Ganeshi Lal Niader Mal v. Joti Prasad Om Prakash — 1969 DIGILAW 244 (ALL)

JUDGMENT H.N. Seth, J. - This is plaintiff's first appeal arising out of a suit for recovery of Rs. 16,937/13/3 from the defendants on account of certain forward transactions, alleged to have been done by the defendants through the commission agency of the plaintiff-firm, which resulted in loss. 2. Plaintiff Messrs. Ganeshi Lal Niadar Mal claiming to be a registered firm under the Indian Partnership Act brought the suit against defendants nos. 2 to 7 who were members of a joint Hindu family, and were carrying on joint family business in the name of Messrs. Jyoti Prasad Om Prakash, which firm has been arrayed as defendant no. 1. 3. Briefly stated the case set up in the plaint was that the defendants entered into various transactions of sale and purchase of Matar, Binaula, Gwar, Gur, Gold and silver through the commission agency of the plaintiff-firm. All transactions in Hapur Mandi were regulated by rules and regulations passed by the Chamber of Commerce of the market. Consequently, the transactions entered into by the defendants were also governed by the same rules, regulations.and usage. According to usage of the market and rules of Chamber of Commerce, transactions in Mandi are entered into in the name of the dealers, and name of the constituents for whom the transactions are entered is not disclosed. The dealers in the market have to abide by the decision of the Chamber of Commerce and Mahavir Vyapar Mandai in all matters relating to these transactions as and when the same are made. On Phagun Sudi 9, Sambat 2008, corresponding to 5th March 1952, the defendants had outstanding as bought 25 Bijaks of Binaula of Baisakh Sudi 2009 delivery each Bijak of Binaula is equal to 200 Mds. On account of great fluctuation in the rates that were prevailing near about the time, the Mahavir Vyapar Mandal Hapur decided to have all the outstanding transactions of Binaula deliverable in Phagun Sambat 2009 settled at the rate of Rs. 7/11/3. Accordingly defendants transactions were also settled at that rate, which resulted in loss of Rs. 23,788/9/3 including expenses. Certain other transactions were also entered into by the plaintiffs in respect of which there was profit and after adjusting the same defendants have to pay a sum of Rs. 16, 937/13/3 to the plaintiff. 7/11/3. Accordingly defendants transactions were also settled at that rate, which resulted in loss of Rs. 23,788/9/3 including expenses. Certain other transactions were also entered into by the plaintiffs in respect of which there was profit and after adjusting the same defendants have to pay a sum of Rs. 16, 937/13/3 to the plaintiff. In spite of demand, defendants failed to pay the amount and as such the plaintiff was entitled to recover the same along with interest at the rate of 6 per cent per annum, as agreed between the parties The plaintiff entered into the transaction as a commission agent and was concerned only with his commission. He had nothing to do with profit and loss of the transactions as such. 4. The defendants contested the suit; three sets of written statements were filed by them. One written statement was filed on behalf of defendant no. 1 Messrs. Jyoti Prasad Om Prakash and defendant no. 3 Sri Jyoti Prasad. In this written statement it was alleged that the transaction had been entered into by defendant No. 3 in his individual capacity and the firm defendant No. I had nothing to do with it. The firm Messrs Jyoti Prasad Om Frakash was a partnership firm registered under the Partnership Act and defendants 2, 5. 6 and 7 had nothing to do with it. Only defendants No. 3 and 4 were the partners of this firm. It was denied that any transaction, as mentioned in the schedule attached to the plaint, was entered into either by the firm or by defendant No. 3. Legality of the transaction was also questioned. The defendants contended, that in respect of transactions that were entered into between the plaintiff and the defendants, the relationship between the parties was that of principal to principal, and the plaintiff never acted as their commission agent. 'These transactions were entered into on Pucca Arhat system. It was further pleaded that it had been specifically agreed between the parties that in no case delivery of the goods would be demanded or given and only profits and losses were to be adjusted in accordance with difference between the rate of pin chase and sale. These transactions were said to be of wagering in nature and no claim under them could be enforced as provided in Section 30 of the Contract Act. These transactions were said to be of wagering in nature and no claim under them could be enforced as provided in Section 30 of the Contract Act. Forward transactions in Binaula had been prohibited under Government Orders, and as such the contract was invalid being against public policy. The defendants were not the members of the Chamber of Commerce and Mahavir Vyapar Mandal and they were not governed by the rules and regulations of these two bodies. The defendants specifically pointed out that the plaintiff had not given any particulars of usage of the market to the effect that all forward transactions in Hapur Mandi were regulated by rules and regulations framed by the chamber of commerce or the Mahabir Vyapar Mandal, and that the transactions in the Mandi were entered into in the name of dealers and the name of the constituent for whom it was entered into was not to be disclosed. In the end the defendants contended that they were not bound by the decision of the Chamber, which was arbitrary, illegal, and against the principles of natural justice and fair-play. Prevailing rate of Binaula on the date of alleged settlement was Rs. 914/- to 918/- and the Chamber or the Vyapar Mandal had no jurisdiction to settle it at the rate of Rs. 7/11/3. This was done with an ulterior motive in the interest of the members of the Chamber. According to his the rate of Binaula prevailing on the due date was Rs. 12/-. 5. Defendants Nos. 2, 5, 6 and 7 pleaded that they had no concern with the firm Messrs Jyoti Prasad Om Prakash and they had nothing to do with the transactions in question. They contended that they had been unnecessarily impleaded in the suit. 6. Plea raised by defendant No. 4 was that he was a partner in the firm Messrs. Jyoti Prasad Om Prakash and defendants Nos. 2, 5, 6 and 7 had nothing to do with it. The transactions in question if any were entered into by defendant No. 3 in his individual capacity and the firm Jyoti Prasad Om Prakash had no concern with it. 7. After considering the evidence produced in the case, trial court came to conclusion that plaintiff firm was a registered firm and the suit was not barred by Section 69 of the Indian Partnership Act. The firm Messrs. 7. After considering the evidence produced in the case, trial court came to conclusion that plaintiff firm was a registered firm and the suit was not barred by Section 69 of the Indian Partnership Act. The firm Messrs. Jyoti Prasad Om Prakash was not a joint Hindu family firm and defendants Nos. 2, 5, 6 and 7 had no concern with it. Forward transactions in question were entered into on behalf of the firm Jyoti Prasad Om Prakash and not by defendant No. 3 in his individual capacity. The defendant firm did all the forward transactions with the plaintiff as mentioned in the plaint and that the position of the plaintiff was that of a Pucca arhti. Dealing between the parties was as between principal and principal and not as between principal and agent. Transaction in question had been prohibited by the Government under a notification dated 4th November 1949, and, as such, no claim in respect of these transactions could be enforced because of the provisions of Section 23 of the Contract Act. The transaction was not vitiated as being by way of wager. It was settled by the Chamber of Commerce on 5th March 1952 at Rs. 7/11/3 in accordance with rule of the Mandal after the defendants failed to pay the margin money. The transaction was settled in the plaintiff's own interest as the rate was falling and delay in settlement might have caused great loss to him. Plaintiff actually paid the losses stated by him, and had the relationship between the parties been that of an agent and principal, he would have been entitled to recover the losses claimed by him. The trial court also recorded a finding that there was an agreement to pay interest at the rate of Rs. 6/- per cent per annum. In view of its finding that the contract was one which had been prohibited by law it was void and therefore plaintiff could not recover anything under it. The plaintiff's suit was therefore dismissed. 8. Plaintiff has now come up in appeal before us. On his behalf it is contended that the finding recorded by the trial court that the transaction in question was prohibited by law and was void is erroneous. His suit was wrongly dismissed on this ground. On other findings recorded in the case, he was entitled to a decree against defendants Nos. 1, 3 and 4. On his behalf it is contended that the finding recorded by the trial court that the transaction in question was prohibited by law and was void is erroneous. His suit was wrongly dismissed on this ground. On other findings recorded in the case, he was entitled to a decree against defendants Nos. 1, 3 and 4. Counsel for the defendants supported the judgment of the court below on the ground that the transaction in question was void. He contended that even if it is found that the transaction was not void still the plaintiff is not entitled to any decree as he could not bind the defendants by settling his transaction through the Mandal. Settlement made by the Mandal was not binding on the plaintiff, more so when it had not been made in accordance with its own rules. This settlement was absolutely without jurisdiction and illegal. It was further contended that the plaintiff did not produce any evidence about the market rate on the clue date and as such he was not entitled to recover any amount. The market rate of Binaula on the due date was Rs. 12/- and if the transaction had been settled on that date defendants would have been entitled to recover some money from the plaintiff. 9. We will first consider the question whether forward transaction in Binaula entered into by the parties on 5th March 1952 was a transaction which stood prohibited in law and was therefore void as being against public policy. 10. The Central Government in exercise of its powers under the Essential Supplies and Temporary Powers Act 1946 issued a notification No. 58-TPC (1) /49 on 4th November 1949 under this notification it prohibited all forward contracts in cot-ton seed with effect from 4th November 1949. In the normal course prohibition contained in the notification would have continued to be in force on 5th of March 1952 when the transaction in question took place. On 15th September, 1951 Government of India issued another notification which was in following words. In the normal course prohibition contained in the notification would have continued to be in force on 5th of March 1952 when the transaction in question took place. On 15th September, 1951 Government of India issued another notification which was in following words. "In exercise of the powers conferred by Section 3 of the Essential Supplies (Temporary) Powers Act 1946, the Central Government hereby directs that no order made or deemed to have been made under the said Act or corresponding law in any state except the State of Punjab shall have effect as to prohibit or restrict the movement of cotton seed from any place in that state to any other place within or outside the State or so as to regulate or control the price, production, movement or distribution thereof in any manner whatsoever." Thereafter the Central Government again issued another notification on 20th May, 1952, similar to the notification of 1949 prohibiting forward contract in cotton seed with effect from 20th May, 1952 and providing that all forward contracts pending on that date would be settled at the rate prevailing on that date. In paragraph 5 of this notification it was provided that cotton seed (forward contract) order 1949 was being superseded on behalf of the defendants it was argued that prohibition contained in the 1949 Control order continued till it was superseded by the control order of 1952 on 20th May, 1952. 11. Notification dated 15th September, 1951 showed, that provision was being made that no order made or deemed to have been made under the Essential Sup-plies and Temporary Powers Act 1946 or under any corresponding provision of a law in any State was to have effect so as to regulate or control the price, production, movement or distribution of cotton seed in any manner whatsoever. There can be no doubt that 1949 control order was made under the Essential Supplies (Temporary Powers) Act 1946 and therefore, 1951 order intended to make it inoperative in so far as it regulated and controlled the price production, movement or distribution of cotton seed in any manner. There can be no doubt that 1949 control order was made under the Essential Supplies (Temporary Powers) Act 1946 and therefore, 1951 order intended to make it inoperative in so far as it regulated and controlled the price production, movement or distribution of cotton seed in any manner. Provisions of the Essential Supplies and Temporary Powers Act 1946 under which the 1949 Control order was issued show that the control order was issued for the purposes of controlling the production, supply and distribution of trade and commerce in cotton seed, and as such when the 1951 Order provided that no order made or deemed to have been made under the Essential Supplies and (Temporary Powers) Act, shall have effect so as to regulate or control the price, production, movement or distribution of cotton seed in any manner whatsoever, it had the effect of superseding the 1949 Order. The entire 1949 order was directed towards regulating or controlling price movement or distribution of oil seed. The case of Chamber of Commerce, Hapur v. State of U.P., A.I.R. 1955 SC 8 supports this argument. The facts of this case were that the State of U. P. promulgated the U. P. Food Grains (future and option Prohibition) order 1945, in exercise of its power under the Defence of India Rules. It prohibited entering into futures and option in food grains or to pay or receive or agree to pay or receive margins relating to such futures. This order was continued by the Essential Supplies (Temporary Powers) Ordinance 1946. On 5th March, 1947 a notification was issued by the Central Government under Section 3 of the Act directing that no order made or deemed to he made by a provincial Government under the Act should have effect from that date so as to prohibit or restrict the movement of edible oil seed or oils other than coconut oil from any place in a province to any other place within or outside the province or so as to regulate or control the price, production or distribution thereof in any was. The 1945 order, therefore, ceased to have effect in so far as it prohibited or restricted the movement of edible oil seed or oils other than coconut oil or it regulated or controlled the price, production, distribution thereof in any manner. The 1945 order, therefore, ceased to have effect in so far as it prohibited or restricted the movement of edible oil seed or oils other than coconut oil or it regulated or controlled the price, production, distribution thereof in any manner. Subsequently, however, the power of the Provincial Government to make orders in respect of pulses other than gram was withdrawn and by another notification dated 15th November, 1947 it was provided that no order made or deem-ed to have been made by the Provincial Government under the Act shall have effect from that date so as to prohibit or restrict the movement of pulses other than gram from any place in a province to any other place within or outside the province or so as to regulate or control the price, production or distribution thereof in any manner, After considering various arguments raised in the case the Supreme Court came to the conclusion that as a result of joint operation of notification dated 5th March, 1947 and 15th November, 1947 the Control order of 1945 stood affectively superseded in so far as it prohibited or restricted the movement of edible oil and oil seeds and pulses other than gram or to regulate or control the price, production or distribution of these commodities. Their Lordships of the Supreme Court observed as follows :- "By these notifications the Central Government directed that no order made or deemed to have been made under the Act by a provincial Government should have effect so as to prohibit or restrict the movement of edible oils and oil seeds, pulses other than gram or to regulate or control the price, production or distribution of these commodities in any way. As a result of the joint operation of these notifications the 1945 Order ceased to have effect so as to prohibit or restrict the movement of edible oils and oil seeds and pulses other than gram or to regulate or control the price, production of those commodities. As that order of 1945 ceased to have effect with regard to the price, production, distribution and movement of those commodities it is not easy to comprehend how that Order could continue to regulate or control a trade commerce in those commodities. Trade commerce in any commodity cannot be controlled unless the ' price, production distribution and movement of that commodity can also be con, trolled. Trade commerce in any commodity cannot be controlled unless the ' price, production distribution and movement of that commodity can also be con, trolled. It follows, therefore, contrary to the contentions of the State that these two notifications of 1947 quite effectively supersede the 1945 Order so far as it purported to regulate or control the price, production, distribution and movement of Trade or commerce in any edible oil, oil seed and pulses other than gram." Wordings used in the notification dated 15-9-1951 in our case are more or less identical with the wordings used in the two notifications dated 5th March, 1947 and 15th November, 1947 in the Supreme Court case, for superseding the 1945 Order in respect of edible oil, oil seeds and pulses other than gram. We, therefore, feel that, as in the Supreme Court Case, the two notifications dated 5th March, 1947 and 15th November, 1947 had the effect of superseding the Central Order of 1945 so far as edible oil, oil seeds and pulses other than gram was concerned, in the same manner the notification dated 15th September, 1951 had the effect of superseding the 1949 Order prohibiting forward contracts in cotton seeds. 12. The trial court has tried to distinguish the Supreme Court case on the ground that in that case it was the combined effect of both the notifications and not the solitary effect of later notification which resulted in the complete withdrawal of the power of the provincial Government in respect of those commodities. We fail to appreciate the distinction drawn by the learned Civil Judge. In the Supreme Court cases Control Order of 1945 was superseded in respect of edible oil and oil seeds and pulses other than gram not because of the notification withdrawing the power of the provincial Government to make orders in respect of those commodities. It stood superseded because the two notifications dated 5th March, 1947 and 15th November, 1947 made provision that nothing in any order made or deemed to be made by a provincial Government under the Act was to have effect so as to regulate or control the price production or distribution of edible oil, oil seed and pulses other than gram. 13. The learned Civil Judge pointed out that notification made on 20th May, 1952 mentioned that the 1949 notification was being superseded by it. 13. The learned Civil Judge pointed out that notification made on 20th May, 1952 mentioned that the 1949 notification was being superseded by it. He argued that in case the 1949 notification already stood superseded by the 1941 notification there was no point in providing for its supersession in the year 1952. According to him this clearly shows that notification of 1949 was not superseded by 1951 notification. 14. We do not agree with this reasoning given by the learned Civil Judge. In the first place if the 1949 notification stood superseded by 1951 notification, it is immaterial that 1952 notification made a provision for its supersession. This would have been a redundant provision because 1952 notification could not have superseded the 1949 notification over again after it stood superseded in the year 1951. In the second place it is significant to note that notification of 1952 provides for settlement of existing forward contracts on the date that notification came into force. If the notification of 1949 did not stand superseded by the 1951 notification all forward contracts stood prohibited after the year 1949, and no question of settling them on the date of that notification in the year 1952 could possibly arise. It may also be pointed out that notification of 1949 was applicable to whole of India and forward contracts in cotton seed in all the provinces were prohibited. 1951 notification removed the ban in respect of forward contract in all the provinces excepting in the province of Punjab. The results of 1951 notification was that although 1949 notification stood superseded in respect of all the provinces but it survived so far as Punjab was contained. Therefore, it became necessary to make a provision in 1952 notification for superseding 1949 notification and for settling forward contracts outstanding on that date. 15. In view of the aforesaid discussion we are of opinion that the 1949 notification prohibiting forward contracts stood superseded by the notification dated 15th September, 1951. When the contract was entered into between the parties on 5th March, 1952 there was no legal ban on forward contracts in cotton seed. Relief to the plaintiff, therefore, could not be refused on the ground that the contract was void and could not be enforced under Section 23 of the Act. 16. When the contract was entered into between the parties on 5th March, 1952 there was no legal ban on forward contracts in cotton seed. Relief to the plaintiff, therefore, could not be refused on the ground that the contract was void and could not be enforced under Section 23 of the Act. 16. We will now consider the arguments raised on behalf of the defendant-respondent that the transaction in Binaula was entered into between them and the plaintiff is principal and they had nothing to do with the Chamber of Commerce and the settlement made by it; that the settlement made by the Chamber or the Mandal was not binding on them; that even if settlement of transaction in accordance with the rules of the Chamber of Commerce had been binding on the defendant, the transaction had not been settled according to rules and as such plaintiff cannot hold the defendant responsible for losses and to recover the same. 17. Most important thing that has to be considered in this connection is as to what were the terms of the contract that was entered into between the parties. Admittedly the defendant is not a member of the Chamber or Mahabir Vyapar Mandal, and prima facie he will not be bound by its rules, unless until plaintiff is able to show that they were so bound under some agreement, custom or usage prevailing in the market. 18. In paragraph 7 of the plaint it was mentioned that all the transactions in Hapur Mandi are regulated by rules and regulations framed by Chamber of Commerce of the market, consequently the transactions entered into by the defendants were also governed by the same rules. Again in paragraph 9 it was mentioned that according to usage of the market and rules of the Chamber of Commerce and Mahavir Vyapar Mandal transactions in the Mandi are entered into the name of the dealer and the name of the constituent for whom the transaction is entered is not disclosed. It is, therefore, clear that according to the plaint there was no agreement between the parties and that they would be bound by any order made by 'the Chamber or the Vyapar Mandal or that the Chamber would be entitled to settle, their transactions before due date, as it could do in respect of its own members. It is, therefore, clear that according to the plaint there was no agreement between the parties and that they would be bound by any order made by 'the Chamber or the Vyapar Mandal or that the Chamber would be entitled to settle, their transactions before due date, as it could do in respect of its own members. Indeed there is no evidence on record to show that any such agreement was arrived at between the parties. Under issue No. 7 the trial court observed. "The plaintiff stated that Binaula transactions were done in accordance with rules of the Vyapar Mandal, copy of which was Ex. 200. This fact was supported by Dharam Das on oath. Ram Chandra P. W. also stated that one of the defendants made their transactions in accordance with rules of Mandal." Out of four witnesses examined in the case on behalf of plaintiff P. W. Dharam Das is the partner in plaintiff's firm. He alone was in a position to give out the terms on which agreement was arrived at c between the parties in respect of Binaula transaction. We have gone through the statement of Dharam Das and he did not state anywhere that the Binaula transaction was done between the parties in accordance with rules of Mandal. So far as statement of P. W. Ram Chandra, who is a broker is concerned, he also does not say that one of the defendants entered into transactions with the plaintiff in accordance with rules of the Mandal. All that he says is that Kailash Chandra defendant used to come to the Bazar and enter into transactions. He used to say that entry relating thereto was to be made at the place of his partner Ganeshi Lal Niadar Mal and whenever information was sent to the plaintiff he used to enter these transactions in their Arhat. The statement does not show on what terms plaintiff and the defendants entered into the Binaula transaction. Moreover, court below found that Kailash Chandra, who is defendant No. 5 in the case, had nothing to do with the firm koti Prasad Om Prakash and this finding has not been challenged by the plaintiff before us. The statement does not show on what terms plaintiff and the defendants entered into the Binaula transaction. Moreover, court below found that Kailash Chandra, who is defendant No. 5 in the case, had nothing to do with the firm koti Prasad Om Prakash and this finding has not been challenged by the plaintiff before us. In view of the fact that Kailash Chandra had nothing to do with the defendant firm, the fact that he visited the Mandi and entered into certain transactions cannot have any bearing on the questions as to on what terms the transactions was entered into between the plaintiff and the defendant firm. No finding about the terms, on which the plaintiff and the defendant firm entered into contract for the purchase of Binaula can be given on the basis of the statement of this witness. No evidence was brought to our notice for showing that in the Mandl there was a custom that whenever a non-member of the Chamber, Vyapari entered into a transaction with a member of the Chamber the non-member Vyapari would be bound the orders or regulations of the chamber in respect of settlement of the contracts of the Chamber in respect of settlement of the contracts before due date. Under the circumstances we are unable to agree with the finding recorded by the learned Civil Judge that the Binaula transactions or the contract between the parties was brought about in accordance with the Rules of the Chamber and that the Rules of the Mandal were, as such, binding on the defendant, who was not a member of the Mandal. 19. Again the trial court observed, that in accordance with the terms of the contract, the plaintiff was also entitled to settle the contract when defendants failed to give margin money. We do not think that under the circumstances of the case trial court was justified in recording this finding. As already indicated there was no contract between the parties that the transaction would be in accordance with rule of Chamber and that those rules would be binding on the defendants who were not members of the Mandal. It therefore, follows that the transaction between the parties could not be dosed on failure of the defendant to pay the margin money under these rules. It therefore, follows that the transaction between the parties could not be dosed on failure of the defendant to pay the margin money under these rules. No other provision, under which margin money could be demanded, and on failure to pay which the transaction could be closed, has been brought to our notice. 20. Moreover the plaintiff did not take the case that he demanded any margin money, and as the defendants failed to pay it, he closed the transaction. Even in his evidence P. W. Dharampal, representing the plaintiff, did not state that any margin money was demanded from the defendants. The plaintiff wanted to rely on certain Hundies, correspondence, telegrams and cheques for showing that some money was being demanded from the defendants which they were unable to pay. There is nothing in the Hundis, correspondence and cheques to connect them with the demand of margin money in respect of Binaula transaction in question. So far as telegrams are concerned the plaintiff did not care to get them included in the paper book of the case. The case, that the transaction was closed because margin money was demanded and not paid, is quite different from the case taken up in the plaintiff which was to the effect that the transaction was closed, because on account of great fluctuations the Mahavir Vyapar Mandal, Co. Hapur decided to have all the outstanding transactions of Binaula deliverable in Phagun Sambat 2009 settled at the rate of Rs. 7/11 / 3 and accordingly, the defendant transactions were also settled at that rate. We, therefore feel that the plaintiff should not be permitted to argue and support his claim on the ground that he was entitled to settle the contract, when the defendant failed to pay the margin money demanded. 21. Trial court thereafter found that the plaintiff acted in the interest of the defendants in settling the contract at the rate prevailing on 4th March 1952 as it was expected that the market might go down further and in such a case defend. ants would suffer greater loss. We may again point out that the plaintiff did not give this as a reason for settling the contract. In the plaint in paragraph 11 all that he stated was that as Mahavir Vyapar Mandal decided to have all outstanding transactions of Binaula, deliverable in Phagun Sambat 2009 settled at the rate of Rs. ants would suffer greater loss. We may again point out that the plaintiff did not give this as a reason for settling the contract. In the plaint in paragraph 11 all that he stated was that as Mahavir Vyapar Mandal decided to have all outstanding transactions of Binaula, deliverable in Phagun Sambat 2009 settled at the rate of Rs. 7/1/13 accordingly, the defendants transactions were also settled at that rate. As pointed out above, the defendants were not bound by the settlement made by Mahavir Vyapar Mandal. Before giving credit to the plaintiff in settling a forward contract before the due date, without any reference to the defendants we have to examine whether the plaintiff had any such authority. 22. Counsel for the appellant contended, that he had authority to settle the contract, as transaction had been entered into according to the rules of the Chamber which were binding on the defendant. The Vyapar Mandal having settled the contract, the settlement was binding on the defendants as well. We have already repelled the argument that the Rules of Chamber were binding on the plaintiff. It, therefore, follows that the plaintiff had no authority to settle the contract before the due date under an agreement. 23. Further Ex. 198 is a copy of the Rules of Mahavir Vyapar Mandal relating to transaction of Binaula for Baisakh Sudi 15, Sambat 2009. These Rules enabled the Mandal to settle and square up the contract under circumstances mentioned in paragraphs 3 to 10 of those Rules. Paragraph 10 provided for a settlement of a transaction, in case some Government order was received, whereunder the transaction had to be closed as per that order or at the last closing rate. It is nobody's case that the transaction had been closed as per Government Order. Under paragraph 3 it was provided that in the event of rise or fall in rates on a difference of annas four per Maund, a cover rate having been published the amount of cover shall be realised. In the event of non-receipt of the amount of cover the Mandal would be fully authorised to square up the transaction or keep the same standing at the risk of the shop-keeper. In the event of non-receipt of the amount of cover the Mandal would be fully authorised to square up the transaction or keep the same standing at the risk of the shop-keeper. Power under clause (3) could be exercised by the Mandal in case of rise or fall in the rates beyond four annas per maund and if margin money was demanded and not paid. As stated earlier, plaintiff did not come with the case that any margin money was demanded from the defendants which they failed to pay. Plaintiff's case was that because of great fluctuations Mandal decided to settle all contracts and the plaintiff agreed to this, and the defendants were hound by the settlement. This case of the plaintiff is quite inconsistent of the argument that the transaction was closed because of non-payment of margin money P. W. 2 Sri Ram Adhar who works with the Mandal says that he does not know whether any cover money was demanded from the plaintiff. This also shows that the Mandal closed the forward transactions without demanding cover money. It is therefore obvious that the transactions were not closed under the Rules, but were closed because all the members agreed to close the forward contracts and to suspend further trading in such commodities. We, therefore feel that the transactions were not settled in accordance with Rules and even if the Rules had been binding, (we have already held that they are not so binding) the defendants would not have been bound by this settlement. 24. Learned counsel for the appellant then urged, that even if the Rules of the Chamber were not binding on the defendants, the plaintiff as a Pucca Arhatia had the right to settle the contract before the due date and claim to be indemnified for the loss suffered by him. Rights of a Pucca Arhatia primarily depend upon the custom prevailing in the area. Customary rights of Pucca Arhatia have been discussed in several cases. Counsel for the appellant was not able to point out any evidence about such a custom. He was also unable to point out a single case where it had been recognised that a Pucca Arhatia could close a transaction relating to a forward contract before the due date. 25. In the case of Tika Ram v. Daulat Barran, A.I.R. 1924 Alld. He was also unable to point out a single case where it had been recognised that a Pucca Arhatia could close a transaction relating to a forward contract before the due date. 25. In the case of Tika Ram v. Daulat Barran, A.I.R. 1924 Alld. 530 a Division Bench of this Court observed as follows :- "Pakka Adhatia probably corresponding to what is known in England as der, credere agent, that is to say an agent or factor who being entrusted with the goods of his principal to dispose of to the best advantage, is in lawful possession of them with a general power to deal with them without reference to his principal but guaranteeing the solvency of the purchaser, and while entitled to charge against his principal his expenses and entitled also to an indemnity form his principal against all losses resulting from carrying out his duty, is under an obligation to pay to his principal the amount due after accounts have been properly settled. Unless the contract clearly indicates the contrary, Pakka, Adhatia becomes a factor entrusted with goods of his principal with wider power, and has no doubt under the appropriate section of the Contract Act, eventually to account to his principal but the accounting must necessarily be done at the place where all the business is transacted." In the case of Kishan Lal v. Bhanwar La1, A.I.R. 1954 SC 500 (502), which is a case of a Pakka Adhatia it was observed as follows :- "It is a suit by an agent claiming indemnity against the principal, for the loss which the agent had suffered in carrying out the directions of the principal. The right to such indemnity is founded on statutory provision contained in Section 222 oi the Indian Contract Act which stands as follows : "The employer of an agent is bound to indemnify him against the consequences of all lawful acts done by such agent in exercise of the authority conferred upon him. .......................... It is the statutory right which flows from the contract of agency that the plaintiff are seeking to enforce against the defendant ........ .......................... It is the statutory right which flows from the contract of agency that the plaintiff are seeking to enforce against the defendant ........ " In the case of Farm Murlidhar Banwari Lal v. Firm Kishore Lal Jagarznath Prasad, A.I.R. 1960 Rajasthan 296, which was also a case of Pakka Adhatia it was observed by Modi, J. at page 300 as follows :- "There is no magic in the mere use of this expression and it would be going very very far indeed to infer merely from the defendants having been characterised as Pakka Adhatias that they had transacted the given dealings as principals and not as agents of the plaintiffs. I am fully conscious of the custom which has been recognised in some of the cases referred to above that a Pakka Adhatia may allocate business which he is asked to transact by his principal to himself." In the case of Sheo Narain v. Bhallra, A.I.R. 1950 Alld. 352 it was observed :- "The basic distinction between a Kachcha and a Pakka Adhatia is that a Kachcha Adhatia acts as an agent on behalf of his constituent and never acts as -1 principal to him. The person with whom he enters into a transaction on behalf of his constituent is brought into contract with the constituent or at least the constituent is informed of the face that the transaction has been entered into on his behalf with such and such other persons. Although the Kachcha Adhatia may not communicate the name of his constituent to the third party he informs the constituent of the third party. In the case of a Pakka Adhatia and the agent makes himself liable upon the contract not only to the third party but also to his constituent and he does not inform his constituent as to the person with whom he has entered into a contract on his behalf." 26. These observations appear to have been approved by a Divisional Bench of this Court in the case of Shanti Lal v. Madan Lal, A.I.R. 1954 Alld. 789. Attributes of a Pakka Adhatia have also been discussed in detail in a Full Bench case of Firm Ram Dev Jai Deo v. Seth Kakoo, A.I.R. 1950 East Punjab 92. These observations appear to have been approved by a Divisional Bench of this Court in the case of Shanti Lal v. Madan Lal, A.I.R. 1954 Alld. 789. Attributes of a Pakka Adhatia have also been discussed in detail in a Full Bench case of Firm Ram Dev Jai Deo v. Seth Kakoo, A.I.R. 1950 East Punjab 92. In this case the main incidents of the relationship between an up country constituent and a Pakka Adhatia have been described as follows :- " (1) A Pakka Adhatia is an agent employed for reward but he is an agent of a special type, the ordinary incidents of agency having, in their application to the Pakka Adhatia, been considerably modified by custom or usage of the market. (2) An ordinary agent has to carry out the principal's mandate for purchase or sale by actually entering into contracts with third parties so as to bring about privity of contract between the principal and the third party. A Pakka Adhatia however has no authority to pledge the credit of the constituent to third parties or to enter into contracts with third parties in the name of the constituents or to establish any privity between the constituent and third parties but may carry out the mandate of the constituent by allocating the contract to himself as the principal. In other words, the Pakka Adhatia himself buys front the constituent, or sells his own goods to the constituent which an ordinary agent cannot ordinarily do. (3) When a Pakka Adhatia under instructions of the constituent puts through a contract in such contract and the constituent and the Pakka Adhatia or the contracting the parties as principals and a new relationship as between principal arises between the constituent and the Pakka Adhatia with respect of the individual contracts so concluded. (4) A Pakka Adhatia may or may not cover himself by entering into con-tracts with third parties but if he does, he does so entirely on his own account and no privity is established between the constituent and the third parties and the constituent has no concern with such covering contracts with third parties and cannot call upon the Pakka Adhatia to account for those contracts. The profits or losses arising out of these covering contracts with third parties are entirely the concern of the Pakka Adhatias. The profits or losses arising out of these covering contracts with third parties are entirely the concern of the Pakka Adhatias. (5) The Pakka Adhatia is under no obligation to substitute a fresh contract to meet the order of his constituent. (6) The Pakka Adhatia stands in a dual relationship with the constituent, namely he is an agent for the purpose of quoting market prices and putting through contracts under instructions of his constituent, although he may allocate the contract .to himself and he is also a principal with respect to the contract, he as agent actually concludes with himself the two distinct relationships subsist side by side. (7) An ordinary agent has to show to his principal how he has carried out the latter's instructions for purchase or sale by disclosing the names of the purchasers or salers and the particulars of the rates etc. at which the goods were purchased or sold and strictly to account for the profit if any, made by the agent in course of the Principal's business; but a Pakka Adhatia not being bound to enter into any contract with third parties is absolved from liability to account on the stringent footing like an ordinary agent and is indeed not liable to disclose his covering contracts or to account for the profits or loss made by him out of those covering contracts. The Pakka Adhatia nevertheless has all the ordinary duties of an agent in so far as they are not specially abrogated by custom or usage of the market. Thus he has to given correct quotations of the market rates, put through contracts under orders of the constituent although he may make the contract with himself as a principal to inform the constituent as to whether he has carried out the instructions, submit accounts showing the results of the cross-contract the account due by or to the constituent, the amounts received from or paid to the constituent and to remit the balance, if any to the constituent. In short, although the Pakka Adhatia is absolved from the liability to account for the covering contracts and the profits or loss made there out, there is no reason to hold that he is not liable to render ordinary account showing what contracts he as agent made with himself as principal, and at what rate, how the contracts so concluded has been performed or squared up by cross-contracts the moneys received or paid to the constituent and the net amount due by or to the constituent : 27. Analysis of the aforesaid authorities show that the relationship between the plaintiff as Pakka Adhatia and the defendant as his constituent can be either -1' that of a principal to principal or an agent to a principal, depending upon facts and circumstances of each case. If the relationship between the Pakka Adhatia and his constituent is shown to be that of a principal to principal the constituent will not be concerned with how the Adhatia dealt with third parties. At best the par-ties could be entitled to recover and pay profits and loss on the due date, in case the delivery of the goods is not giv9n or taken. The constituent would not be concerned how the Adhatia settled his transactions with other parties and whether he suffered any losses. On the other-hand, as contended by the appellant, if relationship between the plaintiff and the defendant is taken to be that of an agent and a principal, and plaintiff would be entitled to enforce the rights of an agent under the contract or the rights which an agent might have under the custom or usage of the market. As pointed out, above there is no evidence of custom or usage in this case. 28. Under Section 222 of the Contract Act, the defendants would be liable to indemnify his agent against the consequences of all lawful acts done by him in exercise of the authority conferred upon him. Now the authority conferred upon the plaintiff was to enter into contract for purchasing Binaula at a specified rate deliverable in Baisakh Sambat 2009. No authority was given by the defendants to the plaintiff to sell it. Under the circumstances the plaintiff was not entitled to sell Binaula on behalf of the defendant. Now the authority conferred upon the plaintiff was to enter into contract for purchasing Binaula at a specified rate deliverable in Baisakh Sambat 2009. No authority was given by the defendants to the plaintiff to sell it. Under the circumstances the plaintiff was not entitled to sell Binaula on behalf of the defendant. If on the due date, the defendant refused to take delivery of the goods after making payment and committed a breach of contract, the plaintiff then might have sold the goods and may have been in a position to claim indemnity for any loss suffered by him. Provision of this section however did not authorise the plaintiff to dispose of and settle the contract before the clue date unilaterally and to claim to be indemnified for the loss suffered. 29. Learned counsel for the appellant contended that under Section 189 of the Contract Act an Agent has an authority to an emergency to do all such acts for the purposes of protecting his principal from loss as would be done by a person of ordinary prudence in his own case under similar circumstances. He contended that action to settle the contract was taken as price was falling and it was prudent to settle the same before the due date in order to protest the defendant from further loss. Action of the plaintiff was authorised, though not under specific agreement, but under the provision of this section. His action being lawful and under the authority of law, he was entitled to be indemnified for the loss suffered by him as provided in Section 222 of the Contract Act. 30. The plaintiff could get advantage of this argument, if it could be held that the action of the plaintiff in settling the contract of 5th March, 1952 at the rates prevailing on 4th March, 1952 was an action taken in an emergency and was the act of a person of ordinary prudence. A perusal of the plaint shows that the plaintiff did not seek to be indemnified by relying upon the provisions of this section. Instead lie relied upon the implied agreement between the parties under which he had the authority to settle the contract if so directed by the Chamber of Commerce of which he was a member. A perusal of the plaint shows that the plaintiff did not seek to be indemnified by relying upon the provisions of this section. Instead lie relied upon the implied agreement between the parties under which he had the authority to settle the contract if so directed by the Chamber of Commerce of which he was a member. The question whether there was an emergency or not is a question of fact and has to be pleaded and proved before any benefit under this section can be claimed by an agent. Ordinarily, while performing his duty an agent has to act under the direction of and with the consent of his principal. An exception to this rule has been made by making a provision in Section 189 of the Contract Act, empowering an agent to do all such acts, which may be done by a prudent man, for the protection of his own interest in an emergency. This obviously means that the emergency contemplated by this section is a situation which calls for an immediate action so that if by the time permission of the principal is taken and acted upon, the principal may suffer loss. In this case no plea was taken that before settling the contract it was not possible for the plaintiff to have obtained the consent of the defendant for settling the transaction before the due date. No evidence about the nature of emergency in which the plaintiff acted without obtaining consent of the defendant has been produced in the case. The fact that the rates in the market were fluctuating must have been known to the defendants. Further the defendants must have been award of the extent of the fluctuations. It was for them to issue direction to the plaintiff for the closure or to settlement of contract, if he considered that his interest was going to suffer in case the same was kept open till the due date. Nothing has been shown as to what actually happened on 5th March, 1952, which impelled immediate settlement of the contract without any reference being made to the defendants. Nothing has been shown as to what actually happened on 5th March, 1952, which impelled immediate settlement of the contract without any reference being made to the defendants. In our opinion merely because other traders in the Mandi had decided to settle their transactions because of a resolution passed by the Chamber it does not mean that there was such an emergency because of which the plaintiff should have settled the transactions of the defendant without making a reference to them. 31. We have, therefore, come to a conclusion, that the plaintiff has failed to establish any custom under which a Pakka Adhatia could without obtaining instructions settle a forward contract, entered into on behalf of his constituent. before the due date. He has failed to prove that there was any agreement between the parties because of which the defendants understood to be bound by any decision taken by the Chamber of Commerce concerned, and to claim to be indemnified for losses suffered on account of such settlement. The plaintiff had not been authorised expressly or impliedly, to settle the contract. Further, there was no emergency in which the plaintiff had to act immediately for the settlement of the contract in the interest of the defendants. His act was therefore not lawful and he could not claim to be indemnified under the provisions of Section 222 of the Contract Act. 32. The plaintiff has led no evidence to prove what the rate of Binaula was on the due date in Baisakh. The defendant's statement, which stands unrequited shows that the rate of Binaula on the due date in Baisakh was Rs. 12/- per Maund. There could not be an over all loss if the transaction of Binaula could be kept alive upto the due date in Baisakh. 33. As a result of the aforesaid discussion we find that the plaintiff is not entitled to recover loss suffered by him as claimed in the plaint. 34. The appeal fails and is dismissed with costs.