Supreme Court: Power Of Attorney Impliedly Revoked When Principal Acts Independent Of Agency With Knowledge To Agent & Third Parties

 A con-joint reading of Sections 201 and 207 of the Contract Act and especially the illustrations appended to these Sections, I am of the view that the principal viz., Thelma Cecelia Pereira was well within her right and authority to deal with the suit property, dehors the Power of Attorney and during its subsistence and the moment the settlement deed was executed by the principal herself, it resulted in an automatic implied termination of the Power of Attorney given to the power agent.(Emphasis supplied) {Para 27}

21. In the absence of a particular mode suggested for revocation of the authority of an agent, the manner adopted by the principal to revoke the authority of the agent must be one which clearly and unequivocally communicates to the parties i.e., to be affected by such revocation, that the agent's authority has been withdrawn. In the framework of Sections 207 and 208 of the Act, the revocation/renunciation of authority may be made by express words or may be implied from the words and conduct of the principal, viz., which is inconsistent with the continuance of the agency. This is one facet of renunciation or revocation of authority of an agent; the other facet is governed by Section 208 of the Act. Section 208 provides for the effective time and date of termination of the agent's authority and third parties. From a plain reading, Section 208 infers and gives effect to revocation upon the twin conditions being satisfied, (i) communication to the agent and (ii) knowledge to a third party i.e., one who deals with or is likely to deal with the agent. Then, the revocation of authority becomes known to the agent and the said third parties. In other words, an idea in the mind of the principal to revoke cannot be construed as implied revocation or renunciation of agency. There ought to be an act or conduct of the principal which implies that the agency is revoked or withdrawn. If the revocation is expressed, such as by publication in newspapers, public notice or advertisement, communication to the agent etc., the parties who deal with the agent have a reasonable opportunity to know the revocation of agency by the principal. Two stages of revocation are, firstly, one dealing with the agent, and secondly, one which applies to the third parties. For attracting the consequence of revocation to either of the situations, the revocation of the agent's authority is made by the principal in a manner that clearly implies that the principal has withdrawn the authority to act on his or her behalf by the agent. Followed by knowledge to third parties, let us examine the circumstances of the case on whether implied revocation coupled with communication is established.

22. The Power of Attorney (Ex. A-4) was executed on 04.12.2003. The Appellant, on 30.11.2007, claims to have retired from service and settled in India. A power of attorney confers power for the execution of deeds in situations of necessity, including in the absence of the Appellant in the country. From the record, it can be noted that from 2007 onwards, the Appellant was not entirely absent from India or residing exclusively in the U.S.A. Therefore, the Appellant and Respondent No. 1 executed the sale deed dated 18.01.2008 (Ex. A-3). Respondent No. 2 is one of the witnesses to Ex. A-3. The execution of sale deed dated 16.04.2008 (Ex. A-5) is inconsistent with and contradictory to the power granted to Respondent No. 1 in Ex. A-4. This is an explicit conduct of the Appellant to act for herself on the share she holds in the property purchased in 1991. In Deb Ratan Biswas (supra), this Court held that the signing of a compromise by the Defendants themselves would amount to implied revocation of power of attorney. In a case where the principal chooses to act for himself, particularly to the agent's knowledge and a person to be affected, then it can be held that Section 207 of the Act is attracted. We have no doubt in holding that the Appellant, in terms of Section 207, impliedly revoked the authority of Respondent No. 1, and as required by Section 208, Respondent No. 2 had the knowledge of the independent dealing with the property by the Appellant. Therefore, the revocation takes effect on 18.01.2008. Ex. A-5 was executed on 16.04.2008. Thus, with the operation of implied revocation of authority, Respondent No. 1 cannot act as an agent of the Appellant and, hence, the sale deed insofar as the Appellant's share in the suit Schedule is held void ab initio.

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 6495 of 2023

Decided On: 09.07.2024

Thankamma George Vs. Lilly Thomas and Ors.

Hon'ble Judges/Coram:

C.T. Ravikumar and S.V. Bhatti, JJ.

Author: S.V. Bhatti, J.

Citation: MANU/SC/0582/2024,2024 INSC 494.

Read full Judgment here: Click here.

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Important Notes on contract law

 

1) Twelve Golden Rules governing ratification of act of agent by principal.

https://www.lawweb.in/2020/07/ratification-by-principal-of-act-of.html

2) Difference between Liquidated and unliquidated damages

https://www.lawweb.in/2020/07/difference-between-liquidated-and.html

3) What is basic concept of doctrine of frustration with reference to Indian contract act? 

https://www.lawweb.in/2024/06/what-is-basic-concept-of-doctrine-of.html

4) What are the basic concept of indemnity and guarantee with reference to Indian Contract Act?

https://www.lawweb.in/2024/06/what-are-basic-concept-of-indemnity-and.html

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What action Insurance Company can take if its agent has issued fake insurance policy?

The Learned Tribunal after considering the evidence on

record has reasoned in its impugned Judgments as follows;

MAC App. Nos.07, 08 and 09 of 2020 10

“27. Shri Bikash Roy Pradhan, the Branch

Manager of the Opposite Party No. 3 clearly admitted

that Shri Rajen Tamang is the authorized agent of

Opposite Party No.3. Exhibit-10 is the certified copy of

the Insurance Policy of the vehicle. In Exhibit-10, in

place of the details of the agent/Broker, the name

of Shri Rajen Tamang with his agent code number as

„BA000015623‟ has been clearly mentioned. Exhibit-

10 was served upon the Opposite Party No.3. The

Opposite Party No. 3 failed to produce and examine

Shri Rajen Tamang, Authorized Agent of Oriental

Insurance Company Limited (Opposite Party No. 3)

despite several opportunities having been given to it.

By perusal of Exhibit -10, it is difficult to identify the

fake and the genuine policy. There is no evidence

produced by the Opposite Party No.3 that the

Opposite Party No.1 owner of the vehicle had

involved himself or influenced the said Shri Rajen

Tamang to illegally issued the fake insurance policy to

him. The Opposite Party No. 3 has not exhibited any

complaint/document against the Opposite Parties No.

1, 4 or Shri Rajen Tamang, authorized agent of

Opposite Party No. 3 stating that the Opposite Parties

No.1 and 4 had obtained a fake insurance policy of

the Oriental Insurance Company Limited or Shri Rajen

Tamang handed over the fake insurance policy to the

Opposite Parties Nos.1 and 4 and the same was in

their personal knowledge. There is no evidence to the

effect that the Opposite Parties No.1 and 4 had

obtained fake insurance policy in collusion with the

staff or agent of Opposite Party No.3. From evidence

on record, no apparent role appears to have been

played by the owner in obtaining the fake insurance

policy. It is very difficult to pin point who is

responsible for issuance of the fake insurance policy.

It is unbelievable that an insured would obtain a fake

certificate by paying the same premium at his own

risk and peril. The Opposite Party No.4 Shri Biren

Gurung further establishes that in order to obtain

Exhibit-10, Opposite Party No.1 had given him ₹

14,500/. He personally knows Rajen Tamang as he

is the agent of the Opposite Party No.3. Opposite

Party No.4 paid a sum of ₹ 14,500/- to Rajen

Tamang, agent of the Opposite Party No. 3 through

one Palden Bhutia and Rajen Tamang handed over

Exhibit-10 to Opposite Party No.4. Opposite Party No.

4 further establishes that as per the direction of

Rajen Tamang, he handed over premium amount to

Shri Palden Bhutia. On the facts and circumstances of

the case at hand, it cannot be held that Opposite

Party No.1 (Owner of the vehicle) has any role to

play in issuance of the fake policy, on the other hand

evidence on the record cast suspicion towards the

authorized agent of the insurance company. Since,

Opposite Party No. 3 has admitted that Shri Rajen

Tamang is its authorized agent, there is master and

servant relation between the Opposite Party No.

3 and the said Shri Rajen Tamang. From this angle

MAC App. Nos.07, 08 and 09 of 2020 11

also Opposite Party No. 3 is liable for the act of the

said Rajen Tamang. However, the Opposite Party No.

3 is as liberty to conduct an inquiry against its agent

Rajen Tamang in respect of issuance of Exhibit 10 to

find out the actual fact as narrated supra and if found

guilty, it can recover the amount paid to the Claimant

by way of the Award in the instant claim petition from

the said Rajen Tamang.” [emphasis supplied]

13. The observations of the Learned Tribunal in arriving at

its conclusions is perfectly reasoned and brooks no interference.

{Para 12}

 THE HIGH COURT OF SIKKIM : GANGTOK

(Civil Appellate Jurisdiction)

MAC App. No.07 of 2020

The Branch Manager, Oriental Insurance Company Limited Vs

 Padam Bahadur Rai and Others

Coram: Meenakshi Madan Rai, J.

DATED : 2nd December, 2022.

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Whether in claim petition, the Insurance company can take the defence that they are not liable to pay compensation as their agent has committed the fraud?

When admittedly Ganesan is the Agent of the Insurance Company and received the premium from Gurusamy and in fact that Gurusamy was also given a policy, we are shocked and surprised to see, how the Insurance Company can disown its liability, more so when it does not suspect the bona fides on the part of Gurusamy. It is not the case of the Insurance Company that as per rules/conditions of the Policy, whenever a client receives a Policy from the agent, he has to go over to the office and contact the -manager or any named officer to show the policy which he has received to ascertain its genuineness.{Para 9}

10. Let us turn to analyse the legal position. The word 'agent' is derived from the Latin word "agere" which means 'to do'. Thus, an agent is a person, who acts for another whether by express or implied consent. The general rule is that whatever a person may do himself, he may authorize another to do for him in accordance with the maxim "qui facit per alium facit per se " meaning he who does anything by another, does it by himself.

In Krishna v. Ganapathi, MANU/TN/0264/1955 : AIR1955Mad648 , a Division Bench of this Court explained the concept of agency in the following terms:

"An agent is thus a person either actually or by law held to be authorized and employed by any person to bring him into contractual or other legal relations with a third party. He is a representative vested with authority, real or ostensible to create voluntary primary obligations for his principal by making promises or representations to third person calculated to induce them to change their legal relations. Representative character and derivative authority may briefly be said to be the distinguishing feature of an agent."

(a) What House of Lords ruled way back on 19th July, 1912 in Lloyd v. Grace, Smith & Co. 1912 AC 716 would be relevant.  In that case, Lord Macnaghten expressed his view in the following terms,

"The only difference in my opinion between the case where the principal receives the benefit of the fraud, and the case where he does not, is that in the latter case the principal is liable for the wrong done to the person defrauded by his agent acting within the scope of his agency; in the former case he is liable on that ground and also on the ground that by taking the benefit he has adopted the act of his agent; he cannot approbate and reprobate."

Lord Shaw of Dunfermline agreed with Lord Macnaghten and further added the following,

"The case is in one respect the not infrequent one of a situation in which each of two parties has been betrayed or injured by the fraudulent, conduct of a third. I look upon it as a familiar doctrine as well as a safe general rule, and one making for security instead of uncertainty and insecurity in mercantile dealings, that the loss occasioned by the fault of a third person in such circumstances ought to fall upon the one of the two parties who clothed that third person as agent with the authority by which he was enabled to commit the fraud.

... I am aware of the approval given to this language in subsequent cases, as for instance in Ruben v. Great Fingall Consolidated, 1906 AC 439, by Lord Davey, and in British Mutual Banking Co. v. Charnwood Forest Rv. Co., 18 O.B.D. 714, by Lord Bowen. If I may respectfully do so, I tender my entire concurrence in the opinion Just delivered by my noble and learned friend Lord Macnaghten upon the dicta of Lords Davey and Bowen in these cases. But I do so subject to this - that I cannot bring myself to think that it was ever distinctly meant to be announced or suggested as law that, on the assumption that a person deals with an agent in good faith, and that the conduct of the agent is fully within the scope of his authority, then the principal of that agent is not responsible for the agent's fraud, by reason of the fact that the agent did not mean to 'benefit his principal by the fraud, but to benefit himself. That, in my opinion, is not the law. On the contrary, the principal is, in such circumstances, legally responsible for his agent's conduct."

The principal is liable for the fraud of his agent acting within the scope of his authority, whether the fraud is committed for the benefit of the principal or for the benefit of the agent.

 IN THE HIGH COURT OF MADRAS

C.M.A. No. 55 of 1997

Decided On: 27.10.2003

The National Insurance Company Limited Vs. M. Nandan and Ors.

Hon'ble Judges/Coram:

A.S. Venkatachala Moorthy and S.R. Singaravelu, JJ.

Citations: II(2004)ACC645, 2004ACJ1449, 2004(2)CTC522, (2004)1MLJ146, MANU/TN/1923/2003.

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Whether any unauthorized sale made by the agent will tantamount to the Principal parting with possession of immovable property?

 The reasoning given by the High Court for holding that the appellant ought to have challenged the alienations, is that the appellant was out of possession. Here again, the High Court failed to appreciate that the possession of an agent under a deed of Power of Attorney is also the possession of the Principal and that any unauthorized sale made by the agent will not tantamount to the Principal parting with possession. {Para 14}

IN THE SUPREME COURT OF INDIA 

CIVIL APPELLATE JURISDICTION 

Civil Appeal No. 2592 of 2022 

MRS. UMADEVI NAMBIAR Vs THAMARASSERI ROMAN CATHOLIC DIOCESE 

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Whether the principal is liable for the unauthorized act of agent if he fails to repudiate the action of agent or he must ratify said act?

 Section 182 of the Contract Act defines an "agent" as a person employed to do any act for another or to represent another in dealings with a third person. The authority of the agent, as Section 186 provides, may be express or implied. Section 187 defines express and implied authorities. An authority is said to be express when it is given by words spoken or written. It is implied when it is to be inferred from the circumstances of the case. Things spoken or written or the ordinary course of dealing may be considered as these circumstances. So far as the extent of the agent's authority is concerned, Section 188 provides that the agent, having an authority to do an act, has authority to do every lawful thing which is necessary in order to do such act. If the agent has done any act on behalf of his principal, without the latter's authority, under Section 196, the latter may elect to ratify or disown such act; if he ratifies the act, the same effects follow as if it had been performed by his authority. Ratification, as provided in section 197, may itself be express or may be implied by the conduct of the person on whose behalf the act is done. The ratifier must, however, have knowledge of the facts of the case, without which, as Section 198 provides, no valid ratification is possible. These provisions give rise to a whole lot of questions, particularly in the light of the facts of our case where the Petitioner's wife is claimed to have acted as his agent so as to make him responsible for her acts, which questions appear to have escaped the arbitrator's attention altogether. Was the Petitioner's wife acting for him in the particular act, namely, addressing of the two subject mails, or was she generally representing him in his dealings with the Respondent or involving the others to whom the emails were copied? Was her authority to do so express or was it to be implied from the circumstances of the case (including words spoken or written by the Petitioner)? Was calling the Respondent a "forger", which may be a criminal act involving an offence under Section 499 of IPC, a matter within or without her authority? If without her authority, did the Petitioner ratify the act? Did he do so expressly or by implication? If he might be said to have ratified it, did he have the full knowledge so as to make the ratification valid? These and other pertinent questions either appear to have escaped the arbitrator's attention altogether or to have been considered by him only in an unacceptably tentative manner, as I shall presently point out.

12. It was nobody's case that the Petitioner's wife had his express authority (i.e. by spoken or written words) to act on his behalf when she wrote the two subject emails. The only circumstance, which the arbitrator appears to have considered in this behalf, is that the Petitioner, despite knowledge of the email of 15 June 2011, did not repudiate his wife's statement or clarify that it was not his opinion. The law does not put the burden of repudiation on the principal, when the agent acts beyond his authority. The law requires a positive act of ratification on his part so as to fasten him with the consequences of that act. Once again, the arbitrator appears to have missed the plot, resulting into a complete miscarriage of justice.

 IN THE HIGH COURT OF BOMBAY

Arbitration Petition No. 167 of 2015

Decided On: 19.05.2020

 Jackie Kukubhai Shroff  Vs.  Ratnam Sudesh Iyer

Hon'ble Judges/Coram:

S.C. Gupte, J.

Citation: MANU/MH/0633/2020,2020(5) MHLJ 524

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Twelve Golden Rules governing ratification of act of agent by principal.

There are twelve rules governing ratification of act of agent by principal.

1) The contract must be made by the agent for or on account of the principal,and not on his own account.

2) The principal must be in existence at the time of the act.Thus, a newly formed Company can not ratify an act done in its name before its incorporation.

3) A transaction which is void ab initio can not be ratified.A principal can ratify only those acts which he is legally competent to do.Thus,there can not be ratification of a void contract.A minor,can not after attaining majority,ratify a contract made during his minority,because a minor's contract is absolutely void.

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Whether agent can delegate his powers or duties without authority of principal?

 At this juncture, a nice legal question arises as to whether a delegate can further delegate. The axiomatic maxim is "Delecata protest as non protest delegari" The maximum lays down the general rule that an agent cannot delegate his powers or duties to another, in whole or in part, without the express authority of the principal or authority derived from the statute.

IN THE HIGH COURT OF MADRAS

Crl. R.C. Nos. 98 to 103 of 2009 and Connected M.Ps.

Decided On: 20.12.2012

 Vadivel Sizing and Weaving Mills (P) Limited Vs Fenner (India) Limited Textile Division

Hon'ble Judges/Coram:
B. Rajendran, J.

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Whether principal can ratify previous act done by agent by executing second power of attorney?

That an act done, for another, by a person though without any precedent authority whatever, becomes the act of the principal, subsequently ratified by him, is the known and well-established rule of law. In that case the principal is bound by the act, whether it be for the detriment or his advantage, and whether it be founded on a tort or on a contract, to the same effect as by, and with all the consequences which follow from, the same act done by his previous authority. And so by a wholesome and convenient fiction, a person ratifying the act of another, who, without authority, has made a contract openly and avowedly on his behalf, is deemed to be, in fact he was not, a party to the contract.

Relation back of an act of ratification was expressly accepted in this case. Other cases have been summarised in the manual of the Law and Practice of Powers of Attorney issued by the Council of the Chartered Institute of Secretaries; This follows from the maxim of law "Canis ratihabitio retrotrahitur at mandate priori aequiparatur"--that is to say, ratification is thrown back to the date of the act done, and the agent is put in the same position as if he had authority to do the act at the time the act was done by him. The learned authors quote the case of the House of Lords which we have above cited and add to it certain other cases with which we do not consider necessary to encumber this judgment.

9. It therefore follows that the second power of attorney was a valid document and it authorised Mr. Chawla to execute the document as well as to present it for registration. This being a document ratifying a former inconclusive act related back to the time when the first document was made and cured the illegality in the presentation for registration which had taken place.

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 198 of 1967

Decided On: 16.03.1970

Jugraj Singh Vs. Jaswant Singh and Ors.

Hon'ble Judges/Coram:

M. Hidayatullah, C.J., A.N. Ray and I.D. Dua, JJ.

Citation: UJ 1971 (SC) 197

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Whether an Advocate is more than agent of his client?

Apart from the above, in our view lawyers are perceived to be their client's agents. The law of agency may not strictly apply to the client-lawyer's relationship as lawyers or agents, lawyers have certain authority and certain duties. Because lawyers are also fiduciaries, their duties will sometimes more demanding than those imposed on other agents. The authority-agency status affords the lawyers to act for the client on the subject matter of the retainer. One of the most basic principles of the lawyer-client relationships is that lawyers owe fiduciary duties to their clients. As part of those duties, lawyers assume all the traditional duties that agents owe their principals and, thus, have to respect the client's autonomy to make decisions at a minimum, as to the objectives of the representation. Thus, according to generally accepted notions of professional responsibility, lawyers should follow the client's instructions rather than substitute their judgment for that of the client. The law is now well settled that a lawyer must be specifically authorised to settle and compromise a claim, that merely on the basis of his employment he has no implied or ostensible authority to bind his client to a compromise/settlement. To put it alternatively that a lawyer by virtue of retention, has the authority to choose the means for achieving the client's legal goal, while the client has the right to decide on what the goal will be. If the decision in question falls within those that clearly belong to the client, the lawyers conduct in failing to consult the client or in making the decision for the client, is more likely to constitute ineffective assistance of counsel.

The Privy Council in the case of Sourendra Nath Mitra v. Tarubala Dasi MANU/PR/0016/1930 : AIR 1930 PC 158 has made the following two observations which hold relevance to the present discussion:

Two observations may be added. First, the implied authority of counsel is not an appendage of office, a dignity added by the Courts to the status of barrister or advocate at law. It is implied in the interests of the client, to give the fullest beneficial effect to his employment of the advocate. Secondly, the implied authority can always be countermanded by the express directions of the client. No advocate has actual authority to settle a case against the express instructions of his client. If he considers such express instructions contrary to the interests of his client, his remedy is to return his brief.

32. Therefore, it is the solemn duty of an advocate not to transgress the authority conferred him by the client. It is always better to seek appropriate instructions from the client or his authorized agent before making any concession which may, directly or remotely, affect the rightful legal right of the client. The advocate represents the client before the Court and conducts proceedings on behalf of the client. He is the only link between the Court and the client. Therefore his responsibility is onerous. He is expected to follow the instructions of his client rather than substitute his judgment.

IN THE SUPREME COURT OF INDIA

Civil Appeal Nos. 4360-4361 of 2015 (Arising out of S.L.P. (C) Nos. 9302-9303 of 2013), 

Himalayan Cooperative Group Housing Society Vs. Balwan Singh

Hon'ble Judges/Coram:

H.L. Dattu, C.J.I., S.A. Bobde and Arun Mishra, JJ.

Citation;(2015) 7 SCC 373

Decided On: 29.04.2015

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Whether principal can deny receipt of money by his agent?

From the foregoing findings arrived at by the Courts below, it has been held that there was an Agreement to construct a flat for the appellant dated 2-8-1995 whereby a substantial amount of the costs of the consideration was duly paid to the respondent No. 1. There is a dispute with regard to an amount of ` 1,79,995/- which the appellant claims to have paid to the representative of the respondent No. 1 G. A, Naik and Y.G. Naik. It is contended by the respondent No. 1 that no payment was received by the said two persons on behalf of the respondent No. 1 nor were they authorised to receive such amount. The appellant is admittedly occupying the subject premises from 5-4-1998. It is contended by the respondent No. 1 that it was only a permission to keep the furniture and as the respondents began erecting a gate at the entrance where the suit Flat was located, the appellant filed the suit on 30-6-1998 and obtained an interim relief which was served on 1-7-1998 on the respondents. The subject termination by the respondent No. 1 was by notice dated 7-7-1998 addressed to M/s. Straight Deals which the appellant alleged have not received till date. The Order of injunction granted was confirmed on 15-9-1998 and an Appeal was preferred before the learned Addl. District Judge which came to be disposed of on 9-9-1999. A revision was preferred before this Court which came to be dispose of by Order dated 27-7-2000 with a direction that the amount which has been deposited by the appellant in the High Court be paid to the party which is found entitled to receive at the end of the trial. What emerges from the findings on facts is that the respondent No. 1 disputes the payment of a sum of ` 2,07,000/- which the appellant admittedly paid in the hands of Mr. G.A. Naik and Mr. Y.G. Naik, who the respondent No. 1 claims to be not authorised to receive the amounts on behalf of the respondent No. 1. The learned Trial Judge has in fact found that though the payments were made to the said two persons by the appellants, there was no material on record to show that the said persons were authorised by the respondent No. 1 to receive payments on their behalf towards the subject Flat. The Lower Appellate Court has also found that the letter produced on record of the said Shri G.A. Naik at exhibit Pw. 1/P which shows that the said Mr. G.A. Naik had stated that he had not received any amount on behalf of the respondent No. 1 would show that the amounts paid to said Mr. G.A. Naik and Mr. Y.G. Naik, were not part of the consideration of the suit Flat as it was claimed that such amounts were paid by the appellant in repayment of the amounts towards customs duty payable by the appellant. Both the Courts have also noted that said Mr. G.A. Naik was in fact authorised to take bookings on behalf of the respondent No. 1. The Lower Appellate Court found that non-examination of Mr. G.A. Naik was irrelevant as the appellant has failed to establish that he was duly authorised to receive amounts on behalf of the respondent No. 1. But, however, the fact remains that a sketch is placed on record prepared in the handwriting of the respondent No. 5/defendant No. 5 disclosing to the appellant the road they would have to take to reach the residence of said Mr. G.A. Naik who is the father of Mr. Y.G. Naik. The fact that amounts were transferred from the NRI Account of the appellant in favour of the said Mr. G.A. Naik and Mr. Y.G. Naik, has been duly established. The defendant No. 5-respondent No. 5 has not been examined in the Court. The sketch produced on record in the handwriting of respondent No. 5 was delivered to the appellant. Once it is established that Mr. G.A. Naik was the booking Agent for Flats in the subject building in Mumbai appointed by the respondent No. 1 and when the appellants have established a payment of a sum of ` 2,07,000/- in the hands of said Mr. G.A. Naik and Mr. Y.G. Naik and the sketch prepared by the respondent No. 5 is established, the burden shifted on the respondents to establish that Mr. G.A. Naik had limited powers or exceeded the power whilst dealing with the prospective Flat purchases of the respondent No. 1. In the written statement filed by the respondents, it has been admitted that the said G.A. Naik, was an agent in Mumbai but contending that he was only a booking agent and had no authority to collect money on behalf of the respondent No. 1. In fact, the appellant sought clarification from the said G.A. Naik that such amounts were paid towards the part consideration of the cost of constructing the subject Flat. The contents of the letter addressed by the said G.A. Naik at Exhibit PW1/P are seriously disputed by the appellant and, as such, cannot by itself support the case of the respondents that such amount was paid towards the custom duty. What has to be noted is that the appellant proceeded to the address drawn on the sketch by the respondent No. 5 to contact the said G.A. Naik to make such payment. In terms of section 186 of the Contract Act, the authority of an agent may be express or implied. Once it is established that the appellant proceeded to hand over the amount at the instance of the respondent No. 5 who is one of the partners of the respondent No. 1 and when the said G.A. Naik is admitted to be an agent though claimed to be only a booking agent, the circumstance can clearly imply that he was authorised to receive such payment specially when neither the said G.A. Naik nor the respondent No. 5 who has prepared the sketch have entered the witness box to show that such amount has been received towards the payment of custom duty as claimed by the respondents. In such circumstances, the Courts below were not justified to come to the conclusion that the amounts so paid were not in connection with the suit agreement. But the fact remains that this Court whilst disposing of the application for temporary injunction, had directed the deposit of the disputed amount of ` 1,79,995/- which included the amount towards extra work, by the appellant which has been duly complied with.

10. Mr. S.D. Lotlikar, learned Senior Advocate appearing for the appellant, upon instructions, states that in view of the said Order of this Court, the appellant has not challenged the directions to pay such amount to the respondent No. 1 herein. In such circumstances, though the Courts below have erroneously found that the appellant has failed to establish that the said amount of consideration was not paid by the appellant, nevertheless, I find that the non-examination of the defendant No. 5/respondent No. 5 and said Mr. G.A. Naik to prove the contents of the said two documents Pw. 1/F and Pw. 1/P, the Court would have to draw an adverse inference against the respondent No. 1 herein. No doubt, the Courts below have concurrently found that the appellant has failed to establish that the said Mr. G.A. Naik was duly authorised by the respondent No. 1 to receive the amount from the appellant on their behalf but, however, the fact remains that as said Mr. G.A. Naik was a booking Agent representing the respondent No. 1 in Mumbai, the Courts below were not justified to cast the burden on the appellant to establish the extent of such authority.

11. The extent of the authority of Mr. G.A. Naik would be an aspect to be established by the respondent No. 1 herein. Once it is admitted position that Shri G.A. Naik was a booking Agent for the respondent No. 1 and the appellant had in fact claimed that a substantial sum of money was paid to said G.A. Naik and his son towards the balance amount payable by the appellant towards the consideration of the subject Flat, the burden had shifted on the respondent No. 1 to establish that he had exceeded his authority in receiving such amount. The contention of the respondents based on the said letters addressed by said G.A. Naik to the appellant cannot be accepted as the contents whereof are not admitted by the appellant in the Court nor the respondent No. 5 who had guided the appellant to the residence of G.A. Naik, was also not examined in Court. Such payments were effected by the appellant in the course of the business relationship between the respondent No. 1 and the said G.A. Naik who was admittedly a booking agent. The respondent No. 1 has not produced the terms of authority upon which the said G.A. Naik was authorised to function as a booking agent in Mumbai. In such circumstances, the Courts below have taken an erroneous view with that regard by placing the burden on the appellant to establish that said G.A. Naik and his son were entitled to receive the amounts on behalf of the respondent No. 1.

IN THE HIGH COURT OF BOMBAY AT GOA

S.A. No. 23 of 2003

Decided On: 31.03.2017

 Sharad Prabhudas Vs. Sapana Real Estates and Ors.

Hon'ble Judges/Coram:

F.M. Reis, J.

Citation:2017(4) MHLJ 227

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Whether a person can be held guilty for breach of injunction order even if he was not party to suit?

The respondent set up a case that the owner of the disputed premises is Smt. Savita Singh and the respondent No. 3 has denied to be present at the site during the period when the outlets in question were closed by filling earth. The architect who was working at the instance of respondent No. 3 had filed his affidavit and stated that he had filled the strip of land with earth at the instance of respondent No. 3. The respondent No. 3 stated that he had been away from Dehradun at the relevant time and also said that the petitioner has no right of easement. Now, after the judgment of the civil court decreeing the petitioners' suit for injunction accepting the easementary right, it is no more open to the respondent to plead otherwise and deny that there is no easementary right of flowing rain and flood water through the disputed outlets. The technical plea raised is that owner of the premises is Smt. Savita Singh and the respondent is not the owner and he has no concern with the same. The judgment of the learned Civil Judge shows that he mainly proceeded on placing reliance on 1962 ALJ 201 (supra) and has not noticed the relevant amendments made in the Code otherwise he would have invoked the inherent jurisdiction under O. 39, R. 2A. The question whether an agent of the defendant can be proceeded against in a proceeding under 0. 39, R. 2A of the Code as amended by 1976 Act, the Patna High Court in MANU/BH/0067/1983 Ram Pd. Singh v. Subodh Pd. Singh has held that a person is liable to be proceeded against under O. 39, R. 2A of the Code even if he was not presently party to the suit provided he is shown to be the agent or servant of the defendant and to have violated the orders of the Court in spite of knowledge that there was such an order. The respondent No. 3 is the husband of the owner of the premises. The architect stated on affidavit that the apertures were closed at the instance of the respondent No. 3. It is wholly immaterial whether the respondent was personally present at the time of actual closing of the outlets or not and whether he was a party in the suit or not.

IN THE HIGH COURT OF ALLAHABAD

Civil Misc. Writ Petition No. 19415 of 1988

Decided On: 13.07.1992

 K.L. Virmani  Vs.  IIIrd Additional Dist. Judge, and others

Hon'ble Judges/Coram:
N.L. Ganguly, J.
 Citation : AIR 1992 All 326

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Whether power of attorney holder can get personal benefits by doing any act on behalf of principal?

 The law relating to power of attorney is governed by the provisions of the Power of Attorney Act, 1982. It is well settled therein that an agent acting under a power of attorney always acts, as a general rule, in the name of his principal. Any document executed or thing done by an agent on the strength of power of attorney is as effective as if executed or done in the name of principal, i.e., by the principal himself. An agent, therefore, always acts on behalf of the principal and exercises only those powers, which are given to him in the power of attorney by the principal. Any act or thing done by the agent on the strength of power of attorney is, therefore, never construed or/and treated to have been done by the agent in his personal capacity so as to create any right in his favour but is always construed as having done by the principal himself. An agent, therefore, never gets any personal benefit of any nature. Applying the aforesaid principle, this Court in Suraj Lamp and Industries Private Limited (2) vs. State of Haryana & Anr., (2012) 1 SCC 656 held in paragraphs 20 and 21 as under:

“20. A power of attorney is not an instrument of transfer in regard to any right, title or interest in an immovable property. The power of attorney is creation of an agency whereby the grantor authorises the grantee to do the acts specified therein, on behalf of grantor, which when executed will be binding on the grantor as if done by him (see Section 1-A and Section 2 of the Powers of Attorney Act, 1882). It is revocable or terminable at any time unless it is made irrevocable in a manner known to law. Even an irrevocable attorney does not have the effect of transferring title to the grantee.

21. In State of Rajasthan v. Basant Nahata, (2005) 12 SCC 77, this Court held: (SCC pp. 90 & 101, paras 13 & 52) “13. A grant of power of attorney is essentially governed by Chapter X of the Contract Act. By reason of a deed of power of attorney, an agent is formally appointed to act for the principal in one transaction or a series of transactions or to manage the affairs of the principal generally conferring necessary authority upon another person. A deed of power of attorney is executed by the principal in favour of the agent. The agent derives a right to use his name and all acts, deeds and things done by him and subject to the limitations contained in the said deed, the same shall be read as if done by the donor. A power of attorney is, as is well known, a document of convenience.

* * *

52. Execution of a power of attorney in terms of the provisions of the Contract Act as also thePowers of Attorney Act is valid. A power of attorney, we have noticed hereinbefore, is executed by the donor so as to enable the donee to act on his behalf. Except in cases where power of attorney is coupled with interest, it is revocable. The donee in exercise of his power under such power of attorney only acts in place of the donor subject of course to the powers granted to him by reason thereof. He cannot use the power of attorney for his own benefit. He acts in a fiduciary capacity. Any act of infidelity or breach of trust is a matter between the donor and the donee.” An attorney-holder may however execute a deed of conveyance in exercise of the power granted under the power of attorney and convey title on behalf of the grantor.” This was followed by this Court in Church of Christ Charitable Trust and Educational Charitable Society vs. Ponniamman Educational Trust, (2012) 8 SCC 706 (para 20)

43) When we apply this well settled principle of law to the facts of the case in hand, we are of the considered view that when Dhanapal, who was acting as an agent of A. Radhakrishnan on the strength of power of attorney, executed the tenancy agreement with respondent No. 1 in relation to the suit premises then he did such execution for and behalf of his principal - A Radhakrishnan, which resulted in creating a relationship of landlord and tenant between A. Radhakrishnan and respondent No. 1 in relation to the suit premises. In this execution, Dhanapal being an agent did not get any right, title and interest of any nature either in the suit premises or in tenancy in himself. The effect of execution of tenancy agreement by an agent was as if A. Radhakrishnan himself had executed with respondent No.1.

44) In view of the foregoing discussion, we are of the considered opinion that the High Court was not right in holding that the tenancy in relation to suit premises was with Dhanapal. We cannot thus concur with the finding of the High Court and accordingly reverse the finding and hold that the appellants were able to prove that the tenancy in relation to the suit premises was between A. Radhakrishnan and respondent No.1 and on the death of A. Radhakrishnan, it was created between the appellants and respondent No.1 by operation of law which entitled the appellants to maintain the eviction petition against respondent No.1 seeking his eviction on the grounds available to them under the Act.

Reportable

Supreme Court of India

Tmt. Kasthuri Radhakrishnan & Ors vs M.Chinniyan & Anr on 28 January, 2016

Bench: J. Chelameswar, Abhay Manohar Sapre

   CIVIL APPELLATE JURISDICTION

   CIVIL APPEAL No.5158 OF 2009

Citation;(2016)3 SCC296

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Whether non examination of principal is fatal to case if agent was examined who was having knowledge of facts of case?

The appellant contended that none of the three vendors (defendants 1, 2 and 3) stepped into the witness box to give evidence and therefore an  adverse inference should be drawn against them that the case put forth by them is incorrect. Reliance was also placed on the decisions of this court in Vidhyadhar v. Mankikrao & Anr. (1999) 3 SCC 573 and Balasaheb Dayandeo Naik (Dead) through LRs. and Ors. v. Appasaheb Dattatraya Pawar (2008 ) 4 SCC 464 in that behalf. There were four defendants in the suit. Defendants 1,2 and 3, who were the owners of the lands were respectively the wife, son and daughter of the fourth defendant. It is an admitted position that the entire transaction was done on behalf of the defendants 1,2 and 3 by defendant No.4 who alone had complete knowledge of the entire transaction. Fourth defendant has given evidence on behalf of all the other defendants. When one of the defendants who is conversant with the facts has given evidence, it is not necessary for the other defendants to be examined as witnesses to duplicate the evidence.

The legal position as to who should give evidence in regard to the matters involving personal knowledge have been laid down by this court in Man Kaur (dead) by LRS. v. Hartar Singh Sangha (2010) 10 SCC 512. This court has held that where the entire transaction has been conducted through a particular agent or representative, the principal has to examine that agent to prove the transaction; and that where the principal at no point of time had personally handled or dealt with or participated in the transaction and has no personal knowledge of the transaction, and where the entire transaction has been handled by the agent, necessarily the agent  alone can give evidence in regard to the transaction. This court further observed:

"Where all the affairs of a party are completely managed, transacted and looked after by an attorney (who may happen to be a close family member), it may be possible to accept the evidence of such attorney even with reference to bona fides or 'readiness and willingness'. Examples of such attorney holders are a husband/wife exclusively managing the affairs of his/her spouse, a son/daughter exclusively managing the affairs of an old and infirm parent, a father/mother exclusively managing the affairs of a son/daughter living abroad."

Therefore the evidence of the fourth defendant (examined as DW2) was sufficient to put forth the case of the defendants and there was no need to examine the other three defendants who did not have full or complete knowledge of the transactions. In the circumstances we find no merit in the contention that the suits ought to have been decreed, as defendants 1,2 and 3 did not step into the witness box.

Reportable

Supreme Court of India

Saradamani Kandappan vs S. Rajalakshmi & Ors on 4 July, 2011

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When suit seeking true and correct accounts from agent will be barred by limitation?

As far as prayer (e) is concerned, plaintiff seeks an order and decree

against defendant No.1 to render true and correct accounts of its acts and actions

in respect of suit property.   Even if defendant No.1 is considered as an agent of

the plaintiff, for such relief as claimed in prayer (e) for rendering true and

correct accounts by an agent Article 4 of the Limitation Act would be applicable

which provides for three years time to file a suit by  a principal against agent to

include his conduct or in any event Article 113 which provides for three years

period in respect of the claim to which no other article applies would apply and

time begins when right to sue first accrues.  Consent award was made on 15th

April 1986.  Decree was passed in 1991.  Right to sue if any for rendering true

and correct account by the first defendant arose in the year 1991.   Prayer (e)

thus on the face of it is barred by law of limitation.  

 IN THE HIGH COURT OF JUDICATURE AT BOMBAY

 ORDINARY ORIGINAL CIVIL JURISDICTION 

SUIT NO. 808 OF 2011

Naresh Lachmandas Aswani  

Vs

  Haridas alias Hardas Lachmandas

     

     CORAM : R.D. DHANUKA, J.

    

    Dated : 18th OCTOBER, 2013

Citation: 2016(4) ALLMR 286

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Whether there can be transaction of sale of goods between agent and principal?

All the above referred terms and conditions show nothing but authority of respondent no. 2 to sell the goods in it's own right and pass on the title to the goods in it's own right to the specified buyer. The essence of contract of sale under Section 4 of The Sale of Goods Act, 1930 lies in transfer of the property in goods by the seller to a buyer for a price. Whenever the seller transfers or agrees to transfer the property in goods to a buyer for a price, the contract is of sale. As against this, in a contract under which a relationship of agent and principal is created, an agentwp4383.08.odt cannot deal with the goods as if they are his own goods and cannot pass on the title in his own right to the buyer for a price. These attributes of agency are absent in the said agreements which rather fulfill the characteristics of contract of sale and, therefore, the argument that respondent no. 2 acted only as an agent for importing edible oil on behalf of Government and that there was no sale effected between respondents 2 and 3, cannot be accepted.

Bombay High Court

Mumbai Agricultural Produce ... vs The Hon\'Ble Minister For ... on 20 July, 2015

Citation;AIR 2015 Bombay 234

CORAM : Naresh H. Patil and S.B. Shukre, JJ.


Read full judgment here;click here

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Whether agent can act in his own right and for himself?

Now, let us deal with the first question. Under Section 182 of The Indian Contract Act, 1872, an "agent" is a person employed to do any act for another or to represent another in dealings with third persons. The person for whom something is done or who is so represented is called the principal. Thus, a contract of agency is created only when authority is given to a person called the agent to represent the principal in dealing with third persons or to do something for the principal. Whatever is done by the agent in pursuance of such an authority or employment, would be for and in the name of the principal and, therefore, could be said in law to be done by the principal only.

That is the reason why in the case of National Textile Corporation Ltd. v. Nareshkumar Badrikumar Jagad & ors. -

AIR 2012 SC 264, in paragraph 22, the Hon'ble Apex Court described the relationship between agent and principal in these words -

"...... An agent is merely an extended hand of the principal and cannot claim independent rights."

10. In the case of Sourthern Roadways Ltd., Madurai v.

S.M. Krishnan - AIR 1990 SC 673 while examining the issue as to whether the possession of the agent can be termed to be the possession of the principal for all purposes including the acquisition of title and the Hon'ble Apex Court held that agent who receives property from or for his principal, obtains no interest for himself in the property for the reason that possession of the agent is the possession of the principal and in view of the fiduciary relationship the agent cannot claim his own possession.

11. In the case of Kalyanji Kuwarji v. Tirkaram Sheolal & ors. - AIR 1938 Nagpur 254 Single Bench of Nagpur High Court dealt with the question as to whether a commission agent engaged by a principal for selling the goods on his behalf on commission could be considered as his agent. The facts of the case were that the plaintiff, a merchant from Khamgaon dealing in the purchase and sale of grain and cotton seed, had engaged the defendants, also merchants carrying on their business at Sonpat in Punjab to act as commission agents for selling of goods on plaintiff's instructions being received by them at Sonpat. The arrangement was this; plaintiff was to send to the defendants consignment of goods from time to time from Khamgaon; defendants were to keep the goods with them and await instructions from the plaintiff about the sale; then as soon as the plaintiff gave them the word, they were to sell and in due course hand over the sale proceeds to the plaintiff less their commission charges. The money, however, was not to be paid at Khamgaon but at Delhi. Vivian Bose, J. (as his Lordship then was) delivering the judgment devised a twin test for answering the question when his Lordship observed thus :

"The test to my mind is this ..... does the commission agent when he sells have authority to sell in his own name? Has he authority in his own right to pass a valid title? If he has then he is acting as a principal vis- a-vis the purchasers and not merely as an agent and therefore from that point on he is a debtor of his erstwhile principal and not merely an agent. Whether this is so or not must of course depend upon the facts in each particular case."

12. It would be clear from the above-referred cases governing the field that an agent cannot perform an act in his own right and for himself. He is essentially a person who does something on instructions or under the authority given to him by his principal and his such performance binds the principal. In other words, it is the principal who, in law, is answerable to the third person for the acts done by his agent as long as the acts so performed fall within the scope of employment or authority of the agent. It would then mean that a commission agent would have no authority to sell in his own name and would have no authority in his own right to pass on a valid title.

Bombay High Court

Mumbai Agricultural Produce ... vs The Hon\'Ble Minister For ... on 20 July, 2015

Citation;AIR 2015 Bombay 234

CORAM : Naresh H. Patil and S.B. Shukre, JJ.

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Whether agent can be sued when principal is known?

It is a settled legal proposition that an agent cannot be sued where the principal is known. In the instant case, the appellant has not taken plea before either of the courts below. In view of the provisions of Order VIII Rule 2 CPC, the appellant was under an obligation to take a specific plea to show that the suit was not maintainable which it failed to do so. The vague plea to the extent that the suit was bad for non-joinder and, thus, was not maintainable, did not meet the requirement of law. The appellant ought to have taken a plea in the written statement that it was merely an `agent' of the Central Government, thus the suit against it was not maintainable. More so, whether A is an agent of B is a question of fact and has to be properly pleaded and proved by adducing evidence. The appellant miserably failed to take the required pleadings for the purpose.

Supreme Court of India

National Textile Corp.Ltd vs Nareshkumar Badrikumar Jagad & ... on 5 September, 2011

Bench: P. Sathasivam, B.S. Chauhan

Citation;(2011) 12 SCC 695.

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Whether agent is liable for giving of accounts if he sell property of principal unauthorisedly?

Commercial - recovery - suit for recovery - it was proved that some bales of cloth were undoubtedly entrusted to defendant for being deposited in their godown were sold by defendants - sale proceeds not paid to plaintiff - once it was proved that defendant was in possession of bales in question which formed part of bales of cloth it was duty of defendant to account for same - defendant has given no explanation for same - oral as well as documentary evidence led by plaintiff showed that goods in question were sold by defendant but sale proceeds were not paid to plaintiff - claim of plaintiff as regards to goods in question justified and cannot be disallowed.

Supreme Court of India

Madan Gopal Kanodia vs Mamraj Maniram And Ors. on 15 January, 1976

Equivalent citations: AIR 1976 SC 461, (1977) 1 SCC 669

Bench: R Sarkaria, S M Ali

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When principal is liable jointly and severally with agent to restore amount received from third party?

 In Goolabchand v. Miller (1938) 2 M.L.J. 688 a Bench of this Court consisting of Varadachariar and|Pandrang Row, JJ., observed as follows at pages 694-695:

It is only when the contract as such cannot be enforced against the principal, that the lender has to fall back on the equitable rule founded on the theory of 'unjust enrichment'. Though the authorities have not been uniform as to the precise basis of the rule, the rule itself is now well established that, where by any wrongful or unauthorised act of an agent the money or property of a third person comes to the hands of the principal or is applied for his benefit, the principal is liable jointly and severally with the agent to restore the amount or the value of such money or property (see Bowstead, Article 103). In some cases, the plaintiff's right was based on the count for money had and received or the theory of failure of consideration, and sometimes on the analogy of the count for money paid to the use of the defendant. Again the theory of subrogation was at one time suggested as the analogy but it was later on pointed out that the analogy was not true. In re Wrexham Mold and Connahs' Quay Railway Co. L.R. (1890) 1 Ch. 440. It was also suggested that in such cases, there was really no borrowing at all, because there was no addition to the principal's total liability but merely a substitution of liability to another (the lender) in place of the pre-existing liability to another (the person paid off). Other cases have supported the claim only on grounds of equity ; and in In re Wrexham Mold and Connah's Quay Railway Co. L.R. (1890) 1 Ch. 440, two of the Lords Justices observed that the effect of the rule was to make the borrowing valid to the extent to which the principal has received the money or the benefit of its application.

In Mahalingam Chettiar v. Ramanathan Chettiar and Ors. Appeal No. 665 of 1948, it was held:

It was first contended that the case fell within the doctrine of unjust enrichment. The basis of the doctrine is that if a person has received any property or benefit from another it is just that he should make restitution as otherwise he would be unjustly enriched at the expense of the other. This doctrine so far as we are concerned is embodied in Sections 69 and 70 of the Indian Contract Act and it is generally recognised that these Sections are much wider in scope than the doctrine as applied in England and go far beyond it. Mr. Rajah Ayyar referred to the following passage in Leake on Contracts (8th edition) which may be taken as an accurate statement of the English Law, 'A debt for money paid arises where a person has paid money for another under circumstances and upon occasions which make it just and equitable that it should be repaid ; a debt or promise to pay is then implied in law, without any actual agreement to that effect.

Madras High Court

Govindarajulu Naidu And Ors. vs S.S. Naidu Alias Soundararajulu ... on 17 January, 1958

Equivalent citations: (1958) 2 MLJ 148

Author: Ramaswami

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