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The Pudukottah Textiles Limited, a Public Limited Company, Incorporated Under the Indian Companies Act, Represented by Its Director-in-charge, L. Narayanan Chettiar and anr. Vs. B.R. Adityan - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai High Court
Decided On
Reported in(1975)1MLJ356
AppellantThe Pudukottah Textiles Limited, a Public Limited Company, Incorporated Under the Indian Companies a
RespondentB.R. Adityan
Excerpt:
- .....defendant did function only as the agent of the first defendant in the matter of the alleged suit contract.7. the director-in-charge, when he acted as such agent obviously had the implied authority to act for the company and make offers and counter offers in the matter of the sale of the property belonging to the company. it is a well established principle of law that qui facit per alium facit per se, he who acts through another, acts for himself. in the instant case, the company acted through its director-in-charge. virtually, therefore it was the incorporated company, who was acting for itself, though in the garb of its agent or director-in-charge, namely the second defendant. in such circumstances, section 230 of the indian contract act makes it clear that in the absence of any.....
Judgment:

Ramaprasada Rao, J.

1. The defendants, who failed in the City Civil Court, Madras, in O.S. No. 4362 of 1967, are the appellants The first defendant is Pudukottah Textiles Limited, which was represented for all purposes in this action as -well as in the correspondence by its Director-in-charge, L. Narayana Chettiar, who is the second defendant in the suit. In June 1965, the defendants caused a publication to be made in regard to the -sale of certain textile machineries belonging to them. The plaintiff in response to the said advertisement, offered, after inspection, to purchase the said machineries for a sum and consideration of Rs. 2,50,000 but made the offer subject to the following conditions.

1. The licence from the Textile Commissioner should be got by the defendants and endorsed in favour of the plaintiff.

2. The time for taking delivery of the machinery and payment of a sum of Rs. 2,25,000 after adjusting the sum of Rs. 25,000 paid as advance by the plaintiff should be on or before 31st May, 1966.

3. The defendants should encash the cheque for Rs. 25,000 if they agreed to the above conditions.

2. The defendants formally accepted the offer by a telegram, but followed it up by a letter stating that the offer has been accepted on condition that the machinery should be taken delivery of on or before 8th May, 1956 on payment of the sum of Rs. 2,25,000. The acceptance was also conditioned by the fact that the offer was subject to the permission being granted for the sale of the machinery by the Madras Industrial Investment Corporation. As the defendants did not in toto accept the offer and the conditions imposed thereon by the plaintiff, the plaintiff wrote under Exhibit P. 9 stating that the terms were not acceptable to them ; but again they made a fresh offer under it subject to almost all the conditions referred to above excepting that the date by which the balance of the consideration has to be paid and the machinery taken delivery of would be 15th of July, 1966. Here again, a formal confirmation was made by the defendants under Exhibit A-10, which was followed up by Exhibit A-11, which stated that a sum of Rs. 1,00,000 at least should be paid on or before 31st May, 1966 and the balance on or before 15th July, 1966. This counter-offer made by the defendants was not acceptable to the plaintiff. Therefore, under Exhibit A-12 the plaintiff withdrew their offer and called upon the defendants to return the advance of Rs. 25,000 paid by them by a cheque, which cheque apparently, the defendants encashed without adverting to the conditions under which the cheque was tendered by the plaintiff to the defendants. As the defendants did not return the said advance, the plaintiff followed up the correspondence by a lawyer's notice Exhibit A-13 demanding the payment of the same, which evoked a reply from the defendants under Exhibit A-I4 to the effect that the contract was concluded and that the sum of Rs. 25,000 was forfeited because of the breach committed by the plaintiff. The following issues were framed for trial on the pleadings as above:

1. Whether the plaintiff is entitled to recover the suit amount from the defendants?

2. Whether there was no concluded contract at any time?

3. Whether the plaintiff has committed breach of contract and hence the advance amount of Rs. 25,000 paid by him to the defendants is forfeited?

4. Whether, in any event, the claim for interest at 12 per cent. per annum is untenable?

5. To what relief, if any, is the plaintiff entitled? The learned Judge held that there was no concluded contract between the plaintiff on the one hand and the defendants on the other and ultimately he decreed the suit as against both the defendants with costs. It is as against this, the present appeal has been filed.

3. From the correspondence it is seen that the second defendant always signed the letters which emanated from the defendants for and on behalf of the first defendant and as its Director-in-charge. On a fair reading of the correspondence that passed between the parties, it is difficult to hold that...the second defendant had a personal interest in the contract and he entered into it in his own individual capacity without reference to the first defendant or acting for it as its agent. We shall presently advert to this aspect.

4. Equally it is clear from a perusal of the relevant exhibits already referred to that the contract was never concluded as between the parties. There was no consensus ad idem between them at any material point of time. In the first phase of the correspondence, the plaintiff made it clear that they could take delivery of the goods on or before 31st May, 1966 But the defendant, while formally accepting the offer of the plaintiff to purchase the textile machinery, stated that the machineries and spares should be taken delivery before 15th March, 1966 and that payment should also be made before that date. This was followed up by another letter Exhibit A-6 wherein the defendants of their own accord extended the time for such delivery of machinery and concurrent payment to 8th May, 1966. But the fact remains that the offer of the plaintiff was not accepted. But there was indeed a counter-offer by the defendants in the matter of the payment of the balance of consideration and the delivery of the machinery on such payment. As we said, this counter-offer, as it were by the defendants, was not accepted by them. But under Exhibit A-9, they made a fresh offer, but subject to the material conditions stated above and made it clear that they could pay and take delivery of the machinery on or before 15th July, 1966 only. To this again, the defendants would not agree. They made a. counter-proposal under Exhibit A-12 wherein they would ask the plaintiffs to pay the sum of Rs. 1,00,000, before 31st May, 1966 and pay the balance on or before 15th July 1966. Thus the trend of correspondence indicates that at no-point of time the parties ever agreed that there was a concluded contract as between them. The sum and substance of the material exhibits referred to above point out that there were proposals and. counter-proposals between the parties and they have themselves not resolved to commit themselves to a particular situation in the matter of the offer and acceptance of the contract to sell and buy the textile machinery as above. The learned Judge was, therefore, right when he found that there was no concluded contract between the parties and in consequence, the encashment of the cheque of Rs. 25,000 by the defendants was premature in the sense that they ought not to have done before a contract was concluded in the manner known to law.

5. It, therefore, follows that the plain-tiff is entitled to a decree for the return of the sum of Rs. 25,000 which the defendants were withholding even after demand.

6. The question, however, is as to who is primarily responsible for the repayment of the money which was paid by the plaintiff as advance or as earnest money towards the contract in question. This leads us on to a pronouncement on the jural relationship between the first and second defendants. The first defendant is an incorporated company, which, obviously and invariably should function through a human agency. Normally, it functions through its Directors or Managers. In the instant case, the second defendant as the Director-in- charge of the first defendant company was corresponding with the plaintiff over the subject-matter of the suit. We have already referred to the fact that the second defendant took the precaution of signing all the letters 'for and on behalf of the Pudukkottah Textiles Limited, as its Director-in-charge. The second defendant, therefore, was throughout functioning as the agent of the company. Though normally a director of the company is not an agent of the company, yet in certain circumstances, he could act as such agent by making such overt representations to that effect. From the trend of the correspondence and from the nature of the bargain between the parties, the conclusion is inescapable that the second defendant did function only as the agent of the first defendant in the matter of the alleged suit contract.

7. The Director-in-charge, when he acted as such agent obviously had the implied authority to act for the company and make offers and counter offers in the matter of the sale of the property belonging to the company. It is a well established principle of law that Qui facit per alium facit per se, he who acts through another, acts for himself. In the instant case, the company acted through its Director-in-charge. Virtually, therefore it was the incorporated company, who was acting for itself, though in the garb of its agent or Director-in-charge, namely the second defendant. In such circumstances, Section 230 of the Indian Contract Act makes it clear that in the absence of any contract to that effect an agent cannot personally enforce contracts entered into by him on behalf of his principal, nor is he personally bound by them. The learned Counsel for the respondents was unable to refer to us any contract to the contrary in the instant case whereby the second defendant took over for himself the personal responsibility of honouring or executing the so-called contract in the suit. In the absence of any such contract, an agent cannot be personally bound by all such acts done by him for and on behalf of his principal. In the case under consideration, the second defendant received the advance for and on behalf of the first defendant, but mistakenly encashed it prematurely without adverting to the fact whether a contract has been fully forged or concluded as between the parties. It is common ground that the cheque was issued in the name of The Pudukkottah Textiles Limited. The moneys went to the benefit of the first defendant. The second defendant obviously acted for and on behalf of the first defendant and did not receive any benefit from the so-called contract. In these circumstances, we agree with the learned Counsel for the appellant that the plaintiff could only obtain relief as against the first defendant who is the principal in the bargain and not as against the second defendant, who is an agent to such a principal. Following the well-known principle laid down in Section 230 of the Contract Act as also the accepted law that an agent is not personally liable for the acts done by him for and on behalf of this principal and in which he had no interest or secured a benefit, we are of the view that the learned trial Judge was wrong in having decreed the suit against both the defendants. In these circumstances, we modify the decree of the trial Court and decree the suit as against the first defendant with costs. In so far as the suit against the second, defendant is concerned, it is dismissed but there will be no order as to costs.

8. The appeal is, therefore, partly allowed but the first appellant shall pay the costs of the respondent in this appeal.


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