9911796707
TMI Blog1961 (2) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... orities) in gunny bags bearing the trade mark "Konarak Cement. " With a view to secure uninterrupted supply of cement they entered into an agreement with the project authorities for the purchase of their old second-hand serviceable gunny bags so that fresh cement may be supplied in those bags also. The price of these serviceable second-hand gunny bags was originally fixed at Rs. 28 per hundred bags but subsequently it was reduced to Rs. 25 per hundred bags. The petitioner, one Sreelal Agarwalla (hereinafter referred to as Sreelal) who is a businessman of Sambalpur town was later engaged as a "middleman" (to use a neutral expression in view of the controversy regarding his status) by Orissa Cement to purchase serviceable secondhand gunny bags from the Project authorities and to deliver them at their factory premises at Rajgangpur. It was agreed between Sreelal and Orissa Cement that in addition to the contract price of Rs. 28 per hundred bags Sreelal would get an additional sum of Rs. 7 per hundred bags to cover all kinds of expenses, including commission. He was required to take delivery of the bags from the Project authorities after paying the price fixed and then to transport the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he sorting report and they will remain at your risk until so removed. After two months no claim whatsoever will, in regard to such bags, lie against us. (7) The works manager's decision as to the quality of the bags accepted or rejected and the quality of the bags received at the works shall be final and binding on you. No objection or any other plea for reconsideration of this decision will be entertained by us. (8) Please note that bags made from hessian cloth are not to be supplied. Kindly acknowledge and convey your acceptance of these terms and conditions. Yours faithfully, For Orissa Cement Limited, Sd. Illegible, Secretary". N.B.-The price payable to the Project authorities and the commission payable to Sreelal were subsequently reduced, but this does not affect the main question involved in this case. 3.. On behalf of Sreelal it was contended by Mr. Sidhartha Roy that he was merely an agent of Orissa Cement, that the purchase of serviceable second-hand gunny bags by him from the Project authorities was made on behalf of Orissa Cement who was his principal and that the extra amount of Rs. 7 per hundred bags, over and above the price actually paid by him to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts show a state of things different to a simple arrangement between principal and agent then the effect of those facts will not be altered simply because the language of agency has been used in a loose manner": Per Lord Chancellor in Towle Co. v. White and Others[1873] 29 L.T. 78. 5.. It is true that the main agreement was between the Project authorities and Orissa Cement for purchase of second-hand serviceable gunny bags bearing the mark "Konarak Cement" from the Project authorities with a view to refill those bags with cement and supply the same to the Project authorities. As Rajgangpur, where the factory premises are located, is more than 90 miles away from Hirakud (near Sambalpur) it was obviously necessary ror Orissa Cement to engage a middleman to facilitate the purchase and collection of the bags at Hirakud and their delivery at Rajgangpur. The middleman may be either an agent of Orissa Cement as alleged by the petitioner; or else, he may also be an intermediate buyer and seller as alleged by the Sales Tax Authorities. Similarly, for the purpose of facilitating prompt payment of the full price to the Project authorities Orissa Cement may give the middleman financial acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two months "no claim whatsoever will, in regard to such bags, lie against us". This clause is of the usual pattern that is generally found in an agreement between buyer and seller for the sale of ascertained goods. In such a case, when the goods are delivered by the seller to the buyer the latter before appropriating them towards the contract is entitled first to examine whether the goods answer to the discription stipulated and until such examination takes place and the buyer is satisfied, the appropriation is not complete and there is no transfer of property in the goods. If, after such examination, he does not accept the goods either in whole or in part, then sections 42 and 43 of the Sate of Goods Act require him to intimate to the seller that he refuses to accept them and he is also required to give reasonable time to the seller to take the goods away. It is with a view to comply with this requirement that a clause of the type contained in paragraph 6 of exhibit C is generally inserted. The words "the goods will remain at your risk until removal" and the further words that if the goods are not removed within two months "no claim whatsoever in regard to those bags, will lie ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry charges, railway freight and risk of rejection of some bags by Orissa Cement, Sreelal ultimately claims a rate of Rs. 35 per hundred bags F.O.R. Orissa Cement and further adds that the Calcutta office also "purchased at the above rate." He accordingly asks Orissa Cement to confirm the rate of Rs. 35 per hundred bags. The use of the expression "rate" and the reference to "purchase" by the Calcutta office to some extent support the department's view that, as between Sreelal and Orissa Cement, the transaction was essentially in the nature of a "sale" and that in the consequent correspondence words like "agency", "commission" etc. were used so as to make it appear to be one between a principal and his agent. 9.. Mr. Roy made several unsuccessful, though ingenious attempts, to reconcile paragraphs 5 and 6 of the agreement (exhibit C) with Sreelal's position as an agent. He urged that though Sreelal had general authority to buy from the Project authorities those gunny bags which he considered serviceable, nevertheless by virtue of the agreement between him and Orissa Cement as embodied in paragraph 5, the ultimate test of serviceability was agreed to be applied by Orissa Cement's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o make good the loss or damage caused by his negligence or want of skill, as provided in section 212 of the Contract Act. Hence, if Sreelal was really an agent of Orissa Cement one would have expected a provision in exhibit C regarding the quantum of loss or damage payable if it is eventually found that some of gunny bags were rejected as unserviceable on scrutiny at Rajgangpur. Such a provision is significantly absent in the agreement. Moreover, there can be no question of such rejected bags remaining in the premises of Orissa Cement at the risk of Sreelal or of his having any claim against Orissa Cement in respect of those bags because ex-hypothesi he (in his capacity as agent) could have had no property rights in the gunny bags and he could not properly have any claim in respect of the same. Realising this difficulty Mr. Roy contended that paragraph 6 was put in exhibit C by way of abundant caution so as to retain in the principal the right to reject the goods with a view to prevent the agent from saying later on that he "ratified" his action in buying unserviceable gunny bags also. The question of ratification is academic here. That would arise only when the agent acts in exces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the buyer at the place where the goods were examined on arrival and where the right was reserved to reject the goods which were found not to be in accordance with the specifications. 14.. Mr. Roy cited the well known case of Cassaboglou v. Gibbs[1873] 11 Q.B.D. 797., in order to show that there was the relationship of principal and agent. But, in my opinion, this decision has no application to the facts of the present case. It only lays down the principle that the right of stoppage in transitu which is ordinarily exercisable by a seller while the goods are in transit to the buyer may also be exercised by an agent. It is of no help in considering whether in the circumstances of a particular case a person is an agent or seller. 15.. The learned Member, Board of Revenue, appears to have committed a slight error in holding that Sreelal was engaged to purchase not only serviceable gunny bags but also unserviceable gunny bags which were quoted at a much lower rate, viz., Rs. 9 per hundred (see exhibit C-2) but this error does not affect the real position inasmuch as the true relationship between the parties must be ascertained by a construction of the agreement, exhibit C, especiall ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
