Applicability of the provisions of Articles 120, 36 and 90.

These two appeals arise out of two suits filed by the appellant, the India Sugar Refineries, Ltd., by its Director and Managing Agent, T. Padmanabhan, for recovery of sums of money from the estate of one V. Ramalingam, who was a director of the company and also its sole managing agent from 16th November, 1936, till the date of his death 18th December, 1942. The plaintiff company was incorporated under the Indian Companies Act with the principal object of manufacture of Sugar at Hospet. By its memorandum of association, Messrs. Ranganathan & Co., a partnership firm, were appointed managing agents of the company. The firm continued to hold that office till they resigned that office in or about July 1935. Subsequent to this, an agreement was entered into by the company with V. Ramalingam under which the latter was appointed its sole managing agent on terms set out in the agreement. V. Ramalingam as the managing agent was entitled to receive a salary of Rs. 800 per mensem together with a commission of 7 per cent, per annum on the total net annual income of the company. Besides these he was also entitled to a commission in respect of work done by him in capacities other than that of a Managing Agent. More detailed reference will be made to the material terms in due course in this judgment.

In the two suits out of which these appeals arise, the company claimed various amounts on the ground that Ramalingam had wrongfully been paid those amounts or had drawn those amounts or was otherwise liable to pay the company the amounts which he had received. The learned District Judge of Bellary who tried both the suits dismissed them with costs. There was another suit which was tried along with these two, claiming more or less similar reliefs, and that too was dismissed.

In the two appeals, the learned Advocate-General who appeared for the appellant company pressed before us only certain items among the several items claimed by the company in the suits originally. In Appeal No. 766 of 1948, the learned Advocate-General pressed only one item, namely, the aggregate of the amounts drawn by Ramalingam as commission on the sales of sugar effected through him as commission agent. The fate of commission was 1½ per cent, on the price. The amount of such commission was in the aggregate Rs. 34,929-6-0. Ramalingam drew this commission in accordance with the terms of the agreement executed between the company and him. The material clause in the agreement runs as follows:

"2.(e) The said allowances and commission of 7½ per cent. shall be exclusive of and shall not include............(iii) remuneration to the agent as commission agent and selling agent for the company in relation to work as commission agent and selling agent and the work of shipping, landing, clearing and storing materials, goods and plant purchased out of and imported into India and the work of purchasing out of and importing into India materials, goods and plant for the purpose and benefit of the company which work shall be done by the agent upon such terms as to remuneration and otherwise as may be mutually agreed upon in writing from time to time."

Clause 3 of the agreement is in general terms and runs thus:

"The Managing Agent may also in addition to his duties as Managing Agent as hereunder mentioned perform any other duties and work for the company which the directors may decide and shall receive such resonable and proper remuneration for such work as shall be from time to time agreed upon between the Managing Agent and the Directors, such remuneration being in addition to the remuneration aforesaid."

It is clear that the commission in question which was drawn by Ramalingam would certainly fall within one or other of these two clauses. Article 115, clause 22 conferred on the directors of the company the power to appoint the firm of agents as brokers or selling agents of the company for the sale of sugar or other articles manufactured by the company on such terms as to remu