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Babasa Bakale Vs. Hombanna Rayappa Hombannavar - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtMumbai
Decided On
Case NumberSecond Appeal No. 513 of 1929
Judge
Reported inAIR1932Bom593; (1932)34BOMLR1268; 140Ind.Cas.624
AppellantBabasa Bakale
RespondentHombanna Rayappa Hombannavar
DispositionAppeal dismissed
Excerpt:
.....section 122-commiasion agent-purchases on behalf of principal-refusal by principal-re-sale by agent-suit to recover damages-indian limitation act (ix of 1908), articles 85,61.; section 222 of the indian contract act is founded on the english rule that every agent has a right against his principal founded upon an implied contract to be indemnified against all losses and liabilities and to reimburse all expenses incurred by him in the exercise of his authority.; where an agent by contracting renders himself personally liable for the price of goods bought on behalf of his principal, the property in the goods as between the principal and agent vests in the agent and does not pass to the principal until be pays for the goods, and the agent has the same rights with regard to the disposal..........61 of the indian limitation act. he argues that the claim being one for recovery of the price of goods, limitation would begin to run from the date the price was paid by the agent to the merchant from whom he bought the goods, that that fact had not been considered by the lower courts, and therefore the case should be remanded for reconsidering the question.4. but the courts found that the goods were purchased by the plaintiff in february 1921 under instructions of the defendants. the trial court held that the cause of action with regard to this part of the plaintiff's claim arose on march 17, 1921, when the defendants refused to take delivery of the goods, and that the suit was in time.5. on the question of limitation the lower appellate court observed as follows:-the contention on.....
Judgment:

Rangnekar, J.

1. The question raised in this appeal is one of limitation, and to appreciate it is necessary to know what the suit is about.

2. The plaintiff was the commission agent of a partnership firm consisting of the three defendants, and brought this suit to recover Rs. 2,800 as being the balance due to him at the foot of an account existing between him and the defendants, The suit was defended only by defendant No. 1, who challenged certain items in the account, some of which were disallowed by the trial Court, and a decree was passed against him for a sum of Rs. 1,568 odd. The decree was confirmed by the lower appellate Court. In the appellate Court the defendants raised two contentions: (1) that no instructions were given to the plaintiff by the defendants for the purchase of 300 bags of tamarind, and (2) the claim in respect of it was barred by the law of limitation. The appellate Court rejected both the contentions and confirmed the decree of the trial Court. Neither Court, unfortunately, has mentioned the Article of the Indian Limitation Act applicable to the case.

3. Mr. Nilkanth for the appellant has raised only one question. He says that the claim of these 300 bags is barred by limitation under Article 61 of the Indian Limitation Act. He argues that the claim being one for recovery of the price of goods, limitation would begin to run from the date the price was paid by the agent to the merchant from whom he bought the goods, that that fact had not been considered by the lower Courts, and therefore the case should be remanded for reconsidering the question.

4. But the Courts found that the goods were purchased by the plaintiff in February 1921 under instructions of the defendants. The trial Court held that the cause of action with regard to this part of the plaintiff's claim arose on March 17, 1921, when the defendants refused to take delivery of the goods, and that the suit was in time.

5. On the question of limitation the lower appellate Court observed as follows:-

The contention on behalf of the appellant that the cause of action to recover the price of 300 bags accrued to the plaintiff on the date of the purchase cannot be accepted. Although the tamarind was purchased on February 8 and 13, its price was not immediately paid. Moreover until the patti was prepared and sent to the defendants, the plaintiff could not claim the price of the tamarind. That patti was prepared on August 9, when the amount was debited in the accounts and it was actually despatched on August 10,1921. Hence this suit filed on March, 15, 1924, is obviously in time.

6. There is considerable force in Mr. Nilkanth's argument that this reasoning is not clear and it is difficult to follow it. In the first place there is no finding as to when the plaintiff paid the price to the person from whom he purchased the goods for and on behalf of the defendants. Secondly, it is difficult to understand what the preparation of the patti has to do with the question of limitation. The learned Judge had probably in his mind the evidence to the effect that there is a practice among commission agents in this district according to which the commission agent debits the amount due to the principal after pattis are sent. But such a practice can hardly be of any use to the plaintiff on the question of limitation unless he relies on a definite custom in the trade well-known to the parties to the effect that it is only after a patti is sent that the commission agent becomes entitled to the payment shown in the patti. No such custom was set up or proved.

7. Now this was not a vendor's suit to recover the price of goods sold to the defendants. The suit was by a commission agent to recover the balance due by the defendants as principals at the foot of an account between the parties. One of the items in the account related to the purchase of goods effected by the agent under the instructions of the principals. The evidence shows that the defendants refused to pay for and take delivery of the goods. The plaintiff waited for some time and after giving notice to the defendants re-sold the goods on their account and credited the amount realized to them. It appears that he had not debited the price to the defendants till August 9, 1921.

8. The correspondence referred to by the lower appellate Court shows that there was no refusal to take up the goods till at any rate March 23, 1921. After that it appears that the defendants quarrelled among themselves and their partnership was dissolved. Nothing seams to have happened thereafter till August 16, 1921, when the plaintiff gave a notice to the defendants and re-sold the goods thereafter, and credited the amount realized to the defendants' account.

9. Under Section 222 of the Indian Contract Act the principal is bound to indemnify the agent against the consequences of the lawful acts done by such agent in exercise of the authority conferred upon him. This section is founded upon a well recognised principle of the English law that every agent has a right against his principal founded upon an implied contract to be indemnified against all losses and liabilities and to reimburse all expenses incurred by him in the exercise of his authority.

10. Now where an agent by contracting renders himself personally liable for the price of goods bought on behalf of his principal, the property in the goods as between the principal and agent vests in the agent and does not pass to the principal until he pays for the goods, and the agent has the same, rights with regard to the disposal of the goods and with regard to stopping them in transit as he would have had if the relation between him and his principal had been that of seller and buyer. The decision in Jenkyna v. Brown (1849) 14 Q.B. 416 is an authority in support of this proposition, and I may also refer to the well-known case of Imperial Bank v. London and St. Katherine Docks Company (1877) 5 Ch. D. 195 and Feiee v. Wray (1802) 3 East 93 This principle is now expressly recognised by the Sale of Goods Act, 1930. In Chap. V. which deals with the rights of unpaid seller against the goods, Section 45 Sub-section (5), lays down that the term 'seller' includes an agent who has himself paid or is directly responsible for the price.

11. When, therefore, the principal refuses to pay for and take delivery of the goods purchased by theagent under his instructions, the agent after giving proper notice to the principal would be entitled to re-sell the goods on account of the latter and hold him liable for any deficiency resulting from the sale. The deficiency, it is obvious, would be the measure of the loss sustained by the agent in the transaction, in respect of which he is entitled to be indemnified and reimbursed.

12. In this view I do not think Article 61 would apply to this case. In my opinion the Article applicable is Article 85 of the Limitation Act.

13. When, therefore, the defendants refused to accept the goods in question, the plaintiff had a right to re-sell them on their account. There is no clear evidence as to when the defendants finally repudiated the transaction, but taking the most favourable view of the defendants' case, it is clear that the transaction was recognized, and that there was no refusal till March 23, 1921. It was then open to the plaintiff to re-sell the goods at any time after proper notice to the defendants, and the right to re-sell accrued to the plaintiff as from that date. The suit was filed on March 15, 1924, and even if the plaintiff's right of indemnity came in existence on March 23, the suit is clearly in time.

14. In this view, I think the Courts below were right in holding that the suit was not barred by the law of limitation. The appeal fails and must be dismissed withcosts.


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