LOON KARAN SOHAN LAL Vs. FIRM JOHN AND CO
LAWS(ALL)-1965-3-8
HIGH COURT OF ALLAHABAD
Decided on March 12,1965

LOON KARAN SOHAN LAL Appellant
VERSUS
FIRM JOHN AND CO. Respondents


Referred Judgements :-

TOWLE (JOHN) AND CO. V. WHITE [REFERRED TO]
LIVINGSTONE V. ROSS [REFERRED TO]
MICHELINE TYRE CO. V. MACFARLANE (GLASGOW) LTD. [REFERRED TO]
KITSON V. KING (P.S.) AND SON,LTD. [REFERRED TO]
LAMB (W.T.) SONS V. GORING BRICK CO. [REFERRED TO]
SURYAPRAKASARAYA V. MATHESON'S COFFEE WORKS [REFERRED TO]
BANARAS BANK V. RAM PRASAD [REFERRED TO]
PHOOL CHAND V. AGARWAL B.M. CO. [REFERRED TO]



Cited Judgements :-

PAWAN HANS HELICOPTERS LTD VS. AES AEROSPACE LTD [LAWS(DLH)-2008-4-19] [REFERRED TO]
COMMISSIONER TRADE TAX VS. S S RAMAPATI TEWARI JAINATH TEWARI [LAWS(ALL)-2004-8-12] [REFERRED TO]
JAGRAN PRAKASHAN LIMITED VS. DEPUTY COMMISSIONER OF INCOME TAX TDS [LAWS(ALL)-2012-5-226] [REFERRED TO]
CHIEF TREASURY OFFICER VS. UNION OF INDIA [LAWS(ALL)-2013-3-66] [REFERRED TO]
PARMOD KUMAR & COMPANY & ORS VS. HARYANA WARE HOUSING CORPORATION & ANR [LAWS(P&H)-2012-5-600] [REFERRED]


JUDGEMENT

Dhavan, J. - (1.)I agree with the conclusions of my learned brother that the plaintiff-appellant has not established any liability on the part of the fifth defendant Sethiya and Co. I would like to add a few reasons of my own by way of supplementing those of my learned brother. Mr. Misra argued the appellant's claim against this defendant in the alternative. First he contended that Sethiya and Co. were liable in damages to the appellant for non-delivery of 152 bales of yarn to the defendant and for the refund of the price. But this liability could only arise under a contract, and the evidence does not disclose any contract between the appellant and Sethiya and Co. The contract of sale was with John and Co., not with Sethiya. The appellant cannot hold the latter liable unless he can establish privity of contract with that firm. The principle of law is so simple as to be elementary. If a person makes an agreement of purchase of goods with another paying the price in advance, and the seller directs his agent or stockist or pledgee to deliver the goods to the purchaser from the stock in his possession, and the agent fails or refuses to deliver them, the purchase is against the seller and not against the seller's agent, because the latter is under no obligation or liability to him. In the present ease Sethiya and Co. were no party to the agreement of sale of yarn, and under no obligation to the plaintiff to deliver the bales to him. They may or may not be liable for their alleged default to John and Co. under some other agreement, but they are under no liability to the plaintiff.
(2.)MR. Misra then argued that Sethiya and Co. were or became, the agents of the plaintiff to receive delivery of the goods on behalf of the plaintiffs and deliver these to him, and as they failed to do so, they are liable in damages for breach of duty as agents. The short answer to this argument is that no agreement of agency between the parties, express or implied, has been established. It was not the plaintiff's case that Sethiya and Co. were his agents and no issue was framed on this point.
Mr. Misra then argued that Sethiya and Co. arc liable to the plaintiff for wrongful conversion of 152 bales belonging to him. But to establish conversion, the plaintiff had to prove that he was the owner of 152 bales which were misappropriated by this defendant. To establish ownership he had to prove that the property in the goods lying in the custody of Sethiya and Co. had passed to him. The contract was for the sale of 600 bales of yarn--in other words, a contract for unascertained goods. In such a contract, the property in the goods does not pass to the buyer unless and until the goods are ascertained and unconditionally appropriated to the contract and the buyer has notice of Ibis fact. In this case it is established that Sethiya and Co. were financing John and Co. and were the pledgees of all the yarn manufactured by the latter. They had in their possession more than 152 bales of yarn. In order that properly in 152 bales could pass to the plaintiffs. Sethiya and Co had to set apart 152 bales out of a larger number and appropriate it to the contract. There is no evidence of this appropriation. Learned counsel pointed out that the defendant Sethiya, in his account books, debited John and Co. with the amount of commission on the sale of 600 bales to which he was entitled on every sale made by the Company under the financing agreement. He argued that he could not have charged it without appropriating the goods to the contract because the commission accrued only when the sale was complete. I do not think Sethiya's inclusion of the amount of commission in his account with John and Co. necessarily leads to this inference. He might have charged it on learning of the agreement of sale. John and Co. owed him a large sum of money and he was anxious to get back as much of his dues as he could, and it is not unlikely that he was not particular about the time when he should charge the commission. At any rate, the Court cannot presume from the entry relating to the commission that 152 bales in dispute were unconditionally appropriated by Sethiya to the contract or the property in them passed to the plaintiff. The plaintiffs' claim under conversion fails.

I shall now consider the plaintiff-appellants' case against the eighth defendant, the Government of Assam Mr. Misra argued that the plaintiff was appointed by the Assam Government as their agent to perform the duties of procuring yarn and if in the performance of his duties as agent he suffered loss he is entitled under Sections 222 and 223 of the Contract Act to be reimbursed by the Assam Government as principal. According to learned counsel, the plaintiffs position under the agreement with the Assam Government (Ex. C-1) was that of an agent, and that of the Government of principal Counsel pointed out that the Assam Government had described as their agent in the agreement which begins thus: "This agreement made between the Governor of Assam represented by the Additional Secretary in the Department of Supply (Textile) hereinafter called the Govt. of the one part and M/s Loonkaran Sohanlal hereinafter called the agent of the other part. The agent has been appointed for the purpose of procuring yarn for the month of August and September 1948 on the following terms and conditions."

(3.)THUS the Assam Government described the plaintiff as 'agent' not only in the preamble but each paragraph. Paragraph 4 enjoins that "the agent shall sell and deliver yarn to such persons at such place or places within the province of Assam and in such of the States as may be approved by the Government"; paragraph 5 provides that "the agent shall purchase at prices which are fixed by law": paragraph 6 provides that "the agent shall keep all stocks of yarn", Paragraph 8 that "the agent shall accept full responsibility for any shortage, deterioration, loss of, or damage to the yarn procured and despatched", paragraph 9 that "the agent shall at his own expense arrange for maintaining an office", and paragraph 10 that "the agent shall in all respects occupy with all directions and orders which from time to time may be given to the agent by the Government." Mr. Misra also relied on the correspondence between the Assam Government and the Textiles Commissioner in which the plaintiff was described by the Assam Government as their 'agent.' He relied on the government's letter Exhibit 47 in which it wrote to the Textiles Commissioner that "our yarn procuring agent had complained that he had not been given delivery of all the bales released in his favour by the Com- missioner." A copy of this letter was sent to the plaintiff at the time. Learned counsel argued that the words of the agreement and the letters of the government describing the plaintiff as their agent is conclusive proof of a relationship of agency; and in the alternative, these documents estop the Assam Government from denying this relationship or the plaintiffs status as their agent. But in my opinion the description of the plaintiff in the agreement Ex. C-l and in the letter Ex. 47 as the agent of the Assam government is not conclusive. The court must examine the true nature of the agreement and the subsequent dealings between the parties, and then decide whether it established a relationship of agency under the law. It is common experience that the word 'agent' is frequently used to describe a relationship which is not an agency in law. In several cases, a person described as an agent in the agreement or his letter of appointment was held to be not an agent according to law. Some of these cases are cited in Halsbury's Laws of England, 3rd edition, Vol. 1 p. 146, in a foot-note to the following observation: "351. Agency Depends on True Nature of Relationship In order to ascertain whether the relation of agency exists, the true nature of the agreement or the exact circumstances of the relationship between the alleged principal and agent will be regarded and if it is found that such agreement in substance contemplates the alleged agent acting on his own behalf, and not as an agent in the agreement, the relation of agency will not have arisen."
The cases cited in the foot-note are: Re Nevill, Ex parte White, (1871) 6 Ch. App. 397; Towle (John) and Co v. White, (1873) 29 LT 78; Livingstone v. Ross. 1901 AC 327; Micheline Tyre Co. v. Macfarlane (Glasgow) Ltd., (1917) 55 Sc L. R. 35; Kitson v. King (P. S.) and Son, Ltd. (1919) 36 T. L. R. 162, Lamb (W T.) and Sons v. Goring Brick Co. (1932) K. B. 710.

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