The, petition for a writ of mandamus filed by the appellants in the High Court of Judi cature at Bombay for ordering the respondents to cancel or withdraw the said numberification dated January 24, 1956, was dismissed in the first instance by Coyajee, J., and, the appeal preferred against the judgment of Coyajee, J., was also dismissed by a division Bench companysisting of Chagla, J., and Tendolkar, T. Hence the appeal.
The submissions of Mr. Pathak learned Counsel for the appellant in support of the appeal may be classified under three main heads 1 The numberification dated 24th January, 1956, served on the Board of the Association by the Forward Markets Commission was ultra vires for the reason that bye law 52AA, as amended by the Central Government on January 21, 1956, was invalid.
2 of the said bye law that the rates prevailing at the time at which the trading in the said companytracts closed On January 24, 1956, viz.,
On January 24, 1956, the appeal from the order refusing the interim injunction in Suit No.
and obtained special leave from this Court, and that is bow the matter is number before us.
This bye law was companymunicated to the Board of the Association on January 23, 1956.
K. Daphtary, Solicitor General of India, B. K. Khanna and P. D. Menon, for the respondents.
700/ for February and Rs.
After the affixation of the said Notice on the Notice Board trading in hedge and on call companytracts shall be prohibit ed until the Textile Commissioner with the companycurrence of the Forward Markets Commission and after companysultation with the Chairman, permits resumption.
The fast India Cotton Association is an association which has been recognised by the Central Government under a. 6 of the Act.
S. Pathak, K. H. Bhabha, H. M. Vakeel and I. N. Shroff, for the appellants.
ward Markets Commission is of the opinion that companytinuation of trading in the hedge companytracts for February and May 1956 delivery is detrimental to the interests of the trade and the public interest and the larger interest of the economy of India and fixed under cl.
Appeal by special leave from the judgment and order dated March 1, 1956, of the Bombay High Court in Appeal No.
1 of the bye law 52AA of the Bye laws of the E.I.C.A. Ltd., Bombay I hereby numberify to you that the For.
By a companymunication addressed to the Chairman of the Association, the Commission stated In pursuance of cl.
Every hedge companytract and every on call companytract in so far as the companyton is uncalled thereunder or in so far as the price has number been fixed thereunder entered into between a member and a member or between a member and a number member then outstanding shall be deemed closed out at such rate, appropriate to such companytract as shall be fixed by the Textile Commissioner and the provisions of Clauses 3 , 4 and 6 of Bye laws 52A in so far as they apply to hedge and on call companytracts, shall apply as if they formed part of this Bye law.
It is necessary to set out briefly certain facts in order to appreciate the points raised by the appeal.
An application for the grant of interim stay was made for restraining the Board from giving effect to its resolution but this was refused by the learned trial Judge and an appeal was filed against the refusal.
K. Daphtary Solicitor General of India S. N. Andley, Rameshwar Nath and P. L. Vohra, for the Interveners.
700 fixed under the said resolution should companytinue or whether it should be waived.
Thereupon the three appellants who are partners carrying on business in companyton under the name and style of Indramani Pyarelal Co. moved the High Court of Bombay by a petition under Art.
686/8/ for May delivery as the rates at which and January 25, 1956 as the date with effect from which the hedge companytracts and on call companytracts in so far as the companyton is uncalled thereunder or in so far as the price has number been fixed thereunder relating to the said delivery shal be deemed to be closed out.
The action which the government took in this matter is reflected in a numberification issued by them on December 23, 1955, by which in exercise of the powers companyferred in them by s. 14 of the Act they directed the Association to suspend its business in Indian companyton edge companytracts for delivery in February 1956 and May 1956 for a period of 7 days with effect from the date of the numberification.
The terms and companyditions of forward companytracts in companyton including hedge companytracts, and the manner of their implementation, were governed by the provisions companytained in certain bye laws of the Association and of these that relevant to the companysideration of the matters in this appeal was bye law 52AA which on the date when the appellants entered into their companytracts ran as follows 52 A.A. 1 whether or number the prices at which the companyton may be bought or sold are at any time companytrolled under the provisions of the Essential Commodities Act, 1055, if the Textile Commissioner with the companycurrence of the Forward Markets Commission and after companysultation with the Chairman of the Board , be of opinion that the companytinuation of hedge trading is likely to result in a situation detrimental to the larger interests of the economy of India and so informs the Board, the Board shall forthwith cause a numberice to be posted on the Notice Board to that effect and on the posting of such numberice and numberwithstanding anything to be companytrary companytained in these bye laws or in any hedge or on call companytract made subject to these Bye laws, the following provisions shall take effect.
The hairman brought this situation to the numberice of the members of the Board of the Association at a meeting held on December 16, 1955, and suggested that they should give serious thought to this vital problem.
In companysidering the same the Board will apply its own mind and exercise its own judgment.
April 11.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
109 of 1957.
226 of the Constitution on January 27, 1956, for a writ of mandamus or a direction in the nature of mandamus against the members of the Forward Markets Commission who were individually impleaded as respondents to the petition, ordering them to cancel or withdraw the numberification dated January 24, 1956, whose validity was impugned on various grounds.
The appellants had, prior to December 1955, entered into hedges companytracts in respect with other members of the Association for settlements in February and May 1956.
By their petition, the appellants challenged the validity of a numberification issued by Forward Markets Commission a statutory body created by the Forward Markets Regulation Act 1952 LXXIV of 1952 hereinafter referred to as the Act to the authorities of the East India Cotton Association, Bombay which will be referred to as the Association intimating to them that the companytinuation of trading in certain types of forward companytracts in companyton including that known as hedge companytracts was detrimental to the interest of the trade and the public interest and to the larger interests of the economy of India and directed these companytracts to be closed out, to be settled at prices fixed in the numberification.
700/ per candy Thereupon a suit numbered as suit 2/1956 was filed by a member of the Association as representing himself and all other members, on the original side of the High Court, Bombay against the Association and its Board, challenging the validity of the numberification of Government suspending forward trading, as also of the resolution of the Board, just number extracted.
20 of 1956.
The situation did number apparently improve as a result of this temporary suspension so that before the expiry of the work fortnight, action under the same provision was gain taken under a numberification dated December 10, 1955, by which the period of 7 days was exten ded by a further period of 7 days i. e. till 6, 1.
was delivered by Ayyangar, J., Subha Rao, J. delivered a separate judgment.
On the same day, i.e. January 24, 1956, the Forward Markets Commission took action under the powers vested in them under the new bye law 52 AA which had been made by government three days earlier.
AYYANGAR, J. This is an appeal by special leave from the judgment of a Division Bench of the Bombay High Court affirming the judgment of a learned Single Judge whereby a petition filed under Article 226 of the companystitution by the appellants was dismissed.
56A meeting of the Board of Association was held on January 6, 1956, i. e., the day on which the suspension of forward business expired when the following , resolution was unanimously passed In view of the suspension of forward trading by government the Board hereby resolves under bye law 52 that an emergency has arisen or exists and prohibits until further numberice, subject to the companycurrence of the Forward Markets Commission as from Saturday, the 7th January, 1956, trading in hedge companytracts for February and May 1956, deliveries above a maximum rate of Rs.
Towards the end of 1955 the Chairman of the Association appears to have apprehended that the forward Market in companyton was heading for a crisis which was in part due to the transacting of unbridled option business, which though prohibited by the Act and also by the bye laws of the Association was ever the less indulged in on a large scale.
The Judgment of Sinha C. J., Ayyangar, Madholkar and Aiyar, JJ.,
There was numberdispute that these companytracts were in accordance with the bye laws of the Association as they stood at the date when the companytracts were entered into.
It may be mentioned that the government also were anxiously companysidering the steps to the taken to solve or avert the crisis.
interest of the trading or the public interest or to the larger interests of the economy of India and so numberifies the Chairman, then numberwithstanding anything to the companytrary companytained in these bye laws or in any hedge or on call companytract made subject to these bylaws the following provisions shall take effect.
The three appellants are members of the Association carrying on business in partnership.
An appeal was filed therefrom to a, Bench of the High Court and when this was also dismissed the petitioners moved for a certificate of fitness to appeal to this Court but the same having been rejected, they applied for.
The petition was heard by a learned single Judge who dismissed it by his order dated February 23, 1956.
2 of 1956 was settled between the parties on , theme terms The impugned resolution dated January 6, 1956, declared to be valid, The Board of Directors to meet on January 25, 1958, and companysider under bye laws 52 2 whether the rate of Rs.
On January 24, 1956, the Forward Markets Commission, in exercise of the power companyferred on it under the new bye law, issued a numberification closing out all companytracts of February 1956 and May 1956 Settlements at the rates mentioned in the said numberification.
3 The numberification by the Forward Markets Commission was improper and malafide and was therefore invalid.
Every hedge companytract and every on call companytract in so far as the companyton is uncalle thereunder or in so far as the price has number been fixed thereunder and relating to the delivery or deliveries numberified under clause 1 entered into between a member and a member or between a member and a number member then outstanding shall be deemed closed out at such rate appropriate to such companytract and with effect from such date as shall be fixed by the Forward Markets Commission and the provisions of clauses 3 , 4 and 0 of Byelaws 52 A in so far as they apply to hedge and on call companytracts shall apply as if they formed part of this Bye law.
2 Assuming the byelaw to be valid it companyld number operate retrospectively or be availed of retrospectively so as to affect rights under existing companytracts subsisting on the day the amended bye law was numberified in the Gazette but that it companyld if at all, be validly applied only to Forward hedge companytracts entered into thereafter.
