Liability under a contract lies with the disclosed principal and not the agent, as per Section 230 of the Indian Contract Act.

VALMIKI J. MEHTA, J.

1. This Regular First Appeal under Section 96 of the Code of Civil Procedure, 1908 (CPC) is filed by the defendant no.2 in the suit impugning the judgment of the trial court dated 10.3.2005 whereby the trial court has decreed the suit of the respondent no.1/plaintiff for a sum of Rs.3,57,021/- along with interest at 21% per annum. The suit was decreed against the two defendants with the appellant being the defendant no.2 and the respondent no.2 being the defendant no.1. Both the defendants in the suit i.e appellant/defendant no.2 and the respondent no.2/defendant no.1 have been held jointly and severally liable to pay the decretal amount.

2. The facts of the case are that the respondent no.1/plaintiff filed the subject suit claiming an amount on account of printing “HFCL Brochures” by it. Respondent no.1/plaintiff pleaded that the printing was done for the respondent no.2/defendant no.1 and invoices were raised by the respondent no.1/plaintiff upon the respondent no.2/defendant no.1 for a total amount of Rs.2,37,745/-. Since this amount was not paid, the subject suit came to be filed. The subject suit was filed on 23.4.1999 with the respondent no.2 herein being the sole defendant. Appellant/defendant no.2 was added as a party in terms of the order dated 12.3.2001 of the trial court whereby application under Order I Rule 10 CPC filed by the respondent no.1/plaintiff was allowed. Pursuant to adding of the appellant/defendant no.2 as a party-defendant in the suit, the suit plaint was amended and amended plaint was filed on 9.10.2002 adding paras 9(A) and 9(B). As per these paras 9(A) and 9(B) respondent no.1/plaintiff pleaded that appellant/defendant no.2 always was and acted as an agent of respondent no.2/defendant no.1 and that the job of printing done by the respondent no.1/plaintiff was given by the appellant/defendant no.2 acting as the agent of respondent no.2/defendant no.1. Therefore, the appellant/defendant no.2 was pleaded to be liable on account of it being the agent of respondent no.2/defendant no.1.

3. As per the written statement filed by both the defendants i.e appellant/defendant no.2 and the respondent no.2/defendant no.1, it was pleaded that respondent no.1/plaintiff had no privity of contract with any of them. Whereas the appellant/defendant no.2 pleaded that the contract of printing was between the respondent no.1/plaintiff and the respondent no.2/defendant no.1, the respondent no.2/defendant no.1 in its written statement pleaded that the contract was between respondent no.1/plaintiff with the appellant/defendant no.2 and not with the respondent no.2/defendant no.1.

4. After pleadings were complete the trial court framed the following issues:-

“1. Whether there is privity of contract between the plaintiff and Defendant No.1? O.P.P.

2. Whether there is privity of contract between the plaintiff and Defendant No.2? O.P.P.

3. Whether the Plaintiff is entitled to recover the suit amount, if so, from whom?

4. Whether the Plaintiff is entitled to interest, if any, if so, at what rate?

5. Whether this Court has territorial jurisdiction to try this suit as Defendant No.1 is running his business in Gujarat? O.P.P.

6. Reply.”

5. Before this Court learned counsel for the appellant/defendant no.2 argued that there cannot be a privity of contract of respondent no.1/plaintiff with both the appellant/defendant no.2 and respondent no.2/defendant no.1 inasmuch as privity of contract can only be with one person i.e the contract is entered into only with the person upon whom is placed the order of printing by the respondent no.2/defendant no.1. It is argued that once the respondent no.1/plaintiff itself pleaded in the amended plaint that the appellant/defendant no.2 was only acting as the agent of the respondent no.2/defendant no.1, in such a situation the agent appellant/defendant no.2 cannot have privity of contract and it is always the principal who is liable once the principal is a disclosed principal in v