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Goverdhandoss Tokersey Vs. M. Abdul Rahiman and anr. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai
Decided On
Reported inAIR1942Mad634; (1942)2MLJ636
AppellantGoverdhandoss Tokersey
RespondentM. Abdul Rahiman and anr.
Cases ReferredLtd. v. Reckitt and Ors.
Excerpt:
- - 150 per ton if either of the parties failed to deliver or take the goods mentioned in the agreement. f-15) in reply on the 13th november, 1936, in which he expressed his surprise at the 3rd defendant's failure to act in accordance with the instructions contained in the former's letter (obviously referring to the letter, dated the 3rd november, 1936--ex. 9. before we go into the various questions raised on behalf of the parties, we should like to examine the contentions advanced on behalf of the defendants 1 and 2 in their additional written statements on the 23rd august, 1939. if the plaintiff's suit is liable to be dismissed on the ground that he had no locus standi to maintain the action, it would be unnecessary to examine the other questions. in all probability, the plea that.....abdur rahman, j.1. this appeal arises out of a suit for refund of rs. 8,700 stated to have been advanced by the 3rd defendant as an agent of the plaintiff to the 1st defendant at the time of the execution of the agreement (ex. j) on the 9th november, 1936. under the terms of this agreement, the 1st defendant. who held a general power of attorney, dated the 24th march, 1936 from the 2nd defendant, agreed to sell to the 3rd defendant as an agent of the plaintiff 30 tons of sandalwood that may be got ready by the former out of the two estates (benhope and killiard), belonging to his principal in a period of one year at rs. 800 per ton and any further quantity of wood that may be available out of the aforesaid estates at rs. 780 per ton. the sum. of rs. 7,800 was acknowledged to have been.....
Judgment:

Abdur Rahman, J.

1. This appeal arises out of a suit for refund of Rs. 8,700 stated to have been advanced by the 3rd defendant as an agent of the plaintiff to the 1st defendant at the time of the execution of the agreement (Ex. J) on the 9th November, 1936. Under the terms of this agreement, the 1st defendant. who held a general power of attorney, dated the 24th March, 1936 from the 2nd defendant, agreed to sell to the 3rd defendant as an agent of the plaintiff 30 tons of sandalwood that may be got ready by the former out of the two estates (Benhope and Killiard), belonging to his principal in a period of one year at Rs. 800 per ton and any further quantity of wood that may be available out of the aforesaid estates at Rs. 780 per ton. The sum. of Rs. 7,800 was acknowledged to have been received by way of an advance in Ex. J and was agreed to be adjusted at the time when the goods were delivered to the 3rd defendant on behalf of the plaintiff at the rate of Rs. 100 per ton. The agreement also provided for a liquidated damage at Rs. 150 per ton if either of the parties failed to deliver or take the goods mentioned in the agreement. On the same date another varthamanam letter (Ex. J-2) was executed by the 3rd defendant as an agent of the plaintiff in favour of the 1st defendant as the power of attorney agent of the 2nd defendant under which six tons of sandalwood (not covered by the agreement Ex. J) were sold at the rate of Rs. 810 per ton and were agreed to be delivered before the 30th November, 1936. The 3rd defendant communicated the terms of the agreement Ex. J to his principal in Bombay the very next day (Ex. F-14) in which he referred to a sum of Rs. 8,700 haying been paid by way of an advance to the 1st defendant towards this contract. A sum of Rs. 5,000 was stated to have been paid in cash and the balance of Rs. 3,700 that was due by the 1st defendant to the plaintiff in respect of certain previous dealings was said to have been taken into account towards the advance. The plaintiff sent a telegram (Ex. F-15) in reply on the 13th November, 1936, in which he expressed his surprise at the 3rd defendant's failure to act in accordance with the instructions contained in the former's letter (obviously referring to the letter, dated the 3rd November, 1936--Ex. F-11), refused to accept the terms communicated to him in Ex. F-14 and asked the 3rd defendant to cancel the agreement. The 3rd defendant was also forbidden by the plaintiff to pay Rs. 5,000 to the 1st defendant. But the sum of Rs. 5,000 or, as it really transpired later, the sum of Rs. 4,600 had already been paid to the 1st defendant on the date on which Ex. J was executed. On the receipt of the telegram Ex. F-15, the 3rd defendant wrote to the 1st defendant on the 15th November, 1936, Ex. H in which the plaintiff's refusal to abide by the agreement was duly communicated and the sum of Rs. 5,000 alleged to have been paid to the 1st defendant was asked to be adjusted towards the price of the six tons of sandalwood covered by the agreement, Ex. J-2. This letter was not acknowledged by the 1st defendant. The 3rd defendant was thus constrained to write another letter on the 30th November, 1936, (Ex. V) in more or less the same terms. This was taken by the 1st defendant to Mr. Ramamurthy, an Advocate at Ootacamund who sent a reply to the 3rd defendant (Ex. K). In this letter the sum of Rs. 5,000 was acknowledged to have been received in cash and the 3rd defendant's contention that the agreement Ex. J, had been entered into subject to the condition of its being ratified by the plaintiff was repudiated. The 1st defendant expressed his readiness and willingness to abide by the terms of the agreement and threatened to make the 3rd defendant and his principal (the plaintiff) liable if they persisted in committing a breach of the agreement. On the same date a copy of the reply sent to the 3rd defendant was sent to the plaintiff's lawyer at Bombay (Ex. K-l) in which a copy of Ex. K was enclosed. This was taken or sent by the plaintiff to Messrs. Payne & Co., Solicitors of Bombay for reply. They wrote Ex. L and Ex. L-l on the 23rd December, 1936, to the 1st and 2nd defendants respectively. In these letters, the 3rd defendant's authority to enter into 'any contract with any person' without the plaintiff's express authority and sanction was denied and the agreement was said to have been brought about under some kind of pressure and coercion to which the 3rd defendant was alleged to have been subjected. In the end it was asserted that the agreements were conditional on the plaintiff's approval and as he had repudiated them on the 15th November, 1936, they were no longer binding. The allegations contained in these letters were denied by the defendants in the letters written by their lawyer on the 23rd January, 1937, (Ex. L-2 and Ex. L-3).

2. The present suit was instituted by the plaintiff on the 16th February, 1938, with the allegations that the 3rd defendant was not entitled to enter into any agreement on behalf of the plaintiff and that in doing so, he had not only acted beyond the scope of his authority but in direct contravention of the plaintiff's instructions. The 2nd defendant was attempted to be made liable for the refund of the amount of Rs. 8,700 which formed the consideration of Ex. J as the 1st defendant held a power of attorney from the 2nd defendant and had acted within the scope of his authority.

3. The 1st defendant in his reply contended that the 3rd defendant had been for a long time acting on behalf of the plaintiff in such matters and that the agreement was fully within the scope of his authority. And since the breach of the contract by the plaintiff and the 3rd defendant was alleged to be unjustified and the 1st defendant's readiness and willingness to abide by the terms of the contract reaffirmed, the whole of the advance of Rs. 8,700 was claimed to have been forfeited. A sum of Ha. 1,715-8-0 was claimed on behalf of the 1st defendant in the alternative as having been suffered by him in consequence of the breach by the plaintiff and the 3rd defendant.

4. The 2nd defendant in his written statement contended that the 1st defendant had no authority to enter into the contract contained in Ex. J. It was said to be in excess of his powers and the power of attorney referred to by the plaintiff in the plaint was alleged to have been cancelled by the 2nd defendant long before Ex. J came into existence. In the alternative he asked for damages from the plaintiff to the extent of Rs. 5,700.

5. The plaintiff in his replication, dated the 26th July, 1939, also pleaded a ratification by the 2nd defendant of the agreement entered into by the 1st defendant on his behalf.

6. Two additional written statements were filed on behalf of the 1st two defendants on the 23rd August, 1939, in which it was contended that the amount for which the suit was brought was not due to the plaintiff personally and the claim for the same could not therefore be enforced by him. In other words, as specified in paragraph 3 of the written statement, the suit was not brought by the proper person and was therefore liable to be dismissed. The plea raised on behalf of the 2nd defendant in his written statement was, if anything, clearer. It was alleged that the suit was instituted by Goverdandoss, the plaintiff in his individual capacity and as he had no right to the suit amount, he was incompetent to file it. It was also alleged in paragraph 3 of the additional written statement that the firm 'Goverdandoss Tokersey' had not been registered as required under the Partnership Act at or before the presentation of the suit and that registration was effected only on the 31st July, 1939.

7. One of these written statements that is, the one filed on behalf of the 1st defendant appears to have been admitted on a condition which appears to be meaningless. The writing of the learned Subordinate Judge is extremely illegible, but the order admitting the statement on behalf of the 1st defendant is read by the office as follows:

Counter filed; not opposed subject to plaintiff being allowed to raise the contention that it is not open to the defendant to revise the memo (written statement) filed.

The other order was unconditional and it gave permission to the 2nd defendant to raise this new defence. Why should these two orders passed on the same day have been different in terms cannot be easily understood unless it be that the Subordinate Judge desired to admit the written statement of the 2nd defendant on the same condition as was imposed by him when he was admitting the additional pleas on behalf of the 1st defendant. Why were pleas of this nature allowed to be raised at all, unless the Subordinate Judge had applied his mind and come to the decision that these ought to be admitted is equally incomprehensible. The issues framed by the Subordinate Judge on the 6th August, 1939, raised points other than those mentioned in the written statements. It is not easy to follow how these issues were framed and why the objection on behalf of the defendants were misunderstood. We take it however that the issues raised by the lower Court merely covered the objections contained in the additional written statements filed on the 23rd August, 1939, and their scope could not be enlarged only because they happen to be vague and indefinite. Objections of this kind should be, if raised, faced by the trial Court and disposed of finally. The pleas should have been either admitted or rejected.

8. The Subordinate Judge in a judgment which is unnecessarily prolix held that although the power of attorney in favour of the 1st defendant was not proved to have been cancelled until April, 1937, he had no authority to enter into a contract on behalf of the 2nd defendant and that the latter had not ratified the agreement contained in Ex. J. Be also found that the 3rd defendant had authority on behalf of the plaintiff to enter into the contract. The contention that the whole of the advance was liable to be forfeited was repelled but the plaintiff was held liable to pay damages suffered by the 1st defendant to the extent of Rs. 1,715-8-0. He also found that out of Rs. 5,000, a sum of Rs. 400 was not paid in cash by the 3rd defendant and that a promissory note for the amount was executed by him in favour of the 1st defendant. In view of his findings the Subordinate Judge ordered the promissory note to be returned by the 1st defendant to the plaintiff and passed a decree for the sum of Rs 8,300 against the 1st defendant after a credit for Rs. 1,715-8-0 found to have been suffered by him as damages was allowed to him. The suit against the 2nd defendant was dismissed. The plaintiff appeals.

9. Before we go into the various questions raised on behalf of the parties, we should like to examine the contentions advanced on behalf of the defendants 1 and 2 in their additional written statements on the 23rd August, 1939. If the plaintiff's suit is liable to be dismissed on the ground that he had no locus standi to maintain the action, it would be unnecessary to examine the other questions.

10. The objection that the plaintiff was incompetent to maintain the suit in his individual capacity was based on the assertion that the money advanced under the agreement Ex. J belonged to the firm working under the name and style of Goverdandoss Tokersey--which also happened to be the name of the plaintiff who was a partner thereof. The plaintiff's capacity to institute the suit in his individual name was, for that reason, questioned.

11. But taking advantage of the issues framed by the lower Court, Mr. Sitarama Rao, learned Counsel for the respondents, contended that in so far as the suit was instituted .'' on behalf of'' or in other words, for the benefit of the firm of Goverdandoss Tokersey, it falls within the mischief of Section 69 (2) of the Indian Partnership Act (Act IX of 1932) and is liable to be dismissed on that ground. We have already referred to the fact that the plea advanced on behalf of the defendants was only to the effect that Goverdendoss Tokersey who had filed the suit in his individual name was incompetent to do so and not that the suit was by or on behalf of the firm of Goverdandoss Tokersey and was not maintainable in the absence of the firm having been registered. In fact the plea that is now being advanced is directly opposed to what had been raised in the written statements. The contention then was that the suit had been instituted by Goverdendoss Tokersey in his individual capacity and it could not therefore be. maintained. The argument that is now urged assumes that the suit had been brought by the plaintiff on behalf of the firm and would be maintainable if the firm had been duly registered before its institution as required by the Indian Partnership Act. The reasons for this change of front are not far to seek. It was not denied on behalf of the plaintiff that the firm of Goverdandoss Tokersey was not registered at the time when the suit was instituted but was registered shortly before this plea was raised on behalf of the defendants. The defendants were fully aware of this fact and had in their written statements even given the date when the registration was effected. In all probability, the plea that the suit was on behalf of the firm and was liable to be defeated on that ground was not raised as one of the learned Judges of this Court had taken the view that the registration of the firm subsequent to the institution of the suit was sufficient and the suit could not be dismissed on that ground, Varadarajulu Naidu, Kuppuswami Naidu, and Co. v. Rajamanicka Mudaliar : AIR1937Mad4767 . That is why the plea that the present suit was on behalf of the firm was not raised and the objection--even if the issue was to be taken literally and as extending the scope of the pleas raised in the written statements--not pressed, as stated by the lower Court, at the time of the arguments. But after the decision of this suit by the lower Court, the, view in Varadarajulu Naidu v. Rajamanicka Mudaliar : AIR1937Mad4767 . was dissented from in Ponnuchami Gounder v. Muthuswami Gounder (1941) 2 M.L.J. 268. and an attempt was made to press the objection--although not raised in the written statements--which happened to be covered by the words of the issue as framed by the trial Court.' The contention was attempted to be supported by a statement of one of the partners of the firm of Goverdandoss Tokersey who was examined as a witness on behalf of the plaintiff (P.W. 1). There is no admission, however, in this statement that the contract Ex. J was entered into on behalf of the firm.

12. When it was pointed out to Mr. Sitarama Rao that the contention now advanced by him was materially different from what was urged by his clients in the lower Court in their additional written statements, he said that it was open to him to raise a point of law for the first time in appeal and that it would be our duty to give effect to it if found to be correct in the same way as it would be our duty to give effect to a plea of limitation even when it has not been raised by a party. He cited a decision of Sind in Lokramdas Chatomal Firm and Ors. v. Tharumal Shevaram A.I.R. 1939 Sind 206. in support of his contention. There is a distinct provision in the Indian Limitation Act that a Court is bound to dismiss a suit on the ground of limitation if it finds the suit to be barred whether a plea of this kind had been raised on behalf of the defendants or not. No such provision however exists in the Indian Partnership Act. It is not therefore quite easy to accept the view that the Court is bound to dismiss a suit on the ground of non-registration of the firm suo motu even if no plea had been raised by any of the defendants to the suit. We agree however that a point of law of this nature can be raised for the first time in appeal if all the facts necessary for its determination are on the record. Had we therefore been of the view that there was substance in this contention, we would have had to give effect to it. But on a reading of the plaint we find that the suit was not instituted by or on behalf of the firm but by Goverdandoss Tokersey in his individual capacity and this fact was actually admitted by the defendants in their written statement. Learned Counsel for the respondents however contended that this would not be material if the suit was actually filed in the interest of the firm. He urged that such a suit would fall within the ambit of Section 69 (2) of the Indian Partnership Act and would be covered by the words 'on behalf of the firm' used in that section. We are not impressed by that argument. A stringent provision of this nature has, first of all, to be strictly construed. It is, moreover, immaterial in our opinion, whether the benefit of a suit is to go to any person other than the plaintiff ultimately. The provisions of Section 69 (2) of the Indian Partnership Act could only be attracted to a suit if it was instituted either by or on behalf of the firm, that is to say, ex facie it purports to be filed either by or on behalf of the firm or even, as urged by Mr. Sitarama Rao, in the interests of the firm. But this must be clear from the plaint itself and must not in any case depend on the liability of a plaintiff to restore the benefit that he has received out of that suit to the firm of which he is a partner eventually. The law has been thus stated in Lindley on Partnership at page 350 (10th edition):

One partner may sue alone on a written contract made with himself if it does not appear from the contract itself that he was acting as agent of the firm; and one partner ought to sue alone on a contract entered into with himself, if such contract is in fact made with him as principal, and not on behalf of himself and others.

13. The Supreme Court of Hongkong had non-suited the plaintiff in Jose Joaquim Agacio v. Paul S. Forbes (1861) 14 Moor P.C. 160 : 15 E.R. 267 on the ground that the suit should have been filed by the firm which was beneficially interested and not by the plaintiff who had entered into the contract. This decision was reversed by their Lordships of the Privy Council who held that the contract having been entered into by the plaintiff personally constituted a personal agreement and that he was entitled to bring the suit in his own name without joining Ms partners as plaintiffs in the action. The suit could therefore be and was properly instituted by the plaintiff and the defendant's objection that the present suit falls within the mischief of Section 69 (2) of the Indian Partnership Act is therefore overruled.

14. We must now see whether the plaintiff was entitled to bring the suit in his own name. It is true that the agreement Ex. J does not clearly state that the 3rd defendant was acting on behalf of the individual Goverdandoss Tokersey and not on behalf of the firm carrying on business in that name--but on going through the various letters that were exchanged between the various parties to the suit (Ex. F-14, Ex. M, Ex. K, Ex. L and Ex- L-1) there is no doubt left in our minds that the 3rd defendant had entered into the contract Ex. J as an agent and on behalf of the individual Goverdandoss Tokersey and not the firm of that name.

15. The first important question of fact to decide is whether the 1st defendant was empowered by the 2nd defendant to enter into a contract such as is contained in the agreement Ex. J. The lower Court found (and that finding is not challenged before us) that the power of attorney (Ex- M) had not been cancelled until April, 1937, i. e., for at least five months after this agreement was entered into. The 1st defendant would therefore be entitled to enter into a contract on behalf of the 2nd defendant if he was authorised to do so under that document. The material portion of Ex. M is as follows:

You shall cut the sandalwood trees in the undermentioned two estates by employing coolies, sell them according to your like, pay the wages, etc., to the coolies, maintain ledger and day-book accounts in respect of sale, deliver them to me with particulars. You shall yourself sign on my behalf, in the forest Government order, permit, etc., in the undermentioned two estates from this date.

These two estates are then described in the schedule.

16. We have already referred to the fact that the sandalwood trees on the two estates known as Benhope and Killiard belonged to the 2nd defendant. They were purchased by him in October and December, 1935, under Ex- XVIII-A and Ex. XV respectively. It was in regard to these sandalwood trees that the power of attorney was executed by the 2nd defendant in favour of the 1st defendant. It was in regard to these sandalwood trees that he had entered into an agreement with the 3rd defendant under Ex. J.

17. Learned Counsel for the appellant argued the case in this Court against the 2nd defendant both on the basis and independently of this power of attorney. But as, in our opinion, the power of attorney is clear and binding on the 2nd defendant in respect of this transaction, it is unnecessary for us to refer to a large body of other documents to which our attention was drawn by learned Counsel for the appellant in this connection. The 2nd defendant was not held liable by the lower Court

(a) as the 1st defendant was found to have entered into a contract in regard to 87 tons of sandalwood which it was not possible to supply to the plaintiff out of the two estates;

(b) as the terms in the power of attorney were so construed as not to confer any authority on the 1st defendant to enter into a forward contract; and

(c) as the 1st defendant was not found to have been authorised under the power of attorney to receive a large sum of Rs. - 8,700 as an advance (vide paragraphs 20, 21, 22 and 23 of the judgment).

The same grounds have been reiterated by learned Counsel for the respondents before us in support of his contention that the 1st defendant could not have been authorised by the 2nd defendant to enter into a contract of the nature contained in Ex. J. He also attacked the contract on the ground that inasmuch as the 1st defendant had been induced to enter into the contract contained in Ex. J by agreeing to make his own principal, the 2nd defendant, liable for the sum of Rs. 3,700 in substitution for his own liability, he must be held to have acted in such a way as came in conflict with his own duty as an agent and the transaction must, for that reason, be held to have been vitiated. We will consider this objection separately and later.

18. The contention that the 1st defendant had entered into a contract for the supply of 87 tons of sandalwood that was far in excess of the supplying capacity of the two estates is based upon the terms found in Ex. J, that the parties to that document had agreed to deduct Rs. 100 per ton out of the advance received or acknowledged to have been received by the 1st defendant. We are not however prepared to agree with the construction that is, being placed on that agreement. It specifically provides for the sale of 30 tons of sandalwood. This was approximately the quantity of wood that was to be found in the two estates. Had the parties been contemplating the supply of wood not out of the two estates but from other sources, we have no doubt that it would have been clearly mentioned in the agreement. A reference to the supply of further wood was obviously made to cover such additional wood as may be available from out of these two estates in addition to the 30 tons which formed the subject of the agreement. It is difficult to infer that the contract was to supply 87 tons of sandalwood simply because Rs. 100 had to be deducted out of every ton of wood delivered by the 1st defendant to the 3rd defendant. The obvious meaning of a provision of that nature was that Rs. 100 would be deducted on the delivery of each ton up to 30 tons and the balance would be deducted from out of the price due in respect of such other wood as may be supplied in addition to 30 tons. It is unreasonable to assume that a contract for the supply of 57 tons would have been left so vague and indefinite if the idea were that the 1st defendant could get that quantity from elsewhere and supply it to the 3rd defendant. Had the price of sandalwood risen higher than that for which it was agreed to be sold, could it have been contended on the basis of a contract such as is to be found in Ex. J that the 3rd defendant would have been entitled to recover damages from the 1st defendant on the latter's failure to supply 57 tons of wood? We do not think so.

19. The next contention which appears to have been accepted by the lower Court and was advanced again before us was to the effect that the 1st defendant was not empowered by the power of attorney to enter into an agreement for the sale of forward goods or rather of wood which had not been cut, dried, cleaned and rendered fit for sale. Learned Counsel for the respondents con-tends that the power of sale mentioned in the power of attorney after the power to have the sandalwood trees cut, leads to the inference that the power to sell could only be exercised after the trees had been cut. If the order in which the various powers have been conferred is read in the manner suggested by learned Counsel for the appellant, it would mean that the power to pay wages, etc., to the coolies (apparently for cutting the trees) could not be exercised by the 1st defendant unless the sandalwood had been sold. But the sandalwood could not be sold, as contended, unless the trees were cut. And the trees could not be cut unless the coolies were paid either daily or weekly. The suggested construction would make it impossible for the 1st defendant to do any work and would defeat the very object for which the power of attorney was given to him. It is proved on the record that the usual procedure in this business is that the monies are advanced by the intending purchasers after they have entered into an agreement to buy the wood with the object of enabling the owner of the trees to pay for the cost of getting the trees cut and the wood dried and cleaned. The advances made by the persons who had entered into agreements of purchase are subsequently deducted from out of the price when the wood is delivered to them. This was exactly what had happened in this case as well. The power to sell the wood in the circumstances contained in the power of attorney would include the authority to agree to sell the wood that was not ready for delivery and had to be cut, dried and cleaned later on.

20. There is no force in the contention that the 1st defendant was not entitled to receive a large sum of Rs. 8,700 by way of an advance. There is nothing in the power of attorney which may even suggest that the 1st defendant's powers were in any way limited as long as he was exercising, the authority given to him under Ex. M. But learned Counsel for the respondents contended that the mere authority to sell the trees would not entitle the 1st defendant to receive their price, large or small. In support of this contention reliance was placed on an observation of a Division Bench of this Court in Narasimhulu Chetti v. Sundarachariat : (1910)20MLJ479 . which was to the effect that the authority to sell immovable property did not carry with it the authority to receive the price of the same. This was, however, in the nature of an obiter as the learned Judges were not satisfied in that case that Mr. Devarajulu Naidu had been authorised to sell the house at the price at which he had purported to sell it without any further reference to the owners. But there is no doubt that the learned Chief Justice was of that opinion and referred to two cases Mynne v. Joliffe (1834) 42 Rev. Rep. 802. and Viney v. Chaplin (1858) 27 L.J. Ch. 434. on the authority of which he was prepared to hold that a mere general authority to sell land did not carry with it an implied authority to receive the purchase money on behalf of the principal. These decisions first of all would have no application to the present case as we are dealing with wood cut and dried and not with immovable property. But even with regard to immovable property it is not quite easy to lay down unconditionally, and we say so with very great respect to the learned Chief Justice, that a person authorised to sell the property would not ordinarily be entitled to receive the price for which he sells the property. It would be different if an agent is authorised to execute a conveyance merely. But when a person is authorised to sell, he is naturally authorised to do something more than to execute conveyances. For instance he can settle the price if he is not already asked to sell for a price fixed by the owner. He can select the purchaser and, in the absence of any specific directions, sell the property to any one that he likes if the same price is offered by more than one. He can enter into an agreement to sell or of sale and can convey the property. An agent having an authority to sell must not only be taken to have authority to do every lawful thing which is necessary to effect a sale but also what is usually done in the course of conducting a sale. And the receipt of the value or the price of the property sold by the agent must be regarded to be what is usually done in the course of conducting a sale. The power to receive the price must be ordinarily, and in the absence of any stipulation or direction to the contrary, considered to be implicit in the power of sale. It would otherwise mean that an agent who is authorised to sell the property to a vendee may sell and convey the property but when it comes to actually receiving the price for which it has been sold, he must withhold his hand and refer the vendee to go and pay it to the owner for the simple reason that there is no specific authority in his favour to receive it on behalf of the owner. What would happen if the Vendee becomes an insolvent after the property has been conveyed to him? Is the owner to lose his money? Let us now examine the decision on which the observation of the learned Chief Justice was based.

21. The facts in Mynne v. Joliffe 42 Rev. Rep. 802. were that an agent was employed to find a purchaser and to enter into a contract to sell an estate. He possessed no authority express or implied to receive the purchase money and was therefore held not entitled to receive the purchase money on behalf of the owner of the estate. It must not be overlooked that the agent in that case was merely a commission agent. This decision can only be understood on the basis that the agent in that case was an agent to find a purchaser and to enter into a contract to sell the estate but had no power to convey the same. Since the agent did not have the power to pass the title in the property, he was found to possess no authority to receive its price. This decision is no authority for the proposition that an agent who is authorised to sell the property and to convey the same to the purchaser, would not be entitled to receive the price of the property sold and conveyed by him. The case in Viney v. Chaplin (1858) 27 L.J. Ch. 434 from which the observations of Lord Chancellor Cranworth were cited by the learned Chief Justice should present no difficulty if it is remembered that the vendor's solicitor, although he happened to be in possession of the executed conveyance along 'with the signed receipt for the consideration money indorsed' was held not entitled to receive the purchase money for the property as he was found to possess no authority to receive the price and the possession of the conveyance and the receipt executed by the vendor were not found by the Court of Appeal to confer any authority on him to receive the money. There is nothing in that case to suggest that the solicitor was authorised to sell and convey the property himself. We have discussed these cases not because the decision in Narasimhulu Chetti v. Sundarachariar : (1910)20MLJ479 . is binding upon us (the observation being in the nature of an obiter) but out of respect for the learned Chief Justice. Sale has been defined in the Transfer of Property Act as being a transfer of ownership in exchange for a price. The authority to sell would therefore carry with it the power to receive the price. At all events, cases of movable property must be decided on entirely different considerations. An auctioneer who is merely an agent on behalf of an owner of goods was found entitled in Woolf v. Horne (1877) 36 L.T. 705, to recover the price from the purchaser himself and was held personally liable when he failed to deliver the goods sold by him to the purchaser. It may be that this decision was arrived at as the auctioneer was held to be in possession of the goods (coupled with interest) as distinct from having merely their custody as a servant or an agent; but we have referred to this case to bring out the distinction between the sale of movable and immovable property. Section 27 of the Indian Sale of Goods Act (1930) and Section 178 of the Indian Contract Act confer special powers on mercantile agents in regard to sales and pledges of goods. But it is worthy of note that Section 27 of the Sale of Goods Act only provides that a person cannot validly sell the goods belonging to another unless he had authority to do so (or where the authority could not be disputed by the owner on account of his conduct) and does not separate the power of sale from the power or authority to receive the price. The authority to sell goods is assumed to carry with it the authority to receive the price.

22. We then come to the contention advanced by Mr. Sitarama Rao, learned Counsel for the respondents, that the 1st defendant could not enter into a transaction in which his personal interest was in conflict with his duty towards the 2nd defendant, his principal and the transaction contained in Ex. J could not therefore be binding on him. This contention is based on the fact that the sum of Rs. 3,700 (which formed part of the advance stated to have been made by the 3rd defendant at the time when the agreement Ex. J. was entered into) had been due to the plaintiff by the 1st defendant in respect of certain prior transactions and it was not possible for the latter, as an agent of the 2nd defendant, to have accepted the money which he owed to the plaintiff by way of an advance towards the transaction in suit, without actually receiving it from the 3rd defendant unless the 1st defendant was not only in a position to pay the amount due by him to the plaintiff in cash in the 2nd defendant's account but had in fact done so. In order to substantiate the contention that the 1st defendant was induced to act in contravention of his duties towards his principal both by the 3rd defendant and by the plaintiff, reference was made to the letters Ex. F-11 and Ex. F-13 exchanged between the plaintiff and the 3rd defendant and it was urged that if the principle that no agent could be permitted to enter into a transaction in which he had a personal interest in conflict with his duty was to be upheld, the agreement Ex. J must be held to be void as against the 2nd defendant.

23. Reliance was placed by Mr. Sitarama Rao in this connection on two decisions by the House of Lords in Reckitt v. Barnett Pembroke and Slater, Ltd. (l929) A.C. 176. and Midland Bank, Ltd. v. Reckitt and Ors. (1933) A.C. 1. It was held in the first of these decisions that as the agent had not been authorised under the power of attorney given to him to use his principal's money for the purpose of paying his (the agent's) private debts and as the authority was limited to draw cheques in connection with the management of the principal's affairs, an issue of a cheque by the agent for the payment of his private debts could not fall within the authority. Arid as the bankers had notice that the principal's money was being applied for the agent's private purposes, they were held not entitled to keep the proceeds of the cheques. Similarly in the second case a solicitor who was authorised by a power of attorney to draw cheques on the client's banking account with the object of applying it for the purposes of his client was held to have no authority to draw cheques for the payment of his private debts to the Midland Bank. The Bank was found to have notice from the form of cheques issued that the money did not belong to the solicitor and was not consequently allowed to retain it as against the debts due to it by the solicitor on a suit for refund brought by his principal.

24. The only conclusion that could be drawn from these decisions is that the 1st defendant could not exceed his authority given under the power of attorney Ex. M and acknowledge the receipt of money due by him on behalf of his principal without an actual payment made by him in his principal's account. Nor could the 2nd defendant be liable to refund the amount that was not paid to the 1st defendant on his behalf unless he (the 2nd defendant) had chosen to ratify the 1st defendant's act with a full knowledge of all the facts so that the 2nd defendant may be found to have accepted the responsibility for his agent's act.

25. These decisions, or the principles, underlying these decisions, whatever their effect may be in regard to the sum of Rs. 3,700 and to a sum of Rs. 400 (out of Rs. 5,000) which was not admitted to have been received in cash, can have no effect on the sum of Rs. 4,600 which was actually paid to the 1st defendant within the authority conferred on him by the power of attorney Ex. M. Moreover it must be remembered that the plaintiff is not suing for the performance of the contract contained in Ex. J. but merely for the refund of money paid by his agent, the 3rd defendant, to the 1st defendant. The plaintiff asks for the refund as the 3rd defendant was not, according to his contention, authorised to enter into this transaction without his specific authority and even if found to have been acting within the scope of his authority as the contract remained unfulfilled. The question of the authority of the 3rd defendant to enter into a contract of this kind may and would in fact bear on the question of the plaintiff's liability to pay damages for the breach of the contract but has, in our opinion, no relevancy to the question of refund for which this suit has been instituted. Had the 2nd defendant or the 1st defendant suffered no damages whatever in respect of the breach of the contract entered into by the 3rd defendant within the scope of his authority would it have been possible for the 1st defendant or even for the 2nd defendant, if the contract by the 1st defendant were found to be within the scope of his authority as this one is already held to be, to urge that the suit should be dismissed even to the extent of Rs. 4,600 simply because in taking the advance on behalf of the 2nd defendant the 1st defendant had agreed to accept the sum of Rs. 3,700 due by him to the plaintiff? To the extent of Rs. 4,600 at least there was no conflict between the 1st defendant's interest and duty. It is not possible therefore for the 2nd defendant to get rid of his liability to refund what had been actually received by his agent, the 1st defendant subject of course to the deduction of any damages that the plaintiff may be found liable to pay on account of the breach of the contract committed by the 3rd defendant and subject to our finding on the question of ratification by the 2nd defendant of the contract Ex. J. and thus of the advance of the entire sum of Rs. 8,700 pleaded by the plaintiff.

26. There is no evidence on the record that the 2nd defendant had ever ratified his agent's act in acknowledging the sum of Rs. 3,700 as an advance after the former had come to know that this sum of money was due by the latter and was not actually paid by the 3rd defendant. In the absence of any such evidence, it is not possible to make the 2nd defendant liable for payment of that sum or of any other sum that is not found to have been paid to the 1st defendant at the time when the agreement Ex. J was entered into.

27. After considering the evidence both documentary and oral in the case, the lower Court took the view that the contract Ex. J. entered into by the 3rd defendant must be taken to have been entered into within the scope of his authority and the plaintiff was therefore liable to pay damages to the 1st defendant for the breach of contract committed by him with the consent and at the instance of the plaintiff. Having been taken through the various documents and the oral evidence on the record we are of the same opinion and would therefore hold that the plaintiff is liable for the breach of contract.

28. Although there is a reference in the notice Ex. K that a sum of Rs. 5,000 was paid by the 3rd defendant to the 1st defendant, yet we find for a fact that Rs. 4,600 were paid in cash to the 1st defendant and that the 3rd defendant had executed a promissory note for Rs. 400 in favour of the 1st defendant on that date. This promissory note has not been paid for and was in fact produced in this Court by the 1st defendant as Ex- II. This shows that the second defendant could not be held liable to pay the sum of Rs. 400 which was not received by the 1st defendant.

29. Now that the contract Ex. J has been held to have been entered into by the 3rd defendant within the scope of the authority given by the plaintiff, the last question to decide is what damages is he (the plaintiff) liable to pay on account of the breach of contract committed by him or at his instance (see Ex. F-15 and Ex. H). An attempt was made by Mr. Sitarama Rao to show that his client would be entitled to recover damages at the rate of Rs. 50 per ton for the 87 tons that had been agreed to be supplied under the terms of Ex. J- We have already held that the contract was for the supply of 30 tons of sandalwood definitely and for such other wood that may be got out of the two estates and that it was not for 87 tons. The lower Court was, in the circumstances, of opinion that the damages claimed by the 1st defendant in his written statement amounting to Rs. 1,715-8-0 were not unreasonable and have been established. Having regard to the market conditions and to the rate prevailing for these goods at or about the time when they would have been delivered by the 1st defendant if the contract had not been cancelled in November, 1936, we are of opinion that the damages awarded by the lower Court were fully justified and we need not reduce them by Rs. 215-8-0 if we cannot see our way to enhance them in the manner asked for by learned Counsel for the respondents.

30. For the above reasons the plaintiff is entitled to recover the sum of Rs. 4,600 from the 2nd defendant after being debited with the sum of Rs. 1,715-8-0, the amount of damages which he has been found liable to pay for the breach. The plaintiff would be entitled to recover this sum from the 2nd defendant, A decree for the balance is accordingly passed in his favour against the 2nd defendant with interest at 6 per cent. from the date of the suit up to the date of realisation. The 1st defendant was liable to pay Rs. 3,700 to the plaintiff and a decree to that extent against him is maintained. The sum of Rs. 400 is found not to have been paid by the 3rd defendant to the 1st defendant. The promissory note executed by the 3rd defendant is, as stated before, on the record. No decree can be passed in regard to that sum. It will be delivered to the 3rd defendant as cancelled and he would no longer be liable to pay the amount due thereunder. As for costs the most appropriate order in the circumstances of the case seems to be that as between the plaintiff and the 2nd defendant, the parties will bear their own costs both here and in the Court below. But the 1st defendant will be liable to pay proportionate costs to the extent of the sum decreed against him in both the Courts.


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