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B. Mahinder Das Vs. P. Mohan Lal and anr. - Court Judgment

LegalCrystal Citation
Subject Tenancy
CourtAllahabad
Decided On
Reported inAIR1939All187a
AppellantB. Mahinder Das
RespondentP. Mohan Lal and anr.
Excerpt:
- - the case set out in the plaint clearly was that the defendants were appointed agents and not sub-agents. 6. from this it would appear that plaintiff 1 had given very wide powers to plaintiff 2 and the power to appoint an agent under these circumstances may well be inferred. as regards the negligence as to the house called fernole the house agency did claim the rebate but when the city board asked to prove that they were agents entitled to claim it instead of sending the letter of authority that they had, they referred the, matter to the bank which did nothing showing an i have already said that its methods are not business like. under these circumstances i am satisfied that the defendants are not responsible to make good the loss to the plaintiffs......referred to may and should be implied where, from the conduct of the parties to the original contract of agency, the usage of trade or the nature of the particular business which is the subject of the agency, it may reasonably be presumed that the parties to the contract of agency originally intended that such authority should exist...3. this principle has been codified in section 194, contract act, which provides:where an agent, holding an express or implied authority to name another person to act for the principal in the business agency, has named another person accordingly, such person is not a sub-agent, but an agent of the principal for such part of the business of the agency as is entrusted to him.4. section 190 of the act lays down:an agent cannot lawfully employ another to.....
Judgment:

Mohammad Ismail, J.

1. This is a defendant's appeal arising out of a suit brought for the recovery of Rs. 387 or such amount as may be found duo to the plaintiffs. Plaintiff 1, Pt. Mohan Lal, is admittedly the owner of the houses in question in Mussoorie. The plaintiff 2, Bhagwan Dass & Co. Ltd., were appointed agents by plaintiff 1 to lease the houses in the year 1933. The plaintiffs' case is that plaintiff 2 appointed the defendants as agents on behalf of plaintiff 1 to rent the houses and agreed to pay them commission at the rate of 21/2 per cent, on the amount of rent realized, that the defendants rented the three houses placed under their agency for a total sum of Rs. 2550,. that out of the said amount Rs. 2145-10-0 was paid to plaintiff 1 but the balance, Rs. 269-6-0, was still due, that apart from the above mentioned sum the plaintiffs claimed Rs. 17-10-0 which sum the plaintiffs were entitled to by way of remission in respect of the house tax of 'Fenloe' from the City Board but the said sum was not recovered owing to the negligence of the defendants. The suit was resisted by the defendants on, various grounds. It was pleaded inter alia that there was no privity of contract between plaintiff 1 and the defendants as the latter were appointed sub-agents by( plaintiff 2 who alone was entitled to sue, that the original contract entered into between the parties was modified by another contract under which it was stipulated that-the nominal rental value of the threes houses would be deemed to be Rs. 1800.. That any sum that the defendants realized over and above that amount would be divided half and half between the plaintiffs and the defendants after deducting a sum of Rs. 250 which would be payable to a. third person through whose exertions the rents of the houses would be raised. The trial Court decreed the suit in favour of plaintiff 1 for Rs. 500-2-0, that is, for a sum larger than was originally claimed by the plaintiffs. The defendants preferred an appeal from the decree of the trial Court with the result that the lower Appellate Court reduced the amount to Rs. 323. The defendant now comes to this Court in, appeal.

2. Learned Counsel for the appellant has stressed two points in appeal. It has been, argued that the lower Appellate Court recorded no definite finding on the plea raised by the defendant to the effect that there was no privity of contract between plaintiff 1 and the contesting defendant. This question, it is argued, had become-vital to the decision of the case in view of the fact that the suit of plaintiff 2 had been dismissed by the trial Court and no appeal was made by him from that decree. It is argued that the only party entitled to institute a suit being plaintiff 2 and his suit having been dismissed no decree should, have been passed against the defendant in favour of plaintiff 1. It is not disputed that plaintiff 2 was not appointed an agent by plaintiff 1. It is again not disputed that the defendants were appointed agents by plaintiff 2. The question for determination is whether under these circumstances a suit by plaintiff 1 for recovery of the balance of the rent is maintainable. There is no doubt that as a general rule an agent cannot without authority from his principal devolve upon another obligations to the principal which he has himself undertaken to personally fulfil. But in special circumstances it is permissible for the agent to appoint a substitute who would be responsible to the principal in the same way as the agent himself. In De Bussche v. Alt (1878) 8 Ch. D 286 at p. 310, Thesiger L.J. observed as follows:

But the exigencies of business do from time to time render necessary the carrying out of instructions of a principal by a person other than the; agent originally instructed for the purpose, and where that is the case, the reason of the thing : requires that the rule should be relaxed, so as, on the one hand, to enable the agent to appoint what has been termed a 'sub-agent' or 'substitute' and on the other hand, to constitute, in the interests and for the protection of the principal, a direct privity of contract between him and such substitute. And we are of opinion that an authority to the effect referred to may and should be implied where, from the conduct of the parties to the original contract of agency, the usage of trade or the nature of the particular business which is the subject of the agency, it may reasonably be presumed that the parties to the contract of agency originally intended that such authority should exist...

3. This principle has been codified in Section 194, Contract Act, which provides:

Where an agent, holding an express or implied authority to name another person to act for the principal in the business agency, has named another person accordingly, such person is not a sub-agent, but an agent of the principal for such part of the business of the agency as is entrusted to him.

4. Section 190 of the Act lays down:

An agent cannot lawfully employ another to perform acts which he has expressly or impliedly undertaken to perform personally unless by the ordinary custom of trade a sub-agent may, or, from the nature of the agency, a sub-agent must, be employed.

5. In the present case the trial Court came to the conclusion that plaintiff 2 had power to appoint the defendant as agent. Plaintiff 2 is a, banking concern. The case set out in the plaint clearly was that the defendants were appointed agents and not sub-agents. The letters addressed by plaintiff 2 to the defendants do not mention anywhere that the defendants were appointed sub-agents on behalf of plaintiff 2. Although the lower Appellate Court has not recorded a definite finding on this point yet it has decreed the suit in favour of the plaintiffs against the defendants. It follows therefore that in the opinion of the lower Appellate Court there was privity of contract between the parties. If plaintiff 2 had an implied authority to employ the defendants as agents the latter would be deemed to be agents of plaintiff 1 and not sub-agents of plaintiff 2. In Ex. 5 dated 22nd February 1934 written by plaintiff 1 to Mr. Chander Sen, the agent of the bank, it was stated:

In any case you need not enquire from me about renting the cottages or St. Clair. You have full authority to accept anything. I know you look to my interest, therefore it is needless to ask my acceptance.

6. From this it would appear that plaintiff 1 had given very wide powers to plaintiff 2 and the power to appoint an agent under these circumstances may well be inferred. A banking concern usually is not expected to go about in search of tenants and plaintiff 1 must have known that other agencies will have to be employed in order to find suitable tenants for the three houses entrusted to plaintiff 2. Under these circumstances in my judgment plaintiff 2 had authority to appoint defendants as agents and the latter are accountable to plaintiff 1.

7. The next point argued by learned Counsel is that the original contract was modified by a subsequent contract between the parties and the Court below had erred in not recording a specific finding on the plea raised by the defendants. From a perusal of the judgment of the Court below it appears that in the opinion of the learned District Judge the novation of contract set up by the defendants was not considered binding on plaintiff 1. It appears that there was some discussion with regard to revisional terms between the manager of plaintiff 2 and Hori Lal, father of one of the partners of the defendant firm. The learned Judge apparently is of opinion that any settlement made by the manager of the bank with the father of one of the partners will not affect the agreement entered into between the plaintiffs and the defendant firm. In my opinion Hori Lal could not legally represent the defendant firm and the Court below has come to a correct conclusion on this point. The last point urged by learned Counsel for the appellant is that the defendants should not be made liable for the loss of Rs. 17-10-0 suffered by the plaintiffs. The learned Judge of the Court below has remarked as follows:

As regards the negligence as to the house called Fernole the house agency did claim the rebate but when the City Board asked to prove that they were agents entitled to claim it instead of sending the letter of authority that they had, they referred the, matter to the bank which did nothing showing an I have already said that its methods are not business like.

8. It seems to me that plaintiff 2 was responsible for the loss sustained by plaintiff 1. The letter of authority to the defendants was written by plaintiff 2 and not by plaintiff 1. Under these circumstances plaintiff 2 should have either specifically authorised the defendants to recover money from the City Board or to apply directly to the City Board for the refund. The trial Court has remarked that it was admitted (by the parties) that it is the owner's duty to let the Hoard know who his agent was. Neither the owner, namely plaintiff 1, nor his agent plaintiff 2 ever took the trouble of applying to the City Board for the refund of this amount. Under these circumstances I am satisfied that the defendants are not responsible to make good the loss to the plaintiffs. in the result I modify the decree of the Court below and reduce the decretal amount by Rs. 17-10-0 only. In other respects the appeal fails and is dismissed. Under the special circumstances of the case I order the parties to bear the costs of this Court. Costs of the Court below as in the decree of that Court. Leave to appeal is refused.


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