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TMI Blog1975 (1) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... ted. A commission of 6 1/4 per cent. was being paid by the appellants to the respondent in respect of the orders so executed as well as on the goods supplied by the appellants to the respondent directly. An extra commission of 1 1/2 per cent. and concession regarding Central sales tax were also given to the respondent by the appellants. This arrangement which was in force from 1952 onwards was modified by a letter dated 27th February, 1964 written by the appellants to the respondent herein, marked as Exhibit A-44. Under this arrangement, the nature of the relationship between the parties was not altered, but only the remuneration received by the respondent by way of commission was changed. Under the revised terms, the respondent was to get only 6-1/4 per cent, towards commission on all orders either booked in the name of the respondent or booked in the name of third parties and no additional commission or rebate regarding Central sales tax was payable to the respondent. However, a commission called, Target Commission' of 1 1/4 per cent. was to be paid by the appellants to the respondent, if the annual turnover exceeded a particular limit. This agency of the respondent was term ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e settlement pleaded by the defendants in paragraphs 13, 14 and 15 of the written statement is true and valid and binding on the plaintiff? (5) Is the termination was (sic) in breach of the contract and the settlement pleaded is not true and valid ? (6) To what relief is the plaintiff entitled ? 3. The learned Principal Judge, City Civil Court, Madras, by his judgment and decree dated 26th March, I970 came to the conclusion that the relationship of principal and agent existed between the appellants and the respondent, that the respondent was acting as the agent of the appellants as far as Madras State was concerned and that he was the sole selling agent of the appellants' goods in that area He further held that there was no express understanding between the parties that the respondent should not deal in the goods of other manufacturers, that there was no express understanding to the contra either and that therefore the fact that the respondent sold the goods of other manufacturers would not constitute a misconduct on his part so as to entitle the appellants herein to terminate the agency of the respondent without giving a reasonable notice. the learned trial Judge also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly question for consideration before me in the appeal, is whether the respondent was entitled to a reasonable notice before termination of his agency as held by the learned trial Judge. 5. The argument on behalf of the appellants in this behalf is two fold. One is that the respondent was merely a selling agent for the appellants herein and that such a selling agency can be terminated summarily without any notice. In support of this contention, reliance was placed on the following statement found in paragraph 878 of Halsbury's Laws of England, Fourth Edition, Volume I (Pages 527-528). In the case of an agent who is a mere commission agent with no obligation to seek orders for the principal and who is in no other sense ' employed' by the principal, the agency may be terminated summarily. The above statement of law in Halsbury's Laws of England is based upon certain decisions which included Levy v. Goldhill (1917) 2 Ch. 297. However, it is unnecessary to consider this contention for the reason that it does not appear to have been put forward in that form before the trial Court. On the other hand, the learned trial Judge in paragraph 14 of his judgment points ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which forms the subject-matter of the agency, the agency cannot, in the absence of an express contract, be terminated to the prejudice of such interest. Section 203 provides that the principal may, save as is otherwise provided by the last preceding section, revoke the authority Section 207 states that revocation and given to his agent at any time before the used so as to bind the principal. Thus, it will be seen implied and section reads : at Sections 202 deals with the termination of an agency coupled with interest, that is, it is not confined to any particular mode of termination, but to all methods of termination. On the other hand, Section 203 deals with revocation only and provides that the principal is entitled to revoke the authority given to his agent at any time before the authority has been exercised so as to bind the principal. But this right of the principal is subject to Section 202. Section 204 again deals with the revocation of the authority of an agent by a principal and according to that section, the principal cannot revoke the authority given to his agent, after the authority has been partly exercised so far as regards such acts and obligations as arise from act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... renunciation', does it relate only to the previous revoclion or renunciation mentioned in Section 20 or if it covers any revocation or renunciation. If Section 206 is correlated to Section 205, it is not disputed before me that the requirement of reasonable notice will apply only to a case of agency where the principal and the agent had contracted that the agency should be continued for any period of lime and that if they had not agreed on any such period of time for the agency, Section 206 will not apply. The argument of the learned Counsel for the appellants is that the expression, ' such revocation or renunciation occurring in Section 206 necessarily makes that section applicable to the cases governed by Section 205 only, that in the present case admittedly the agency being not for a prescribed period, Section 206 is not attracted and that therefore the respondent was not entitled to a reasonable notice. On the other hand, the argument of the learned Counsel for the respondent is that the expression, such revocation or renunciation occurring in Section 206 will take in every revocation or renunciation dealt with by the relevant provisions of the Act relating to age ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the section itself is Section 205. Therefore the expression such revocation or renunciation' occurring in Section 206 must really relate back to Section 205 and to no other section, secondly, if the argument of the learned Counsel for the respondent is to be accepted the word, 'such' in Section 206 will have no meaning whatever. It is one of the cardinal principles of interpretation that no word used by the Legislature in a statute should be ignored or should be held to be meaningless, superfluous or otiose, unless the Court is driven to such a conclusion, having regard to the scheme, object and other relevant circumstances of the statutory provision. In this context there is absolutely nothing warranting the conclusion that the word, such in Section 206 is superluous or otiose. By giving the word such the normal and natural meaning as referred to above, the section is dearly intelligible and there is no difficulty in working or applying that section. Simply because, if the word, such is given its due meaning, the section will have one effect and if the word, such is held to be superfluous or otiose, it will have another effect, the Courts cannot refuse to giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y before the expiry of the period prescribed and there is no sufficient cause for such revocation or renunciation, the principal or the agent, as the case may be, shall give reasonable notice of such revocation or renunciation to the other party. 4. If no such reasonable notice is given, then the principal or the agent, as the case may be, will have to make good the damage resulting to the other by such previous revocation or renunciation. 16. The above construction of mine of Sections 205 and 206 of the Act is not opposed to any principle or authority. It has always been held that an agency being one based on mutual trust and confidence should be revocable and terminable and there can be no question of permanency with regard to a contract of agency. The only question that may arise for consideration will be, if a contract of agency is terminated by either of the parties to the same, does such termination give rise to any right in favour of one party against the other party so terminating the contract of agency. 17. As early as 1873, James, L.J. said in Llanelly Railway and Book Company v. London and North Western Railway Company (1873) 8 Ch. A. 942 at pp. 949-950: I st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or reasonable notice. Notwithstanding this facility available to the parties, if they do not contract to that effect and enter into a relationship of principal and agent without there being any fixed period for the continuance of such relationship, neither party can complain against the action of the other is terminating the relationship at any time he liked, subject of course, as I have pointed out already, to the restriction imposed on the principal's authority to revoke the agency under Sections 202 and 204. 19. It will be now appropriate to refer to the decision of the High Court of Calcutta mentioned already, that is In re Shaw Wallace and Co. A.I.R. 1931 Cal. 676 That case arose out of a reference made under the Income-tax Act, '922. The assessee, Messrs. Shaw Wallace Co., were the distributing agents in India for the Burmah Oil Company and sole agents in India and Aden for the marketable products of the Anglo-Persian Oil Company. The assessees had at no time any formal agency agreement with either of the oil companies. The agency was transferred to some other body and the assessees were paid compensation for the termination of the agency. The question for consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Contract Act. Section 206 lays down : 'Reasonable notice must be given of such revocation or renunciation; otherwise the damage thereby resulting to the principal or the agent, as the case may be, must be made good to the one by the other. If the phrase 'such revocation or renunciation' is to be taken as referring back to Section 205 I confess that I find no meaning in the section; and it is at least arguable that what the draftsman meant to say is that when there is no express or implied contract that the agency should continue for any fixed period reasonable notice must be given of the revocation or renunciation of the agency and, etc. The question of damages and the question of indemnity doubtless would overlap in the circumstances of these agencies, and in the case of the Burmah Oil Company we knew that the sum of . 12 lakhs was in a sense to cover work done and to be done by the assessees until the new agent could take over completely. From what I have, extracted above, it is clear that the interpretation of Section 206 was not strictly relevant for the point to be considered in the reference made under the Indian Income-tax Act. Secondly, with very great re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the respondent in the present case. The above statement proceeds on the basis of the relationship between the parties being more in the nature of master and servant than of principal and agent, and stress is laid on the existence of restriction imposed on the agent in dealing with the products of other persons. As far as the present case is concerned, by no stretch of imagination it can be contended that the relationship of the appellants and the respondent was in the nature of master and servant. I have already referred to the fact that the respondent even before he entered into the arrangement with the appellants was himself a wholesale dealer in plastic goods. Equally I have referred to the contention of the respondent himself that there was no understanding between the appellants and the respondent that he ought not to deal in the goods of other people. As a matter of fact, one of the grounds put forward by the appellants before the trial Court was that the respondent was dealing in the goods of other people, that that was the reason why he did not purchase goods sufficiently from the appellants and back sufficient orders for the goods of the appellants, and that the act of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t merely provided that, if the plaintiff introduced customers and if the orders were accepted by the defendant then the plaintiff should be entitled to half of any profits which were derived from those orders. There was no obligation on the part of the plaintiff to do work for the defendant, nor was there any obligation on the part of the defendant to provide work for the plaintiff, but there was merely a provision that the defendant would in a certain event pay certain remuneration to the plaintiff. Under these circumstances, I hold that the conclusion of the learned Principal Judge, City Civil Court, Madras, that the respondent was entitled to a reasonable notice of four months and on that account was entitled to a compensation of ₹ 16,000 for the notice period is not correct. It the respondent was not entitled to the said sum of ₹ 16,000 under the head referred to above, the respondent himself admittedly owing a sum of ₹ 13,432-41 to the appellants as against the sum of ₹ 6,250 due by the appellants to the respondent, the respondent will not be entitled to any decree in the present suit. Hence, the appeal is allowed and the judgment and decree of the l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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