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V.G. Sarma and Co. Firm and ors. Vs. Friends and Co. and anr. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtAndhra Pradesh High Court
Decided On
Case NumberA.A.O. No. 216 of 1955
Judge
Reported inAIR1960AP13
ActsIndian Contract Act, 1872 - Sections 213; Code of Civil Procedure (CPC) , 1908 - Order 7, Rule 2
AppellantV.G. Sarma and Co. Firm and ors.
RespondentFriends and Co. and anr.
Advocates:R.V. Rama Rao and ;D. Srimannarayana Chowdhary, Advs.
DispositionPetition dismissed
Excerpt:
contract - agent - section 213 of contract act, 1872 and order 7 rule 2 of code of civil procedure, 1908 - suit by agent for rendition of account - agent cannot call upon principal for accounts - suit not maintainable - agent's claim identified as indemnity under order 7 rule 2 - held, agent entitled for indemnity. - - , held that it is only in exceptional cases where his remuneration depends on the extent of dealings which are not known to him or where he cannot be aware of the extent of amount due to him unless the accounts of his principal are gone into, that a suit by an agent for accounts against his principal might be compe-tent. , air1957mad21 ,that under very exceptional and special circum-stances an employee is entitled to sue an employer for account......that as the plaintiff according to his own showing was an agent, he cannot in law maintain a suit for accounts against the defendants, they admittedly being the rincipals. the objection was sought to be supported y a reference to mahadevi v. sankara menon ilr 1940 mad 296: (air 1940 mad 504). the district judge gave effect to the objection and directed plaintiff to file a memorandum stating the amount due to him from the defendants. the plaintiff on 8-3-1954 filed the memorandum but did not state the amount due to him. the district munsif passed the following order on the check-slip :'the plaintiff is not willing to state the amount due. as the plaintiff is not willing to obey the order of the court, the plaint shall be rejected. the check-slip is answered accordingly.'the learned.....
Judgment:

Qamar Hasan, J.

1. Defendants 1 to 3 appeal and the appeal is directed against the order dated 18-2-1955 of the Subordinate Judge, Eluru by which he reversed the order of the District Munsif of the same place rejecting the plaint, and remanded the case to the Trial Court for trial and disposal on merits.

2. The relief sought in the plaint was for rendition of accounts. It was stated therein that defendants 2 to 4 constituted themselves into a partnership and iraded under the name and style of V. G. Sarma and Co., the 1st defendant. On 27-11-1948, the 1st defendant and the plaintiff entered into an agreement under which the 1st defendant constituted the plaintiff a stockist of the products of Techno Chemical Industries Ltd., for a period of two years terminable by giving certain kind of notices on either side during and after the said period. As a sole distributor the 1st defendant undertook to execute all orders of the plaintiff at their expense and give commission to the plaintiff at certain rates viz., 3 per cent on soap, 5 per cent on oils and 10 per cent on inks on invoice prices and pay discount on goods supplied direct by the sole distributor to any partners in West Godavari as also on unsold stock at the end of each month.

The grievance of the plaintiff was that in pursuance of the said agreement the defendants received Rs. 5,250/- and supplied stocks but committed breach of the other terms of the contract by not arranging for sales and distribution of the stocks by failing to take back all the unsold articles and by failing to account to the plaintiff for the amounts received, the commission, the discount payable to the plaintiff, the loss, the office and other expenses payable to the plaintiff.

3. In para 9 of the plaint, the plaintiff valued the suit at Rs. 100/- and paid a Court-fee of Rs. 11-3-0 under Section 7(iv)(f) of the Court Fees Act inasmuch as according to him the suit was one for an account of the dealings between the plaintiff and the defendants.

3a. The Court-fee Examiner objected that as the plaintiff according to his own showing was an agent, he cannot in law maintain a suit for accounts against the defendants, they admittedly being the rincipals. The objection was sought to be supported y a reference to Mahadevi v. Sankara Menon ILR 1940 Mad 296: (AIR 1940 Mad 504). The District Judge gave effect to the objection and directed plaintiff to file a memorandum stating the amount due to him from the defendants. The plaintiff on 8-3-1954 filed the memorandum but did not state the amount due to him. The District Munsif passed the following order on the check-slip :

'The plaintiff is not willing to state the amount due. As the plaintiff is not willing to obey the order of the Court, the plaint shall be rejected. The check-slip is answered accordingly.'

The learned Subordinate Judge differed from the cryptic view of the Court and distinguishing the authority cited by the Court-fee Examiner held that :

'There may be a case where the agent is not in a position to know what exactly is the amount due to him and in such circumstance where the principal alone knows what exactly is the amount due by him, he cannot turn round and say that the agent is bound to sue only for a specific sum and not for a rendition of account.'

In coming to that conclusion he felt himself fortified by the decision of the Madras High Court in Ramachandra Madhavadoss Co. v. M. Birankitti and Bros., AIR 1938 Mad 707 : 1938-2 Mad LJ 112 and that of the Nagpur High Court in Basant Kumar v. Ro-shan Lal, AIR 1954 Nag 300.

4. The respondents, who were respectively the plaintiff and the 4th defendant, have preferred to remain ex parte. It was contended before me on behalf of the appellant that inasmuch as the liability to render account lies with the agent under Section 213 of the Contract Act and no such corresponding liability is cast upon the principal, the agent is bound to sue for a specific amount within the meaning of the first paragraph of Order 7, Rule 2, C. P. Code. I do not think that this rule is decisive of the controversy raised in the appeal. Paragraph 2 of the rule also provides that where the plaintiff sues for an amount which will be found due to him on taking unsettled accounts between him and the defendant, the plaint shall state approximately the amount sued for.

The question will therefore have to be seen In the light of decided cases. In AIR 1938 Mad 707; 1938-2 Mad LJ 112, Abdur Rahman J., held that it is only in exceptional cases where his remuneration depends on the extent of dealings which are not known to him or where he cannot be aware of the extent of amount due to him unless the accounts of his principal are gone into, that a suit by an agent for accounts against his principal might be compe-tent.

The ratio of this decision was followed in AIR 1954 Nag 300, wherein Hidayatullah and Kausha-lendra Rao JJ. held that as the right of a principal to have an account from his agent is founded on the statute, such a suit would always lie. Neverthe-less, there may be circumstances rendering it equitable that the principal should account to the agent. Such a case may arise where all the accounts are in the possession of the principal and the agent does not possess accounts to enable him to determine his claim for commission against his principal. The same view finds expression in Sivasubramanla Pillai v. Panruti Industrial Co., Ltd., : AIR1957Mad21 , that under very exceptional and special circum-stances an employee is entitled to sue an employer for account.

5. In this view of the matter one has to go through the plaint to find out whether the plaintiff laid the foundation for a suit for account against his principal. As already stated the case for the plaintiff is that in pursuance of the agreement the defendants received Rs. 5,250/- and supplied stock but committed breach of the other terms of the contract by not arranging for sale and distribution of the stocks, by failing to take back all the unsold articles and by failing to account to the plaintiff for the amount received, the commission, the discount payable to the plaintiffs, the loss, the office and other expenses payable to the plaintiff.

These allegations on the whole bring the case' within the four comers of the authorities referred to above. The decision in : AIR1957Mad21 , can have no application to the facts of this case. In that case, an agent appointed to collect rent to meet all proper expenses in connection with a certain estate was dismissed. He instituted a suit against the principal to receive certain amounts. His case was that after taking account what he had collected by way of rent and what he had expended and the salary due to him during the period of his suspension together with the peon's salary which he had himself met, the principal was liable in the sum mentioned.

On these facts, it was held that the agent was in effect suing for an indemnity against his principal and that it was not a suit for account within the meaning of Article 31 of the Provincial Small Cause Courts Act and consequently not excluded from its jurisdiction. A casual observation was however made at the fag-end of the judgment that an agent cannot call upon his employer for an account. As rightly observed by the Subordinate Judge, the observation was mere obiter dictum, and would not go to militate against the authorities cited above.

6. In the result, the appeal fails and is herebydismissed. As no appearance has been put in for therespondents, I make no order as to costs.


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