High Court Of Calcutta
RAMENDRA MOHAN DATTA, C. K. BANERJEE
UNION OF INDIA (UOI) - Appellant
Versus
CHINOY CHABLANI. - Respondent
A. F. O. O. 331 Of 1976
Decided On : 02/19/1981
CONTRACT ACT - SECTION 230(3) - INTERPRETATION - AGENT'S LIABILITY - PRESUMPTION OF CONTRACT - PRINCIPAL'S DIRECT INVOLVEMENT - APPLICABILITY OF LEGAL FICTION.
Fact of the Case:
A suit was filed against a shipping agent, Chinoy Chablani & Co., for alleged negligence and wrongful acts leading to loss of goods during carriage by a vessel owned by Black Sea Steamship Company, U.S.S.R. The plaintiffs, Ramendra Mohan Datta and Food Corporation of India, argued that the agent could be held liable under Section 230(3) of the Contract Act, 1872, as the principal, Black Sea Steamship Company, could not be sued in India.
Finding of the Court:
The court held that Section 230(3) of the Contract Act did not apply in this case because the contract of carriage was entered into by the principal, Black Sea Steamship Company, and not by the agent, Chinoy Chablani & Co. The court found that the legal fiction of presuming a contract between the agent and the third party under Section 230(3) could not be extended to cases where the principal had directly entered into the contract.
Issues: 1. Whether Section 230(3) of the Contract Act, 1872, creates a legal fiction of a contract between an agent and a third party, making the agent liable even when the principal has directly entered into the contract. 2. Whether the expression 'principal...cannot be sued' in Section 230(3) is restricted to cases where the principal cannot be sued in India only.
Ratio Decidendi: 1. Section 230 of the Contract Act, 1872, deals with the rights and liabilities of an agent in respect of contracts entered into on behalf of the principal. The second paragraph of Section 230 creates a legal fiction of a contract between the agent and the third party in certain cases, such as when the agent does not disclose the name of the principal or when the principal cannot be sued. 2. The court interpreted Section 230(3) in conjunction with the rest of the section and concluded that the legal fiction of a contract between the agent and the third party could not be extended to cases where the principal had directly entered into the contract. The court reasoned that the purpose of the legal fiction was to protect the rights of the third party in cases where the principal could not be sued, and that this purpose would not be served in cases where the principal had directly entered into the contract.
Final Decision: The court dismissed the appeal, holding that the agent, Chinoy Chablani & Co., could not be held liable under Section 230(3) of the Contract Act, 1872, as the principal, Black Sea Steamship Company, had directly entered into the contract of carriage.
( 1 ) THIS is an appeal from the judgment and order of Sabyasachi Mukharji, J. dated March 15, 1976 (The learned Judge allowed the application and directed the plaint to be taken off the file. The application before him was made praying for such an order, inter alia, on the ground, that the plaint did not disclose any cause of action and, alternatively for dismissing the suit on the ground that this Court had no jurisdiction to try or to entertain the suit. The petitioner in the further alternative prayed for stay of the suit.
( 2 ) THE point involved in this appeal relates to the interpretation of Section 230 (3) of the Contract Act, 1872. The appellant No. 1 and the Food Corporation of India, the appellant No. 2 filed the suit against the respondents who were carrying on business, inter alia, as steamer agents of one Black Sea Steamship Company of U. S. S. R. The said Steamship Company was the owner of the vessel "s. S. SUDGA". The plaintiff-appellant No. 2 acted on behalf of the Ministry of Agriculture, Government of India in respect of all importations of fertilizers and foodstuffs. According to the plaintiffs, on October 31, 1973 one Mineral and Metal Trading Corporation of India Ltd. had shipped for and on behalf of the Ministry of Agriculture, Union of India on board the said vessel 81956 bags of Urea and further 820 empty spare bags from the Port of Odessa in U. S. S. R. to be carried to any Port in India. A Bill of Lading was issued by the said Black Sea Steamship Company which agreed to carry the same in accordance with the terms and conditions mentioned in the said contract of carriage.
( 3 ) THE said vessel had discharged at Visakhapatnam 51933 bags of urea of which certain quantities were cut and torn and certain quantities contained sweepings only from and out of the said consignment. She completed discharge of the goods in the port of Calcutta also to the extent of 28747 hags of which 3201 were cut and torn and further 50 bags contained sweepings only. The same were duly surveyed at both the ports of Visakhapatnam and Calcutta. According to the plaintiff, the loss occurred thereby was due to the negligence and wrongful acts of the carriers and the plaintiffs-appellants claimed a sum of Rs. 73,285 from the respondent who were acting as the Steamer Agents,
( 4 ) IN paragraph 10 of the plaint, the plaintiffs-appellants have pleaded:"the said Black Sea Steamship Company appears to be the concern of U. S. S. R. and as such cannot be sued in India, In the circumstances, the defendant or its agents is liable and is sued as such. "
( 5 ) THE above, in short, is the frame of the suit. In short, although the contract was entered into with the said Shipping Company which issued the bill of lading but the said document did not mention anything about the respondent Chinoy Chablani and Co, which acted as the agents in the Calcutta Port for discharging the said consignment from the said vessel as the steamer agents.
( 6 ) THE defendant-respondent herein contends that the contract of carriage was entered into by and between the appellants and the Black Sea Steamship Co. which issued the bill of lading. The defendant-respondent merely acted as the steamer agent and, accordingly, it could not have been sued in any event. No privity nor any jural relationship was established by and between the plaintiffs-appellants and the defendant-respondent.
( 7 ) ON behalf of the appellants, it is contended that even though the defendant-respondent did not enter into the contract, still it became liable by reason of the legal fiction created by statute as would appear from the second paragraph of Section 230 of the Contract Act whereby such a contract would be presumed to exist in a case where the principal, though disclosed, could not be sued.
( 8 ) TO appreciate the argument, it would be convenient to set out Section 230 of the Contract Act which runs as follows:--"230. In the absence of any contract to that ef
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