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Sri Vilas Firm Vs. Tinnevelly Municipal Council - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtChennai
Decided On
Reported inAIR1927Mad1020
AppellantSri Vilas Firm
RespondentTinnevelly Municipal Council
Excerpt:
- - we think that *the courts below were perfectly right in finding that the appellants were employed by the company to represent it for the purpose of transacting business at tinnevelly......through the said banyans with regard to such goods and merchandise.3. by clause 2, the prices of goods sold were to be paid to the company in 1 months from the date of the sales and in default the appellants were to pay interest. by clause 4 the appellants were bound to assist the company in procuring cotton at the market rates and be responsible to the company for the due performance of all contracts entered into with the company through them for the supply of cotton. by clause 5, the rates of commission were fixed. by clauses 6 and 11 arrangements were made by the parties for mutual inspection of accounts. by clause 7 the company has to bear the cost of carrying the goods from their mills to the appellants' depots. by clause 9 the company had to pay rs. 150 a month to the appellants.....
Judgment:

1. The appellants are a firm styled Sri Vilas. They have been assessed to pay the companies tax under Section 92, District Municipalities Act as agents of the Tinnevelly Textiles Co., Ltd. The question for decision is whether they are employed by that company as agents to represent it for the purpose of transacting business in the Tinnevelly Municipality. The Courts below have found that they are so employed. Their contention is that they are, as stated in para. 8 of the plaint, 'independent contractors; in other words that the relations between them and the company are those of buyer and seller.

2. The answer to the question turns on the construction of the agreement between the parties, Ex. 4. Under that agreement the appellants were appointed sole banyans of the company for a period of 30 years. They were (Clause 2)

to sell all goods manufactured or produced by the company at such prices as shall be approved by or on behalf of the company.

and to be:

responsible to the company for the due payment by the buyers of the prices of all such goods and merchandise sold by them for and on behalf of the company and for the due performance by the buyers of all contracts entered into by them through the said banyans with regard to such goods and merchandise.

3. By Clause 2, the prices of goods sold were to be paid to the company in 1 months from the date of the sales and in default the appellants were to pay interest. By Clause 4 the appellants were bound to assist the company in procuring cotton at the market rates and be responsible to the company for the due performance of all contracts entered into with the company through them for the supply of cotton. By Clause 5, the rates of commission were fixed. By Clauses 6 and 11 arrangements were made by the parties for mutual inspection of accounts. By Clause 7 the company has to bear the cost of carrying the goods from their mills to the appellants' depots. By Clause 9 the company had to pay Rs. 150 a month to the appellants for their Tinnevelly depot.

4. The only evidence as to the course of dealing between the company and the appellants comes from a clerk employed by the latter. One admission by him is significant; it is that:

yarn is sold to people here on the responsibility of Sri Vilas.

5. In other words, the yarn sold is the property of the company and sold by it, the appellants merely guaranteeing the purchasers. In the face of this admission and of the terms of the agreement, it seems to us idle to contend that the appellants are, as they describe themselves, 'independent dealers'. As pointed by Jessel, M. R. in Ex parte Bright, In re Smith [1879] 10 Ch. D. 566 the fact that the agents are to be liable for the purchasers of the goods paying the money is:

wholly inconsistent with the notion that they were the real purchasers, for then they would be guaranteeing themselves; they would be personally liable to pay as purchasers; and what would be the use of guaranteeing payment by themselves?

6. The real position is that the appellants were the company's servants, that the goods transmitted to and sold by them were the goods of the company and that they had no independence of action. The prices were fixed by the company and the contracts were made with them through the appellants. We think that * the Courts below were perfectly right in finding that the appellants were employed by the company to represent it for the purpose of transacting business at Tinnevelly. They were not customers or commission agents of the company. No doubt they earned a commission, but it was what is known as a 'del credere commission.' They were in fact agents of the company for the sale of their goods. The appeal must be dismissed with costs.


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