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1974 Supreme(Mad) 478
Madras High Court
RAMAPRASADA RAO,RATNAVEL PANDIAN
Pudukottah Textiles Ltd. - Appellant
Versus
B.R.Adityan - Respondent
Decided On : 11/05/1974
V. Shanmugham, for Appellants; M.R. Narayanaswami and V. Shyamalam, for Respondent.
An agent is not personally liable for the acts done by him for and on behalf of his principal and in which he had no interest or secured a benefit.
Headnote:
CONTRACT - SALE OF GOODS - NO CONCLUDED CONTRACT - ADVANCE PAID BY PLAINTIFF - RETURN OF ADVANCE - LIABILITY OF PRINCIPAL AND AGENT - SECTION 230 OF THE INDIAN CONTRACT ACT, 1872.
Fact of the Case:
Plaintiff offered to purchase textile machinery from defendants subject to certain conditions. Defendants formally accepted the offer but imposed additional conditions. Plaintiff made a fresh offer, which was not accepted by defendants. Defendants made a counter-offer, which was not accepted by plaintiff. Plaintiff withdrew the offer and demanded the return of the advance paid. Defendants encashed the cheque for the advance and claimed that the contract was concluded and the advance was forfeited due to breach by plaintiff.
Finding of the Court:
There was no concluded contract between the parties as there was no consensus ad idem. The encashment of the cheque for the advance by defendants was premature. Plaintiff was entitled to a decree for the return of the advance.
Issues: 1. Whether there was a concluded contract between the parties? 2. Whether the plaintiff is entitled to recover the suit amount from the defendants? 3. Whether the plaintiff has committed breach of contract and hence the advance amount of Rs. 25,000 paid by him to the defendants is forfeited? 4. Whether in any event, the claim for interest at 12 per cent. per annum is untenable? 5. To what relief, if any, is the plaintiff entitled?
Ratio Decidendi: 1. An agent cannot personally enforce contracts entered into by him on behalf of his principal, nor is he personally bound by them in the absence of a contract to the contrary (Section 230 of the Indian Contract Act, 1872). 2. The second defendant, as the Director-in-charge of the first defendant company, was acting as its agent in the matter of the alleged suit contract. 3. The second defendant received the advance for and on behalf of the first defendant and did not receive any benefit from the so-called contract. 4. The plaintiff could only obtain relief as against the first defendant, who is the principal in the bargain, and not as against the second defendant, who is an agent to such a principal.
Final Decision: The appeal was partly allowed. The decree of the trial court was modified and the suit was decreed against the first defendant with costs. The suit against the second defendant was dismissed, but there was no order as to costs.
RAMAPRASADA RAO, J.:- The defendants, who failed in the City Civil Court, Madras in O. S. No. 4362 of 1967, are the appellants. The first defendant is Pudukottah Textiles Ltd, which was represented for all purposes in this action as well as in the correspondence by its Director-in-charge, Narayana Chettiar, who is the second defendant in the suit. In June 1965, the defendants caused a publication to be made in regard to the sale of certain textile machineries belonging to them. The plaintiff in response to the said advertisement, offered, after inspection, to purchase the said machineries for a sum and consideration of Rs. 2,50,000 but made the offer subject to the following conditions.
1. The licence from the Textile Commissioner should be got by the defendants and endorsed in favour of the plaintiff.
2. The time for taking delivery of the machinery and payment of a sum of Rs. 2,25,000/- after adjusting the sum of Rs. 25,000 paid as advance by the plaintiff should be on or before 31st May, 1966.
3. The defendants should encash the cheque for Rs. 25,000 if they agreed to the above conditions.
2. The defendants formally accepted the offer by a telegram, but followed it up by a letter stating that the offer has been accepted on condition that the machinery should be taken delivery of on or before 8th May, 1956, on payment of the sum of Rs. 2,25,000/-. The acceptance was also conditioned by the fact that the offer was subject to the permission being granted for the sale of the machinery by the Madras Industrial Investment Corporation. As the defendants did not in toto accept the offer and the conditions imposed thereon by the plaintiff, the plaintiff wrote under Exhibit P-9 stating that the terms were not acceptable to them; but again they made a fresh offer under it subject to almost all the conditions referred to above excepting that the date by which the balance of the consideration has to be paid and the machinery taken delivery of would be 15th of July, 1966. Here again, a formal confirmation was made by the defendants under Exhibit A-10, which was followed up by Exhibit A-11, which stated that a sum of Rs. 1,00,000/- at least should be paid on or before 31st May, 1966 and the balance on or before 15th July, 1966. This counter-offer made by the defendants was not acceptable to the plaintiff. Therefore, under Exhibit A-12 the plaintiff withdrew their offer and called upon the defendants to return the advance of Rs. 25,000/- paid by them by a cheque, which cheque apparently, the defendants encashed without adverting to the conditions under which the cheque was tendered by the plaintiff to the defendants. As the defendants did not return the said advance, the plaintiff followed up the correspondence by a lawyer's notice Exhibit A-13 demanding the payment of the same, which evoked a reply from the defendants under Exhibit A-14 to the effect that the contract was concluded and that the sum of Rs. 25,000/- was forfeited because of the breach committed by the plaintiff. The following issues were framed for trial on the pleadings as above.
1. Whether the plaintiff is entitled to recover the suit amount from the defendants?
2. Whether there was no concluded contract at any time?
3. Whether the plaintiff has committed breach of contract and hence the advance amount of Rs. 25,000 paid by him to the defendants is forfeited?
4. Whether in any event, the claim for interest at 12 per cent. per annum is untenable?
5. To what relief, if any, is the plaintiff entitled ?
The learned Judge held that there was no concluded contract between the plaintiff on the one hand and the defendants on the other and ultimately he decreed the suit as against both the defendants with costs. It is as against this, the present appeal has been filed.
3. From the correspondence it is seen that the second defendant always signed the letters which emanated from the defendants for and on behalf of the first defendant and as its Director-in-charge. On a fair reading of
