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Bombay High Court
Pestonji Jehangirji vs Jaisingdas Hansraj on 8 July, 1903
Equivalent citations: (1920) 22 BOMLR 420
Author: Robertson
Bench: Macnagttten, Robertson, A Scoble, A Wilson


Robertson, J.

1. The appellants are the heirs and executors of Jehangirji Hormasji, a merchant in Bombay. Jehangirji had certain transactions with the respondents, who are a firm of merchants trading at Khamgaon ; and on 23rd March 1892 he sued the respondents in the Court of the Civil Judge at Akola for Rs. 24600-1-6 as the balance due to him on those transactions. The respondents brought into Court Rs. 2571, which they admitted to be due, and they denied liability for the rest. The Civil Judge at Akola, on 30th April 1897, gave decree for Rs. 13,421. On appeal, the Judicial Commissioner of the Hyderabad Assigned Districts, on 29th November 1899, reversed this decree, holding that the respondents were liable for 110 more than the sum brought into Court. The question in the present appeal is which of those judgments is right.

2. On the face of the documents the contracts now in dispute were sales of cotton by Jehangirji to the amount of 2800 Bojas; and, although in each case the sale purports to be to a third party, yet it is common ground that by registering the sale note the respondents, to whom it was transmitted, made themselves liable, as the agents of Jehangirji, to the purchaser. It is also common ground that delivery of the 2800 Bojas not having taken place, the appellants must be debited with some sum representing those undelivered Bojas, and the whole question is, with what sum ? The case of the respondents is that it was an implied term of the contract and that the rate payable for cotton not delivered should be fixed by a certain Committee of Khumgaon merchants dealing in cotton ; that this body, called a Panchayat, has fixed the sum at Rs. 57-14 per Boja ; and that this is conclusive of the controversy. The case of Jehaugirji, as stated in his plaint, was that, “If the plaintiff failed to deliver the goods, both parties should calculate the price of the goods not so delivered at the rate of ready goods of the Sutta description prevailing in the Khamgaon market on 13th March 1892.”

3. From the position thus assumed by Jehangirji, of ignoring the Panchayat, he was dislodged at the trial of his own evidence. Ho first said, “If I did not make delivery, the rule in the printed contract Exhibit D/XIV applied. On looking at Exh. D/XI I find no such rule as referred to by me above.” He then said “The rule which was to apply was that the rates were to be settled by rates ruling on the day of delivery.” But he went on, “These rates were to be settled by certain shroffs appointed by the Sutta shroffs at Khamgaon ; and the profits and losses were to be determined by these rates if the rates settled were fair and true. This the shroffs do in accordance to the practice of the Sutta trade at Khamgaon. … I knew of this system of appointing a Panchayet and settlement of rate by them and settlement of profits and losses to be determined accordingly, if the rates are fair and true, since it is a practice that prevails all over Berar and in other places.” This admission is qualified, as will be observed, by the words “if the rates were fair and true”: and the case of the appellants ultimately consisted of an impeachment of the rate fixed by the Panchayet as not having been “fair and true.”

4. This being the condition of the argument, it is manifest that the appellants can only get behind the decision of the body to whom the question of rate stood referred, by making out a strong and clear case. Their theory was that the duty of the Panchayet was simply to find out at what rate sales of this class of cotton had been made on 13th March 1892 ; and they say that, as a matter of fact, the rate ruling on that day was not Rs. 57-14 but Rs. 50. The matter, however, is a great deal less simple than this contention assumes it to be.

5. The truth is, that the transactions in which Jehangirji was engaged were of the nature of speculations on the rise and fall of cotton market, and did not deal with extant goods required for purposes of commerce. On the contrary, the amount of cotton named in the contracts now in question far transcended the amount of cotton in the market on the dates when performance of those contracts purported to be due. “On any of the dates” in question, says one of the appellants’ own witnesses, Mr. Macintyre, “2800 Bojas of cotton of any description were not available in the Khamgaon market. There were not 2800 Bojas of cotton in the aggregate available on any particular day. I think on any of these dates 100 or 200 Bojas of cotton of the Sutta description could have been purchased per day. Under ordinary circumstances I do not think more than 200 Bojas of Sutta description of cotton could have been available in Khamgaon on any of those days.”

6. It is obvious that in these conditions the problem to be solved was something much more complicated than that suggested by the appellant; and it is perhaps not surprising that the Khamgaon speculators should have set up a skilled Committee of their number to settle such questions. For it is to be borne in mind that, in order to take part in those speculations in cotton, the Bombay merchant required to employ, as his agent, one of the Khamgaon shroffs in whoso hands the dealing was, and to submit to the conventions governing the trade, such as it was. The highly artificial operation of fixing the prices which would have to be paid, in imaginary purchases, in order to procure non-existent goods, is one not to be controlled by the appellant’s rule-of-thumb, and it necessarily involves more arbitrary methods. Accordingly the mere fact that on 13th March 1892 certain comparatively small parcels of cotton were sold at Rs. 50 per Boja, does not prove the appellant’s case, or convict the Panchayct oven of error. Very much more than error, however, would be required to upset the decision of an expert tribunal voluntarily set up for the decision of matters of skill.

7. In their attack on the Panchayet the appellants have entirely failed to prove fraud, either in the inception or the proceedings of that body. The Panchayet was set up in the usual way. Its raison d’etre, of course, was that its members, as well as the persons coining before them were engaged in speculating in cotton. Some of its members were “bull” operators and some “bears”, some were interested to have a high figure fixed, some to have a low one; some had no interest one way or the other. There is nothing to suggest that they treated this matter of the appellant’s otherwise than in the ordinary course of business. The exposition in the witness box, by these gentlemen, of their rationes decidendi is certainly not lucid; but this is not inconsistent with the honesty and validity of their conclusion. Their Lordships find in the judgment of the Judicial Commissioner an adequate and intelligent defence of that conclusion.

8. Their Lordships will humbly advise his Majesty that the appeal ought to be dismissed. The application to the High Court For leave to appeal to his Majesty in Council appears from the record to have been presented by all the appellants, and leave to appeal was apparently granted to them all. But in the petition of appeal which has been referred to their Lordships by his Majesty, the first appellant appears as the sole petitioner, and their Lordships are informed that he is in fact the sole surviving executor at present entitled to act either in British India or the Hyderabad Assigned Districts. In these circumstances their Lordships will order the first appellant to pay the respondent costs of the appeal.

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