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ishaq Abdul Karim and anr. Vs. Madan Lal - Court Judgment

LegalCrystal Citation
SubjectContract
CourtAllahabad High Court
Decided On
Case NumberSecond Appeal No. 2312 of 1952
Judge
Reported inAIR1965All34
ActsContract Act, 1872 - Sections 8 and 188; Evidence Act, 1872 - Sections 106 and 114
Appellantishaq Abdul Karim and anr.
RespondentMadan Lal
Appellant AdvocateK.C. Saksena, Adv.
Respondent AdvocateYashodanandan and ;U.S. Avasthi, Advs.
DispositionAppeal allowed
Excerpt:
.....was a device adopted to mitigate damages because the defendant-appellant knew that he had broken the contract, are findings upon a case not set up by the plaintiff-respondent at all. in the present case the lower appellate court has clearly misplaced the burden of proving the extent of the agent's authority on the shoulders of the defendant-appellant i think it has also erred (sic) not raising any presumption from the failure of the plaintiff-respondent to produce babu ram merely because babu ram does not happen to be in the service of the plaintiff-respondent any more......case the lower appellate court has clearly misplaced the burden of proving the extent of the agent's authority on the shoulders of the defendant-appellant i think it has also erred (sic) not raising any presumption from the failure of the plaintiff-respondent to produce babu ram merely because babu ram does not happen to be in the service of the plaintiff-respondent any more. the presumption from non-production of the most essential witness in the case which would ordinarily arise in such a case against the plaintiff, could be dispensed with if it was shown that the plaintiff-respondent could not have produced the witness at all or that the witness had actually been won over by the defendant-appellant. 7. the next question which was argued was that the lower appellate court had.....
Judgment:

M.H. Beg, J.

1. This second appeal arises out of a suit for recovery of Rs. 955/- as damages for breach of contract after deducting a sum of Rs. 5,100/- already paid by the defendant-appellant to the plaintiff-respondent.

2. The plaintiff-respondent carries on the business of wholesale dealers in potatoes at Fatehgarh, to Uttar Pradesh, and the defendants-appellants carry on the business of selling potatoes at Khandwa in Madhya Pradesh. The defendant-appellant No. 2 sent the defendant-appellant No. 1 to the plaintiff at Fatehgarh with a letter of introduction. After this letter had been handed over to the plaintiff-respondent by the defendant-appellant No. 1 at Fatehgarh, the defendant-appellant No. 1 placed an order on the 13th December, 1948. for despatch of a wagon of potatoes and deposited Rs. 500/- with the plaintiff. On the 1st of January 1949, the plaintiff-respondent despatched a wagon of potatoes to defendant No. 1 and forwarded the Invoice and railway receipt to him through the Imperial Bank. The defendant-appellant No. 1 refused to take delivery of the goods. On getting information of this, the plaintiff sent his munim, Babu Ram, to Khandwa where the goods were lying. The plaintiff's munim and agent contacted the defendant-appellant No. 1 and discussed the matter, and then he tried to sell the goods to other persons, but he was not able to get an offer higher than the offer of the defendant-appellant No. 1 which was Rs. 5100/- upon certain conditions. In fact, the next highest offer was Rs. 4200/- only. The agent and munim, thereupon, accepted the offer of defendant-appellant No 1 together with the conditions in it, and gave a writing that the payment was a full settlement of the claim of the plaintiff against the defendant-appellant No. 1. This money was received by the plaintiff-respondent and was duly entered in the respondent's account-books as money received from the defendant-appellant No. 1 Babu Ram, the agent and, munim of the plaintiff-respondent, who has not been produced, must have informed the plaintiff-respondent that he had settled the matter with the defendant-appellant No. 1 at Rs 5100/- and accepted the money in full satisfaction of the claim of the plaintiff-respondent. The total claim of the plaintiff-respondent amounted to Rs 6,377/3/- out of which a sum of Rs. 5,100/- was deducted as tt was accepted by the plaintiff-respondent. The writing given by the plaintiff-respondent also indicated that, out of the sum of Rs 500/- already deposited with the plaintiff-respondent, a sum of Rs. 430/- was adjusted towards price of potatoes and Rs. 70/- towards expenses. The result was that, for a total payment of Rs 5,600/-, the defendant-appellant obtained the potatoes and a release from any obligation to pay anything more if thewriting given by the agent of the plaintiff-respondent is treated as binding upon the plaintiff.

3. Both the courts below held that time was not of the essence of the contract so that the defendant-appellant was not justified in refusing the consignment sent, with slight delay due to difficulties in obtaining a wagon at a time when the price of notatoes had fallen.

4. It has been argued before me that the courts below have erred in deciding this question by overlooking Section 36(2) Sale of Goods Act and the nature of the goods consigned of which prices fluctuate rapidly I do not propose to decide this question as this appeal can be disposed of on other grounds.

5. It was then argued that the trial court, which had dismissed the suit, was right in holding that the plaintiff's agent must be deemed to have invested with the authority to settle the claim which was implied in the authority given to negotiate about the matter and to take delivery of and to sell the potatoes. The lower appellate court reversed that decision and decreed the suit after holding that the defendant-appellant did not prove the specific authority of the plaintiffs munim, Babu Ram, who settled the matter with the defendant-appellant and gave the writing mentioned above, to arrive at such a settlement even though he may have had the authority to take the delivery of and to sell the potatoes lying at Fatehgarh. The lower appellate court held that Babu Ram the agent, had been sent armed with the Railway Receipt and the authority to take delivery of the Potatoes and to sell them because the defendant-appellant had broken the contract and had returned the Hundi and the Railway Receipt. It also held that non-production of Babu Ram could not affect the case as he was no longer in the service of the plaintiff-respondent. It furthermore, held, relying upon the statement of a witness of the defendant-appellant, that Babu Ram never told the defendant-appellant that he had any authority to settle the claim. It pointed out that the defendant-appellant did not either enquire from Babu Ram whether he had any authority to settle the claim or write and find out from the plaintiff-respondent whether the agent had any such authority. It almost placed the duty of producing Babu Ram upon the defendant-appellant. It doubted whether the transaction between Babu Ram and defendant-appellant was above board.

I am afraid the approach of the lower appellate court to the question was rather confused. It the plaintiff-respondent was placed in a difficult position due to the breach of contract by the defendant-appellant, it was more likely that he would send an agent fully authorised to resolve that difficulty and to do all that may be necessary for this purpose. The findings of the lower appellate court, that the defendant-appellant knew full well that Babu Ram had no authority to give up the claim and that the receipt obtained from him was a device adopted to mitigate damages because the defendant-appellant knew that he had broken the contract, are findings upon a case not set up by the plaintiff-respondent at all. In fact the plaintiff-respondent had taken up an obviously untruthful case, as pointed out by the trial court, in alleging in the plaint itself that the goods were actually sold to Tota Ram and not to the defendant-ap-pellant at all. The (sic) given by the trial (sic) that the defendant-appellant actually paid a sun of Rs. 5,100/- in cash, togcther with Rs. 430/ out of Rs. 500/- in deposit already, to Babu Ram, who was authorised by the plaintiff-respondent to seil the goods at the price he chose to accept, and the finding that Babu Ham acted in the interest of the plaintiff-respondent have riot been upset by the lowet appellate court The lower appellate court appears to have overlooked the evidence that Babu Ram himseif approached Tota Ram (D. W 2) in order to negotiate with and settle the matter with the defendant-appellant. In a case in which an agent is authorised by his principal to go to another place and take delivery of and to sell goods there at any price which he chooses, the agent would have implied authority, under Section 188 of the Contract Act, to accept the price either wholly in terms of ready cash or partly in terms of cash together with abandonment of a claim for money by the principal againsl the purchaser. This doctrine of implied authority was correctly applied by the trial court but ignored by the lower appellate court.

6. In a case where the principal pleads that the authority of an agent, armed with the power to take delivery of goods elsewhere and to sell them at any price he chooses, did not confer upon the agent an implied power to accept any particular consideration, a specific limitation of this nature on the power of the agent ought to be proved by the principal. The plaintiff was content to prove absence of any conferment of specific authority upon the agent to accept the settlement. The person with whom the agent deals will be entitled to presume that the agent has implied authority to accept any consideration from the fact that the agent is armed with the power to take delivery of goods and to dispose of them and the fact that the agent accepls the particular terms offered (sic) is not necessary for the purchaser, in these circumstances to make enquiries from the principal about the extent of the authority of the agent. The agent's implied authority is determined by the nature of the business which he is authorised to transad. It is only the. principal or the agent who would be in a position to know any specific or special limitation upon the powers of such an agent. Therefore. Section 106 of the Indian Evidence Act would apply and place the burden of proving that specific limitation upon the authority of the agent on the shoulders of those who have means of knowledge to prove the limitation of authority. In the present case the lower appellate court has clearly misplaced the burden of proving the extent of the agent's authority on the shoulders of the defendant-appellant I think it has also erred (sic) not raising any presumption from the failure of the plaintiff-respondent to produce Babu Ram merely because Babu Ram does not happen to be in the service of the plaintiff-respondent any more. The presumption from non-production of the most essential witness in the case which would ordinarily arise in such a case against the plaintiff, could be dispensed with if it was shown that the plaintiff-respondent could not have produced the witness at all or that the witness had actually been won over by the defendant-appellant.

7. The next question which was argued was that the lower appellate court had completely overlooked the provisions of Section 8 of the ContractAct. On this ground the case of the defendant appellants appears to be even stronger than it is on the other grounds. This section lays down that the performance of the condition of a proposal, or the acceptance of any consideration for a reciprocal promise, which may be offered with a proposal, is an acceptance of the proposal. Now the plaintiff-respondent sent Babu Ram, his agent, to negotiate the matter with the defendant-appellant. There is evidence, which has been completely ignored by the lower appellate court, that he went in the company of Tota Ram (D. W 2) to negotiate with the defendant-appellant with the help of Tota Ram. There was no necessity at all for Babu Ram to see the defendant-appellant if Babu Ram had not been sent by the plaintiff-respondent to negotiate on the matter. The defendant-appellant had sent back the Railway Receipt and returned the Hundi. If Babu Ram was not authorised to negotiate or had been prohibited from negotiating with the defendant-appellant he would have just taken delivery of the potatoes and sold them in the market. But, no went to the defendant-appellant who made an offer of the amount of Rs. 5,100/- together with the condition that the sum should be accepted as a complete settlement of the plaintiffs claim after adjusting Rs. 430/- towards the price out of Rs 500/-already in deposit. In other words, the payment accepted by Babu Ram on behalf of the plaintiff-respondenl was linked with a condition from which the acceptance of the consideration could not be separated. If the consideration was accepted at all it would be deemed to be accepted together with the condition with which it was linked This is the principle which has been laid down in two cases of this Court: Behari Lal v. Radhey Shyam : AIR1953All745 and Gaddarmal v. Tata Industrial Bank Ltd. : AIR1927All407 The findings of both the courts below arc that the consideration of Rs. 5100/- was accepted by the plaintifi-respondent and shown in the account books as having been received from the defendant-appellant. The condition with which this consideration was linked would also, therefore, be deemed to have been accepted. It was not the plaintiff's case that he had been detrauded by Babu Ram or by Tota Ram or that either of these two and the defendant-appellant were acting in collusion with each other In fact, the plaintiff-respondent appears to have been conscious of the inequitable position in which he had placed himself. It is perhaps for this reason that the plaintiff-appellant took up the patently untrue case that the transaction of sale by Babu Ram was with Tota Ram (D. W. 2) and not with the defendant-appellant. The findings of both the courts below are that the transaction was actually with the defendant-appellant through Babu Ram whose authority to sell has not been repudiated. The trial court did not specifically mention Section 8 of the Contract Act but it had rightly applied the principle contained in it. The lower appellate court having completely ignored Section 8 of the Contract Act, I have considered the evidence in the case and find that the plaintiff-respondent could not possibly be held to be ignorant of the conditions with which the offer of Rs. 5100/- was linked. The plaintiff cannot approbate and reprobate in the same breath. He cannot accept the consideration and reject the condition with which it was linked. I. therefore, hold that the principle contained in Section 8 of the ContractAct was a complete answer to the plaintiff's claim and the lower appellate court erred in not applyingit.

8. Accordingly, I allow this second appeal, setaside the judgment and decree of the lower appellate court, and restore that of the trial courtThe defendant-appellant will get his costs


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