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Smt. Nannho Bibi Vs. Ram Swarup Rastogi and anr. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtAllahabad High Court
Decided On
Case NumberSecond Appeal No. 764 of 1958
Judge
Reported inAIR1965All533
ActsContract Act, 1872 - Sections 230; Code of Civil Procedure (CPC) , 1908 - Order 41, Rule 33
AppellantSmt. Nannho Bibi
RespondentRam Swarup Rastogi and anr.
Appellant AdvocateS.M. Fakhruzzaman, Adv.
Respondent AdvocateMohd. Husain and ;K.L. Saxena, Advs.
DispositionAppeal allowed
Excerpt:
.....an auctioneer is that of a stake-holder and where a deposit is made of a portion of the purchase money in an auction sale with the auctioneer and later on it is found that the vendor had no title to convey, a case arises in which a deposit was made on a consideration which had failed and an action would he against the auctioneer for money had and received. 12. it is no doubt true that the transaction failed because the appellant executed a gift deed in favour of her children. 2 had suffered to any extent by reason of the failure of the appellant to complete the transaction, it may be open to him to bring a suit, against the appellant for his dues but for this reason he cannot withhold the earnest money advanced to him by respondent no. 1 and we see no good ground either in law or in..........no. 1 had prayed for a decree against both the appellant as well as respondent no. 2 but the suit was decreed only against the appellant. because respondent no. 1 had not preferred appeal against this decision and was apparentlysatisfied with the decree, no relief could be given to the appellant under the provisions of order 41, rule 33, code of civil procedure and it was open to the appellant to file a suit against respondent no. 2. with these observations the appeal was dismissed. 5. in this second appeal we have heard the learned counsel for all the three parties. learned counsel for respondent no. 1 stated that he was interested in the recovery of his money and it did not matter to him against which party the decree was passed. learned counsel for the auctioneer respondent no......
Judgment:

R.N. Sharma, J.

1. This is a second appeal from the judgment and the decree of learned District Judge, Lucknow, dismissing the appeal of Smt. Nannho Bibi against the judgment and the decree of the learned Munsif, North, Lucknow, decreeing the suit of respondent No. 1, Ram Swamp Rustogi against her for recovery of Rs. 2000/- with costs. When this appeal came up before a learned single Judge of this Court, he referred it to a Bench because apparently he found some conflict between the authority of the decision in Kalika Prasad v. Sarju Prasad AIR 1942 All 90 (2) and the provisions of Section 230 of the Indian Contract Act. Thus this appeal was heard by this Bench.

2. Smt. Nannho Bibi appellant before us was the owner of a house. According to the concurrent finding of the two Courts below she authorised respondent No. 2 Emron and Sons, auctioneers, to sell her house by public auction or by private negotiations. After advertisement respondent No 2 held auction of the house on 11-10-1955. The highest bid was of respondent No. 1 Ram Swarup Rastogi and it was accepted. A sum of Rs. 2000/- was deposited by him with the auctioneer as earnest money. It is alleged that the bidder respondent No. 1 was required to deposit Rs. 3000/- more by 13-10-1955 to make up 25% of the auction price as earnest money. Somehow the amount of Rs. 3000/- could not be deposited till 14-10-1955 and in the meanwhile the appellant transferred the house by means of a gift deed in favour of her son and daughter. Respondent No. 1 asked for the return of the amount of Rs. 2000/- deposited by him and because it was not returned lo him he filed a suit for recovery of this amount against the appellant as well as the auctioneer. Both defendants of the suit contested it. The appellant pleaded that she had not given any authority to the auctioneer to sell the house and any transaction conducted by the auctioneer was not binding on her. The auctioneer pleaded that the sale was conducted on behalf of the appellant, that the amount of Rs. 2000/- stood forfeited because the auction purchaser did not fulfil his part of the contract for which time has been allowed to him and that it was the appellant who was liable for return of the consideration.

3. The trial Court held that auction of the house was made at the instance of the appellant and that the auctioneer acted as her agent Thus the auctioneer was held not liable for return of the consideration although it was also held that he had no right to forfeit the amount advanced to him. The suit was therefore decreed against the appellant alone. The appellant went in appeal to the District Judge who agreed with the trial Court's finding that a valid authority had been given by the appellant to the auctioneer for selling the house and that the auctioneer acted as agent of the appellant. The learned Judge held that 'the mere fact that the money may not have been paid to the appellant would not save her from liability to repay.'

4. It was also urged before tha learned District Judge on behalf of the appellant that under Order 41, Rule 33 of the Code of Civil Procedure, a decree should be passed against the auctioneer respondent No. 2, in favour of respondent No. 1, and she should be absolved from liability because she had not received the money. The learned District Judge however observed that respondent No. 1 had prayed for a decree against both the appellant as well as respondent No. 2 but the suit was decreed only against the appellant. Because respondent No. 1 had not preferred appeal against this decision and was apparentlysatisfied with the decree, no relief could be given to the appellant under the provisions of Order 41, Rule 33, Code of Civil Procedure and it was open to the appellant to file a suit against respondent No. 2. With these observations the appeal was dismissed.

5. In this second appeal we have heard the learned counsel for all the three parties. Learned counsel for respondent No. 1 stated that he was interested in the recovery of his money and it did not matter to him against which party the decree was passed. Learned counsel for the auctioneer respondent No. 2 contended that because he had acted as an agent for a disclosed principal, the decree was rightly passed against the appellant and it should not be passed against him.

6. The facts established in the case are that respondent No. 2 was duly authorised by the appellant to sell her house. There is concurrent finding of the Courts below on this point and it could not be challenged before us. Ext. B 1 is the document by which respondent No. 2 was authorised to sell the house. It reads as follows.

'I authorise you to sell my three-storied building situated........................'

You may sell the property either by auction or private negotiations.

'You will be paid Rs. 60/- as advertisement costs and Rs. 500/- as your commission if the property is sold for Rs. 19,000/- (Nineteen thousand) whatever above Rs. 19,000/- (Nineteen thousand) you sell that amount will be yours. ..........'

7. It has not been disputed before us that the property was actually put to auction and respondent No. I made the highest bid and deposited Rs. 2000/-as earnest money with respondent No. 2/-. There is nothing on record to show that this amount of Rs. 2000/- was paid by respondent No. 2 to the appellant and this fact of non-payment was not disputed before us. It was definitely alleged in paragraph 12 of the written statement of the appellant that she did not receive any part of the alleged earnest money. Respondent No. 2 did not at all allege in his written statement that he had passed on the amount to the appellant. All that he stated in paragraph 10 of his written statement was that the amount paid stood forfeited as the balance of the earnest money was not paid on 13-10-1955, the time for payment being the essence of the contract. In cross-examination D. W. 2 M.H. Rahman, the proprietor of the auctioneer firm, admitted that the forfeited the amount of Rs. 2000/-deposited with him and he did not pay any amount to the appellant. It has been admitted in the written statement of the appellant that she executed a gift deed of this house in favour of her son and daughter on 14-10-1955.

8. Thus the facts established are that the house was auctioned with the authority of the appellant, that an amount of Rs. 2000/- was received as earnest money by respondent No. 2, that the transaction fell through because of transfer of the house by the appellant to her son and daughter and that the amount of Rs. 2000/- received as earnest money remained with respondent No 2 alone. There is no satisfactory evidence to indicate that respondent No. 1 was bound under the terms of any agreement to deposit the remaining amount of Rs. 3000/- within a specified number of days and that the time was of the essence of the contract so that on the failure of respondent No. 1 in depositing the remaining amount of Rs. 3000/- his initial deposit of Rs. 2000/- could be forfeited by respondent No. 2. D. W. 2 M. H. Rahman has stated that he had passed on a receipt to respondent No. 1 but he retained a duplicate with himself. Neither respondent No. 1 filed the original receipt norrespondent No. 2 filed the duplicate. It cannot therefore be known whether any such condition was in corporated in the receipt. Respondent No. 1 has stated that it was agreed that he would pay the remaining amount o Rs. 3000/- on the 13th and a date would be fixed for execution of the sale deed but it was not agreed that his initial deposit would be forfeited in case he did not pay the remaining amount. Further on he stated that when on the 13th he went to respondent No. 2 with the remaining amount, it was agreed that a joint receipt would be given to him when Smt. Nannho Bibi would also be present. Respondent No. 2 asked him to come on the next day and when he went to respondent No. 2 on the next day, respondent No. 2 was not available,

9. On behalf of respondent No. 2 reliance has been placed on Section 230 of the Contract Act which lays down that in the absence of any contract to that effect an agent cannot personally enforce contracts entered into by him on behalf of his principal, nor is he personally bound by them. Then this section lays down three cases in which such a contract shall be presumed to exist. We are not concerned with case No. 1. Case No. 2 is where the agent does not disclose the name of his principal, and case No. 3 is where the principal, though disclosed, cannot be sued. It is urged that none of the two conditions aforesaid apply to the present case because the name of the principal was disclosed and the principal was such as could be sued, there being no prohibition to a suit being brought against the appellant. The question however is whether respondent No. 2 received the money as agent of the appellant. Dar, J. held in AIR 1942 All 90 (2), that the position of an auctioneer is that of a stake-holder and where a deposit is made of a portion of the purchase money in an auction sale with the auctioneer and later on it is found that the vendor had no title to convey, a case arises in which a deposit was made on a consideration which had failed and an action would He against the auctioneer for money had and received. Dar, J, went to the extent of holding that even in cases where the auctioneer has handed over the deposit to the seller his liability as a stake holder does not cease. It is stated in Dart. On The Law of Vendors and Purchasers, Seventh Edition, Volume II, page 989, that on a sale by auction the deposit, unless otherwise expressed, is paid to the auctioneer as stakeholder and not as agent for the vendor and as such he may be sued for it. Then on page 203, Volume I, it is stated that until the purchase is completed the auctioneer is a stakeholder of the deposit, unless the conditions provide that he shall hold it as agent for the vendor and should not part with it except by consent of both vendor and purchaser.

10. In paragraph 1107 at page 709 of Halsbury's Laws of England, Volume I, Hailsham Edition, also it is stated that in the absence of special agreement, the auctioneer receives the deposit as stakeholder for the vendor and the purchaser and it is his duty to hold it until the completion or rescission of the contract and to pay it to the 'party ultimately entitled.

11. In this case respondent No. 2 has not paid the money either to the appellant or to respondent No. 1, There is no satisfactory proof of an agreement under which the initial deposit was liable to be forfeited by respondent No. 2 in case the remaining amount was not paid by the date when the vendor ceased to have any title in the property sought to be sold. Thus respondent No. 2 wrongfully retained the amount of Rs. 2000/- with him D. W. 2 M. H. Rahman himself has not stated that there was any stipulation made in the document of receipt passed by him to the respondent No. 1 that the initial deposit would be forfeited in case the remaining amount of Rs. 3000/- were not paid by the 13th. The onlyground of forfeiture stated by him is that the remaining amount was not paid to him.

12. It is no doubt true that the transaction failed because the appellant executed a gift deed in favour of her children. Respondent No. 1 did not sue for specific performance of the contract of sale or for damages. All that he wanted was the earnest money paid by him to the auctioneer. If the auctioneer respondent No. 2 had suffered to any extent by reason of the failure of the appellant to complete the transaction, it may be open to him to bring a suit, against the appellant for his dues but for this reason he cannot withhold the earnest money advanced to him by respondent No. 1. The appellant did not get the earnest money and she should not be made to reimburse respondent No. 1. The liability is of respondent No. 2 alone for reimbursing respondent No. 1 and we see no good ground either in law or in equity to make the appellant pay an amount which she never received. Under Section 188 of the Contract Act an agent having an authority to do an act has authority to do every lawful thing which is necessary in order to do such act. The position of respondent No. 2 might have been that of an agent when he was authorised by the appellant to sell her house but he could have no authority to realise part of the purchase money from the auction bidder in order to pocket it.

13. We were referred to the case of R.P. Kharas v. Bawanji Narsi, AIR 1926 Sind 6. In that case an auctioneer was employed to sell moveables by public auction. He did so and then sued for the recovery of the value of the goods which were knocked down to the defendant as the highest bidder and delivery of which was given to him. The question arose whether the suit in the name of the auctioneer was competent. The answer was given in the affirmative. The facts of that case were thus different but it was observed that though an auctioneer is classified as an agent the nature of his duties invest him with certain rights which differentiate him from an ordinary agent. In his capacity as an auctioneer he has an interest in the goods entrusted to him for auction sale but this is not relevant to the present case.

14. On the facts of the present case the appellant was not liable to repay the amount which she had not received. The amount was wrongfully detained by respondent No. 2 and he alone was liable to repay it to respondent No. 1, In our view therefore the decree passed against the appellant was not justified and it must be set aside.

15. The fact, however, remains that respondent No. 1 did deposit the amount of Rs. 2000/- with respondent No. 2 for purchase of a property which was not subsequently sold to him. He is entitled to refund of his amount. It appears to have been urged before the learned District Judge that the court possessed sufficient power under Order XLI, Rule 33, Code of Civil Procedure, to adjust equities in such cases even though respondent No. 1 did not prefer an appeal against the order of the trial court. In our view the learned District Judge was wrong in refusing to apply the provisions of Order XLI, Rule 33 of the Code of Civil Procedure. Rule 33 lays down that the Appellate Court shall have power to pass any decree and make any order which ought to have been passed or made and to pass or make such further or other decree or order as the case may require, and this power may be exercised by the Court not withstanding that the appeal is as to part only of the decree and may be exercised in favour of all or any of the respondents or parties, although such respondents or parties may not have filed any appeal or objection. This rule confers wide powers on the Court to adjust equities and pass such orders as may be necessary in the interests of justice.

We can therefore pass a decree in favour of respondent No. 1 against respondent No. 2 eventhough respondent No. 1 has not filed any appeal or made any objection against the decree. Respondent No. 1 in his suit asked for a decree against both the appellant and respondent No. 2. His interest lies in the recovery of his money and it is of no consequence to him whether he gets it from the appellant or respondent No. 2.

16. We therefore allow the appeal, set aside the decree passed against the appellant and dismiss the suit as against her. Because her conduct in executing a gift deed of the house after the auction has given rise to all this trouble, we direct that she will bear her costs throughout.

17. We decree the suit o respondent No. 1 against respondent No. 2 for recovery of Rs. 2000. Respondent No. 2 shall pay the costs of the suit to respondent No. 1 who will bear his costs of the lower appellate court and this Court himself. Respondent No. 2 shall not get costs of any court.


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