John Wallis, C.J.
1. This is an appeal by the plaintiffs from the decree of the Subordinate Judge of Sivaganga in a suit for an account against their agent, the defendant, in so far as it dismisses the suit in respect of transactions with two persons, E, S. Attia and S. Clifford, which are the subject of the fifth issue. The Subordinate Judge found that in these transactions the agent exceeded his authority and that his action was not ratified expressly or impliedly by his principals, but held that the fact that the principals took over from the agent certain securities which he had obtained from these two debtors and dealt with some of them amounted to a ratification. Before us Mr. A. Krishnaswami Aiyar, who appeared for the respondent, endeavoured mainly to support the Subordinate Judge's finding on the ground that ratification was proved independently of the subsequent dealings with the securities, and this question has been most elaborately argued before us. The principals are Nattukottai Chettis who have their permanent home where their, families reside in the Madura District and carry on business mostly by agents in various places in India, Burma and the Near East. This is by no means the first case of the kind which has come before this Court. They not infrequently issue very stringent instructions to their agents as to the class of business they should undertake, and the agents not infrequently take an elastic view of the restrictions imposed upon them and embark from various motives on unauthorised transactions. In such cases, if the agent fully and frankly discloses what he has done, as it is duty to do under his contract which is one of the utmost good faith, and if the principal takes, no objection or abstains from pressing his objection after hearing the agent's explanations, ratification may readily be presumed. In Prince v. Clark (1828) 1 B. & C. 186: 1 L.J.K.B. 69 Abbott, C.J., laid down that it was the duty of the principal to notify his dissent to the agent within a reasonable time and Holroyd, J., said that the question was whether the principal assented to the act done by the agent which might or might not be beneficial. And if the inference arising from the facts was that he decided to take the cargo on his own account or that he meant at least to take the chance of the market, that would be sufficient to discharge the agent. So too Bayley, J., observed that 'the principal...has no right to pause and wait the fluctuation of the market, in order to ascertain whether the purchase is likely to be beneficial or prejudicial; he is bound, if he dissents, to notify his determination in a reasonable time, provided he has an opportunity of doing so.' The same principles, in my opinion, are applicable in the present case, and if the principals decided not to press their objections but to wait and see how the transactions turned out, that would be sufficient to discharge the agent.
2. The question has to be decided mainly on the correspondence which is, practically all of it, produced by the plaintiffs, as the defendant returned to his principals the letters he had received from them or left them behind at Rangoon with his successor. It is incomplete, and it was suggested to us that some of the plaintiffs' own letters to the defendant had been kept back by them, or had even been re written. The Subordinate Judge found some of the letters exhibited not proved, but, in view of the fast that they were not cross examined to, we think the letters exhibited may be accepted as genuine; but, as will be pointed out, there is some ground for thinking they have been selected with a view to help the plaintiffs' case. Further the plaintiffs have not produced the Kurippus or monthly statements of transactions sent them by the defendant, or the Paredu or ledger which they admit having written up for a time from these Kurippus as received. They no doubt say they afterwards discontinued this practice for no apparent reason; nor have they produced the Aindugais or more detailed statements showing the state of each constituent's accounts which were forwarded to them. P. W, No. 3 in his evidence only complains that the defendant stopped sending this about a year before he returned from Rangoon, which was in 1911. Exhibit 1 (b), dated 26th August 1909, shows an Aindugai had just then been sent. Exhibit J-24, dated 2nd January 1911, is the first complaint of the Aindugai not being sent, 'In spite of your having been told for the last four or five months to send the Aindugai you have not sent it.' This does not look as if no Aindugai had been received since May 1910 which is the material date here, but I do not attach very much importance to this as I am not satisfied that the plaintiffs did not write up their Paredu, which they have not produced, from the Kurippus which were regularly sent them, and I have come to the conclusion that they knew more of the real state of the transactions than they are now willing to admit. No doubt, in Exhibit J-24 in January 1911 they stated that they supposed the whole of the oil share transactions were then closed but I doubt if this was serious. They would thus appear to have suppressed some of their accounts and they have not put Alagappa Chetty, the agent who succeeded the defendant at Rangoon, into the box; and these facts must be taken seriously into -account in considering whether or not the correspondence shows their assent. Again to form a right conclusion on the correspondence it must be read consecutively and as a whole. Mere isolated sentences taken out of their context and used without reference to the date of the letter in which they occur may be very misleading.
3. The main question is whether the plaintiffs assented to the defendant's advancing large sums to one Attia and one Clifford on the security of certain oil shares between November 1908 and May 1910. There were also large transactions with Mawer & Co. of the same kind which have not resulted in loss and as to which, therefore, no claim is made. Mawer, who is best known to the public in connection with the losses sustained by Indian depositors owing to failure of the Bank of Burma, half of which he owned according to one of the letters, was also largely interested, as was the Bank, in certain oil companies which he had beep instrumental in bringing out. Attia and Clifford are said by plaintiffs' witness No. 3 to have been Mawer's partners. As already stated, there were large transactions with him, but the transactions now in question were entered into by Attia and Clifford on their individual accounts. One of the earliest letters, Exhibit J 28, dated 7h January 1908, from the senior partner of the plaintiffs' firm, now deceased, shows that the plaintiffs were fully alive to the risk involved in advancing money against shares. Many of the letters addressed to the defendant in 1908 were in the nature of general instructions rather than positive orders. Exhibit II (e) tells the defendant not to lend on Hundis without security. Exhibit II (f) modifies this. Exhibit J-21, dated 2nd September 1908, tells the defendant to confuse himself mainly to getting in outstanding debts, and Exhibit J-7, dated 3rd November 1908, is to the same effect. Exhibit K-2, dated 11th November 1908, from the 3rd plaintiff complains of the defendant's disregard of their instructions and threatens that, if he lends in contravention of instructions, he shall answer for every pie. Exhibit J 11 reports that Attia's Hundis had been taken against a deposit of shares, as could be seen by the ledger, and that the defendant was making frequent enquiries about the value of the shares. If they fell, the money could be collected gradually. This put the plaintiffs on notice of the transaction so far. Exhibit J-26, dated 14th December 1908, shows the plaintiffs' attention had already been called to transactions with Attia as they directed that the money due from him should be called in. Exhibit L, dated 24th December 1908, is a reply from the defendant urging that Attia was a good constituent and it would be better to go on dealing with him. In Exhibit J 29, dated 11th January 1909, the plaintiffs' senior partner inquired why Attia had not paid interest for a long time. Exhibit J-2, dated 19th January 1909, is a general instruction to get in debts outstanding on simple bonds, shares and Hundis. In Exhibit J-12, dated 21st January 1909, which crossed it, the defendant reported that Attia's Hundis were being renewed as his shares were of great value. The plaintiffs seem to have accepted the situation go far; but Exhibit J8. dated 30th March 1909, complained of the scale on which the defendant was doing business and told him not to lend any more. The next reference to Attia is Exhibit K 4, dated 14th June 1909, when the plaintiffs enquired why the defendant had to take up Attia's Hundi if he was such a sound constituent. In Exhibit J-13, dated 17th June 1909, the' defendant gave his reasons for thinking Attia a sound constituent, and that it was advantageous to the plaintiffs to deal with him. in Exhibit J-4, dated 29th June 1909, he was asked why Attia borrowed from them if, as the defendant stated, ha could borrow at 6 per cent. from the Bank. Exhibit J-27, dated 26th July 1909, mentioned that people from Rangoon had been expressing alarm at the way the defendant was managing the business. In Exhibit J-16, dated 29th July 1909, the defendant replied that it was going on well enough. Exhibit J-18, dated 3rd August 1909, complained that he was going on lending and asks when was this to stop.
4. We now come to the 12th of August 1909. The day-book, with which the monthly Kurippus sent to the plaintiffs corresponded, shows that Attia's account was then balanced, but that this was partly effected by discounting his Hundi with the Bank; and the defendant in his evidence admits that he had to take it up on 23rd September 1909. It is in respect of the fresh commitments between this date and April 1910 that it has been endeavoured to make the agent responsible and it is necessary to see in what circumstances these fresh advances were made. We are not so much concerned with the respective attitudes of the agent and the principals before this time, as with the question whether the transactions which followed between September 1909 and August 1910 were brought to the knowledge of the plaintiffs and assented to by them. There were fresh debts of Rs. 5.000 on the 27th August and of Rs. 10,000 on the 17th September in respect of which shares were deposited, and by the 9th December the balance shown as due by Attia was Rs. 26,300 Which rose by 7th April 1910 to Rs. 93,644. Just at this most important period the correspondence produced by the plaintiffs becomes curiously meagre and in complete. The only letters from September 1909 to February 1910 which have been exhibited are Exhibits II (c), L-15, III, I (c). They do not appear to contain any reference to Attia, whereas Exhibit I (c) expressly prohibits advances to certain other persons. The next letter dealing with Attia and Mawer is Exhibit J 17, dated 28th March 1910, from the defendant. It deals at length with the advances to Mawer and Attia, and urges various matters which it says the plaintiffs do not take into consideration. It is clearly in answer to a letter from the plaintiffs which the plaintiffs, who, as I said, are in possession of the letters written by them to the defendant, have not chosen to produce. They were getting Kurippus as usual from September to the end of March showing the transactions with Attia, and I have no doubt they were the subject of letters which have not been produced. Exhibit III (a), dated 4th April 1910, in which the receipt of the Kurippu sent on the 11th March is acknowledged, is an answer to a letter not produced and inquires how they are to realise the shares deposited, which may be taken to include the shares, etc., deposited by Attia and Clifford as well as those deposited by Mawer. This is explained by the defendant in Exhibit I(1), dated 15th April 1910. The answer to Exhibit J-17 is the 3rd plaintiff's letter Exhibit K 5, dated 18th April 1910. After urging the defendant not to make fresh commitments as his successor would be coming and might not agree to take them over he concludes, I have read all you have written about Mawer and E. S. Attia. People here say Attia is a cheat and Mawer a leaky essel in many ways.' The defendant's answer is Exhibit I (d), dated 29th April 1910. He says Mawer's and Attia's loans are secured and that it is necessary to oblige them with small loans and that if he refused they would not be prepared to leave such ample security. This letter certainly does not explain the large advance of Rs 30,000 on April 1st, but we have to see what followed. On the 1st April the debit balance stood at Rs. 93,644. The subsequent transactions were in the nature of renewals and the ultimate balance was Rs. 83,000 and odd secured by a large number of shares. Exhibit J-23, dated 27th Chittrai (9th May 1910), acknowledges the receipt of the Kurippu for last month, that is of Panguni, the month preceding Chittrai, which must have included the Rs. 30,000 transactions just mentioned and merely says, it is not desirable to go on giving more and more. It also comments on the fact that Attia had not been able to take up and pay from the Thavanai Hundi which was paid by the defendant and debited against him on the 25th of the month, apparently the debit in the accounts of 14th April for the Thavanai Hundi of Rs. 2,000. In his reply, Exhibit L-6, dated 19th May 1910, the defendant says that as Attia's securities were so much in excess it was necessary to cash his Hundis. Exhibits L-4 and L-5 again are letters from the defendant to the 3rd plaintiff in reply to letters of the 7th of June and 19th July which the plaintiffs have not chosen to produce. The missing letters would be very material as to the firm's attitude with regard to the secured loans to Mawer and Attia. In Exhibit L-4 the defendant merely says there is no reason for being nervous about the accounts, and in Exhibit L-5 that the dealings with Mawer and Attia are going on regularly. Mawer, who had been alluded to as the leaky ship, he says, was paying cash, and the transactions with him were closed without any loss. As I have said, the transactions to which objection was taken in argument before us took place between September 1909 and April 1910. In the light of the correspondence which the plaintiffs have produced which, moreover, is incomplete and contains very significant omissions, I cannot find that the plaintiffs ever intimated up to end of the year 1910 that they were not prepared to be bound by the transactions which had been brought to their knowledge and I think they must be taken to have assented to them. The exact state of the accounts might have been ascertained by writing up the Paredu from the Kurippus sent to them. They admittedly used to do so. They have given no explanation why they ceased, and have not produced the Paredu which they admit having maintained for a time and I am not satisfied that they gave up the practice of writing up the Paredu as they now pretend. My impression is they were persuaded somewhat reluctantly to accept the policy of making advances againt these oil shares. If this conclusion be not correct, I can only say that the plaintiffs have themselves to blame. The defendant cannot be considered to have been their only source of information as to their shares. There were plenty of other Nattukottai Chetties living near who carried on business through agents in Rangoon, and this oil speculation must have been a source of frequent conversation among them and the state of the market must have been well-known to the Chetties in Madura. No further correspondence between plaintiffs and defendant is produced about Attia till the end of the year 1910. There is a letter of 4th August 1910 from defendant to one Kandanur, who was apparently wanted to influence the' defendant's successor as to the terms on which he should take over. It contains the false statement that all Attia's debt had been paid in cash. The plaintiffs apparently did not see this and certainly were not deceived by it. If Attia had cleared off his debt the credits in his favour would have appeared in the monthly Kurippus, which were admittedly forwarded to the plaintiffs. The case would be altogether different if the defendant sent false Kurippus, suppressing these transactions, but the plaintiffs might easily have proved this and established their case by producing the Kurippus sent them. They have neither produced them nor accounted for their failure to do so, and in these - circumstances, I cannot come to the conclusion that these transactions were kept back from them. There was further correspondence about defendant coming back, Exhibit VII, dated 28th October 1910 and Exhibit I (f) dated 19th November 1910, but no further letters about Attia are produced though 1 cannot help thinking there must have been some, In Exhibit I (f) the defendant writes that the withdrawal of Rs. 75,000 had occasioned difficulties and concludes: 'You are not to set up that all the moneys recovered were lent under your directions, and that all that remains outstanding was lent on my responsibility.' Exhibit J24, dated 2nd January 1911, complains that the plaintiffs had been asking for the Aindugai for 4 months, and observes: 'I suppose no oil transactions are open.' The monthly Kurippus cannot have suggested this. Possibly they had heard that the oil shares were unsteady. Exhibit F, dated 3rd February 1911, which is an answer to the defendant's letter-Exhibit I (f) dated 19th November 1910, answers the statement by the defendant in that letter that the profit and loss was theirs, and says that every one knows that, so that at that time they were not thinking of holding the defendant liable for his advances on the security of the oil shares. It also contains the first express allusion to the fall in the value of the shares, and observes the people 'who owe us money on shares say they cannot realise as the shares are low and that they will sell and pay when the price is to their advantage.' This shows that the plaintiffs were following the market in Rangoon. There are more complaints of the failure to send the Aindugai, and the- plaintiffs' case is that owing to this failure they were kept in the dark as to the extent of the commitments, but they had all along been receiving the monthly Kurippus containing the entries of debits and credits, and I cannot accept this contention, especially in view of their failure to produce the Kurippus sent them, the Paredu they-admit having written up from it for a time, and the incomplete state of the correspondence they have chosen to produce. The transactions questioned before us were between September 1909 and April 1910, and the plaintiffs must be taken to have been informed of them within a month or six weeks by the monthly Kurippus. It was only after the shares had fallen, and the defendant had reported the difficulty of getting Attia to pay in Exhibit I-J, dated 16th March 1911, and Exhibit I k, dated 27th March 1911, that the plaintiffs in Exhibit E on 12th April 1911 took occasion on the arrival of the Aindugai to say that they did not know that Rs. 85,000 was due by Attia and Rs. 27,000 by Clifford. On the whole I cannot agree with the Subordinate Judge that the plaintiffs did not assent to the transactions between September 1909 and April 1910 which have been impeached before us. He has not dealt with the letters in chronological order in the light of the information which the plaintiffs must be taken to have had when writing, nor has he noticed the significant lacunas-. The plaintiffs and the defendant are each anxious to escape the loss and their oral evidence is unreliable. Taking the correspondence which has been produced in the light of the information of which the plaintiffs were admittedly in possession, and having regard to the fact that all the material letters which should be in the plaintiffs' custody are not before us and to the fact that they have kept back the Kurippus and Paredus I think the evidence is sufficient to warrant an inference from their silence for many months that they assented to the transactions in question. The loss appears to have resulted from the fall in the value of the shares at the beginning of 1911 and I am not satisfied that the defendant has been shown to have been guilty of subsequent neglect or misconduct as regards the recovery of the debts outstanding at this period. The evidence as to what happened in Rangoon before he returned and as to a certain portion of Attia's debt having been taken over by his successor Alagappa is incomplete and the plaintiffs have not called Alagappa.
5. On the foregoing grounds, I think the appeal fails. If I had been able to accept the Subordinate Judge's finding that the transactions were not ratified expressly or impliedly until the plaintiffs intermeddled with the securities taken from Attia and Clifford, I should have teen unable to agree with the Subordinate Judge's conclusion that such intermeddling amounted to a ratification. Story says that when an agent contrary to instructions makes advances against security, the principal may realize the security and hold the agent liable for the balance. The arguments addressed to us have altogether failed to persuade me that this is not good law as well as good sense, but the point does not arise and it is unnecessary to discuss it further.
6. My conclusion on the main question rests on the conclusion to which I have been compelled to come in the present state of the evidence, that the transactions which are now impugned were reported to the principals as they occurred in the monthly Kurippus and that they were allowed to stand without repudiation in their accounts for many months until the shares began to fall. I quite appreciate what my learned brother has written about the difficulties of Nattukottai Chetties in dealing with their agents, but the fact that they are very much in the hands of these agents and are afraid of offending them lest worse befall, affords no sufficient reason in my opinion for abstaining from applying to them the principles laid down by Lord Tenterden and other eminent judges in Prince v. Clark (1828) 1 B. & C. 186 : 2 D. & R. 266 : 25 R.R. 352. The present case appears to me to suggest two lessons for Nattukottai Chetties in the position of the plaintiffs, one that they should, promptly disavow transactions entered into on their behalf by their agents in excess of instructions; and the other, that, if their case is that the agents have deceived and misled them by suppressing facts, they should put the Court in a position to judge whether this was so or not by putting before the Court the documents containing the information actually supplied to them by the agents.
7. The appeal is dismissed but without costs. The memorandum of objections is also dismissed.
Seshagiri Aiyar, J.
8. The correspondence relating to the case has been set out very fully in the judgment of the learned Chief Justice which I had the advantage of reading before writing mine. I do not propose to deal with the whole of it again. As, in my opinion, the conduct of the defendant has not been straight forward, I propose to refer to the main features of the case, although I do not differ from the conclusion arrived at by my lord. The defendant was appointed agent in February 1907. He had under his salary chit only 3 years to serve. His business was to take up the collection of the. monies lent by his predecessor, the retiring agent, and to lend out monies to the best advantage of his principal. Ordinarily at the end of the three years, the defendant was bound to have closed his account, and after settling the valuation in the presence of mediators with the incoming agent to have handed over the balance-sheet to the latter and to have come back to British India to render a full account of his stewardship. Therefore, during the last year of his agency the outgoing agent is not expected to grant fresh loans to constituents. If this practice of agents transacting business is kept in mind, it will be seen that the defendant in this case did not act honestly in advancing fresh loans like the ones with which we are concerned. It is common ground that the dealings with Attia were originally closed in August 1909. By this time the defendant had been 2 1/2 years in Rangoon, and in 6 months' time he was bound to return to Madras and to render an account. Even before August 19C9 the defendant was warned that he should not lend to Attia on personal security. In Exhibit J-26 written on the 15th of December 1908, referring to Attia the 1st plaintiff wrote: Collect in full from customer No. 53 and let there be no balance.... If you act without attending to instructions, it would amount to disobedience of written orders.' In reply to that the defendant wrote Exhibit L on the 24th December 1908, in which he said: 'The two persons (referring to Attia) are one and the same person. All that he owes to our two shops, are covered by securities. He is a little slippery person. The security is worth much.' It- is necessary to explain that there were two shops in Rangoon belonging to the principals, one known as Chinna Kadai and the other known as Peria Kadai. There is evidence that in Chinna Kadai the defendant had a share in addition to being an agent. In January 1909 the principal asked the defendant (Exhibit J-29) why interest has not been paid by individual No. 53 for a long time. It also cautioned him against renewing Hundis. In Exhibit J-12, dated the 21st of January 1909, the defendant replied saying that Attia's Hundis were being renewed because his securities were good. On the 30th March 1909 the 3rd plaintiff wrote Exhibit J-8 to the defendant that he should not lend any more money because 'it was his duty to make up his accounts and not embark on fresh transactions.' It must be mentioned that the plaintiffs had, from the outset, been very suspicious about the dealings of the defendant. As early as November 1908 the 3rd plaintiff wrote Exhibit K-2 to the defendant in very strong terms against his reckless advances and informed him that he was bringing the name of the firm into disrepute. On the 15th of April 1909 the third plaintiff again wrote to the defendant (Exhibit J- 22) in these term?: ' Moreover, it is two and a quarter years since you went there. Hereafter you should engage yourself only in the work of collection, but if you were to be advancing more and more, things would get beyond control and our business would suffer.' The letter said further that the principals intended to send an agent even within the period of his agency but as the defendant had not got the business under control' they were delaying sending a new agent. On the 23rd of April 1909 the same principal wrote to the defendant (vide Exhibit K-3): You should as strictly as possible collect from all constituents excepting the one constituent, namely, the man of Kuthaya. In future you should not lend even a pie to constituents.' On the 11th of May 1909 the 1st plaintiff wrote Exhibit J 3 in which he asked the defendant to close up his accounts as early as possible and. make it possible for a new agent being sent out at once. On the 11th of May 1909 the 3rd plaintiff wrote Exhibit J-9 in which he stated: 'People say that the securities on which you have lent out money are all weak and insufficient'...'it seems to us as if you do not care to follow our instructions.' On the 8th June 1909 the 1st plaintiff wrote Exhibit K-l in which he sarcastically referred to Attia's soundness of credit and asked the defendant not to honour his Hundis. To these various warnings against lending to Attia the defendant replied by Exhibit J- 13 on the 17th of June 1909 in which he stated: 'It is cur good luck that E. S. Attia has come and joined us as our friend.' On the 14th of July 1909 the 3rd plaintiff wrote to the defendant (vide Exhibit K-7): 'Although we may write to you ever so much, it is very painful to us to see that-although you receive them all you go on making further payments without recovering anything from Enams and keep sending Kurippu accounts.' On the 29th of July 1909 the 1st plaintiff wrote to the defendant Exhibit J- 27 wherein he said: 'If you would from this moment not advance a pie to any constituent, but make all the necessary endeavours to collect and curtail and close business, there would on the whole be a good name for you and a good name for us too.... The only request I make is that you should arrange to make collections soon before the substitute arrives.' At about the same time the 3rd plaintiff wrote [vide Exhibit VII (a)] : A bad report has spread here that your agency business is vary extensive and that the transactions are very unsound. More than two years of your period has expired. In future you should curtail business and pay up dues and close accounts.' On the 12th of July the defendant wrote to the 3rd plaintiff (tide Exhibit J-16) : '' We are carrying on our dealings here well enough, There is no confusion of any kind.' On the 3rd of August 1909 the 1st plaintiff wrote (Exhibit J- 18): 'You still continue to give loans on shares. It is not known when this is to stop.' The correspondence to which I have referred shows that the plaintiffs were very anxious that the defendant should not grant fresh loans, that the defendant should wind up the business and that particularly he should have no further dealings with Attia. It is with full knowledge of this attitude of the plaintiffs that the defendant began fresh transactions with Attia between September 1S09 and April 1S10. I shall refer to only a very few letters of this period, as the learned Chief Justice has gone into the correspondence of this period at great length, and then state my conclusions ; in my opinion also the full correspondence of this period has not been placed before the Court and the blame for not having placed all the materials before the Court must rest on the plaintiffs. The general attitude of the plaintiffs may be gathered from Exhibit K-5 written by 3rd plaintiff on the 20th April 1910 in which he stated: 'I have read all that is written about Company and Attia. They say that Attia is a cheat and the Company is a leaky vessel.' Prior to this letter the defendant had written on the 28th of March 1910 (Exhibit J-17) in which he stated: 'Mawer and Co., Attia and Clifford and others have mortgaged shares to us...we should keep on the good side of them by frequently saying that they were given to us in trust...while the state of affairs here is like this, some one has spread a false rumour there.' Exhibit K-5 may be taken to he a reply to this. In Exhibit L-l the defendant assured the plaintiffs that the loans made to Mawer and Co. and others were on good security. On the 29th of April 1910 the defendant wrote Exhibit I (d): 'As E. S. Attia and Mawer and, Co. and others hold share mortgages and as Thavanai money is' being received for the said Hundis, we have to accommodate them when they apply for small loans. If we refuse to give they would want to have the share mortgages. The securities are in excess.' We have further letters from the defendant Exhibits L(3), L(6) and L (17), which were intended to assure the plaintiffs that everything was being properly done. In reply to Exhibit I (d) the 1st plaintiff wrote Exhibit J- 23 on the 9th of May 1910: 'In the case of E. S. Attia, if you keep saying that the mortgage loans can be recovered sooner or later, when is it to be recovered It is not desirable to give more and more...you have represented him to be a person of a very high status. It does not appear that his credit will continue to the end.' To this the defendant replied in Exhibit L(6) on the 19th of May 1910: 'As the security of Attia is in excess of the sum of the Hundis we do renew them occasionally.' In this way matters went on. The plaintiffs in their native place felt helpless against the defendant who was conducting business as he liked disregarding positive injunctions from the principals. It was said that the attitude of the plaintiffs was that of parsons sitting on a fence. It is difficult to see what could have been done; his instant dismissal coupled with the coming of a new agent might have been the correct procedure, but that would have precipitated matters or might have caused the plaintiffs' heavy loss. It must be said that Nattukottai Chetties do not clearly appreciate the duty they owe to themselves and to their agents. They repose the greatest confidence in the good faith of their agents and permit them to deal with their monies as if they were the owners and not simply agents. The idea that if they wanted to hold the agents liable they should at once repudiate the transaction has apparently not occurred to them yet; Moreover, the transactions are not of such a simple nature as could easily be affirmed or disaffirmed. The agents are expected to lend out monies to numerous constituents. They are not like ordinary agents whose oases have bean considered in England in the various decisions quoted before us. These latter, generally speaking, were commissioned to conduct particular businesses. In such cases repudiation is easy. In my opinion, the application of principles governing the relationship of English agents to their principals should not be extended to Chetty agents in India. The agent of a Chetty is practically the principal. He lends out monies. He is entitled to sue to recover them. Under these circumstances the position of a Chetty agent approximates to that of a trustee. I do not say that every consideration relating to transactions between a trustee and the cestui que trust should apply. But I am doubtful whether it is desirable to import into questions of this nature rules governing the relationship of principal and agent in England. In Ramasamy Chetty v. Karuppan Chetty 31 lnd. Cas. 216, such principles have been applied in the case of Chetty agents. I think the whole subject requires re-consideration. Section 211 of the Contract Act suggests that if the directions of the principal are disregarded the loss consequent upon such conduct must be made good by the agent to the principal.
9. Further, I feel convinced that the defendant has kept back information and has not acted towards his principal in a straightforward manner. The repeated requests of the principal that the Aindugais should be sent have been ignored by the defendant. The last but one Aindugai was sent on the 15th of August 1909. The final one was sent on the 15th of March 1911. Between these periods there is no excuse for the defendant not having sent the Aindugais. In his evidence the defendant admitted that he did not send Aindugais even after repeated requests. He says in one of his letters that it would have taken him a long time to make up the Aindugai. When we remember that the defendant was a near relation of the plaintiffs and that the plaintiffs informed him that he should not take advantage of the relationship and should conduct himself as an agent and not as nephew, the conduct of the defendant in disobeying the express instructions and advancing new loans appears to be reprehensible. But for the fact that the plaintiffs have not produced all the Kurippus sent to them and to the fact that they have kept back Alagappa Chetty from the witness box, 1 would have felt inclined, notwithstanding the decisions to the contrary, to hold that the defendant was guilty of gross negligence and that no ratification ought to be implied from the failure to expressly repudiate the transactions. Having regard to the view taken by the learned Chief Justice and to the authorities in this Court and in England, I do not propose to differ from the judgment just delivered. I hope that our conclusions would have the effect of opening the eyes of Chetty principals to the necessity of observing greater caution in their dealings with their agents, and to their exercising greater scrutiny over their doings. I agree, though not without hesitation, that the appeal should be dismissed, The memorandum of objections should also be dismissed.