Ramaswami, J. - (1.) This appeal is brought against the judgment of the High Court of Madras dated December 15, 1959 in 0. S. Appeal No. 22 of 1955.
(2.) The respondent was a trader at Madras in hides and skins. The appellant was a firm, Gordan Woodroffe and Company (Madras), Limited, doing business among other things as exporters of hides and skins. For the period of 8 months commencing from January, 1949 there were as many as 101 contracts entered into between the appellant and the respondent. The case of the respondent was that he entered into an agreement with the appellant to act as agents for shipping the goods (hides and skins) to United Kingdom and for finding purchasers there. It is alleged that the appellant used to make payment to the respondent in respect of the goods sent to it for shipment in the nature of advances and he used to set off these advances when payment was made to the respondent after the goods were shipped. The respondent will hereinafter be referred to as the plaintiff and the appellant as the defendants. The plaintiff tentatively claimed a sum of Rs. 56,564/and odd as due to him as balance of the price of the goods and a further sum of Rs. 40,275/- as representing the loss sustained by him by reason of the defendants' conduct in not shipping his goods under the "Sheik mark". The plaintiff accordingly prayed that an account should be taken of the dealings between the parties for the period in question. The defendants contested the suit on the ground that it was not an agent of the plaintiff but it purchased hides from the plaintiff for export and for re-sale in the United Kingdom. The case of the defendants was that there was an outright purchase of the goods from the plaintiff for the purpose of re-sale in the United Kingdom. The defendants also contended that a sum of Rs. 4,351/- and odd was due to it from the plaintiff and it prayed for a decree against the plaintiff for that amount by way of counter-claim. The trial Judge held, by his judgment dated May 6, 1954 that the defendants were only purchasers of the goods from the respondent and the idea of agency was quite inconsistent with the nature of the transactions between the parties. The trial Judge came to the conclusion that the plaintiff was bound by the Statements of Account rendered by the defendants from time to time. After giving an opportunity to the parties to produce further evidence, the trial Judge held that since there was no fraud the accounts could not be reopened and the claim of the plaintiff with regard to Rs. 157/- in respect of the marine insurance alone was sustainable. The trial Judge accordingly dismissed the suit and decreed the counter-claim of the defendants after deducting the said sum of Rs. 157/-. The plaintiff preferred an appeal to the High Court of Madras under the Letters Patent. By its judgment dated December 15, 1959 the High Court reversed the decision of the trial Judge and held that the defendants acted as del credere agents of the plaintiff for effecting the sale of the plaintiff's goods in United Kingdom. On this basis the High Court decreed the plaintiff's suit and directed the taking of accounts, as prayed for, from the defendants, though in respect of some of the items the claim of the plaintiff was negatived. The High Court also held that the plaintiff was liable to pay to the defendants the amount claimed by them by way of counter-claim.
(3.) The first question presented for determination in this case is whether the defendants were acting as del credere agents of the plaintiff or whether the defendants were outright purchasers of the goods supplied to them by the plaintiff. In the approach to this question it is necessary to notice the distinction between a contract of sale and a contract of agency. The essence of sale is the transfer of the title to the goods for price paid or to be paid. The transferee in such case becomes liable to the transferor of the goods as a debtor for the price to be paid and not as agent for the proceeds of the sale. On the other hand, the essence of agency to sell is the delivery of the goods to a person who is to sell them, not as his own property but as the property of the principal who continues to be the owner of the goods and who is therefore liable to account for the proceeds. The true legal relationship between the parties in the present case has, therefore, to be inferred from the nature of the contract, its terms and conditions and the nature of respective obligations undertaken by the parties.;