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PETITIONER: PRATAPRAY MANMOHANDAS

       Vs.

RESPONDENT: BOMBAY BULLION ASSOCIATION LTD.

DATE OF JUDGMENT: 02/03/1962

BENCH: KAPUR, J.L. BENCH: KAPUR, J.L. GUPTA, K.C. DAS DAYAL, RAGHUBAR

CITATION:  1963 AIR  462            1962 SCR  Supl. (3) 541

ACT: Bullion     Association--Member     owing     amount      to creditor--Failure  to  submit Kapli (voucher)  for  amount-- Committee-declaring him a defaulter--Legality of--Giving  of opportunity  to  submit  Kapli  if  denied--Bombay   Bullion Association Bye Laws 155 (4).

HEADNOTE: The appellant was a member of the Bombay Bullion Association Ltd.   He  entered into certain  forward  transactions  with certain  other  persons.  According to the bye-laws  of  the Association the appellant had to submit a balance sheet  and to  give kapli (vouchers) for the amounts due from him,  but the  appellant did not include the amounts due from  him  in the  balance sheet nor did he give the kaplis on the  ground that these transactions were fictitious and illegal.  On the settlement day the Clearance House committee called upon the appellant  to appear before them.  Before the Committee  the appellant  took the stand that they had no  jurisdiction  to proceed  with  the matter as he was  claiming,  arbitration. The committee passed a resolution declaring him a defaulters The appellant filed a suit challenging the resolution, inter alia. on the ground that the Committee, after its  decision, was bound, under bye-law.155 (4) to give him an  Opportunity to give the kaplis before it could declare him a  defaulter. The bye-law provided:- 542 "If  any  member does not submit a kapli in  the  prescribed form  in respect of the amount found claimable from  him  to his   party   (creditor),  the  Clearing   House   committee shall  call him and demand an explanation from him  and  can there  after, if such a kapli is not submitted the  Clearing House Committee can declare him a defaulter." Held, that the resolution  declaring  the  appellant  a defaulter was validly Bye-law declaring (4) provide that if a member did notsubmit a kapli found claimable from him, the Committee shall call him and demand an explanation  from him  and  can  thereafter if such  kapli  is  not  submitted declare  him  a defaulter.  Under this bye-  law  first  the explanation  is  called  and after if  is  giver.  and  some decision  is arrived at, the person complained  against  can

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file  the  kapli but no specific period is  ’prescribed  for doing so nor is the Committee required to call him for  this purpose.  the period of time depends upon the  circumstances in  each case.  In the present case since the appellant  had made it clear before the Committee that he was not going  to make the payment, the giving of time was wholly unnecessary. It  is  not a requirement of the bye-law that  the  clearing House  Committee should call the person defaulting by  tele- phone or by letter or by giving him notice.

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 437/60. Appeal  by special leave from the judgment and decree  dated July 12, 1957, of the Bombay High Court in Appeal No. 71  of 1956. C.K.  Daphtary, Solicitor, General of India,  G.  Patwardhan and Naunit Lal,  or the, appellant. A.V  Viswanatha Sastri, N. P. Nathwani and K.L.  Hathi,  for respondent No. 1. 1962.  March 2. The Judgment of the Court was delivered by KAPUR.  J.-This is an appeal against the judgment and decree of the High Court of Bombay confirming the decree passed  in its  original  jurisdiction.   The appellant,  who  was  the plaintiff in the suit, was trading under the name and  style of  543 Messrs.   Pratapray  Manmohandas as a bullion  merchant  and trader  in  Bombay.  He was a member of the  Bombay  Bullion Association Ltd., which was defendant No. 1 in the suit  and is  respondent  No.  1 in the appeal.  Respondents  2  to  7 defendants 2 to 7 and at all material times were members  of the Clearing House Committee appointed under the Bye-laws of the 1st 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 count. The appellant entered into certain forward transactionswith defendants 8 to 12        during the period from  May    30, 1949 to June 30, 1949.  On June 13,     the  Hawala rate  of these  transactions   was fixed and on June  14,  1949,  the applicant I admitted a clearance sheet under bye-law 131 of’ the  bye-laws  of  1st.  respondent  in  which   outstanding transactions  for the Valan day" (settlement) were  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 lie 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 12  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 illegal.  On June 21, 1994),  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  complained  to  the  respondent  Association  that   the appellant had not issued the necessary kaplis (vouchers). At 3 p. m. on the same day the appellant received a notice from the Clearing House 544 Committee,  respondents  2 to 7 calling upon him  to  appear before them.  The appellant appeared with his solicitor  and counsel,  and  his  contention  before  the  Clearing  House

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Committee  was that it had no jurisdiction to  proceed  with the  matter  because  he was claiming  arbitration  and  the dispute between him and defendants 8 to 12 had to be settled by the arbitrators.  The Committee heard the explanation and passed  a  resolution  under byelaw 155  (4)  declaring  the plaintiff a defaulter and it is this resolution which is the matter in controversy between the parties, On  June.  20,  1952,  the  appellant  brought  a  suit  for declaration  that the resolution in dispute dated  June  21, 1949,  was  bad  in law, inoperative, ultra  vires  and  not binding  on the appellant and also for damages  against  the respondents.   He also prayed for reinstatement as a  member of the respondent Association. The  plea taken by the respondent was that the  transactions in  dispute  were not phatak (fictitious  and  inoperative); that at the meeting on June 21, 1919. defendants 8 to 12 had complained that amounts of money had become payable to  them from  the appellant; that at the said meeting the  appellant had  made  it  clear  that he would  not   give  any  kaplis (vouchers)  and  had  therefore  defaulted  and  they   were therefore  entitled to declare him defaulter under  bye  law 155 (4) of the respondent Association. The  suit  was  tried by Tendolkar J.  Several  issues  were raised  but the appellant led no evidence and respondents  1 to 8 examined Mr. Trikamdas Dwarkadas a solicitor of Bombay, who  was present at the meeting of the Clearing  House  Com- mittee  oil  June 21, 1949.  On June 6, 1956, the  suit  was dismissed and an appeal was taken to the Appeal Court  which was  also dismissed and the appellant has come in appeal  by Special Leave.  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 presence 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 kapti  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 discharging 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 action which                             was taken by the Clearing House Committee" The  Appeal  Court concurred in dismissing the  appeal.   It held  that on a proper interpretation of bye-law  155(4)  it was  necessary for the Clearing 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 kapli is not submitted, the Clearing House  Committee can declare him a defaulter".  In other 546

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words  the  Committee  had  to  give  the  member  a   locus penitentiae  and that after giving his explanation a  member could still submit a kapli, and escape  the    penalty    of being, a defaulter.  From the conduct   of   the   appellant his counselhowever it appeared quite clearly that having challenged the jurisdiction of the Committee and having told them  that  they  could  not  proceed  in  the,  absence  of reference  to arbitration the appellent had no intention  of giving the kaplis. Two  questions  have  been raised in this  appeal,  (1)  the question  of interpretation and (2) that no opportunity  was given  after the decision was made against the appellant  to give  the kaplis.  The submission of the respondents on  the other  hand was that the appellant had deliberately  made  a false  allegation  that after be made a  submission  he  its asked  to  leave.  This was to buttersay his plea  that  the matter  was  decided in his absence.  The court  below  have found  that  whether an opportunity held been given  to  the appellant  or not, he had no interim of giving him  kapli’s. issue  No.  5 was specific on this point.   That  issue  was "whether  the appellant and his legal  advisers  voluntarily 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 case he as put in the forefront of the  question for  decision  the question whether the appellant  left  the meeting  dated June 21, 1949, voluntarily  after  indicating his unwillingness to submit the kaplis.  finding of both the courts, on this question was against the appellant.  In  our opinion  that  is  fully justified by the  evidence  on  the record.  According  to  the  evidence  days  were  fixed  by Association for the settlement of all transaction which  had been entered into for that period. 547 According to the chart of Bombay Bullion exchange 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 respondents  makes  it abundantly  clear that the contention 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  lie  had shown  the transaction his "olia " (clearance  sheet).   All this indicated that the conventions 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 amount found

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             claimable  from him to his  party  (creditor),               the  Clearing House Committee shall  call  him               and  demand  an explanation from him  and  can               thereafter,  if such a kapli is not  submitted               the Clearing House Committee can declare him a               defaulter". 548 That  clause  requires  that  in the  event  of  default  of submission  of  a kapli the Clearing House  Committee  shall call the defaulter and demand an explanation and thereafter, if such kapli is not submitted, declare him a defaulter.  It was  contended  that the meaning of this is that  first  the Clearing  House  Committee is to demand an  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 interpretation of the learned Chief Justice of the High Court is in consonance with  the  language  used. i. e. first  the  explanation  is called  and after explanation is given and some decision  is arrived at in regard to the validity of the reasons for  not giving  the  kaplis then the person 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 submissions.  It is not a requirement of the bye- law that the Clearing House Committee should call 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 be unreasonable to hold  that such is the procedure contemplated by  cl.(4)  of bye-law 155.  The period of time, must, in each case, depend upon  the  circumstances, but where it  is  made  absolutely clear that no payment is going to be made the giving of time is wholly without utility. In our view the High Court has given a correct decision  and we therefore dismiss this appeal with costs. Appeal dismissed. 549