Pratapray Manmohandas v. Bombay Bullion Association Ltd.
KAPUR. J.-This is an appeal against the
judgment and decree of the High Court of Bombay
con firming the decree passed in its original juris·
diction. The appPllant. who waA the plaintiff in
the suit, was trading under the name and style of
3 s.C.R. SUPREME COURT REPORTS 543
Messrs. Pratapray Manmohandas as a bnllion
merchant and trader in Bombay. He was a member
of the Bombay Bullion Association Ltd., which
was defen<:lant No. 1 in the suit and is respondent
No. l in the appeal. Respondents 2 to 7 were
defendants 2 to 7 and at all material times were
members of the Clearing House Committee appoint
ed under the Bye-laws of the lst respondent. The
appellant had also added as parties in the suit
defendants 8 to 12 but they are no longer parties
as their names were struck off in the trial court.
The appellant entered into certain forward
transactions with defendants 8 to 12 during the
period from May 30, 1949 to June 30, l94!l. On
June 13, 1949, the Hawala rate of these transactions
was fixed and on June 14, 1949, the appellant
"admitted a clearance sheet under bye-law 131 of
the bye-laws of lst respondent in which outstand
ing transactions for the Valan day" (settlement)
wern entered. They included the transactions
which had been entered into with defendants 8 to ·
12. All these transactions were Rajued (tallied)
on the following day. According to the bye-laws
of the respondent Association the balance sheet
had to be submitted and money Kiplis (vouchers)
had to be given. In this balance sheet which
was submitted the appellant did not include the
amounts which were due to defendants Nos. 8 to
1 :l or the transactions he had entered into on the
ground that he disputed the transactions entered
into with those defendants as they were fictitious
and illega.L On June 21, 194!J, which was the .
Valan day (settlement day). the appellant claimed
reference to arbitration in regard to those items
under bye·law 38. On that day defendants 8 to 12
oomplained to the respondent Association that
the appellant had not issued the necessary kapli8
(vouchers). At 3 P- m. on the same day the
appellant received a notice from the Clearing House
1962
Praeapray
Manmohanfias
...
Bombay Bullion
Association Ltd.
Kapur J.
1162
Pr~tapray
;\l anmollandtu
..
BombC!)'.Bulli.n
Aasociotion [,td
Kapur J.
Committee, respondents 2 to 7 calling upon him to
appear before them. The appellant appeared
with his solicitor and counsel and his cont<:ntion
before the Clea.ring House Committee was that it
had no jurisdiction to p1 occcd with the ma.ttor
because he was claiming arbitru.tion and tho dispute
betwe,<n him and defendants 8 to 12 had to be
settled by the arbitrators. The Committee heard
the explanation and passed a. resolution under bye·
law 155 (4) declaring the plaintiff a defaulter and
it io this resolution which is tho matter in contro
versy between the parties.
On Ju11e 20, 1952, the· appellant brought a
suit for declaration that the resolution in dibpute
dated .June :!l, 1949, was bad in law, inopnrative,
ultra vire,, and not binning on the appellant and
also for damages against the respondents. He also
prayed for reinstatement as a member of the
rcsponde11t Association.
The pica. tak<•n by the respondent was that
tho transactions in dispute were not phatak
( fictitiou~ and i11opera.tive ); that at the meeting on
June :! I, 1919. defendants 8 to 12 had complained
that amounts of monev had become payable to
them from th<i appella~t; that at the said meeting
the a.ppnlla.nt ha.d made it clear that he would not
give any lcapliB (voucher~) and had therefore
defaulted and they were therefore entitloo to
declare him defaulter under bye· law 155 (4) of the
respondent Association.
The suit was triod by Tcndolkar .J. Several
issues were raiBed but tho appellant led no evidence
and respondents I to 8 examined Mr. Trikamdas
Dwarkadas a solicitor of Bombay, who was pre
Bent at the meeting of the Clearing House Com
mittee on June 21, 1949. On June 6, l!.156, the suit
was dismissed and a.n appeal was taken to the
Appeal Court which was also dismissed and the
appellant ha.B come in appeal by Special Leave.
'
..
~I ' !
3 .. S.C.R . SUPREME COURT REPORTS 545
The trial court had held that the plea taken
by the appellant that after he and his counsel
were heard they were made to. leave the meeting
and the hearing proceeded in their absence was
not established; that for bye-law 38 relating to
arbitration becoming operative, it was necessary to
have a genuine dispute between the parties and
mere pretence of a dispute in order to evade or
postpone the liability on the Valan Day is not
sufficient, that where the defaulter appears before
the Clearing House Committee and denies liability
on some flimsy pretexts and thereby makes it
abundantly plain that he does not wish to give a
kapli giving him an opportunity for giving a
kapli was a mere formality the failure to observe
which does not lead to the conclusion that the
decision of the Clearing House Committee is void.
Considering the evidence of Mr. Trikamdas
Dwarkadas it was clear that the appellant had no
intention of admitting the liability or dischargmg
it. He also held:
"Moreover, it is not the plaintiff's case
that if time had been given he would have
given the kaplis and therefore assuming that
it is necessary under bye-law 155 (4)-a point
which I did not wish to decide in this case
in the present case to give such. time would
have been perfectly futile and therefore
failure to give such time does not invalidate
the actioµ which was ta.ken. by the Clearing
House Committee".
The Appeal Court concurred in dismissing
the appeal. It held that on a proper interpreta
tion of bye-law 155(4) it was necessary for the Cleltr·
ing House Committee to give an opportunity to
the appellant to submit his kaplis because that
was the meaning of the words "and can thereafter,
if such. a ka pli is, not submitted, the Clearing House
Committee can declare him a defaulter". In other
1962
P.,atopray
M anmohandas
v.
Bombay Bullion
Associalion Ltd
KapurJ.
196~
Pratapr~y
M .JnrtUJhat1d11s
v.
Bombay Bu! lion
Ars«iation Ltd.
KapurJ.
~46 SUPREME COURT REPORTS [1962) SuPP.
words the Committee had to gh·e the member a
Zo:us penitmtiae and that after giving his explana
tion a member could still rnbmit a kapli and
escape the penalty of being a defaulter. From
the conduct of the appellant. and his
counsel however it appeared quite clearly t'hat hav
ing challenged the jurisdiction of the CommittPe
and having told them that th"Y could not proceed
in the absence of reference to arbitration the appcl
lent had no intention of giving the kaplis.
Two questions have been raised in this app
eul; (I) the question of interpretation and ( 2 J
that no opportunity was given after the decision was
made against the appellant to give the k.aplw. The
submission of the respondents on th<' other hand
was that the appellant had deliberately made a
false allegation that after he made a submiEsion
he was asked to leave. This was to buttersay his
plea that the matter was decided in his a'bsence.
The court below have found that whether an opp
ortunity had be1·n given to the appellant or not,
he had no in~ntion of giving his kaplis. Issuo
No. 5 was specific on this point. That issue was
"whether the appellant and biB legal adviHers volun·
ta.rily left the meeting after indicating that the
appellant was not going to give the kaplis'' and
that was the principal question which has been
raised throughout the course of these proceedings.
Even in the statement of the appellant's ca.se he
has put in the fordront of the question for deci
sion the question whether the appellant left the
meeting dated June 21, 1949, voluntarily after
indicating his unwillingness to submit the kapli,,,
The finding of both the courts on this question wa.s
against the appellant. In our opinion that is
fully justified hy the evidt•nce on the record.
According to the evidence dayH were fixed by
the Association (or the settlement of all transac
tions which bad been entered into for that period.
'
I
)1
'·
,'
=.\
.. ,,!
3 s.c.:R.. SUPREME UOURT REPORTS 547
According to the ohart of Born bay Bullion excha
nge settlement had to be made, i. e. the monies
had to be paid by 3-30 p.m. on June 21, 1949. The
appellant made it clear, however, that he was not
going to make the payment in accordance with the
requirements of the Valan day; on the other hand
he stated that he will pay after the arbitration award
was made. The evidence produced by the respon
dents makes it abundantly clear that the con
tention of the appellant was that no action should
be taken unless the arbitration which he had asked
for had been disposed of and after saying that he
went away. This is clear from the Attendance
Book of Mr. Trikamdas Dwarkadas solicitor. The
respondent Association was therefore justified in
taking the action that it did. The minutes of the
proceedings of the Clearing House Committee dated
June 21, 1949, also show that the appellant and
his legal advisers stated that they wanted to go to
arbitration and that no action should be taken
against them until the arbitrators had given their
award. It is stated therein that the appellant
admitted that the transactions which his solicitor
said were fictitious were entered in his books and
they had been rajued (tallied) and that he had
shown the transaction in his •'olias" (clearance
sheet). All this indicated that the contentions
raised by the appellant were false and had been
raised in order to gain time. In these circumstances
it cannot be said that the respondent Committee
acted without giving due consideration to the facts
of the case or in any precipitate manner. .
Bye-law 155(4) reads:
"If any member does not submit a
kapli in the prescribed form in respect of the
amo~t found claimab!e from him to his party
(creditor), the C!earmg House Committee
shall call him and demand an explanation
~rom him a~d can therea~ter, if such a kapli
1s not submitted the Clearmg House Commit·
tee can declare him a. defaulter".
Prata;ray
M anmohandas
v.
Bombay Bullion
AssocitJlion Ltd.
Kaput" J.
196!
Pratopro1
.ll anmohdndaa
..
BollWay Bui/inn
.A rsotialion LlJ.
Kopu> J.
548 SUPREME COURT REPORTS [1962) SUPP.
That clause requires that in the event of default
of submission of a kapli the Clearing House
Committee shall call the dofa.ultor and demand an
explanation and thereafter, if such kapli is not
submitted, doclare him a defaulter. It was conten
ded that the meaning of this is that first the C!ear
ring House Committeo is to demand au explanation
and after such an explanation is given, time has to
be given for the purpose of enabling the person
not giving the kapli to submit his kaplis. In our
opinion the intorpretation of the learned Chief
Justice of tho High Court is in consonance with
the language used. i. e. first the explanatian is
called and aft<ir explanation is given and some
decision is arrived at in regard to the validity of
the reasons for not giving the kaplis then the per
son complained against can file the kapli but it
does not mean that the time to be given has to be
one or half an hour or any other specific period.
As we have said above the appellant had
made it clear that he was not going to make the
payment and had just ·left after making his sub
missions. It is not a requirement of the bye-law
that the Clearing House Committee should r.a.11 the
person defaulting either by telephone or by letter
or by giving him a notice and considering the
promptitude with which the payments have to
be made and the dates fixed for the finishing of all
the transactions it will he unreasonable to hold
that such is the procedure oontemplated by cl.(4)
of bye-law 155. The period of time, must, in oach
oase, depend upon the circumstances, but where it
is made absolutely clear that no payment is going
to be made tho giving of time is wholly without
utility.
In our view tho High Court has given a
correct decision and we therefore dismiBS this app
eal with costs.
Appeal dismi.~se,d.
,.
-