1959 Supreme(AP) 15
Andhra Pradesh High Court
Judges : SYED QUAMAR HASAN
V.G.Sarma - Appellant
Versus
Friends - Respondent
Decided On : 01-30-59
An agent may maintain a suit for accounts against his principal in exceptional circumstances, such as when the agent is not aware of the extent of the amount due to him and the principal possesses all the accounts.
Headnote:
ACCOUNTING SUIT - AGENT AGAINST PRINCIPAL - CONDITIONS - COURT FEES ACT, 1870, SECTION 7(IV)(F) - ORDER 7, RULE 2, C. P. CODE - CONTRACT ACT, 1872, SECTION 213.
Fact of the Case:
Plaintiff, an agent, filed a suit for rendition of accounts against his principal, the defendants, alleging breach of contract and failure to account for amounts received, commission, discount, loss, office, and other expenses. The District Munsif rejected the plaint for not stating the amount due, and the Subordinate Judge reversed the order and remanded the case for trial.
Finding of the Court:
The court held that in exceptional cases, an agent may sue his principal for an account, especially when the agent is not aware of the extent of the amount due to him and the principal possesses all the accounts.
Issues: 1. Whether an agent can maintain a suit for accounts against his principal? 2. Whether the plaint sufficiently laid the foundation for a suit for account?
Ratio Decidendi: 1. The court relied on precedents holding that an agent may sue his principal for an account in exceptional circumstances, such as when the agent is not aware of the extent of the amount due to him and the principal possesses all the accounts. 2. The court found that the plaint sufficiently alleged breach of contract and failure to account, bringing the case within the ambit of the aforementioned precedents.
Final Decision: The court dismissed the appeal, upholding the Subordinate Judge's order to remand the case for trial.
( 1 ) 1. Defendants 1 to 3 appeal and the appeal is directed against the order dated 18-2-1955 of the Subordinate Judge, Eluru by which he reversed the order of the District Munsif of the same place rejecting the plaint, and remanded the case to the Trial Court for trial and disposal on merits.
( 2 ) THE relief sought in the plaint was for rendition of accounts. It was stated therein that defendants 2 to 4 constituted themselves into a partnership and traded under the name and style of V. G. Sarma and Co. , the 1st defendant. On 27-11-1948, the 1st defendant and the plaintiff entered into an agreement under which the 1st defendant constituted the plaintiff a stockiest of the products of Techno Chemical Industries Ltd. , for a period of two years terminable by giving certain kind of notices on either side during and after the said period. As a sole distributor the 1st defendant undertook to execute all orders of the plaintiff at their expense and give commission to the plaintiff at certain rates viz. , 3 per cent on soap, 5 per cent on oils and 10 per cent on inks on invoice prices and pay discount on goods supplied direct by the sole distributor to any partners in West Godavari as also on unsold stock at the end of each month. The grievance of the plaintiff was that in pursuance of the said agreement the defendants received Rs. 5,250. 00 and supplied stocks but committed breach of the other terms of the contract by not arranging for sales and distribution of the stocks by failing to take back all the unsold articles and by failing to account to the plaintiff for the amounts received, the commission, the discount payable to the plaintiff, the loss, the office and other expenses payable to the plaintiff.
( 3 ) IN para 9 of the plaint, the plaintiff valued the suit at Rs. 100. 00 and paid a Court-fee of Rs. 11-3-0 under Section 7 (iv) (f) of the Court Fees Act inasmuch as according to him the suit was one for an account of the dealings between the plaintiff and the defendants. 3. The Court-fee Examiner objected that as the plaintiff according to his own showing was an agent, he cannot in law maintain a suit for accounts against the defendants, they admittedly being the principals. The objection was sought to be supported y a reference to Mahadevi v. Sankara Menon ILR 1940 Mad 296: (AIR 1940 Mad 504 ). The District Judge gave effect to the objection and directed plaintiff to file a memorandum stating the amount due to him from the defendants. The plaintiff on 8-3-1954 filed the memorandum but did not state the amount due to him. The District Munsif passed the following order on the check-slip :"the plaintiff is not willing to state the amount due. As the plaintiff is not willing to obey the order of the Court, the plaint shall be rejected. The check-slip is answered accordingly. " The learned Subordinate Judge differed from the cryptic view of the Court and distinguishing the authority cited by the Court-fee Examiner held that : "there may be a case where the agent is not in a position to know what exactly is the amount due to him and in such circumstance where the principal alone knows what exactly is the amount due by him, he cannot turn round and say that the agent is bound to sue only for a specific sum and not for a rendition of account. "in coming to that conclusion he felt himself fortified by the decision of the Madras High Court in Ramachandra Madhavadoss Co. v. M. Birankitti and Bros. , AIR 1938 Mad 707 : 1938-2 Mad LJ 112 and that of the Nagpur High Court in Basant Kumar v. Roshan Lal, AIR 1954 Nag 300.
( 4 ) THE respondents, who were respectively the plaintiff and the 4th defendant, have preferred to remain ex parte. It was contended before me on behalf of the appellant that inasmuch as the liability to render account lies with the agent under Section 213 of the Contract Act and no such corresponding liability is cast upon the principal, the agent is bound to sue for a specific amount within the meaning