# March 2. 196t PrJtdpr_,iy .~l anmohond as v. Bomb<!Y Bullion AuociotiOA lJd

- **Citation:** [1962] Supp. 3 S.C.R. 541
- **Court:** Supreme Court of India
- **Decided:** 1962
- **Bench:** J. L. Kapur, K. 0. Das Gupta, Raghubar . Dayal
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/march-2-196t-prjtdpr-iy-l-anmohond-as-v-bomb-y-bullion-auociotioa-ljd-2399
- **Pages:** 8

## Headnote

Bullion Association-Member owing amount to creditorPailure to submit Kapli (voucher)
for
amount -
Committee
declaring him a defaulter-Legality of -Giving of opportunity
to •ubmit Kapli if denied-Bombay Bullion . Asaociation Bye
Laws 155 (4).
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 kaplis (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. Th
committee passed a resolution declaring him a defaultere
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:-
v.
Tluir W •rkm1n
Wonohoo J,
1962
March 2.
196t
PrJtdpr_,iy
.~l anmohond as
v.
Bomb<!Y Bullion
AuociotiOA lJd.
Kop.,J.
542 SUPREME COUB.T REPORTS (1962] SUPP.
«Jf any member docs not submit a kapli in the prescribed form in respect of the amount found cla1mable from him
to hi; party (creditor), the Clearing Ho"se Commi!lee shall
call him and demand an explanatio;i from him and can there
after, if such a kapli is not submitted the
Clearing House
Committee can declare him a defaulter."
lltld, that the resolution declaring the appellant a defaulter was ,·alidly passed.
Bye-la,. 155 (4) provides that if a
member did not submit a kapli found clai.nable
from him,
the Committee shall cal\ him and demand an
explanation
from him and can thereafter if such
kapfi is
not submitted
declare him a defaulter.
Under this bye- law first the explanation is rall('d and after it is given
and some
decision is
arrived at 1 the person complained against can file the kapl-i,
but no specific period is
prescribed
for doing so nor is the
Com1ni1trc required to call him for this purpose. ·rhe period
of titne depends upon the circumstances in each C"\se.
In the
present case since the appellant had
made it clear before
the Committee that he ,,·as not going to
make the payment,
the giviug 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 telephone or by letter or by giving him notice.
Crv11. .APP}~LLATE Jmus1>ICTION : Civil Appeal
No. 437/60.
Appeal by special le&ve
from the
and decree dated July 12, 1957, of the
:sigh Court in Appeal No. 71 of 1956.

## Text

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•
a s.c.R. SUPREl\lE COURT REPORTS
~ ' I
541
1962
k ·
We therefore see no reason to interfere
wor men.
·.
t
with the order of the tribunal in this respec ·
We therefore allow the appe~ls .in par~ and
dismiss them in part in the manner md1?ated m the
course· of this judgment.
In . the mrcumstances
parties will bear their own costs m both the appeals.
Managtment of the
D. c. M. Chmiical
Works
Appeals allowed in part.
PRATAPRAY MANMOHANDAl::i ·
v.
BOMBAY BULLION AS~OCIATION LTD.
(J. L. KAPUR, K. 0. DAS GUPTA and RAGHUBAR
.
DAYAL, JJ.)
Bullion Association-Member owing amount to creditorPailure to submit Kapli (voucher)
for
amount -
Committee
declaring him a defaulter-Legality of -Giving of opportunity
to •ubmit Kapli if denied-Bombay Bullion . Asaociation Bye
Laws 155 (4).
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 kaplis (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. Th
committee passed a resolution declaring him a defaultere
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:-
v.
Tluir W •rkm1n
Wonohoo J,
1962
March 2.
196t
PrJtdpr_,iy
.~l anmohond as
v.
Bomb<!Y Bullion
AuociotiOA lJd.
Kop.,J.
542 SUPREME COUB.T REPORTS (1962] SUPP.
«Jf any member docs not submit a kapli in the prescribed form in respect of the amount found cla1mable from him
to hi; party (creditor), the Clearing Ho"se Commi!lee shall
call him and demand an explanatio;i from him and can there
after, if such a kapli is not submitted the
Clearing House
Committee can declare him a defaulter."
lltld, that the resolution declaring the appellant a defaulter was ,·alidly passed.
Bye-la,. 155 (4) provides that if a
member did not submit a kapli found clai.nable
from him,
the Committee shall cal\ him and demand an
explanation
from him and can thereafter if such
kapfi is
not submitted
declare him a defaulter.
Under this bye- law first the explanation is rall('d and after it is given
and some
decision is
arrived at 1 the person complained against can file the kapl-i,
but no specific period is
prescribed
for doing so nor is the
Com1ni1trc required to call him for this purpose. ·rhe period
of titne depends upon the circumstances in each C"\se.
In the
present case since the appellant had
made it clear before
the Committee that he ,,·as not going to
make the payment,
the giviug 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 telephone or by letter or by giving him notice.
Crv11. .APP}~LLATE Jmus1>ICTION : Civil Appeal
No. 437/60.
Appeal by special le&ve
from the
and decree dated July 12, 1957, of the
:sigh Court in Appeal No. 71 of 1956.
judgment
Bombay
C. K. Da)lhtary,
Soliciwr
General of India,
S. G. Patwardhan and Naunit Lal, for the appellant.
A. V. Vi.rwanatha Sa.~tri, N. P. NatJiwani and
K. L. flat/ti, for respondent No. I.
1962. ;\farch 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
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 appointed 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 outstanding 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.
544 SUPREME COURT REPORTS [1962] SUPP.
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 controversy 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 preBent at the meeting of the Clearing House Committee 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.
•
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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 casein 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 interpretation 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 explanation 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 having challenged the jurisdiction of the CommittPe
and having told them that th"Y could not proceed
in the absence of reference to arbitration the appcllent had no intention of giving the kaplis.
Two questions have been raised in this appeul; (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 opportunity 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 decision 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 transactions 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 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 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 contended that the meaning of this is that first the C!earring 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 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 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 appeal with costs.
Appeal dismi.~se,d.
,.
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