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Venkatachallam Chettiar (Dead) and anr. Vs. Ponnuswami Aiyangar and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai
Decided On
Reported inAIR1925Mad46
AppellantVenkatachallam Chettiar (Dead) and anr.
RespondentPonnuswami Aiyangar and anr.
Cases ReferredAbdul Saffur Rowther v. Hamida Bivi Ammal
Excerpt:
.....from his principal and shipped them, the position of the agent to his principal is not that of vendor and purchaser. clearly the agency contract and its terms are throughout the dominating feature of the transaction and damages for loss are to be calculated on the footing of that and not as between vendor and purchaser. 10. it is then argued that even if section 91 does not apply in terms, the principle of it applies, that is, that the plaintiff as agent was bound to take reasonable care in the despatch of the goods and that reasonable care is what has been statedly set out in section 91, that the plaintiff, having neglected to despatch the goods in such manner that his principal could hold the carrier responsible for safe delivery, is guilty of the negligence involved. the..........clear question which the master of the rolls put to himself there was : was a breach of duty by an agent as agent not a breach of contract as vendor and if there was a breach what damages has the plaintiff suffered thereby? and the idea that the plaintiff was entitled to get damages as though his agent was a vendor bound to supply him with the goods ordered by him was negatived. it was pointed out that lord blackburnhas not said that as long as the contract between principal and agent is executory the principal can sue the agent and make him pay as though the contract was that of vendor and purchaser.6. and the learned judge goes on to say:it is obvious to my mind that the contract of principal and agent is never turned into a contract of vendor and purchaser for the purpose of settling.....
Judgment:

Wallace, J.

1. The original suit was to recover a sum Rs. 1,691, principal and interest, due on account of dealings by the defendants with the plaintiff in silk goods. It is not denied that the plaintiff was a commission agent in Bombay for the defendants at Kumbakonam, for the purchase of silk thread. In his capacity as such the plaintiff had purchased two bundles of silk thread for the defendants and despatched them by rail to the defendants. One of thorn was lost on the way. The plaintiff in his present suit for the balance due in the matter of his agency account included the price of the lost bundle. The defendants repudiate liability for this and claim that it was lost through the plaintiff's negligence in not insuring the bundle, as required by railway rules to ensure safe transit of all parcels of such a nature whose value is over Rs. 100. The defendants also call in aid Section 91 of the Indian Contract Act.

2. The District Munsif held that Section 91 did not apply to a case of a commission agent and that no negligence had been proved. The lower Appellate Court held that Section 91 applied and that the plaintiff had not followed its provisions and was guilty of negligence, and the loss must fall on him.

3. The chief point argued in appeal by the plaintiff was whether Section 91 applies to the case of a commission agent. Section 91 comes under Chapter VII which is headed 'sale of goods' and under the sub-heading 'Delivery' and no doubt is applied to the case of an ordinary vendor and vendee. The question then is whether a commission agent and his principal stand on the same footing of vendor and vendee, when goods have been purchased in the ordinary course of the agency by the commission agent for the principal and despatched to him. Defendants rely on the dictum of Lord Blackburn in Ireland v. Livingston 5 H.L.C. 395.

It is true that the agent who in this executing an order ships goods to his principal, is in contemplation of law a vendor to him.... The legal effect of the transaction between the commission merchant and the consignee who has given him the order is a contract of sale passing the property from one to the o; her and consequently the commission merchants is the vendor and has the right of one as to stoppage in transitu.

4. But the learned Judge goes on to point out that the contract between principal and agent is in no way superseded by this quasi sale but that 'this superseded sale is not any way inconsistent with the contract of agency existing between the parties.'

5. This dictum has been explained in a later case by Brett, M.R. and Fry, L.J. in Cassabogolu v. Gibb (1883) 11 Q.B.D. 797 It is clear from the notes of argument in that case that the question was clearly raised whether if any foreign agent has purchased goods from his principal and shipped them, the position of the agent to his principal is not that of vendor and purchaser. The other side there pointed out that there was no contract such as would be between a vendor and a purchaser that the plaintiff should have the goods whether or not they were procurable and that it had never been decided that damages for any breach of duty by an agent was to be assessed on the same principle as they are in the case of a vendor and purchaser. The clear question which the Master of the Rolls put to himself there was : Was a breach of duty by an agent as agent not a breach of contract as vendor and if there was a breach what damages has the plaintiff suffered thereby? And the idea that the plaintiff was entitled to get damages as though his agent was a vendor bound to supply him with the goods ordered by him was negatived. It was pointed out that Lord Blackburn

has not said that as long as the contract between principal and agent is executory the principal can sue the agent and make him pay as though the contract was that of vendor and purchaser.

6. And the learned Judge goes on to say:

It is obvious to my mind that the contract of principal and agent is never turned into a contract of vendor and purchaser for the purpose of settling the damages for the broach of duty of the agent.

7. No doubt it can be argued that in that case, since the agents did not ship the goods ordered, but inferior ones they can never have been in the position as regards their consignee of a vendor, while in this case the plaintiff did send the actual goods ordered.

8. I can find nothing in those judgments tending to show that the legal effect of the transaction of a purchase of specified goods by a commission agent has the effect of turning his contract as between principal and agent wholly into one, as between vendor and purchaser. They imply only that the agency contract is in some respects analogous to that of a contract of purchase and sale and not identical with it, analogous in the sense that it will attract to the commission agent certain reliefs ordinarily open to a vendor, for example, the right of a stoppage in transitu. On the other hand, property in goods specified would pass to the principal immediately on purchase by the agent. The passing of the property in the goods would not depend on the manner of She delivery.

9. Let us take a case where the principal has definitely instructed his agent to purchase and forward specified goods by railway, without the insurance insisted on by the railway as the price of its responsibility for the carriage; I do not imagine it would be reasonably contended that Section 91 would nevertheless apply on the principle that the agency contract was, on consignment by the agent, wholly converted into a contract as between vendor and purchaser; clearly the agency contract and its terms are throughout the dominating feature of the transaction and damages for loss are to be calculated on the footing of that and not as between vendor and purchaser. I am therefore clear that Section 91, Indian Contract Act does not in terms apply to the case. Hence, if plaintiff is liable for the loss, it must be on proof of negligence or proof of breach of duty as agent.

10. It is then argued that even if Section 91 does not apply in terms, the principle of it applies, that is, that the plaintiff as agent was bound to take reasonable care in the despatch of the goods and that reasonable care is what has been statedly set out in Section 91, that the plaintiff, having neglected to despatch the goods in such manner that his principal could hold the carrier responsible for safe delivery, is guilty of the negligence involved.

11. Now I am clear that it cannot be laid down in all oases that the measure of reasonableness as between agent and principal is what is laid in Section 91 as the proper method of delivery as between vendor and purchaser. It has to be decided on what the parties themselves, in their usual course of conduct and trade custom considered reasonable. It is in evidence here that not only before the loss but even after it the defendants have sent similar orders for silk thread, valued at over Rs. 100 and have received them, sent uninsured in the same manner, for the plaintiff. The non-insurance was clearly acquiesced in, by the principal prior to this loss and after it, and the plaintiff even after this loss has not received any instructions that such goods should be sent insured. I conclude the non-insurance was the implied customary method.

12. I see no reason, therefore, to hold that the plaintiff is guilty of negligence in sending them in the manner implicitly, if not explicitly, approved of by his principal, who was evidently prepared to take the risk of loss. He has implicitly told the plaintiff that he does not want the goods to be sent insured and he cannot, while refusing thus to incur the cost of insurance, put the whole risk of the loss on the plaintiff and charge him with negligence in following his own implicit instructions.

13. I must, therefore, hold that the plaintiff is entitled to the value of the lost silk bundle and that the lower appellate Court's decision on this issue was wrong. I therefore reverse the decree of the lower appellate Court and restore that of the District Munsif on this point. Plaintiff will get his costs throughout.

14. There is a Memorandum of Cross-Objection filed by the defendants that the plaintiff is not entitled to the interest decreed by the Lower Courts, the contention being that he is not entitled to any interest at all. It is urged that no custom to charge interest on the agency account is alleged or proved, and that no demand for interest was made. The charging of interest is not excluded by the Interest Act, which is not exhaustive of all cases, in which interest is allowable; see Abdul Saffur Rowther v. Hamida Bivi Ammal (1919) 42 Mad. 661 where the matter is discussed at length. It follows that the award of interest is more or less a matter of discretion for the Court and not a matter of law. Both the lower Courts have on the evidence come to the conclusion that there was a custom or rule of trade by which the plaintiff should get interest; and I am not prepared to find that conclusion is unreasonable.

15. I therefore dismiss the Memorandum of Cross-Objections with costs.


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