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TMI Blog1952 (10) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... reement was entered into by the company with V. Ramalingam under which the latter was appointed its sole managing agent on terms set out in the agreement. V. Ramalingam as the managing agent was entitled to receive a salary of Rs. 800 per mensem together with a commission of 7 per cent. per annum on the total net annual income of the company. Besides these, he was also entitled to a commission in respect of work done by him in capacities other than that of a managing agent. More detailed reference will be made to the material terms in due course in this judgment. In the two suits out of which these appeals arise, the company claimed various amounts on the ground that Ramalingam had wrongfully been paid those amounts or had drawn those amounts or was otherwise liable to pay the company the amounts which he had received. The learned District Judge of Bellary who tried both the suits dismissed them with costs. There was another suit which was tried along with these two, claiming more or less similar reliefs, and that too was dismissed. In the two appeals, the learned Advocate-General who appeared for the appellant company pressed before us only certain items among the several i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d a rate of 1 per cent. on the sale amounts. Three of the relevant resolutions have been marked as Exhibits B-21, B-22 and B-23 dated December 10, 1940, November 13, 1941, and December 4, 1942, respectively. The contention of the learned Advocate-General is that the managing agent was not entitled to claim and the directors of the company were not entitled to pay any remuneration in addition to the remuneration fixed under the agreement which shall be a fixed percentage of the net annual profits of the company, together with an office allowance. His contention was based entirely on the provisions of section 87-C which was inserted in the Indian Companies Act by the Amending Act of 1936 (Act XXI of 1936J. Sub-section (2) of this section is as follows: "Any stipulation for remuneration additional to or in any other form than the remuneration specified in sub-section (1) shall not be binding on the company unless sanctioned by a special resolution of the company." The flaw in the argument of the learned Advocate-General is this: The Amending Act came into force on January 15, 1937, the agreement between the company and the managing agent was executed on November 16, 1936, about 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso supported by a legal principle. Strictly speaking, Messrs. Parry Co., worked as agents of Ramalingam and not as agents of the company. Exhibit A-46 is the letter addressed by Messrs. Parry Co. to Ramalingam confidentially in which Messrs. Parry Co. offerred to send a qualified sugar chemist with administrative experience along with an accountant and assistant in consideration of a cash payment of Rs. 1,500 per month. There is no evidence to show that this arrangement was entered into by the company as such, indeed the company could not enter into any such agreement as the entire managing agency had been entrusted to Ramalingam. As between Ramalingam and the company Ramalingam was entitled to demand and to receive, and the company was liable to pay, the remuneration stipulated in the managing agency agreement. Actually what happened was that though in strict honesty it was Ramalingam who should have paid Messrs. Parry Co., from his pocket, he somehow managed to get the company to make the payment. We agree that it was not strictly honest on the part of Ramalingam to have done so, but that would not make his receipt of the stipulated remuneration illegal. If anyone could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to this amount. Therefore, the question of limitation remains to be considered. The learned Judge was inclined to hold that Article 36 or Article 90 would apply. The amount of Rs. 8,510 was earned sometime in 1942, and the suit was instituted on December 14, 1945. It was contended by the learned Advocate General that neither article applies and the proper article to apply was Article 120. Article 36 runs as follows: Description of suit. Period of limitation. Time from which period begins to run. For compensation for any malfeasance, misfeasance or nonfeasance independent of contract and not herein specially provided for. Two years. When the malfeasance, misfeasance or nonfeasance takes place. If this article were to apply, clearly the claim is barred, but in our opinion, it is not the appropriate article. In the first place, it may be mentioned that this article contemplates an action for compensation for a wrong in the nature of a tort. Secondly, the suit to which this article would apply is a suit for compensation. If the suit is for the recovery of a particular property or sum of money as such, then the suit cannot fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the interests of another person, by availing himself of his character, gains for himself any pecuniary advantage, or where any person so bound enters into any dealing under circumstances in which his own interests are, or may be, adverse to those of such other person and thereby gains for himself a pecuniary advantage, he must hold for the benefit of such other person the advantage so gained." Ramalingam was one of the directors of the company. He was also the sole managing agent. He was bound in a fiduciary character to protect the interests of the company. Here, the finding is that he availed himself of this character and utilised the premises and staff of the company as well as his credit with the company by reason of the position which he occupied and gained for himself a pecuniary advantage in the sum of Rs. 8,510. The company now claims that Ramalingam must hold the advantage so gained for the benefit of the company. Article 90 would not in this view of the nature of the claim apply to the case. That article is the residuary article dealing with claims of a principal against an agent. We are inclined to hold that the neglect or misconduct contemplated by the article is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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