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TMI Blog1965 (3) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... s with another paying the price in advance, and the seller directs his agent or stockist or pledgee to deliver the goods to the purchaser from the stock in his possession, and the agent fails or refuses to deliver them, the purchase is against the seller and not against the seller's agent, because the latter is under no obligation or liability to him. In the present ease Sethiya and Co. were no party to the agreement of sale of yarn, and under no obligation to the plaintiff to deliver the bales to him. They may or may not be liable for their alleged default to John and Co. under some other agreement, but they are under no liability to the plaintiff. 2. Mr. Misra then argued that Sethiya and Co. were or became, the agents of the plaintiff to receive delivery of the goods on behalf of the plaintiffs and deliver these to him, and as they failed to do so, they are liable in damages for breach of duty as agents. The short answer to this argument is that no agreement of agency between the parties, express or implied, has been established. It was not the plaintiff's case that Sethiya and Co. were his agents and no issue was framed on this point. 3. Mr. Misra then argued that Set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and if in the performance of his duties as agent he suffered loss he is entitled under Sections 222 and 223 of the Contract Act to be reimbursed by the Assam Government as principal. According to learned counsel, the plaintiffs position under the agreement with the Assam Government (Ex. C-1) was that of an agent, and that of the Government of principal Counsel pointed out that the Assam Government had described as their agent in the agreement which begins thus : "This agreement made between the Governor of Assam represented by the Additional Secretary in the Department of Supply (Textile) hereinafter called the Govt. of the one part and M/s Loonkaran Sohanlal hereinafter called the agent of the other part. The agent has been appointed for the purpose of procuring yarn for the month of August and September 1948 on the following terms and conditions." 5. Thus the Assam Government described the plaintiff as 'agent' not only in the preamble but each paragraph. Paragraph 4 enjoins that "the agent shall sell and deliver yarn to such persons at such place or places within the province of Assam and in such of the States as may be approved by the Government"; p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rincipal and agent will be regarded and if it is found that such agreement in substance contemplates the alleged agent acting on his own behalf, and not as an agent in the agreement, the relation of agency will not have arisen." The cases cited in the foot-note are: Re Nevill, Ex parte White, (1871) 6 Ch. App. 397; Towle (John) and Co v. White, (1873) 29 LT 78; Livingstone v. Ross. 1901 AC 327; Micheline Tyre Co. v. Macfarlane (Glasgow) Ltd., (1917) 55 Sc L. R. 35; Kitson v. King (P. S.) and Son, Ltd. (1919) 36 T. L. R. 162, Lamb (W T.) & Sons v. Goring Brick Co. (1932) K. B. 710. 6. I have examined these cases except the one reported in 55 Sc. L. R. 35 which is not available. They establish the principle that in determining legal nature of relationship between the alleged principal and agent the use or omission of the word "agent" is not conclusive. American Law is similar: "the manner in which the parties designate the relationship is not controlling, and if an act done by person on behalf of another is in its essential nature one of agency, the one is the agent of such other notwithstanding he is not so called. Conversely the mere use of the word by agent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose of placing the principal in contractual or other relations with a third party and it is essential to an agency of this character that a third party should be in existence or contemplated. "Halsbury, ibid, 146. The agreement Ex. C-l does not suggest, even by implication, that the plaintiff was to represent the Assam Government in any transaction or dealings with any other party or parties. No such parties were mentioned in the agreement or in contemplation of the signatories to the agreement. The conduct of the plaintiff after the agreement shows that he never functioned as the agent of the Assam Government. He entered into the agreement of sale of yarn with John and Co. in his own name and on his own behalf; he paid the price from his own pocket and did not debit it to the Assam Government; he regarded himself as the owner of the goods and filed this suit in his own name. He might have been advised, when things went wrong, that the Assam Government had described him as their agent and were therefore liable to reimburse him for the loss suffered by him in the discharge of his obligations under the agreement. He is entitled to our sympathy, but he cannot in the circumsta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Misra then argued that the plaintiff agreed to perform the job of purchasing and selling yarn at the request of the Assam Government and as he did this job for that government, he acted as their agent under Section 182 of the Contract Act, and is entitled to be indemnified against the consequence of all lawful acts done by him in the exercise of the authority conferred on him. Counsel pointed out that under Clause 10 of the agreement Exhibit-C the plaintiff was required to comply with all directions and orders which might "he given to the agent by the government or any officer authorised in this behalf in terms of the conditions set forth" in the agreement He further pointed out that he was hound to obey the instructions in the order of the Textile Commissioner requiring him to make payment to the seller (John & Co.) within ten days. Counsel argued that if he had not made payment in advance to John and Co., he would have incurred penalties under the Agreement Exhibit C-2, including forfeiture of security. For these reasons, according to counsel, the Assam Government is hound to indemnify him against the consequence of his lawful act of making payment of the sale price wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elivery of 152 bales to him, though 1 cannot help sympathising with him. His claim against that Government fails. 14. In my opinion this appeal must be dismissed. Asthana, J. 15. This is a plaintiff's appeal from the judgment and decree of the learned Additional Civil Judge of Agra. The plaintiffs, a registered partnership firm, carried on business in Calcutta and Assam and was appointed yarn procuring agent by the Govt. of Assam in the year 1948. It appears that at that time the manufacture, sale and supply of cotton yarn was controlled by the Government of India in exercise of its powers under the Defence of India Act for which purpose it had issued Cotton Yarn and Cloth Control Order. In exercise of his powers under the said Order the Textile Commissioner at Bombay, at the request of Government of Assam passed an order known as Release Order dated 30-8-1949 directing the John Mill Company Limited Agra, to sell and deliver 600 bales of yarn of particular variety, being quota for the month of August 1948, to the plaintiff at a price not exceeding the maximum ex-factory price specified by the Textile Commissioner and asking the plaintiff to pay the price within ten days of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the defendants or such of them as may be found liable be ordered to deliver 152 bales of yarn of 18 counts and ₹ 30671/- be awarded as damages. The John & Company and its three partners. Mr. Murice L. John, Mr. Ivan E. John and Mrs. Doris John Marzano. defendants 1 to 4 were impleaded as defendants first set in the plaint. M/s Sethiya & Company carrying on business at Belanganj Agra through Seth Loon Karan Sethiya (not to be confused with Seth Loon Karan through whom the plaintiff sued) was impleaded as defendant No 5. Seth Suganchand was impleaded as defendant No. 6, Union of India as defendant No. 7 and the State of Bombay as defendant No. 8. the defendants numbers 5 to 8 were described as defendants second set in the plaint. The plaintiff's case as disclosed in the plaint besides fixing the liability on the defendant first set, was that the defendants second set could not escape the liability to the plaintiff on the following amongst other grounds: (a) Because the sum of ₹ 3,84.750/6/-remitted by the plaintiff was received by the defendant second set with full knowledge that it represented the price of 600 bales to be delivered to the plaintiff and so appropriat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be seen from the above pleadings that by the use of the defendants second set in the relevant paragraphs of the plaint the plaintiff meant defendants 5 and 6 only and not 7 and 8. Thus the description in the plaint of defendants 5 to 8 as defendants second set seems to be inaccurate. The case of the plaintiff against defendants numbers 7 and 8 has been pleaded in paragraphs 16-A, 16-B and 16-C as a result of amendment of the plaint. It is not very clear from these pleadings what the case of the plaintiff against the Union of India was. It appears that the plaintiff alleged that ii paid the sum of ₹ 384756-6-0 to the defendants first set on the bidding and orders of defendants numbers 7 and 8 and they were liable to indemnify the plaintiff for all the losses that the plaintiff had suffered in the transaction by reason of the full delivery not having been made to them by the defendants first set or by the defendants second set. In the alternative it was pleaded by the plaintiff that there was a contract for the supply of 600 bales of yarn to the plaintiff on one side and defendants numbers 7 and 8 on the other and the defendants 7 and 8 were responsible for the breach thereo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the financier of the plaintiff nor a partner in the firm of Sethiya & Company of which Seth Loon Karan alone was the sole proprietor and that no liability could be fastened on him. 19. The defence of the Union of India in the main was that the Textile Commissioner to the Government of India acted under the provisions of the Cotton Textile Order of 1948 being responsible for the equitable distribution of the products of the mills in the various areas of the country. The Union of India did not incur any liability to indemnify the plaintiff if in pursuance of the release order of the Textile Commissioner it failed to obtain the requisite quantity of yarn from John Mills and it was denied that the plaintiff paid any amount to the defendants first set on the bidding and orders of the Union of India who was not liable to indemnify the plaintiff for any loss caused to him in the said transaction. It was further pleaded that there was no contractual relationship between the plaintiff and the Union of India and the plaintiff's claim against the Union of India was misconceived who was not responsible for the plaintiff's failure to obtain the delivery of 152 bales of yarn from any o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Assam, defendant respondent No 8. 23. As far as the liability of Sethiya & Company, defendant-respondent No. 5, was concerned, Sri Misra the learned counsel for the plaintiff-appellant, made three submissions. He contended that (1) Sethiya & Company was liable for having converted the goods of the plaintiff, (2) Sethiya and Company were agents of the John Mills and under a legal liability to deliver the goods to the plaintiff as agents of John Mills, (3) alternatively, if it were found that Sethiya and Company were the agent of the plaintiffs, then it misappropriated the goods as agents. Sri A. K. Kirty, appearing for Sethiya & Company, contended that no plea having been raised in the plaint fastening any liability on Sethiya and Company on the grounds of conversion, the plaintiff appellant were not entitled to raise a new ground in appeal. He further contended that on the evidence in the case it was not established that any specific goods were appropriated to the contract and handed over to Sethiya and Company for delivery to the plaintiffs. He also contended that Sethiya and Company neither were the agents of the John Mills nor of the plaintiff and there being no privity of co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mer on receipt of payment of the price and it was Sethiya and Company who were bound to effect the deliveries on the direction of the partners on receipt of the payment of the price. Thus it was contended that Sethiya and Company were constituted as delivery agents of the John Mills. It was pointed out that it has been proved that the full price of 600 bales remitted by the plaintiff to John Mills was paid to Sethiya and Company by John Mills with the direction that 600 bales be delivered to the plaintiff and further that plaintiffs were informed by John Mills to take delivery from Sethiya and Company. The receipt of a sum of ₹ 3,84,750-6-0 and another sum of ₹ 12,032-11-6 for payment of Sales Tax in the accounts of Sethiya and Company has been established. But the case, of the Sethiya and Company is that those sums though paid by John Mills to it and receipted for in its account were paid by John Mills as debtors towards their debt without informing it that it was the price of 600 bales with the sales tax dues and further without any direction by the John Mills for delivery of 600 bales to the plaintiff. The learned Judge of the Court below has held that it has not bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... original document. Ex. A-31, an entry in the peon book of John and Company was relied upon by the plaintiff as corroborative evidence as a proof of the fact that the letter in question was sent by John Mills and was received by Loon Karan Sethiya. An initialled signature in acknowledgment of the receipt of the letter was claimed to be that of Loon Karan Sethiya which the latter did not admit. It was stated by Smt. Marzano that the letter in question was sent through a peon named Gordha. Gordha has not been produced as a witness. The learned Judge of the Court below held that the initials in the peon book against the entry (Ex. A-31) were not established to be that of Loon Karan Sethiya. He has disbelieved the evidence of Smt. Marzano, which was to the effect that it were the initials of Loon Karan Sethiya. This is then all the evidence on this part of the case. No good reasons have been shown by the learned counsel for the appellant why the finding of the learned Judge of the court below in this regard be interfered with It was strenuously urged by Sri Misra that Loon Karan Sethiya ought not to he believed when he stated in the witness box that no such instructions were received b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of 600 bales and further informing the plaintiff that the John Mills had intimated their financiers. Sethiya and Company to take delivery of the yarn on plaintiff's behalf and arrange despatches and the plaintiff was to correspond with Sethiya and Company, that thus Sethiya and Company were constituted as the agent of the plaintiff and they were under a duly to the plaintiff to deliver the bales. This submission of the learned counsel has hardly any lenability. It was the own case of the plaintiffs that they bad appointed a local agent for taking delivery of the bales from the John Mills by name Tansukhrai Sriniwas. No document had been produced that they ever corresponded with Sethiya and Company constituting them as their agent. Be that as it may, it is not possible to hold on the basis of exhibit 6 that Selhiya and Company became the agent of the plaintiff for receiving delivery of 600 bales for the simple reason that John and Company could not in law appoint an agent for the plaintiff The case of the plaintiff, therefore, against Sethiya and Company as being their agent and bound to deliver the 600 bales received by them from John and Company under the contract has no leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansukhrai Sriniwas. He further explained that as Sethiya and Company were the financier of the John Mills and always gave assurance that they would give delivery, hence no action was taken against them. He further admitted that except the letter dated 11th September 1948 (Ex. 6) no other letter was received from John Mills asking the plaintiff to take delivery from Sethiya and Company. He was further confronted that a notice in November 1948 was given by the plaintiff to John Mills and not to Sethiya and Company and explained it away by saying that the plaintiffs took John Mills and Sethiya and Company as one, hence no telegraphic notice was given to Sethiya and Company. He further admitted in cross-examination that till the drafting of the plaint in the suit it was not known to the plaintiff correctly whether or not John Mills gave 600 bales to Sethiya and Company together with the money and further admitted that till the writing of the plaint the plaintiff did not agree that Sethiya and Company was responsible for giving delivery. It was elicited from the witness that accounts were maintained and the account relating to 600 bales stood in the name of John and Company and evasivel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sethiya and Company made promises but did not deliver goods. He claimed to have written two or four such letters. The witness could not explain the entries in the Rokar and the plaintiff did not take care to produce letters which this witness is stated to have sent to the plaintiff and to John Mills in order to corroborate him. Sri Misra strongly relied on a letter dated 19-1-1949 (Ex. 15) from John and Company to Seth Loon Karan Sethiya and on a letter dated 22-1-1949 (Ex. 16) from Tansukhrai Sriniwas to John and Company and submitted that these documents corroborated the statements of the plaintiff's witness. The letter exhibit 15 shows that Ivan P. John a partner of John and Company, asked Seth Loon Karan. Sethiya to deliver the remaining 152 bales to Messrs. Tansukharai Sriniwas, the local commission agent of the plaintiff. Much was tried to be made out by the use of the word "remaining 152 bales" in this letter in order to support the plaintiff's case that 448 bales were also delivered by Sethiya and Company. Ex. 16 a letter from Tansukhrai Sriniwas to John and Company makes a complaint that in accordance with the letter of the 19th instant they had called on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further stated that as all the goods manufactured by John Mills were sent to Sethiya and Company there were no stocks of goods in John Mills out of which delivery could be given to any one. It was elicited from this witness in cross-examination that the order for delivery was sometimes sent along with the pro forma and sometimes a day earlier or later; that no goods could pass out of the mill without the gate passbook which was kept separate but admitted nothing was written on it showing that it was gate passbook. It was further elicited from the witness that after the cotton yarn became a controlled commodity there was an agreement with Sethiya and "Sethiya Pass-book" began to be written in connection with the goods which were given to Sethiya and Company and 'contractors passbooks' began to be written against such goods as were to be given to the contractors. Proformas were sent to some purchasers and were not sent to some other purchasers. It was further elicited that the goods which were delivered by Sethiya and Company the book contained an entry 'through Sethiya and Company'. A definite question was asked to this witness to the effect that when John ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aran Sethiya for delivery to the plaintiff. On the evidence on record even if the plaintiff's evidence to the effect that 448 bales out of the pledged stock were delivered by Sethiya and Company at the direction of John Mills were believed it would not in law prove the case of the plaintiff that Sethiya and Company had detained any specific goods belonging to the plaintiff and converted the same for their purpose. In fact the present suit is confined to 162 bales. It has to be shown by the plaintiff that Sethiya and Company detained 152 bales belonging to the plaintiffs. In this view of the matter the question whether 448 bales were actually delivered by Sethiya and Company or John Mills becomes immaterial as far as the crucial question of appropriation of 152 bales to the contract is concerned but may be in the nature of corroborative evidence that Sethiya as financier of John Mills under the terms of the finance agreement had delivered those bales out of the stock pledged with him. At best the system which can be culled out from the evidence on record followed by the partners of the John and Company and their financier Sethiya and Company was that all the goods manufactured w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... himself by keeping the money and not delivering the goods. Again this submission of the learned counsel does not carry the plaintiff's case any further against Sethiya and Company for unless on some legal principles a liability arises the plaintiff cannot claim any relief against Sethiya and Company. Moreover, Sethiya and Company in the circumstances of the case can hardly be blamed that they were unduly enriching themselves or for any dishonest conduct on its part by not delivering 152 bales to the plaintiff. John and Company at the earliest stage on 11th September 1948 wrote to their bankers (Ex. B-7) that the amount received from the plaintiff be paid to the Bank of Bikaner Ltd. for credit to their financier's account Messrs. Sethiya and Company. By another letter of the same date (Ex. B-8) John and Company informed Sethiya and Company that they should collect the amount from the Allahabad Bank Ltd. and credit the same to the Mills 'finance' account with them. In these two letters there is absolutely no mention that the amount was the price of 600 bales to be delivered by Sethiya and Company to the plaintiff. It is a clear payment by John Mills to reduce their de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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