An agent's authority to recover amounts on behalf of a principal is valid if expressed or implied, and consideration can exist without direct exchange between the parties.

J U D G M E N T

The decree in a suit for money is under challenge by the defendant.

2. The plaintiff’s case is as follows:- The plaintiff, his brother-in-law Reesul Islam, and the defendant were employed at Saudi Arbia. There were some business dealings between the defendant and Reesul Islam. They decided to wind up their arrangement. It was agreed that the amounts payable by the defendant to Reesul Islam was ` 11 lakhs. Out of the said amount, a sum of ` 5 lakhs was payable on 30.08.2006. The balance ` 6 lakhs was to be paid on or before 30.03.2007. As per the agreement, the amounts were to be paid to the plaintiff on behalf of Reesul Islam. Recording the above, an agreement was executed on 07.07.2006 between the plaintiff and the defendant (Ext.A1). Along with the agreement, a blank cheque of the defendant bearing No.095632 of the Canara Bank, Manjeri Branch, which was with Reesul Islam was also handed over to the plaintiff. From out of the amounts payable, only ` 4,40,000/- was paid by the defendant. It is for realisation of the balance amount with interest that the suit has been filed.

3. The defendant filed a written statement denying Ext.A1 agreement. It was contended that, while at Saudi Arabia, he had borrowed 35000 Riyals equivalent to ` 4,18,250/- from the plaintiff's brother-in-law Reesul Islam. Towards security for the same, signed blank stamp paper and white paper, as well as a cheque were handed over to him. Though the borrowed amount was repaid with interest, the signed papers and cheque were not returned stating that they were misplaced. The agreement in question has been created misutilising the said documents. Accordingly, defendant prayed for dismissal of the suit.

4. The trial court upheld Ext.A1 and accordingly decreed the suit.

5. Heard Sri.Rajesh R. Kormath, the learned counsel for the appellant and Sri.T.K.Saidalikutty, the learned counsel for the respondent.

6. The contention urged by the learned counsel for the appellant are :-

(i) The plaintiff has sued as the agent of Reesul Islam. However, there is no document evidencing such authorisation. Hence the suit is not maintainable in view of Section 230 of the Contract Act.

(ii) Ext.A1 agreement is not supported by consideration.

(iii) The evidence on record proves that signed blank papers were misutilised to create the suit document.

Section 230 of the Contract Act reads thus:-

“230. Agent cannot personally enforce, nor be bound by, contracts on behalf of principal.⸻In the absence of any contract to that effect, an agent cannot personally enforce contracts entered into by him on behalf of his principal, nor is he personally bound by them.”

As is evident therefrom, an agent is disabled from enforcing contracts entered on behalf of the principal unless authorised. Section 186 of the Act provides that the authority of an agent may be express or implied. On a reading of the plaint and the deposition of the plaintiff it is possible to construe that the plaintiff was suing for recovery of amounts due to his brother-in- law Reesul Islam. The very recitals in Ext.A1 agreement itself indicates that the plaintiff is given authority in terms of Section 186 to recover the amount. The defendant has agreed to the same under Ext.A1. Therefore, after execution of Ext.A1, it is not open for the defendant to challenge the authority of the plaintiff to recover the amounts. Therefore, the said contention fails.

7. If the plaintiff is not suing as an agent but in his personal capacity as the creditor, then the agreement Ext.A1 is unsupported by consideration since no consideration has passed between the plaintiff and the defendant; hence the suit is not maintainable, is the next contention urged. Relying on the judgment of the Apex Court inChidambara Iyer and Ors. v. P.S. Renga Iyer and Ors 1966 SC 193, the learned counsel for the appellant would contend that, the consideration as defined in Section 2(d) of the Contract Act must be something which the law regards as having value. In t