Beaumont, C.J:— This is an appeal from the judgment of Kania, J., raising certain questions of commercial usage and commercial law which are discussed at length in the judgment of the learned Judge. It would really be enough to say that I entirely agree with his judgment except as to the point of interest with which I will deal presently. In deference to the strenuous argument of Mr. Mehta I will state very shortly my own reasons for thinking that the appeal must fail.
2. The claim of the plaintiffs is based on their having been instructed as defendants' brokers to purchase 450 tons of linseed for the vaida of September 1921. A 100 tons were subsequently sold. As to twenty-five there was an havala; that reduces the amount to 325 tons. The learned Judge held that as to seventy-five tons the plaintiffs never did purchase them in the market as brokers, but allocated to the defendants' contract seventy-five tons belonging to the plaintiffs, and he held that the plaintiffs were not entitled, being employed as brokers, to convert themselves at will into principals. There is no appeal from that part of the order and that reduces the amount with which we have to deal to 250 tons. The learned Judge has held as a fact that the plaintiffs did purchase in the market as brokers for defendants 250 tons. Mr. Taraporewala contends that having acquired 250 tons as brokers then the relationship between the plaintiffs and the defendants became that of sellers and buyers. Mr. Mehta contends that the relationship between them was that of principal and agent, and that if there had been a breach of the contract at the due date the plaintiffs could only have recovered damages by showing that they had as brokers dealt with the 250 tons in the market with third parties and that they had suffered losses on that basis. To my mind it is not necessary to consider that question in this case because on 27th August 1921 the defendants repudiated the whole transaction denying that they ever instructed the plaintiffs to buy any linseed at all. On that repudiation it was open to the plaintiffs either to refuse to accept the repudiation and wait till the due date keeping the transactions open, or they could accept the repudiation. They did in fact by their letter of 29th. August accept the repudiation, and I think they might then have waited until the due date in order to see what damage they had suffered by reason of the repudiation the amount of which damage would depend on the price of linseed on the due date. In fact in their letter of 29th August 1921 they say that they accept the repudiation of the contract and they have closed the outstanding transaction of 325 tons of linseed for September vaida according to the Bazar Dhara at Rs. 16-12-3 per cwt., being the closing rata of the 30th instant. So that they say that they have closed the account as at the date of 30th August and the learned Judge has held them bound by that statement and has awarded them damages on that basis, and that I think was right.
3. Mr. Mehta has argued that the plaintiffs were bound to show that as agents they had in fact sold against the plaintiffs to third parties, but in my view it is not open to him in one breath to repudiate the whole contract and in the next breath to say that the plaintiffs must continue to show that they acted as agents under the contract. I think they were entitled to accept the repudiation and close the account at the current rate on the date of repudiation. This is the basis on which damages have been given.
4. The learned Judge has further allowed interest on the amount decreed at 6 per cent, from 30th September 1921 until judgment. This being a pure case of damages I do not think we can give interest before judgment. To that extent the decree must be varied. As the appellants have succeeded in part, the interest in this case being a substantial amount having regard to the delay in hearing of the suit, I think there ought to be no order as to costs of the appeal. Subject to this variation the appeal is dismissed.
Mirza, J.:— The plaintiffs' case, as set out in para. 5 of the plaint, was that the plaintiffs had entered into transactions in suit as brokers for and on behalf of the defendants and that the defendants were liable to indemnify the plaintiffs in respect of the loss incurred by the plaintiffs in those transactions. No usage of the linseed market was pleaded by the plaintiffs. Mr. Mehta, who was the learned counsel for the defendants in the trial Court, made an admission in the course of the hearing to the effect that on the transactions being effected the plaintiffs would be responsible to the defendants as well as to third parties in respect of them. The learned Judge has relied on this admission in coming to the conclusion that the principle enunciated in the case of Jamnadas v. Chetandas (1) could be properly applied to this case. That case had reference to an alleged usage of the linseed market whereby a broker was said to be bound to produce shroff's contract during the pendency of the transaction. The finding of the Court was against there being any such usage in the linseed market. But the evidence as to usage was held in that case to establish that in the linseed market after a contract is effected by a broker the broker ceases to be a broker, and is entitled to deal with the broker on the other side as a principal. Incidentally he would be entitled to deal also with his own constituents on whose behalf he enters into the transaction as if he were a principal in the transaction and not merely an agent. In my opinion, for the purpose of our decision in this case, it is not necessary to place the case as high as the learned Judge has done in his judgment. Even on the footing that the plaintiffs continued to be brokers and as such were agents of the defendants in the transactions relating to the September vaida after they were effected, there is ample evidence to show that they allowed the transactions to remain outstanding until they were finally closed on the due date which was 30th September 1921. Mr. Mehta has relied upon the plaintiffs' account books to show that while these transactions were pending the plaintiffs entered into cross-transactions whereby they settled the transactions in suit between 13th and 15th August 1921. The plaintiffs became defaulters in the cotton and the linseed markets on 16th August 1921.
5. They closed their business about that time and entered into no fresh transactions after 15th August. While they were in difficulties it appears that the brokers who had entered into these transactions with the plaintiffs became nervous and pressed them for cross-transactions whereby the accounts between them would be more or less balanced. It does not appear from the entries in the account books that any transactions were closed about the middle of August. It appears that the transactions were left open and were closed only on 1st October, when balances were struck. It is not open to the defendants, in my opinion, to rely upon any specific debit entry appearing in the account books as against a specific credit entry appearing in the same account as one balancing the other unless it can be shown that the one entry was intended to be a settlement of the other. It has not been the defendants' case that he was a party to any such settlement. The evidence on the plaintiffs' behalf has been that about the middle of August the plaintiffs requested the defendants to agree to their transactions being placed with others by way of havalas. The defendants agreed to that course in respect only of twenty-five tons which havala transaction is evidenced by Ex. J. in the case. In respect of the remaining tons which were then outstanding the defendants, according to the plaintiffs' case, failed to come to any arrangement with the plaintiffs. The defendants by their attorneys' letter dated 19th August 1921, questioned the plaintiffs' right to give out to their constituents that some of the transactions for which the constituents were claiming to hold the plaintiffs liable were the defendants' transactions. In the correspondence which ensued the plaintiffs set up their present case.
6. The defendants by their attorneys' letter dated 27th August 1921, finally repudiated their liability in respect of these transactions. The plaintiffs accepted the repudiation and claimed to be entitled to damages from the defendants on the footing of the prevailing rate of linseed on 30th August 1921. It is clear from the correspondence that the plaintiffs regarded the transactions as being still open at the date of the repudiation by the defendants. It appears from the evidence that notwithstanding their letter to the defendants that they were closing the transactions as of 30th August 1921, the plaintiffs did not close the transactions until 30th September 1921, which was the settlement day. When they filed the suit they claimed damages from the defendants on the footing of the prevailing rate on the settlement day.
7. Mr. Mehta has argued that notwithstanding the defendants' repudiation of the transactions the plaintiffs remained the defendants' agents and are under a duty to account to the defendants in respect of these transactions. He contends that the plaintiffs have failed to show that they closed these transactions or had to pay any damage in respect of them to any third party. When the defendants repudiated the transactions, it was open to the plaintiffs to adopt one of two courses, viz. (1) to ignore the repudiation and continue the transactions as defendants' agents until due date, which was 30th September 1921, and then to claim damages on the footing of the rate prevailing on due date; (2) to accept the repudiation and close the transactions against the defendants.
8. The plaintiffs adopted the latter course which, in my opinion, they were entitled to do.
9. The learned Judge has held that having intimated to the defendants that they were adopting this course the defendants were under a duty to mitigate the damages by closing the transactions as of the date when they accepted the repudiation by the defendants.
10. As regards the question of interest, the plaintiffs' claim is for damages and the decree made is in respect of damages. No interest can be allowed on damages. I agree with the order proposed by the learned Chief Justice.
V.B/R.K
11. Decree varied.