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PATNA HIGH COURT
S.C.Misra and G.N.Prasad JJ.
Saligram Marwari
Versus
Ayodhya Prasad Musaddilal
Letter Patent Appeal No. 90 of 1959 ;
Decided On : FEBRUARY 10, 1965
CONTRACT - AGENCY - SUBSTITUTE AGENT - LIABILITY OF SUBSTITUTE AGENT TO PRINCIPAL - SALE OF GOODS - LIABILITY OF AGENT TO PRINCIPAL FOR SALE PROCEEDS - CROSS-OBJECTION - MAINTAINABILITY - POWER OF APPELLATE COURT TO PASS DECREE AGAINST RESPONDENT NOT FILING CROSS-OBJECTION - ORDER 41, RULE 33, CODE OF CIVIL PROCEDURE.
Fact of the Case:
The plaintiff, a merchant of Orissa, purchased Mahua flowers from the Sakti merchant of Madhya Pradesh for sale at Jharia in Bihar. The plaintiff applied for a permit to export the flowers, which was issued on 27th January 1949. The flowers were transported to Jharia in three wagons, which reached the destination on or about 19th February 1949 and 24th February 1949. The first wagon was delivered to Jharia merchants No. 1, the second wagon to Jharia merchants No. 2, and the third wagon to the plaintiff, who made it over to Jharia merchants No. 1. The flowers were sold at Jharia through the agencies of the two sets of Jharia merchants at different rates ranging between Rs. 10 to Rs. 12-8-0 per bag, but the sale proceeds were not paid by them to the plaintiff. The plaintiff instituted two suits, one against Jharia merchants No. 1 and the other against Jharia merchants No. 2, for the price of the flowers sold by them. The Sakti merchant was also made a defendant in both the suits. The trial court decreed the suits against the Sakti merchant alone. In the appeals filed by the Sakti merchant, the plaintiff filed cross-objections. The learned Single Judge, who heard the appeals separately, dismissed the plaintiff's suit against the Sakti merchant in one appeal and declined to pass a decree against the Jharia merchants in the other appeal. The plaintiff preferred Letters Patent Appeals against the judgments of the learned Single Judge.
Finding of the Court:
The court held that the Jharia merchants were not the sub-agents of the Sakti merchant, but they were nominated by the Sakti merchant as substitute agents for the plaintiff and as such they were liable to render accounts to the plaintiff as his agents or substitutes. The court further held that the Jharia merchants were accountable to the plaintiff for the sale proceeds of the Mahua flowers and that they had no authority to ignore the plaintiff and remit the sale proceeds directly to the Sakti merchant. The court also held that the cross-objections filed by the plaintiff were maintainable against the Jharia merchants and that the appellate court was competent to grant to the plaintiff a decree against the Jharia merchants in exercise of its powers under Order 41, Rule 33 of the Code of Civil Procedure.
Issues: 1. Whether the Jharia merchants were the sub-agents of the Sakti merchant or the substitute agents of the plaintiff? 2. Whether the Jharia merchants were accountable to the plaintiff for the sale proceeds of the Mahua flowers? 3. Whether the cross-objections filed by the plaintiff were maintainable against the Jharia merchants? 4. Whether the appellate court was competent to grant to the plaintiff a decree against the Jharia merchants in exercise of its powers under Order 41, Rule 33 of the Code of Civil Procedure?
Ratio Decidendi: 1. The court held that the Jharia merchants were not the sub-agents of the Sakti merchant, but they were nominated by the Sakti merchant as substitute agents for the plaintiff and as such they were liable to render accounts to the plaintiff as his agents or substitutes. The court relied on the following factors to arrive at this conclusion: (i) The ownership in the Mahua flowers which had been transported to Bhaga was in the plaintiff. (ii) In the railway receipt in respect of each of these consignments, the name of the plaintiff was shown both as the consignor and the consignee. (iii) The permit authorising the export of the Mahua flowers from Sakti in Madhya Pradesh to Bhaga in Bihar also stood in the name of the plaintiff. (iv) The Jharia merchants must have been aware of the fact that the goods belonged to the plaintiff, as they had received letters from the plaintiff introducing them to the Sakti merchant and instructing them to sell the goods according to his instructions. (v) The Jharia merchants had to take instructions from the plaintiff, and not from the Sakti merchant, in the matter of disposal of the goods. 2. The court held that the Jharia merchants were accountable to the plaintiff for the sale proceeds of the Mahua flowers and that they had no authority to ignore the plaintiff and remit the sale proceeds directly to the Sakti merchant. The court relied on the following factors to arrive at this conclusion: (i) The Jharia merchants were the substitute agents of the plaintiff and, as such, they were accountable to him for the business. (ii) The Jharia merchants had received instructions from the plaintiff to sell the goods at certain rates and to send the sale proceeds to him. (iii) The Jharia merchants had admitted to have received the money from the sale of the goods and to have paid it to the Sakti merchant. 3. The court held that the cross-objections filed by the plaintiff were maintainable against the Jharia merchants. The court relied on the following factors to arrive at this conclusion: (i) The Jharia merchants were interested in the reliefs which the plaintiff had claimed in his cross-objection, as the liability of the Jharia merchants towards the plaintiff would be affected to the extent to which the decree of the trial court against the Sakti merchant was varied by the appellate court. (ii) One of the items of claim made by the plaintiff in his cross-objection was in respect of the railway freight in respect of the third consignment, which was disallowed by the trial court. The appellate court was bound to re-open a question as between the plaintiff and the Jharia merchants No. 1, as the railway freight had been paid by the Jharia merchants No. 1. 4. The court held that the appellate court was competent to grant to the plaintiff a decree against the Jharia merchants in exercise of its powers under Order 41, Rule 33 of the Code of Civil Procedure. The court relied on the following factors to arrive at this conclusion: (i) Order 41, Rule 33 of the Code of Civil Procedure empowers the appellate court to make whatever order it thinks fit, not only as between the appellant and the respondent but also as between a respondent and a respondent. (ii) The Jharia merchants had appeared before the court and had full notice of the relief which the plaintiff seeks against them.
Final Decision: The Letters Patent Appeal No. 90 of 1959 preferred by the Jharia merchant No. 1 was dismissed. Letters Patent Appeal No. 23 of 1960 preferred by the plaintiff was allowed. In this appeal, there was a decree in favour of the plaintiff against the Jharia merchants No. 2 (respondents 2 to 5) for the amount of his claim found due against them by the trial court, instead of the decree passed by the trial court against the Sakti merchant (respondent No. 1).
G.N.Prasad, J.
1. These two appeals arise out of two suits which were tried analogous and they have, therefore, been heard together, although the First Appeals arising therefrom were dealt with separately by the same learned Single Judge. Letters Patent Appeal No. 90 of 1959, from the decision of the learned Single Judge in First Appeal No. 361 of 1953, arises out of Money Suit No. 12 of 1952, and Letters Patent Appeal No. 23 of 1960, from the decision of the learned Single Judge in First Appeal No. 475 of 1954, arises out of Money Suit No. 76 of 1953. The plaintiff in both the suits is Nalam Kanaka Raju, Respondent No. 2 in Letters Patent Appeal No. 90 of 1959 and the appellant in Letters Patent Appeal No. 23 of 1960. There were two sets of defendants in each suit, and one of them was common to both the suits, and will, for the sake of convenience, be referred to as the Sakti merchant. The other set of defendants are merchants of Jharia who, however, are two different parties. The Jharia merchants, who were defendants in Money Suit No. 12 of 1952, are the appellants before us in Letters Patent Appeal No. 90 of 1959. The other set of Jharia merchants, who were defendants in Money Suit No. 76 of 1953, are respondents 2 to 5 in Letters Patent Appeal No. 23 of 1960. Both these appeals have been heard together as they involve identical questions for decisions.
2. The following facts of the two cases are not in dispute. The plaintiff, who is a merchant of the district of Ganjam, in Orissa, desired to purchase Mahua flowers at Sakti in the State of Madhya Pradesh to transport them to Jharia in the State of Bihar for the purpose of sale at profit. Accordingly, in December 1947, he entered into a contract with the Sakti merchant for the purchase of 1000 maunds of Mahua at the rate of Rs. 5 per maund. He had, however, to experience certain difficulties on account of the fact that at the relevant time there was a ban upon, export of Mahua flowers outside the State of Madhya Pradesh and the Mahua flowers purchased by the plaintiff could not be exported to Jharia without permit from the Government of the State of Madhya Pradesh. Accordingly, the plaintiff applied for the necessary permit, but it was not issued to him until the 27th January 1949. Meanwhile, however, the plaintiff who had already become the owner of the Mahua flowers in question made part payment of their price to the Sakti merchant. After the issue of the necessary permit, steps were taken to arrange for railway wagons for transporting the consignment from Sakti Railway station to Bhaga Railway station situated near Jharia. The consignment was transported in three different wagons. The first wagon reached the destination on or about the 19th February 1949 and the delivery of the consignment was taken by the Jharia merchants, who are defendants in Money Suit No. 12 of 1952 and will be referred to as the Jharia merchants No. 1. The second and the third wagons reached the destination on or about the 24th February 1949. The delivery of the consignment of the second wagon was taken by the Jharia merchants, who are defendants in Money Suit No. 76 of 1953 and will be referred to as the Jharia merchants No. 2, while that of the third wagon was taken by the plaintiff and made over to the Jharia merchants No. 1. The consignment of the second wagon was the subject matter of Money Suit No. 76 of 1953, while the consignments of the first and the third wagons were the subject matter of Money Suit No. 12 of 1952. After the deliveries as aforesaid, the Mahua flowers in question were sold at Jharia through the agencies of the two sets of Jharia merchants at different rates ranging between Rs. 10 to Rs. 12-8-0 per bag, but the sale proceeds were not paid by them to the plaintiff, and that gave rise to exchange of correspondence between the parties and ultimately culminated in the institution of the two suits. In Money Suit No. 12 of 1952, the total claim was laid at Rs. 7,371-11-0 i
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