{"id":1702,"date":"1963-03-29T00:00:00","date_gmt":"1963-03-28T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/hemraj-keshavji-vs-shah-haridas-jethabhai-on-29-march-1963"},"modified":"2017-11-11T17:40:59","modified_gmt":"2017-11-11T12:10:59","slug":"hemraj-keshavji-vs-shah-haridas-jethabhai-on-29-march-1963","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/hemraj-keshavji-vs-shah-haridas-jethabhai-on-29-march-1963","title":{"rendered":"Hemraj Keshavji vs Shah Haridas Jethabhai on 29 March, 1963"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Hemraj Keshavji vs Shah Haridas Jethabhai on 29 March, 1963<\/div>\n
Equivalent citations: 1964 AIR 1526, \t\t 1964 SCR (2) 688<\/div>\n
Author: S C.<\/div>\n
Bench: Shah, J.C.<\/div>\n
           PETITIONER:\nHEMRAJ KESHAVJI\n\n\tVs.\n\nRESPONDENT:\nSHAH HARIDAS JETHABHAI\n\nDATE OF JUDGMENT:\n29\/03\/1963\n\nBENCH:\nSHAH, J.C.\nBENCH:\nSHAH, J.C.\nSINHA, BHUVNESHWAR P.(CJ)\nAYYANGAR, N. RAJAGOPALA\n\nCITATION:\n 1964 AIR 1526\t\t  1964 SCR  (2) 688\n CITATOR INFO :\n RF\t    1972 SC 696\t (7)\n\n\nACT:\n   Forward Contract-Transferability of contract-No. specific\nstipulations  in contract-If indicates\ttransferability\t whe\nther  other  circumstances  can\t be  looked  into-Saurashtra\nGroundnut  and\tGroundnut Products (Forward  Contracts\tPro-\nhibition) Order, 1949.\n\n\n\nHEADNOTE:\n  The  appellant entered into contracts with the  respondent\n(for  sale  of\tgroundnuts) which were\tdescribed  as  ready\ndelivery  contracts  and  were\tsubject\t to  the  rules\t and\nregulations.  of  the Veraval  Merchants  Association.\t The\ncontracts  specified the price and quality of the goods\t and\nstipulated  delivery  at a specific price.   But  there\t was\nnothing\t in  the  contracts  indicating\t whether  they\twere\ntransferable  to  third\t parties.   The\t respondent  claimed\ncertain\t amounts of money in respect of\t these\ttransactions\nbut the appellant resisted the claim on the ground that\t the\ncontracts,  being forward contracts, were prohibited by\t the\nSaurashtra   Groundnut\tand  Groundnut\t Products   (Forward\nContracts  Prohibition) Order, 1949, and were  illegal,\t The\nappellant  contended that the contracts for the delivery  of\ngroundnuts  at\ta  future date, even though  they  were\t for\nspecific  quality  and for specific delivery at\t a  specific\nprice, must be deemed to be forward contracts unless it\t was\nexpressly  recited that they were not transferable to  third\nparties.\nHeld that the contracts were not forward contracts and\twere\nnot  hit by the Prohibition Order.  A contract for  delivery\nof goods at a future date, even though for a specific  price\nand specific quality, can be excluded from the definition of\nforward contracts only if the contract is  non-transferable.\nBut  from the mere absence of an express stipulation  as  to\nnon-transferability in the contract, it cannot be deemed  to\nbe  transferable  and  outside the  exception.\t It  is\t not\nrequired  either by the Order or by the object of the  Order\nthat  the condition regarding non-transferability should  be\nmentioned in the contract itself before the contract can  be\nexcluded  from the definition of forward contract.   Absence\nof a specific stipulation in this regard is not\t conclusive.\nIt has to be seen whether upon the\n 687\nlanguage  of  the  contract  interpreted  in  the  light  of\nsurrounding circumstances it can be field that there was  an\nagreement  between  the parties that the  contract  was\t not\ntransferable.  The rules and regulations of the\t Association\nto  which  the\tcontracts in dispute  were  subject  clearly\nshowed that the contracts were not transferable.\nKhardah\t Company Ltd. v. Raymon & Co. (India) Private  Ltd.,<\/a>\n[1963] 3 S.C.R. 183, applied.\nFirm  Hansraj  v.  Vasanji  (1948)  4  D.L.R.  Bom.  7,\t Uma\nSatyanarayanamurty v. Kothamasu Sitaramayya & Co. (1950) 1 M\nL.J. 557.  Boddu Seetharamaswami v. Bhagavathi Oil  Company,\nI.L.R. (1951) Mad. 723, Hussain Kasam Dada v.  Vijayanagaram\nCommercial  Association, A.I.R. (1954) Mad. 528 and  Vaddadi\nVenkataswami  v. Hanura Noor Muhammad Beegum, A.I.R.  (1956)\nAndhra 9, referred to.\n\n\n\nJUDGMENT:\n<\/pre>\n
  CIVIL\t APPELLATE  JURISDICTION: Civil Appeal\tNo.  164  of
\n1961.\n<\/p>\n
Appeal from the judgment and decree dated December 17, 1957,
\nof  the\t former Bombay High Court (Now\tGujarat),  in  Civil
\nFirst Appeals Nos. 14 and 24 of 1956 from Original Decree.
\nB.R.L.\tIyengar, Atiqur Rehman, J.L. Doshi and\tK.L.  Hathi,
\nfor the appellant.\n<\/p>\n
Purshottam  Tricumdas,\tJ.B.  Dadachanji,  O.C.\t Mathur\t and
\nRavinder Narain, for the respondent.\n<\/p>\n
1963.\tMarch 29.  The Judgment, of the Court was  delivered
\nby
\nSHAH J.-The appellant instituted Suit No. 250 of 1950 in the
\nCourt  of the Civil judge (Senior Division), Junagadh for  a
\ndecree\tfor Rs. 72693\/11\/alleging that the appellant  had  a
\npersonal  account with the respondent in respect of  drafts,
\ncheques,  hundis and cash, and at the foot of  that  account
\nRs. 58,000\/-as principal amount and Rs. 5,793\/12\/as interest
\nremained due and payable by the respondent, that beside\t the
\namount due on the said
\n688<\/span>
\npersonal account an amount of Rs. 8,899\/15\/3 was due to\t him
\nin  respect  of\t a  transaction of  sale  of  1300  bags  of
\ngroundnut  sent\t by him between January 16  to\tJanuary\t 28,
\n1950,  and the price of gunny bags and groundnut  oil  cakes
\ndelivered to the respondent.  The appellant further  alleged
\nthat  forward  contracts were prohibited  with\teffect\tfrom
\nNovember 19, 1949 by the Saurashtra Groundnut and  Groundnut
\nProducts (forward Contracts Prohibition) order, and that the
\nsaid  contracts being illegal the appellant was not  subject
\nto  any\t liability arising from adjustments of\tcredits\t and
\ndebits or differences in rates relating to forward contracts
\nand  the respondent was not entitled nor authorised to\tmake
\ncredit and debit entries in the appellant’s account and that
\nnothing was due by him in respect thereof. The\trespondent
\nby his written statement contendedthat\tin the\tappellant’s
\npersonal account an amountof   Rs.   1,58,000\/-\t   stood
\ninitially  credited but at the foot of that account  only  a
\nsum of Rs. 18,000\/- was due and this sum was credited in the
\ncurrent\t account  of  the appellant in the  name  of  Hemraj
\nKeshavji Oil Mills and Ginning Factory and therefore nothing
\nwas  due  in  the personal  account,  that  the\t transaction
\neffected  by the appellant through the commission agency  of
\nthe  respondent\t in  groundnut\tseed  for   December-January
\n(Samvat 2006) Settlement did not contravene the order  dated
\nNovember  19, 1949, of the United States of  Saurashtra\t and
\nthat  the  respondent has not committed any  breach  of\t the
\norder,\tthat all the transactions for  the  December-January
\nSettlement were in ready goods of specific quality and\tthat
\nthere  was  a  condition relating to giving  and  taking  of
\ndelivery  on fixed dates and the same were all\teffected  at
\nthe  direction of the appellant and that the  appellant\t was
\nlegally\t responsible  for all payments made  in\t respect  of
\nthose  transactions  by the respondents as  the\t appellant’s
\npucca  adatia.\tHe then contended that in Samvat  year\t2006
\nthe appellant had sold
\n 689<\/span>
\n9000 bags of groundnut through the agency of the  respondent
\nand had purchased 2300 bags through him, that the  appellant
\nthereafter gave delivery of only 2000 bags of groundnut\t and
\ndid  not  deliver  the balance and  on\tthat  account  there
\nresulted  a  loss of Rs. 9,221\/7\/9 which the  appellant\t was
\nbound to reimburse. The\t  respondent   admitted\t   that
\nthe appellanthad  sent\t1300 bags of groundnut\tbut  these
\nbags  were  delivered  towards\tthe sale  of  2000  bags  of
\nDecember-.January  settlement and the price thereof  and  of
\nthe  balance of 700 bags was credited in the account of\t the
\nappellant,  and\t that the appellant was not  entitled  to  a
\ndecree\tfor  any amount except the amount found due  at\t the
\nfoot of the account.\n<\/p>\n
The trial Court decreed the claim by awarding Rs. 30,589\/3\/-
\nand  interest.\t Against the decree of the Trial  Court\t the
\nrespondent  as\twell as the appellant appealed to  the\tHigh
\nCourt  of the Saurashtra.  The appeals were transferred\t for
\ntrail under the States Reorganization Act to the High  Court
\nof  judicature of Bombay at Rajkot.  The High Court  allowed
\nthe appeal of the respondent and dismissed the appeal of the
\nappellant.  The appellant has with certificate issued by the
\nHigh Court, appealed to this Court against the decree passed
\nby the High Court.\n<\/p>\n
The  appeal  raises  a dispute about the  liability  of\t the
\nappellant  for\ttransactions  in  groundnut  seed   effected
\nthrough\t the  agency of the respondent\tafter  November\t 19,
\n1949, for December 1949, and January 1950, settlement.\t The
\nappellant  says\t that  these were  forward  transactions  in
\ngroundnut and were prohibited under the Saurashtra Groundnut
\nand Groundnut Products (Forward Contract Prohibition) Order,
\n1949, and that these transactions gave rise to no  liability
\nwhich the appellant is obliged to discharge.  The respondent
\nsays  that  the transactions were ready\t delivery  contracts
\nwhich were not
\n690<\/span>
\nprohibited  by\tlaw and in respect of  the  losses  suffered
\nthereunder   the  appellant  was  bound\t to  indemnify\t the
\nrespondent   and   that\t the  losses   suffered\t  in   those
\ntransactions  were duly debited in the personal\t account  of
\nthe  appellant.\t  There is no dispute before  us  about\t the
\ncorrectness  of the entries in the personal account  of\t the
\nrespondent.   If the respondent’s case is held\tproved\tthat
\nthe  transactions were ready delivery transactions, and\t not
\nprohibited by the Saurashtra order the decree passed by\t the
\nHigh Court must be maintained.\n<\/p>\n
The  Saurashtra\t Groundnut and Groundnut  Products  (Forward
\nContract  Prohibition) Order, 1949, was issued\ton  November
\n19, 1949, and was extended to the whole of the United States
\nof  Saurashtra.\t  By  cl. 2 (a) ‘contract’  was\t defined  as
\nmeaning\t “a contract made or to be performed in whole or  in
\npart in the United States of Saurashtra relating to the sale
\nor   purchase  of  groundnut  whole,  groundnut\t seeds,\t  or
\ngroundnut oil.” By cl. 3 forward contracts in groundnut\t and
\ngroundnut  products  were prohibited.  The  clause  provided
\n“‘No person shall henceforth enter into any forward contract
\nin  groundnut  whole, or groundnut seeds, or  groundnut\t oil
\nexcept\tunder and in accordance with the permission  granted
\nby  Government.” By cl. 4 all outstanding forward  contracts
\non the date of the publication of the order are to be closed
\nimmediately  and at such rates and in such manner as may  be
\nfixed  by the Association concerned under  their  respective
\nbye-laws or other regulations that may be applicable to such
\ncontracts.    The   Trial  Court  held\tthat  out   of\t the
\ntransactions which took place on or after November 19, 1949,
\nonly  one transaction which was for delivery on January\t 25,
\n1950, was not hit by the order.\t The remaining transactions,
\naccording  to the Trial Court must be regarded\tas  wagering
\ntransactions i. e. transactions in which it was intended  by
\nthe parties that delivery of the goods contracted for  could
\nnot
\n 691<\/span>
\nbe demanded without breach of the understanding.  The  Court
\ndid  not consider whether the transactions were\t invalid  as
\nbeing  in  violation  of the prohibition  contained  in\t the
\norder.\t The High Court held that according to the rules  of
\nthe  Association,  by  which the  contracts  were  governed,
\ndelivery  of the goods contracted for was invariably  to  be
\ngiven at the godown of the purchaser and therefore  delivery
\norders,\t railway  receipts  or\tbills  of  lading  were\t not
\ncontemplated  by  the parties and the  contracts  being\t for
\nspecific quality or type of groundnut for specific  delivery
\nand  for specific price in respect of ready  delivery  goods
\nthe transactions were not hit by the order.
\nBy cl. 3 of the order all forward contracts in groundnut and
\ngroundnut  products  except  those in  accordance  with\t the
\npermission granted by the Government were prohibited.  It is
\nnot the case of the respondent that permission was  obtained
\nfrom the Government in respect of those transactions, but he
\ncontends that the transactions were not “forward  contracts”
\nand therefore not within the prohibition of the order.\t The
\ndefinition of the expression ‘forward contract’ is  somewhat
\nobscure\t and  the  precise significance\t of  the  expression
\n“against  which\t contracts  are not  transferable  to  third
\nparties”  is difficult to guage.  A forward contract  is  in
\nthe  first  instance  defined as  meaning  “a  contract\t for
\ndelivery of groundnut whole, or groundnut seeds or groundnut
\noil  at some future date.” The contracts in dispute  in\t the
\npresent\t case  were indisputably contracts for\tdelivery  of
\ngroundnut   at\t“some  future  date.”  But  the\t  definition
\nexpressly excludes certain contracts from its operation even
\nif they are contracts for future delivery viz. contracts for
\nspecific  qualities  or\t types\tfor  specific  delivery\t  at
\nspecific  price, delivery orders, railway receipts or  bills
\nof  lading, against which contracts are not transferable  to
\nthird parties.\tWhy the draftsman should in prescribing\t the
\ncondition of
\n692<\/span>
\nnon-transferability  of a contract against delivery  orders,
\nrailway receipts or bills of ladnng, should have referred to
\n“contracts” is difficult to appreciate.\n<\/p>\n
The  contracts\tin dispute were effected  according  to\t the
\nrules and regulations of the Veraval Merchants\tAssociation.
\nA  sample form of the contracts between the parties  may  be
\nset out :\n<\/p>\n
\t      “This Sauda is to be treated as subject to the
\n\t      rules and regulations of the Association.
\n\t      No.  143 Ready Delivery Veraval, Dt.  21-11-49
\n\t      Sheth Thaker Hemraj Keshavji at Malia.
\n\t      Please  accept  Jay Gopal\t from  Shab  Haridas
\n\t      Jethabhai.\n<\/p><\/blockquote>\n
\t      We  have\tthis  day transacted  the  Sauda  as
\n\t      under,  on your behalf and as per your  order.
\n\t      Having made a note of it and having signed the
\n\t      slip  below the counterpart, return  it  imme-
\n\t      diately.\n<\/p><\/blockquote>\n
\t      P.S.  It is left to our choice whether on\t the
\n\t      deposit  being  exhausted\t to  let  the  Sauda
\n\t      remain outstanding or not.\n<\/p><\/blockquote>\n
\t      1.    Sold-Groundnut  seeds-small\t new  crop..
\n\t      ready  December-january-Bags 100, one  hundred
\n\t      bags at Rs. 31-6.3 rupees thirty one annas six
\n\t      and pies three-Standard filling 177 (1bs.)\n<\/p><\/blockquote>\n
\t      2.    Sold–Groundnut  seeds-small  new  crop,
\n\t      ready  December-January Dated 25th  Bags\t500,
\n\t      five hundred bags at Rs. 31-11-6 rupees thirty
\n\t      one annas eleven and pies six-Standard filling
\n\t      177 (lbs.)\n<\/p><\/blockquote>\n
\t      3.    Sold-Groundnut  seeds–small  new  crop,
\n\t      ready December–January Bags 100 one
\n 693<\/span>
\n\t      hundred bags-at Rs. 31-6-6 rupees thirty\tone,
\n\t      annas  six and pies six-Standard\tfilling\t 177
\n\t      (lbs.)
\n\t      Sd. Chhaganlal for Shah Haridas jethabhai\t 1st
\n\t      Shukla Margashirsh, St. 2006, Monday.”
\n\t      At the foot of the contract is the acknowledg-
\n\t      ment as under :-\n<\/p><\/blockquote>\n
\t\t   “Shah Haridas jethabhai, at Veraval.
\n\t      We have received your Sauda nondh Chitti\tNo..
\n\t      143 and have noted accordingly.
\n\t      2nd Shukla Margashirsh,
\n\t      St.  2006,Dt. 21-11-49 Sd.  Kalidas  Bhagwanji
\n\t      for Sheth Hemraj Keshavji.”\n<\/p><\/blockquote>\n
The  contract is described as a ready delivery contract\t and
\nis  made  subject  to  the  rules  and\tregulations  of\t the
\nAssociation.  The price of the goods and the  quality of the
\ngoods are specified and delivery at a specific price is also
\nstipulated.   There  is nothing in the\tcontract  indicating
\nwhether\t it  was  transferable to third\t parties.   But\t the
\nappellant submits that where the   contract is silent as  to
\nwhether it is transferable against delivery orders, railway
\nreceipts  or bills of lading, it must be deemed\t capable  of
\nbeing transferred to third parties and so for the purpose of
\nthe order, be deemed to be a forward contract.\tThe
\n694<\/span>
\nargument  in substance -is that a contract for\tdelivery  of
\ngroundnut at a future date even for specific quality and for
\nspecific delivery at a specific price would not be  excluded
\nfrom  the  definition  of forward  contract,  unless  it  is
\nexpressly   recited   in  the  contract\t that  it   is\t not
\ntransferable  to  third\t parties  against  delivery  orders,
\nrailway receipts or bills of lading.  This, it is urged,  is
\nso  because  it\t was the object of  the\t order\tto  prohibit
\nspeculation  in\t groundnut and groundnut  products,  and  to
\nachieve\t  that\tpurpose\t it  sought  to\t  prohibit   forward
\ntransactions  which were transferable to third parties.\t  By
\ninsisting  upon\t completion  of the  contract  between\t‘the
\nparties\t thereto,  it is urged it was  intended\t to  prevent
\nspeculation  in\t essential commodities.\t  Reliance  in\tthis
\nbehalf was sought to be placed upon several decisions of the
\nBombay,\t Madras and Andhra Pradesh High Courts dealing\twith
\nthe  interpretation of clauses similar to the definition  of
\nforward\t contract in the Saurashtra order, in which  it\t was
\nheld  that  exclusion from the prohibition  against  forward
\ncontracts   can\t be  regarded  as  effective  only  if\t the
\nstipulation about non-transferability is expressly mentioned
\nin  the\t contract,  and silence\t of  the  contract  imported
\ntransferability\t even in respect of contracts  for  specific
\nquality\t for  specific\tdelivery  at  specific\tprice.\t The
\nearliest decision of this clause was a decision of a  single
\njudge  of the Bombay High Court in Firm Hansraj\t v.  Vasanji
\n(1).   In that case the contract was for spot delivery\ti.e.
\nwhere no delivery order or railway receipt or bill of lading
\nwould ordinarily be issued.  But the learned judge held that
\nsuch  a\t contract in the absence of an\texpress\t stipulation
\nprohibiting transfer would not fall within the\tNotification
\ngranting   exclusion   from  the  prohibition\tof   forward
\ncontracts,    because\tthe   condition\t   regarding\tnon-
\ntransferability would not be fulfilled.\t It was observed  by
\nMr.  justice  M. V. Desai : “The only classes  of  cases  of
\nforward\t contracts  which  were exempted  were\tthose  which
\ncontained  in  them  the guarantee  against  speculation  by
\nreason of a provision
\n(1)  (1948) 4 D.L.R, Bom. 7.\n<\/p>\n
 695<\/span><\/p>\n
that  the  Delivery Orders, Railway Receipts,  or  Bills  of
\nLading\t(which were contemplated by the contracts and  would
\nbe   issued)   should\tnot   be   transferable\t  to   third
\nparties……………………\t  and\the   recorded\t his
\nconclusion as follows :\n<\/p>\n
“‘In  my  opinion, if Delivery Orders  were  con.  templated
\nunder  these contracts, they were illegal, as  the  Delivery
\nOrders were not made non-transferable.\tIf Delivery  Orders,
\nRailway\t Receipts or Bills of Lading were  not\tcontemplated
\nunder  the contracts, then the exemption (which\t deals\twith
\ncases  where Delivery Orders, Railway Receipts or  Bills  of
\nLading are issued) has no application.”\n<\/p>\n
This  decision\twas approved in\t Uma  Satyanarayanamurty  v.
\nKothamasu  Sitaramayya\t&  Co.\t(1),  where  in\t considering
\nwhether a disputed contract was a ,forward contract’  within
\nthe meaning of the Vegetable Oils and Oilcakes (Forward Con-
\ntract Prohibition) Order, 1944, Rajamannar, C. J., held that
\nthe  intention\tunderlying the notification being  to  grant
\nexemption  only to cases of forward contracts in respect  of
\nwhich  there could be some guarantee that they would not  be
\nsubject\t to  speculation,  exclusion  from  the\t prohibition
\nimposed\t by the notification may be established only if\t one
\nof  the terms of the contract is that the delivery order  or
\nrailway\t receipt or bill of lading relating thereto  is\t not
\ntransferable.  It is not enough that such documents are\t not
\ncontemplated,  because\tit  cannot be  said  that  they\t are
\nprohibited.  This view was followed in Bodhu Seetharamaswami
\nv.  Bhagavathi\tOil  Company  (2),  Hussain  Kasam  Dada  v.
\nVijayanagaram\tCommercial  Association\t (3)   and   Vaddadi
\nVenkataswami  v.  Hanura  Noor\tMuhammad  Beegum  (4).\t The
\nphraseology  of\t the notifications and\tthe  definitions  of
\nforward\t contract  were not in terms identical, in  each  of
\nthese cases; but these cases lay down that before a contract
\n(1)  (1950) 1 M. L. J. 557.\n<\/p>\n
(3)  A.I.R. (1954) Mad. 528.\n<\/p>\n
(2)  1. L R. (1951) Mad. 723. A.I.R. (1956) Andhra 9.\n<\/p>\n
696<\/span><\/p>\n
for  delivery  of  a commodity at a  future  date  could  be
\nregarded   as  excluded\t from  the  definition\tof   forward
\ncontract,  even if the contract was for a specific price  or
\nspecific  quality, it must be stipulated that the  contracts
\nwere   not  transferable  to  third  parties  by   expressly
\nprohibiting   the  transfer  of\t delivery  orders,   railway
\nreceipts or bills of lading.\n<\/p>\n
We are unable to hold that a contract for delivery of  goods
\nat  a  future date would fall within the  exception  in\t the
\ndefinition  of\tforward\t contract if  other  conditions\t are
\nfulfilled  only if there is an express stipulation  recorded
\nin the contract prohibiting the transfer of delivery orders,
\nrailway receipts    or bills of lading against the contract
\nthereof.  The  order  issued by\t the  Saurashtra  Government
\nexcluded  from\tthe  definition\t of  forward  contract\t all
\ncontracts for specific qualities or types of groundnut whole
\nor  groundnut  seeds  or  groundnut  oil  and  for  specific
\ndelivery  at  a\t specific price,  delivery  orders,  railway
\nreceipts  or bills of lading against which  contracts,\twere
\nnot transferable to third parties.  But the Legislature\t did
\nnot impose the condition that the contracts for delivery  of
\ngoods  at  some future date must recite that  the  contracts
\nwere  not to be transferable, and there is no indication  of
\nsuch  an  implication.\t Nor  is the  object  of  the  order
\nsufficient  to\t-justify an overriding reason  for  implying
\nthat  condition.  In a recent case Khardah Company  Ltd.  v.
\nRaymon<\/a> -it- Company (India) Private Ltd. (1), this Court had
\nto  adjudicate\tupon  the validity  of\ta  forward  contract
\nrelating  to  jute.   By cl. (2) of s.\t17  of\tthe  Forward
\nContracts  Regulations Act 74 of 1952 forward  contracts  in
\ncontravention of the provisions of sub-s. (1) of s. 17\twere
\ndeclared illegal, but the Notification did not apply to non-
\ntransferable  specific\tdelivery contracts for the  sale  or
\npurchase  of  any  goods.  In a\t dispute  relating  to\tnon-
\ndelivery of jute, which was one of the commodities to  which
\nthe Act was made applicable,
\n(1)  [1963] 3 S.C.R. 183.\n<\/p>\n
 697<\/span><\/p>\n
the Bengal Chamber of Commerce made an award.  In a petition
\nto set aside the award it was urged that in the absence of a
\nspecific clause prohibiting transfer in the contract itself,
\nthe  plea that the contract is not transferable is not\topen
\nto  the\t party\tsupporting the contract\t and  that  evidence
\naliunde is not admissible to establish the condition, and in
\nSupport\t of that argument Seetharamaswani v.  Bhagwathi\t Oil
\nCo. (1), Hanumanthah v. U. Thimmaiah (2)  and Hussain  Kasam
\nDada v. Vijananagaram Commercial Association (3) were cited.
\nVenkatarama   Aiyar,  J,  observed  in\tdealing\t with\tthis
\ncontention:\n<\/p>\n
\t      “x  x x that when a contract has been  reduced
\n\t      to writing, we must look only to that  writing
\n\t      for  ascertaining the terms of  the  agreement
\n\t      between  the parties, but it does\t not
\n\t      follow  from this that it is only what is\t set
\n\t      out  expressly  and in so many  words  in\t the
\n\t      document\tthat  can constitute a term  of\t the
\n\t      contract between the parties.  If on a reading
\n\t      of  the document as a whole, it can fairly  be
\n\t      deduced  from the words actually used  therein
\n\t      that  the parties had agreed on  a  particular
\n\t      term,  there is nothing in law which  prevents
\n\t      them from setting up that term.  The terms  of
\n\t      a contract can be express or implied from what
\n\t      has  been expressed. x x x x on  the  question
\n\t      whether  there  was an agreement\tbetween\t the
\n\t      parties\tthat   the  contract   was   to\t  be
\n\t      nontransferrable,\t the absence of\t a  specific
\n\t      clause forbidding transfer is not\t conclusive.<\/p><\/blockquote>\n
\t      What  has\t to be seen is whether it  could  be
\n\t      held  on\ta reasonable interpretation  of\t the
\n\t      contract, aided by such considerations as\t can
\n\t      legitimately  be taken into account  that\t the
\n\t      agree. ment of the parties was that it was not
\n\t      to be transferred.  When once a conclusion  is
\n\t      reached that such was the understanding of the
\n\t      parties,
\n(1) (1951) 1 M.L.J. 147.  (1) A.I.R. (1954) Mad. 87.
\n(3)A.I.R. (1954) Mad, 528.\n<\/p>\n
698<\/span><\/p>\n
\t      there is nothing in law which prevents  effect
\n\t      from being given to it.”\n<\/p>\n
In our view this principle applies to the interpretation  of
\nthe  Saurashtra\t Groundnut and Groundnut  Products  (Forward
\nContract  Prohibition) Order, 1949.  From the absence  of  a
\nclause\texpressly  prohibiting\ttransfer  of  the   contract
\nagainst delivery orders, railway receipts or bills of lading
\nit  cannot  be inferred that the contract  is  transferable.
\nThe  question whether an impugned contract  is\ttransferable
\nmust depend upon the language of the contract interpreted in
\nthe  light of surrounding circumstances, and silence of\t the
\ncontract   cannot   be\t regarded  as\tan   indication\t  of
\ntransferability-much less would it justify an inference that
\nit is transferable.\n<\/p>\n
We  must  then\tconsider having regard\tto  the\t surrounding
\ncircumstances if such a term can be implied.  The  contracts
\nare made subject to the rules and regulations of the Veraval
\nMerchants’ Association.\t These rules are designated  “‘Rules
\nand  Regulations  of  groundnuts ready\tdelivery”.   Rule  5
\nprovides  that\tthe buyer has to supply empty  bags  to\t the
\nseller and he has to supply a Bardan Chitti within 48  hours
\nfrom  the receipt of the letter of the seller to  the  buyer
\nasking for empty bags.\tIn the event of failure to supply  a
\nBardan\tChitti within 48 hours a penalty of Rs. 2\/- per\t 100
\nbags is to be paid to the seller for every 24 hours.  Rule 6
\ndeals with delivery.  The seller has to give delivery at the
\ngodown of the buyer and the seller is to unload the carts at
\nhis own cost.  The buyer has, on presentation of the receipt
\nof  the\t commodity at his godown to pay 90% of\tthe  invoice
\nprice,\tand 10% may be retained against defects or  shortage
\ndiscovered  in weighment (Rule7).  Weighment has to be\tmade
\nat  the\t godown\t of  the  buyer,  at  the  earliest   moment
\naccording,  to the convenience of the seller and the  buyer,
\nafter  the  commodity  has reached the\tbuyer’s\t godown.   A
\nsample has to be preserved, if
\n 699<\/span>
\nthe  seller so chooses, at the buyer’s place.  At  the\tcon-
\nvenience  of  both  the\t buyer and the\tseller\tand  at\t the
\nearliest  opportunity the sample should be analyzed  at\t the
\nbuyer’s place but after weighment of the commodity, cleaning
\nof  sample should not take more than 6 days and if a  person
\nmakes any delay he would be liable to pay a penalty of -\/8\/-
\neight  annas for every 24 hours per every lot of  100  bags.
\nRule 9 deals with shortages and provides for reimbusement of
\nloss to the buyer.  Rule 10 deals with payment of price.  On
\ntaking\tdelivery of the commodity, the person receiving\t the
\ncommodity, having obtained a kutcha receipt,, is to make 90%
\npayment\t to the person giving delivery immediately . If\t the
\nperson giving delivery of a commodity so desires, the person
\n‘taking\t delivery  has to furnish surety for  the  value  of
\ncommodity   and\t acceptable  to\t the   Association.    After
\nweighment  and\tshortages are settled and on  receiving\t the
\ninvoice,  the  buyer  must pay in full the  balance  of\t 10%
\nwithin\t96 hours.  The buyer paying after 96 hours must\t pay
\ninterest  at the rate of -\/12\/- twelve annas per centum\t per
\nmensem.\t  Rule II provides for “survey of disputes”  arising
\nbetween\t the  members at the time of delivery  of  “‘weighed
\ncommodity.”  The application may be made both by  the  buyer
\nand  the seller.  Rule 15 provides for steps to be taken  if
\nthe seller or the buyer be “unable to meet amount” found due
\nat  the\t settlement regarding the commodity.   The  Managing
\nCommittee,  after  hearing the seller and buyer,  may  grant
\nextension  of  time  on receipt of  an\tapplication  to\t the
\nAssociation  from such buyer or seller, or  the\t Association
\nmay  determine and fix a reasonable rate  after\t considering
\nthe  rates as well as circumstances in the local as well  as
\nother centres of Saurashtra between seller and the buyer and
\nthat the transactions between the buyer and the seller\thave
\nto be settled at the rate so fixed.\n<\/p>\n
The  transactions  for purchase and sale are to\t be  carried
\nthrough between two members of the
\n700<\/span>
\nAssociation  and  under\t the rules and\tregulations  of\t the
\nAssociation.   Delivery has to be given at the warehouse  of
\nthe purchaser and detailed rules about sampling,  surveying,
\npayment\t of price etc., are made. Prima facie,\tthese  rules
\napply  to the persons named as the seller and the  buyer  in
\nthe  transactions  of sale and purchase.  But  Mr.  Ayyanger
\nappearing  on  behalf of the appellant\tcontended  that\t the
\nexpression ,buyer’ would include a purchaser from the  buyer
\nbecause under the general law of contracts the benefit of  a
\ncontract to purchase goods can be assigned and therefore the
\nrights\tof the buyer would be enforceable by the  transferee
\nof  the buyer.\tBut the scheme of the rules  indicates\tthat
\nthe entire transaction has to be carried through between the
\nparties to the transaction and not between the seller and  a
\ntransferee of the rights of the buyer.\tIn carrying out\t the
\ntransactions  under  the  rules,  diverse  obligations\t are
\nimposed upon the buyers, and it is settled law that  without
\nthe  consent of the seller, the burden of a contract  cannot
\nbe assigned.  The rules provide, as we have already  pointed
\nout,  that the empty bags are to be supplied by\t the  buyer.
\nSuch  an  obligation  cannot be transferred  by\t the  buyer.
\nAgain  diverse\trules  provide\tliability  for\tpayment\t  of
\npenalty.  If a buyer connot transfer the Obligations under a
\ncontract which is made subject to the rules and\t regulations
\nof  the Association, ail the obligations prescribed  by\t the
\nrules being made part of the contract, a very curious result
\nwould  ensue in that whereas an assignee of the buyer  would
\nbe entitled to demand delivery at his own godown at the rate
\nfixed, for his default the buyer would remain liable for the
\ndiverse\t obligations including liability to pay penalty\t for
\ndefault\t of his assignee under the rules.  Again the  seller
\nby  Rule 6 has to deliver the goods at the warehouse of\t the
\nbuyer,\tand if the benefit of the contract is  transferable,
\nit would imply an obligation to deliver at the warehouse  of
\nthe buyer’s assignee, wherever the warehouse of the assignee
\nmay be.\t The
\n 701<\/span>
\nwarehouse of the assignee of the buyer may be in Veraval  or
\nat  any\t other place, but the seller having entered  into  a
\ncontract  at a rate which would include normal expenses\t for
\ndelivery  at the buyer’s godown maybe required to  undertake
\nan  intolerable\t burden\t of  meeting  all  the\tcharges\t for
\ntransporting  the  goods  to the warehouse  of\tthe  buyer’s
\nassignee  wherever  such  godown may be\t situate.   Such  an
\nobligation could never have been under contemplation of\t the
\nrule-making body.\n<\/p>\n
Mr.  Ayyanger  contended  that the  assignee  of  the  buyer
\ncontemplated  by the rules would of necessity have to  be  a
\nmember of the Association and therefore resident in Veraval.
\nBut  the  rules to which our attention has been\t invited  do
\nnot, if the buyer is to include the assignee of the  benefit
\nof  the contract, seem to impose any such  restriction.\t  If
\nthe  general law relating to assignment of benefit  under  a
\ncontract   is\tto   be\t  superimposed\t upon\tthe   rules,
\nnotwithstanding\t the scheme which prima\t facie\tcontemplates
\nperformance between the parties, there is no reason why\t any
\nsuch reservation should be made.  It was alternatively urged
\nby  Mr. Ayyangar that the rules of the Association  use\t two
\nexpressions buyer’ and ‘Persons’-and wherever the expression
\nPerson’\t is used it would include an assignee of the  buyer.
\nThis argument, in our judgment, is without force.  The rules
\nhave  not  been drawn up with any precision,  and  there  is
\nnothing to indicate that by using the expression ‘person’  a
\nlarger\tcategory was intended. for instance in rule  5,\t the
\nobligation to supply empty bags is imposed upon the  ‘buyer’
\nand the penalty for failing to carry out that obligation  is
\nimposed\t upon  the  ‘person.’  Similarly  in  rule  10\twhen
\ndelivery is taken by the ‘buyer’ the ‘person’ receiving\t the
\ncommodity  has\tto make payment of 90% of the price  to\t the
\nperson\tgiving delivery.  There arc a large number of  other
\nrules  which  deal with the rights of the “buyers’  and\t the
\nobligations
\n702<\/span>
\nsimultaneously imposed upon persons which in the context may
\nmean  only the buyers.\tThe use of the\texpression  “Person’
\ndoes  not, in our judgment, indicate that he- was to be\t any
\none other than the buyer or his representative.
\nOn  a  careful review of the rules we are of the  view\tthat
\nunder  the rules and regulations of the\t Veraval  Merchants’
\nAssociation  pursuant to which the contracts are  made,\t the
\ncontracts   were  not  transferable.   The  contracts\twere
\nundoubtedly for delivery of groundnut at a future date,\t but
\nthey were contracts for specific quality for specific price,
\nand for specific delivery under the rules of the Association
\nunder which they were made.  The contracts were, for reasons
\nalready\t mentioned, also not transferable to third  parties,
\nand  could not be regarded as forward contracts\t within\t the
\nmeaning\t of  the  order.  It  is  unnecessary  therefore  to
\nconsider whether the respondent who claimed to have acted as
\nPucca Adatia and therefore as Commission Agent was  entitled
\nto  claim reimbursement for any amount alleged to have\tbeen
\npaid  by him on behalf of the appellant for losses  suffered
\nin the transactions in dispute.\n<\/p>\n
We  are therefore of the view that the High Court was  right
\nin  modifying  the decree passed by the Trial Court  and  in
\ndismissing  the appellant’s suit.  The appeal  is  dismissed
\nwith costs.\n<\/p>\n
Appeal dismissed.\n<\/p>\n
 703<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Hemraj Keshavji vs Shah Haridas Jethabhai on 29 March, 1963 Equivalent citations: 1964 AIR 1526, 1964 SCR (2) 688 Author: S C. Bench: Shah, J.C. PETITIONER: HEMRAJ KESHAVJI Vs. RESPONDENT: SHAH HARIDAS JETHABHAI DATE OF JUDGMENT: 29\/03\/1963 BENCH: SHAH, J.C. BENCH: SHAH, J.C. SINHA, BHUVNESHWAR P.(CJ) AYYANGAR, N. RAJAGOPALA CITATION: 1964 […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-1702","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nHemraj Keshavji vs Shah Haridas Jethabhai on 29 March, 1963 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/hemraj-keshavji-vs-shah-haridas-jethabhai-on-29-march-1963\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Hemraj Keshavji vs Shah Haridas Jethabhai on 29 March, 1963 - 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