ordinary shares of the International Bank of India, the agreement' in suit was arrived at and the operative part of the agreement dated 19-3-1948, is to the following effect: It is signed by the defendant and he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contract for the purchase or sale of securities, then in that contract no time must be specified for its performance and the contract must be performed immediately or within a reasonable time. The test, therefore, we have to apply is first whether this is a contract for the purchase or sale of securities and whether it is to be performed within a specified time or whether no time is specified in the contract and the contract is to be performed immediately or within a reasonable time. It will be noticed that the obligation undertaken by the defendant under the contract was to sell for the plaintiff his thousand shares at a price of ₹ 50 per share within 12 months from the date when the bank was converted into a finance corporation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when there is no present obligation at the date of the contract to purchase or sell shares, can it be said that this is a contract fr the purchase or sale of shares which comes within the mischief of the Act? A very simple test that can be applied to this contract is this. Can it be said that on 19-3-1948, there was a contract of purchase or sale of shares? If one were to put that question, the answer is obvious. There was no such contract. In fact it could not even be said on 19-3-1948, that there ever would be such a contract. Whether there would be such a contract or not would depend entirely on what happened at the end of the year. If the defendant succeeded in getting the plaintiff's shares sold there would be no such contract. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authors have devoted lot of time and thought, and there is a very striking passage in Salmond and Williams on Contracts, 2nd Edn., p. 53: 'What, then, does the expression conditional obligation really mean? The true answer would seem to be that a conditional obligation is not in truth a real obligation at all; it is merely the chance or possibility or potentiality of an obligation. The only real obligations are those which are absolute. But the chance or possibility or potentiality of an obligation is itself called an obligation by way of anticipation or prolepsis, and is distinguished from a genuine or absolute obligation by the qualifying epithet 'conditional'. A conditional obligation, in other words, is a quasi-obliga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t being carried out. The defendant might never have been called upon to perform the second promise' if the first promise was fulfilled, and, therefore, it would be erroneous to suggest either that there were two promises given by the defendant at the date of the contract or two obligations undertaken by him. The alternative argument advanced by Mr. Mody is that there are two alternative promises and again, therefore, one must judge of the validity of the contract at the date when it was entered into. Again, there is a fallacy in this argument. It is not true to suggest that there are two alternative promises in the contract. Two alternative promises would mean that the promises would have the right and the option to decide which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stituting a contract for purchase or sale of shares. In our opinion, at the date when it was entered into there was no such contract and that contract only came into existence at the end of 12 months when the performance was either immediate or within a reasonable time. As the plaintiff is suing the defendant in respect of that obligation his suit is hot rendered bad by reason of the provisions of the Bombay Act and the contract in our opinion is valid and enforceable. 8. The result is that the appeal succeeds and the decree passed by the learned Judge will be set aside. The suit will be remanded back for trial on the other issues. The respondent must pay the costs of the appeal. 9. Liberty to the' appellant's attorneys to wit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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