SUNDERLAL & SON versus BHARAT HANDICRAFTS (P.) LTD.

Citation: [1968] 1 S.C.R. 608 · Decided: 20-09-1967 · Supreme Court of India · Bench: J.C. SHAH · Disposal: Dismissed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

60S 
SUNDERLAL a SON 
v. 
BHARAT HANDICRAFCS (P.) LTD. 
September 20, 1967 
(J.C. SHAH, S. M. S!KRI AND J.M. SHELAT, JJ.] 
Forward Contracts (Regulation) Act (74 of 1952), ss. 15(4), and 
20(2)-Validity of contract without consent or authority of party who 
teas not a member of recognised association. 
Code of Civil Procedure (Act 5 of 1908), O. XLI, r. 27-Additicmat 
evidence tendered in Appellate Court-C-0ndition for receiving. 
Under s. 15(1) of the Forward Contracts (Regulation) Act 1952, 
forward contracts for the sale or purchase of specified goods may be 
<entered into only between members of a recognised association or 
with a member or through any member of such association 0th.er· 
wise, the contract will be invalid. By sub-s. (4), Parliament imposed 
c 
a prohibition upon every member of a recognised association against 
entry into a contract on his ouni account, v.·ith a non-member, in D 
respect of the specified goods: the prohibition is lifted when in the 
memorandum. agreement of sale or purchase, or in the bought and 
sold notes H is expressly disclosed that the contract is by the mem-
ber on his own aC'count and that he has secured the consent or autho-
rity of the other person \Vho is a party to the contract. and. if such 
consent or authority be not in writing, the member has obtained a 
written confirmation by such person of such consent or authorit.». 
within three days from the date of the contract. 
E. 
A notification was issued by the Central Government declaring 
s. 15(1) to be applicable to forward contracts in jute goods, and the 
appellants, \vho \Vere members oi an Association recognised by the 
Act, entered into a contract with the respondents-who were not 
C1embers of any such association-for buying jute bags on their O\\'ll 
account. The appellants applied to the High Court, under s. 33 
ofi 
the Arbitration Act. 1940. for an order declaring that there existed F 
a valid arbitration agreement contained in the relevant bought and 
sold notes. No evidence was tendered in the High Court to show that 
the appellants had secured the writtten consent or authority of the 
respondents. to the contract. and it was not their case that they had 
secured any written confirma\ion of an oral consent or authority by 
the respondents. within three days of the date of the contract. The 
High Court held that the requirements of s. 15(4) were not com- a 
plied with, and that the contract was therefore invalid. 
In appeal to this Court. the appellants contended (I) that s. 1~4) 
was complied with, because, the respondents did confirm the con· 
tract in the slip provided for such confirmation at the foot of the 
sold note, that the slip was detached from the sold note but was n<>t 
tendered in evidence in the High Court as its importance \\'as not 
realised; and that this Court should receive the document in evi· B 
dence: and (2) that even if there was a breach of the prohibition in 
s. 15(4) the contract was enforceable. and the breach would merely 
expose the appellants to a criminal prosecution under s. 20(2) 
HELD: (!) The additional evidence could not be allowed to be 
brought on record. [613H] 
A 
The document was in the possession of tije appellants and no 
rational explanation was furnished for not producing It before the 
High Court. Further the document did not prove itself and did not 
establish that the respondents had consented in writing to the terms 
of the contract. This Court as the 111>pellate court, did not require the 
additional evidence to enable it to pronounce judgment, nor was 
any substantial cause made out which would justl!y an order allow-
ing additional evidence to be led in this Court, within the mean-
B ing of O. XL!, r. 27 of the Civil Procedure Code. [613C-D, G-HJ 
(2) The l>rohibition imposed by s. 15(4) Is not imposed in the 
interest of revenue: the clause is conceived in the larger Interest of 
the public to protect them against the malpractices indulged in by 
members of recognised associations in respect of transactions in 
which their duties as agents conflict with their personal Interest. 
Parliament has made a writing, evidencing or confirming the consent 
C or authority of a non-member, as a condition of the contract, If the 
member has entered into a contract on his own account. So long as 
there is no such writing, as is contemplated by s. 15(4) or its proviso 
there is no enforceable contract. (6150.F] 
The penal clause in s. 20(2) cannot be utilised to restr

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