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Patiram Banerjee Vs. Kankinarra Company Ltd. and anr. - Court Judgment

LegalCrystal Citation
Decided On
Reported in31Ind.Cas.607
AppellantPatiram Banerjee
RespondentKankinarra Company Ltd. and anr.
Cases ReferredGubboy v. Avetoom
broker - undisclosed principal--bought and sold notes--contract--construction by similarity--contract act, (ix of 1872). sections 222, 230--arbitration. - .....he seeks a decree for indemnity.2. this award professes to have been made on a dispute between messrs. jardine, skinner & co., managing agents, kankinarra co., limited, and messrs. s.n. banerjee & co., with reference to a claim for damages for non-delivery of 250 bales jute bought and sold under contract no. d/2382 of 2nd jane 1913.3. the bought note was in these terms:no. d/2382.indian jute manufacturers' association.jute contract.calcutta, 2nd june 1913.messrs. jardine, skinner & co.agents, kankinarra jute mills co., ld.dear sirs,we have this day bought by your order and for your account from our principals(here follows a description of the jute and provisions not material at this stage).arbitration.--any dispute arising out of this contract shall be referred to the arbitration of.....

Lawrence Jenkins, C.J.

1. The plaintiff carries on business as a jute-broker under the name of S.N. Banerjee & Co., and he has brought this suit for a declaration that an award, dated the 14th February 1914, is invalid and inoperative, and for consequential relief. In the alternative, he seeks a decree for indemnity.

2. This award professes to have been made on a dispute between Messrs. Jardine, Skinner & Co., Managing Agents, Kankinarra Co., Limited, and Messrs. S.N. Banerjee & Co., with reference to a claim for damages for non-delivery of 250 bales jute bought and sold under contract No. D/2382 of 2nd Jane 1913.

3. The bought note was in these terms:

No. D/2382.

Indian Jute Manufacturers' Association.

Jute Contract.

Calcutta, 2nd June 1913.

Messrs. Jardine, Skinner & Co.

Agents, Kankinarra Jute Mills Co., Ld.

Dear Sirs,

We have this day bought by your order and for your account from our principals

(Here follows a description of the jute and provisions not material at this stage).

Arbitration.--Any dispute arising out of this contract shall be referred to the arbitration of the Bengal Chamber of Commerce, whose decision shall be accepted as final and binding on both parties to this contract.

Yours faithfully,

(Sd.) S.N. Banerjee & Co.


4. A corresponding sold note was sent to Babu K.D. Shaha on the same date.

5. On the 16th September 1913, S.N. Banerjee & Co., by letter declared Messrs. Jardine, Skinner & Co., Agents. Kankinarra Co. Limited, on the one hand, and Babu K.D. Shaha on the other, their principals.

6. On the 17th September, Messrs. Jardine Skinner & Co. replied to Messrs. S.N. Banerjee & Company:

We do not agree to accept your principals names under this contract. The contract must, therefore, stand as originally made out.

7. On the 29th September, Messrs. Jardine, Skinner & Co. called on Messrs. Banerjee & Company to hand them documents for 250 bales, and on the 30th, Banerjee & Co., replied requesting them to ask the seller direct for the jute due under the contract. There was further correspondence but no delivery or payment was made, and ultimately Messrs. Banerjee & Co. received notice from the Registrar, Bengal Chamber of Commerce, that Messrs. Jardine, Skinner & Co. had applied for arbitration. Messrs. Banerjee & Co. repudiated the jurisdiction of the Chamber of Commerce and the arbitrators appointed by it. The arbitrators, however, proceeded with the arbitration and made their award directing Messrs. Banerjee & Co. to pay Messrs. Jardine, Skinner & Co. the sum of Rs. 4,593-12.

8. This is the award now impugned. Chitty, J., has dismissed the plaintiff's suit, and from this judgment, the present appeal has been preferred.

9. It is contended by the appellant that there was no contract between Messrs. S.N, Banerjee & Co. and Messrs. Jardine Skinner & Co., or the Kankinarra Co., Ld., that authorised the reference to arbitration.

10. The Kankinarra Co., Ld., on the other hand maintain that the reference is justified by the clause providing for arbitration in the bought note.

11. The arbitration clause contemplates two parties, each a, party to the contract, and there can, I think, be no doubt that those two parties are the sellers and the buyers.

12. Was then the plaintiff a party to the contract so as to be bound by the arbitration clause, was he a seller or buyer?

13. This question is not to be solved by describing the plaintiff as an agent with an undisclosed principal and finding what the Contract Act says about a person in that predicament; that would be a superficial mode of investigation. We must find out what was the contract between the plaintiff on the one hand, and Messrs. Jardine, Skinner & Co., as representing the Kankinarra Co., Ld., on the other. For this purpose, we must examine the bought note and also the surrounding circumstances, among them being the fact that a corresponding note was sent to Babu K.D. Shaha. The bought note is no doubt signed by the plaintiff, and prima facie, that would bind him, but it would only bind him to that which is expressed in the document.

14. If the document be examined, it does not purport to be a sale by the plaintiff even as an agent: it is an intimation that Messrs. Jardine, Skinner & Co.'s order has been carried out by a purchase made by the plaintiff on their account not from himself, but from some one else.

15. The note may be an admission of the plaintiff's employment by Messrs. Jardine, Skinner & Co. to buy on their behalf, but the contract (if any) as between the plaintiff and them, which it evidences, is a contract not of sale, but of employment.

16. This employment was to negotiate a sale and to be an intermediary, not to sell on behalf of another. The position is described by Jessel, M.R., in Southwell v. Bowditch (1876) 1 C.P.D. 374 : 45 L.J.C.P. 630 : 35 L.T. 196 : 24 W.R. 838 where he says, Blackburn, J., in a remarkably clear judgment says: there is no doubt at all in principle that a broker, as Such, merely dealing as broker and not a-3 purchaser, makes contract from the very nature of things between the buyer and the seller, and he is not himself either buyer or seller' (the phrase the very nature of things' hitting the fallacy of the Court below in this case), 'and that consequently where the contract says sold to A B' or sold to my principals', and the broker signs himself simply as broker, he does not make himself by that either purchaser or seller of the goods''.

17. That a person signs simply as broker may be clear from the terms of the contract as well as from any statement to that effect appended to his signature, and this is illustrated by Mellish, L.J., in the same case at page 379, where he says:

Now there is, I think, a material difference between the words sold for you to my principals' and bought of you for my principals'. The rule of law, no doubt, is that, if the principal is undisclosed, the broker saying bought of you for my principals' is himself liable; but this contract says sold for you to my principals, i.e., I, your broker, have made, a contract for my principals, the buyers.

18. I have already pointed out that the note in this case is in the 2nd of these two forms, and, on its true construction, I hold that the plaintiff was no more than an intermediary, and was not an agent for sale, to whom the provisions of Section 230 of the Contract Act applies, so as to make him liable as an agent who has not disclosed his principal's name.

19. It has been contended before us that the present case is governed by Gubboy v. Avetoom 17 C. 449 at p. 453. It is true that it was there held that the defendant in that case was an agent for an undisclosed principal within the meaning and operation of Section 220. But to treat the construction placed on the document, and circumstances under consideration in that case, as a decision binding us in this case, is to fly in the teeth of the doctrine propounded by Jessel, M.R., in Southwell v Bowditch (1876) 1 C.P.D. 374 : 45 L.J.C.P. 630 : 35 L.T. 196 : 24 W.R. 838 where he says There is no more vicious line of argument, if I may say so with deference to the Court below, than that which was adopted by the Court below in this case of comparing one contract with another arid saying it differs very little; you arrive ultimately at identifying wholly different contracts.' And yet this is the way Mr. Avetoom would have us go. In a word, the Court there on the construction of the document before them, came to the conclusion that a particular relation was established: this cannot bind us in our construction of a different document written under wholly different circumstances. I do not propose to discuss the competence of a suit like the present, for no objection on this score has been raised. Nor is it necessary to consider the plaintiff's claim to indemnity against K.D. Shaha. In my opinion, the judgment of Chitty, J., must be modified and a decree passed in the plaintiff's favour setting aside the award. The respondent Company must pay the plaintiff's costs of the suit and appeal, and the plaintiff must pay K.D. Shaha's costs of the suit and appeal.

Woodroffe, J.

20. We must look at the terms of Section 230 of the Contract Act. The first question is whether the appellant, who is a broker, is as such an agent. I think, a broker is an agent. For what purpose he is an agent is another question. Primarily and for some purposes, he is the agent of the party by whom he was originally employed. He is also generally the agent of each of the two parties for whom he negotiates. The engagement of a broker is like that of an ordinary agent, bat with this difference, that the broker being employed by persons who have opposite interests, he is, as it were, agent for both the one and the other to negotiate the commerce or affair in which he concerns himself. Thus his agreement is twofold and consists in being faithful to all the parties in the execution of what each of them entrusts him with. A broker, when he closes a negotiation as the common agent of both parties, usually enters it in his business back and gives to each party a copy of the entry or a note or memorandum of the transaction, which as given to the seller, is the sold note, and as given to the buyer, is the bought note. Prima facie a broker is employed to find a purchaser or' seller and as such is a mere intermediary. He is thus an agent to find a contracting party, and as long as he adheres strictly to his position as broker, his contract is one o employment between him and the person who employs him and not a contract of purchase or sale with the party whom he in the course of such employment finds. A broker may, however, make himself a party to the contract of sale or purchase. For he can go beyond his position of mere negotiator or agent to negotiate and by the terms of the contract make himself the agent of his principal to buy or sell. The section, therefore, refers to contracts entered into by him on behalf of his principal.' The next question is, therefore--did the appellant enter into the contract in suit on behalf of his principal, that is, was he an agent to sell to the respondent or was he a mere negotiator to bring the parties together, but otherwise not concerned? If in this case, the broker did enter into a contract, then I think on the facts he would be liable. For his principal was undisclosed at the date of the contract and the effect of the subsequent disclosure some three months later, would not in itself affect the right of the respondents to proceed against the appellant though they might, if they chose, elect to proceed against the principal when disclosed. Whilst, however, I am of opinion that the appellant would be liable to the buyers if the case falls within Section 230, the question is whether that section applies.

21. Prima facie, a broker does not make himself liable and upon the question whether he has entered into a contract or not, we must look at the terms of the contract itself. Reference has been made to the fact that the appellant did not disclose his principal until three months later and did not, when Messrs. Jardine, Skinner & Co. attempted to make him personally liable, repudiate the liability then sought to be put upon him. He also appears to have billed the seller for the difference. There is, however, a letter in which he refers Messrs. Jardine, Skinner & Co. to the sellers, and the difference bill is headed 'Kankinarra Account'. Subsequently, personal liability was denied. It is not contended that these facts amount to acquiescence or estoppel, or constitute a new contract. So far as the contract in suit is concerned, we must look to the terms of the contract itself. I should have had no difficulty as to this, had it not been for the case of Gubboy v. Avetoom 17 C. 449 at p. 453, on which the respondent relies, and which is very similar to the case before us, and which (whether it has been rightly or wrongly decked) is, it is contended, binding on us. I felt some difficulty on this point during the hearing, but as the learned Chief Justice is of opinion that this case does no', stand in our way and his decision is in accord with the natural justice of the case, I do not dissent from the order he would pass. I wish to note with reference to the observation that in Calcutta, this would be regarded as a principal contract, that there is no evidence of such usage before us.

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