Arthur J.H. Collins, C.J.@mdashThe only question to be decided in this appeal is what was the intention of the parties when they entered into the
transaction in question. The appeal from the decision of Mr. Justice Davies was originally heard by the late Sir T. Muttusami Ayyar and Mr. Justice
Best, and there was a difference of opinion between the two learned Judges as to the intention of the parties at the time the contract was entered
into. The plaintiff, a sowear, alleges that he entered into a contract with the defendant to buy from him Government 4 per cent, paper, that it was an
honest commercial transaction, and that he expected the defendant to deliver to him the amount he bought, viz., Rs. 4,25,000 on the date named in
the contract, and he would have been ready to pay for the same. The defendant, a retired vakil, on the other hand contends that it was a gambling
transaction, that neither he nor the plaintiff intended that any paper should be delivered, but that the differences only should be paid, The law on this
subject appears to be clear that agreements between buyers and sellers of shares and stocks, to pay or receive the differences between their prices
on one day and their prices on another day, are gaming and wagering transactions, and in India are void u/s 30 of the Contract Act.
2. The plaintiff Raja Eswara Doss was called on his own behalf and deposed that he in October and November 1891, through a broker, had
bought the Government paper from the defendant to be delivered on the 30th November 1891, that he also sold the defendant on the 28th
November Rs. 4,25,000, and that therefore he claimed the difference in the price of the Government paper, the value of the paper being higher on
the day he sold than it was in October, when he bought.
3. The plaintiff''s second witness was a Mr. Berry, who describes himself a stock-broker; he has had dealings in Government paper with both
plaintiff and defendant, but he does not say that he ever delivered any paper to either of them; he says there is a settling day for completing
transactions on the principle of a banking clearing house; he admits there are many transactions in Government paper in which no paper changes
hands, and native dealers generally meet their contracts by asking the purchasers to take delivery from somebody else, and paying or receiving the
difference or by selling back--that is their custom. The plaintiff''s third witness was Venkatachella Chetti, a dealer in Government paper and a
shopkeeper; he is largely indebted to plaintiff; he had dealings with the defendant in Government paper and tried to obtain his differences; he
describes the methods employed in these transactions; he says there is no intention at the time of purchase that Government notes should be
actually delivered or money paid, but at the time of settlement a letter is given authorizing the vendor to deliver to the purchaser and the purchaser
to take from the vendor; he says he has bundles of such letters; he also, says that, when plaintiff went to defendant''s place on the 30th November,
he did not ask for delivery of the paper, but, only for differences. It is worthy of remark that the plaintiff, who deals in many lakhs of Government
paper, gives no instance in which he either delivered or received Government paper, except on one single occasion just before he brought this suit.
4. The defendant''s evidence was to the effect that the differences were only to be paid and no paper was to be delivered; the plaintiff''s broker
said plaintiff was a good man and would pay the differences, and he said the plaintiff had made similar enquiry about defendant.
5. The defendant''s second and third witnesses are brokers, and the third negotiated some of the plaintiff''s sales, and it appears from their evidence
that gambling in Government paper is very common in Madras; one witness says it has been going on for twelve years; the entry in the contract of
a date for delivery is merely nominal and differences only are paid and received.
6. The evidence satisfies me that both plaintiff and defendant intended that differences only should be paid, and were perfectly aware that they
were entering into a gambling transaction.
7. I would dismiss this appeal and with costs.
Parker, J.
8. The judgments of the learned Judges proceed on the basis that the intention must be mutual, and the only point on which they differ in opinion, is
as to whether, at the time of making the contract, the plaintiff regarded and intended it as a contract for the payment of differences only. That this
was the intention of the defendant is not disputed, but it is urged that the plaintiff fully intended and was prepared to accept and deliver the
Government paper if necessary.
9. It is contended that this case is exactly similar to Tod v. Lakhmidas Putahotamdas ILR 16 Bom. 441. In that case as in this the contracts were in
the usual mercantile form and were made through brokers, the principals not being brought into contact with each other at the time the contract
was made. In the Bombay case, however, it was found that, though the transactions were highly speculative and usually cancelled one another, it
was not proved to be the intention of both the contracting parties, under no circumstances, to call for and give delivery from or to each other.
10. In the present case it is observable that the same broker acted for both parties, and that, though they were not brought into contact at the time
defendant contracted to sell Government paper to plaintiff, each had made enquiry beforehand of the broker, not whether the other would be able
to deliver Government paper, but whether he would be able to pay differences. When, on November 28th, it was rumoured that defendant was in
difficulties, plaintiff with others, who had bought paper from defendant, went to his office and asked not whether the paper would be forthcoming,
but whether differences would be paid. This was before the execution by plaintiff to defendant of a sale note for the amount bought. The evidence
as to this conversation shows that it was never even suggested that defendant should perform his contract by the delivery of paper. The sole
question discussed was the payment of differences. Defendant offered 8 annas premium, which plaintiff would not accept, and finally it was
arranged by Vencatachella for plaintiff that the full amount of differences should be paid, but that six months'' time should be given.
11. Though plaintiff has been engaged in these transactions for a considerable time, there is evidence that he only passed paper on one single
occasion. This was in 1892 about two months before the present suit was brought and after defendant had, by Exhibit B on 3rd December 1891,
repudiated his legal liability to pay the differences. In 1892 the plaintiff must of course have realized the importance of being able to show that
paper did sometimes change hands at settling day in settlement of these transactions.
12. I agree in the conclusion of the late Mr. Justice Muttusami Ayyar that plaintiff fully understood the contract was for the payment of differences
only. I would dismiss this appeal with costs.
Subramania Ayyar, J.
13. I also agree in the conclusion that the plaintiff fully understood that the contract was for the payment of differences only. I have nothing to add
to the reasons for this conclusion so fully stated by the late Mr. Justice Muttusami Ayyar or to the observations of Pabkee, J. in his judgment. The
appeal fails and should be dismissed with costs.
