Civil Appeal No 212 of 1959
Appeal from the judgment and decree dated March 1 1957 of the calcutta High Court in appeal from original Decree No 71 of 1954
G section Pathak and Naunit Lal for the appellants
A V Viswanatha Sastri section N Andley Rameshwar Nath and P L Vohra for the respondent
October 13
The Judgment of the Court was delivered by GAJENDRAGADKAR J
This appeal by a certificate granted by the Calcutta High Court arises out of a suit filed by the three appellants against the respondent to recover Rs 83640 
The three appellants are respectively the Firm Radhakrishan Shivdutt Rai which carries on business at Banaras and RamKumar Lal for himself and as karta of his joint family as well as Madan Gopal for himself and as karta of his joint family the latter two being 83 the partners in the first mentioned Firm Radhakrishna Sivadutta Rai for convenience we will refer to the partnership firm hereafter as the appellant
The respondent Tayeballi Dawoodbhai is a partnership firm which carries on business at Calcutta
The appellant s case was that the appellant and the respondent had entered into a contract in the first instance on December 18 1980 through brokers named T N Mehrotra  co
Calcutta
This contract was later confirmed by two letters written respectively on January 3 and 15 1951 by the appellant to the respondent and replied to by the respondent
By this contract the respondent agreed to sell 1000 bales of Banaras Hemp particulars of which were set out in the plaint
According to the appellant by a letter written on March 14 1951 the appellant in part performance of the said contract accepted delivery of 110 bales of Banaras Hemp No 1 and 50 bales of Banaras Hemp No 2 this delivery was Made by the respondent to L N Poddar  Co who acted as the agent of the appellant and Paid the price of the said 160 bales
In they transaction the respondent realised Rs 3840 from the said I
N Poddar  Co in excess of the actual price of the goods delivered to the said company
Inspite of the repeated demands made by the appellant the respondent failed to deliver the balance of the goods contracted for and thus committed breach of the contract
That is how the appellant claimed Rs980j as difference between the market rate on March 31 1951 and the contract rate of the balance deliverable under the contract in suit
This amount was claimed as damages for the breach of contract
In addition an amount of Rs 3840 was claimed as having been paid in excess of tho value of 160 bales delivered to L N Poddar  Co on behalf of the appellant
This claim was resisted by the respondent on several grounds
The principal contention urged by the respondent however was that in relation to 84 the contract in suit the appellant had acted as agent for its disclosed principal Messrs Khaitan and Sons Ltd and as such it was not entitled to bring the present suit
The respondent further alleged that the said disclosed principal Messrs Khaitan and J Sons had settled all their rights and loams under the suit contract with their agent and so the present claim for damages was not maintainable
In regard to the claim for Rs 3840 tho respondent pleaded that the appellant s case was untrue
Several other pleas were also raised but with the said pleas we are not concerned in the present appeal
Mr Justice Bose who tried the suit framed twelve issues
On the principal point in controversy between the parties the learned judge found that the appellant had entered into the contract with the respondent on its own account and not on account of the disclosed principal as alleged by the respondent
According to the learned judge the reference to Messrs Khaitan and Sons Ltd made in the bought and sold notes on which the respondent s plea was based had been inserted by the brokers by mistake or due to some misconception
 The learned judge also found that the respondent had committed a breach of the contract as alleged by the appellant
The appellant s case with regard to the excess payment of Rs 3840 made by L N Poddar  co was however held not to have been proved
In the result a decree was passed in favour of the appellant for Rs 79800 along with interest as stipulated in the decree
Against this decree the respondent preferred an appeal and the main point which was urged on its behalf was directed against the finding of the trial judge that the contract had been entered into by the appellant for itself and not on account of the disclosed principal
This contention was based in the Court of Appeal as in the trial court on the bought and sold notes and it was urged that 85 the bought and sold notes clearly showed that the appellant had entered into the contract on account of the disclosed principal Messrs Khaitan and Sons Ltd
Before the Appellate Court the respondent s case was that the said bought and sold notes constituted the terms
Of the contract and no other evidence was relevant and admissible in order to determine the said terms
Das Gupta J upheld this
In his opinion the bought and sold notes issued by the brokers Constituted the sole basis for the terms
Of the contract and the two letters subsequently written on January 3 and 15 1951 were inadmissible and irrelevant for the purpose of determining the said terms of the contract
Tho learned judge however considered tho matter also on the alternative basis
that the said letters could be considered for ascertaining the terms
Of the contract and came to the conclusion that can reading the said letters and the bought and sold notes together the result was the same namely that the contract had been entered into by the appellant on behalf of the disclosed principal
Bachawat J differed from Das Gupta J on the question about the relevance and admissibility of the two subsequent letters
According to him the two bought and sold notes
and the two letters between them constituted the terms of the contract
He was inclined to take the view that the letters could not be regarded as inadmissible or irrelevant
Reading the four documents together the learned judge
however agreed with the conclusion alternatively recorded by Das Gupta J and held that the four documents supported the respondent s plea that the appellant had entered into the contract on behalf of the disclosed principal
Both the learned judges agreed in holding that there was no evidence to support the appellants plea that the reference to the principal made in the bought and sold notes was a result of any mistake
On these findings the decree passed by the trial court was reversed and the appellant s suit Was ordered to be dismissed
86 In regard to the costs however the Appellante Could took the view that the point raised before the Appellate Court about the effect of the bought and field notes had not been specifically mooted before the trial court and that several other pleas raised by the respondent were found by the trial court to be false and so the proper older as to costs would be that each party should bear its costs throughout
After this judgement was delivered the appellant applied for and obtained a certificate from the High Court and it is with the said certificate that the present appeal has been brought before this Court
On its behalf Mr Pathak has strenuously contended that the Appellate Court was in error in coming to the conclusion that the contracts in suit had been entered into by the appellant on behalf of the disclosed principal Messrs Khaitan  Sons Ltd Banaras
For the purpose of deciding this point we propose to assume in favour of the appellant that the terms of the contract may be gathered from the two bought and sold notes on which the respondent relies as well as the two subsequent letters on which the appellant relies
It would be convenient at this stage to set out the said documents
We will first refer to the brokers  notes and the confirmation slips in respect thereon
This is how the brokers  notes read T N Mehrotra and Co No 377 Hemp Oil and Oil Seedh Pollock House Brokers
3rd Floor 28 A Pollock Street
Any dispute in connection with this deal is subject to Arbitration by Bengal Chamber of Commerce
Calcutta 18 12 1950
87 Radhakrishna Sivadutta Rai Ac Khetan and Sons Ltd Shewpur Banaras
Dear Sirs We confirm having purchased on your account and risk under noted goods from Messrs Tayeballi Dawoodbhai 20 Zakaria Street Calcutta
Commodity 500 five hundred bales of Banaras No 1 only with Agmark JanMarch 51 at K P Docks  Rs 165 per bale of 400 lbs
each on receipt of the goods
Yours faithfully For T N Mehrotra and Company Sd
T N Mehrotra
Sales Tax number should be furnished by the Buyers otherwise to be charged T N Mehrotra and Co No 378 Hemp oil and oil Seeds Pollock House Brokers 3rd Floor Bank 4718 29 A Pollock street Tel BK 1914 Calcutta 18 12 50
Any dispute in connection with this deal is subject to arbitration by Bengal Chamber of Commerce
To Ms Tayeballi Dawoodbhai 20 Zakaria Street Calcutta
Dear Sirs We confirm having sold on your account and risk the under noted goods to Ms Radakrishan Shiv Dutt Rai with A G Mark
Ac Khetan and Sons Ltd Shewpur Banaras
Commodity 500 Five hundred Bales of Banaras No 1 only with A G Mark
88 Delivery JanMarch 1951 at K P Dock
Price  Rs 165 per bale of 400 Ibs
Terms of Payment on receipt of goods
Brokerage 0 8 O per bale
Sales Tax number should be finished by the buyer otherwise to be charged
Yours faithfully For T N Mehrotra  Co Sd
T N Mehrotra To Ms T N Mehrotra  Co Calcutta
We acknowledge receipt of your purchase confirmation memo No 377 dated 18 12 50
Signature Gopal Lal Gupta For Radhakrishna Shivadutta Rai To Ms T N Mehrotra  Co Calcutta
We acknowledge receipt of your purchase confirmation memo
No 378 dated 18 12 50
Signature Gopal Lal Gupta For Radhakrishna Sivadutt Rai
The said confirmation slips were signed by Gopal Lal Gupta for the firm of Radhakrishna Shivdutt Rai
 After the said notes were sent by the brokers to the respective parties Gopal Lal Gupta on behalf of the appellant wrote a letter to the respondent on January 3 1951 and on January 15
1951 the respondent wrote a letter to the appellant
These letters read at follows Messrs Tayeballi Dawoodbhai 3 1 51 20 Zakaria Street Calcutta
Dear sirs We have boughS from you one thousand bales of Banaras Hemp through Messrs T N Mehrotra  Co 28 A Pollock Street Calcutta on the following terms 89 1 500 Five hundred bales Banaras No 1 with agmark  Rs 166 one hundred and sixtyfive per bale of about 400 lbs
delivery K P Docks during JanuaryMarch 1951
2 500 Five hundred bales Banaras No II with agmark  Rs 145 one hundred and fortyfive per bale of about 400 lbs
delivery E P Docks during JanuaryMarch 1951
Please note and confirm
Yours faithfully for Radhakrishna Shivdutt Rai Sd
Gopal Lal Gupta Tayoballi Dawoodbhai 20 Zakaria Street Registered
Calcutta 1
Calcutta 15th January 1951
Messrs Radhakrishna Shivadutt Rai Banaras
Dear Sirs We confirm having sold to you through Messrs T N Mehrotra  Co Calcutta 1000 one thousand bales of Banaras Hemp as follows i 500 Five hundred bales Banaras Hemp No I with Agmark at Rs 165 per bale of about 400 Ibs
delivery K P Docks during JanuaryMarch 1951
ii 500 Five hundred bales Banaras Hemp No II with Agmark at Rs 145 per bale of about 400 lbs
K P Docks delivery during JanuaryMarch 1951
This confirms your letter of 3rd instant
Yours faithfully for Tayeballi Dawoodbhai
x x Partner
Copy to Messrs T N Mehrotra  Co Calcutta and to Gopinath Mehrotra Banaras Mr Pathak contends that in construing the effect of the relevant documents we should not 90 attach any importance to the reference to Khaitan  Sons made in the bought and sold notes for the simple reason that the said reference is the result of a mistake or misconception on the part of the brokers
In that connection he contended that the J finding recorded by the trial court on the issue of mistake should be accepted by us and not the finding made by the Appellate court
We are not impressed by this argument
In regard to these notes we have the evidence of Trilokinath and Gopinath on behalf of the brokers which negatives the theory of mistake or misconception
Trilokinath has stated on oath that when he got the offer from the respondent he telephoned to his brother Gopinath who is a broker in respect of hemp of the firm of Sewnath Gopinath and he told him about the offer
Gopinath then informed Trilokinath that the offer was closed either on the 16th or on the morning of the 17th
This information was received by Trilokinath from Gopinath on the telephone
Trilokinath was then asked about the information that his brother gave him and he stated that his brother told him that the offer which he had communicated to him in respect of 1000 bales at Rs 165 and
Rs 145 had been sold by him to Khaitan Sons  Co Fibre Ltd He also added that he received another message from his brother either on the 18th or on the night of the 17th to prepare a contract so that it will be Khaitan  Sons through the appellant Thus it is clear that the evidence of Trilokinath if believed clearly shows that there could be no mistake or misappreciation on the part of the brokers when the notes referred to Khaitan  Sons as principal in respect of the transaction
Gopinath substantially corroborated the evidence given by Trilokinath
He stated that when he got the offer from his brother Trilokinath he went to Deokinandan who was working for Khaitan  Sons and it was after discussion with Deokinandan thatthe souda was closed as one on behalf of Khaitan  Sons
Having thus closed this 91 contract with Deokinandan who represented the principal Khaitan  Sons Gopinath told Trilokinath to close the offer and asked him to prepare the note showing that the appellant was acting as agent for the disclosed principal Khaitan  Sons
Reading the evidence of the two brothers who worked as brokers in respect of the transaction in suit it is clear that any possibility of a mistake or misappreciation is wholly excluded
On behalf of the appellant Gopal Lal Gupta has given evidence
He attempted to explain away the fact that he did not protest against or object to the insertion of the name of Khaitan  Sons in the notes by suggesting that when he signed the confirmation slips after receiving the notes he had not noticed the reference to Khaitan  Sons
His case was that the purchase had been made by the appellant for itself and not for any other firm and the suggestion he made was that if he had noticed that the notes had made reference to Khaitan  Sons he would either have insisted upon the said name being deletel or would not have concluded the contract but when his statement that he did not notice the reference to Khaitan  Sons was tested in cross examination Gopal Lal was shaken and he had to admit that when he signed the confirmation slip he may have noticed the reference to Khaitan  Sons but he did not read the document attentively
He was however forced to concede that he had gone through the note before he signed the confirmation slip
It was under stress of cross examination that Gopal Lal incidentally mentioned that the reference to Khaitan  Sons may have been made by mistake
It is obvious that Gopal Lal s evidence which otherwiee suffers from the infirmity that it is full of contradictions cannot be accepted on the question of mistake because his explanation about his conduct in signing the confirmation slips considered by itself is wholly unsatisfactory
Therefore in our opinion the Appellate Court was fully justified in 92 reversing the finding of the trial court on this point and in coming to the conclusion that the reference to Khaitan  Sons which the notes made was no the result of any mistake or misconception In this connection it may be relevant to refer to the attitude adopted by the appellant when the dispute arising between the parties in the present contract had gone before the Bengal Chamber of Commerce for adjudication
In those proceedings the respondent had raised the same plea that it has raised in the present suit
It was urged on its behalf that the appellant was not entitled to make ally claim on the contract because it had entered into the contract on behalf of a disclosed principal and on its account
Apparently that plea appears to have been accepted and the arbitration proceedings therefore ended as being without jurisdiction
In meeting the plea raised by the respondent it is significant that the appellant thought it fit to urge that the respondent s allegation that the appellant was the agent of one Khaitan  Co was not correct and that there is no firm or company known as Khaitan  Co Or Khaitan  Sons Ltd or Khaitan  Sons in Shewpur Banaras
The appellant therefore pleaded that the jurisdiction of the Chamber to entertain the case could not be disputed on that score
The appellant also alleged that the reference to Khaitan  Sons was superfluous and no importance should be attached to the said words
In the suit itself a faint attempt was no doubt made to challenge the identity of the firm Khaitan Sc Sons but Mr Pathak has very fairly not attempted to raise that point before us
It would thus be noticed that the principal point made by the appellant in the arbitration proceedings before the Chamber in respect of the reference to Khaitan  Sons in the notes was entirely frivolous no case of mistake appears to have been set out at that state
Besides as we have already pointed out there is no evidence on which a finding of mistake can be reasonably made in favour of the appellant
Therefore we 93 must proceed to consider the question about the construction of the relevant documents on the basis that the reference to Khaitan  Sons which the notes make is not the result of any mistake and has been made in the ordinary course of businesss by the brokers
Let us then consider what the effect of the bought and sold notes is according to the established custom in the mercantile world
Mr Viswanatha Sastri for the respondent contends that according to the established commercial usage if there is no variation or disparity in the bought and sold notes the bought and sold notes issued by the brokers constitute the terms of the contract between the parties for whom the brokers act
We are inclined to accept this contention
The effect of such notes issued by the brokers has been frequently considered by judicial decisions
As early as 1846 the Privy council had occasion to deal with this question in Cowie vs Remfry 1
In that case a C  Co and H Co were merchants at Calcutta
The latter sold to the former a large quantity of indigo through the medium of a broker who drew up a sold note addressed to H Co and submitted
it to H for his approval
H Objected to a particular word appearing in the note whereupon the broker took the sold note to C and informed him of His objection
C then struck his pen through the word objected to by H placed his initials over the erasure and returned the note to the broker
The broker then delivered it in that altered form to H  Co Next day the broker delivered to C  Co a bought note which differed in certain material terms from the sold note
In an action brought by H  Co against C  Co for the breach of the contract as contained in the sold note the Supreme Court at Calcutta was of the opinion that the sold note alone formed the contract and so it decreed the plaintiff s suit
On appeal by the defendant the Privy Council reversed 1 1846 3 MIA448 94 the finding of the Supreme Court and held that the transaction was one of bought and sold notes and Rai held that the circumstances attending C s alteration of the sold note and affixing his initials were not sufficient to make that note alone a binding contract
According to the Privy Council there being a material variation in the terms of the bought with the sold note they together did not constitute a binding contract
It would thus be seen that the Judicial Committee was dealing with a case where the bought and sold notes did not tally and so the decision was that where the bought and sold notes do not tally the sold note alone cannot constitute the terms of the contract
In dealing with this question however their Lordships referred to the mercantile custom in regard to the bought and sold notes and observed that the established usage of dealing in the mercantile world should be held in high respect the very existence of such usage shows that in practice it has been found useful and beneficial the presumption is in its favour and no departure from it is to be inferred from doubtful circumstances
That is why the Privy Council reached the conclusion that this must be considered as a transaction in the contemplation of the parties by bought and sold notes and that the contract is contained in both of the notes and not in one inevitably there being a material variation between the two notes the consequence follows from all legal principles that no binding contract has been effected
This decision shows that the mercantile usage of entering into contracts evidenced by the bought and sold notes issued by the brokers was treated by the Privy Council as well recognised
The next decision to which reference may be usefully made is the case of Sievewright vs Archibaldl
In that case again there was a variation in the bought and sold notes and the variation was material and so it was held that there was no 1   1228 1229
95 sufficient memorandum of a contract to satisfy the Statute of Frauds
In dealing with the question raised for the decision of the Court Lord Campbell C J has made certain general observations which throw considerable light on the genesis of the bought and sold notes and the effect which is ually attributed to the said notes by commercial usage
If the bought note case be considered a memorandum of the parol agreement observed Lord Campbell C J so may the sold note and which of them is to prevail  It seems to me therefore that we get back to the same point at which we were when the variance was first objected and the declaration was amended
I by no means say that where there are bought and sold notes they must necessarily be the only evidence of the contract circumstances may be imagined in which they might be used as a memorandum of a parol agreement
Where there has been an entry of the contract by the broker in his book signed by him I should hold without hesitation notwithstanding some dicta and a supposed ruling of Lord Tenterden in Thornton vs Meux M  M 43 to the contrary that this entry is the binding contract between tho parties and that a mistake made by him when sending them a copy of it in the shape of a bought or sold note would not affect its validity
Being authorised by the one to sel and the other to buy in the terms of the contract when he has reduced it into writing and signed it as their common agent it binds them both according to the Statute of Frauds as if both had signed it with their own hands the duty of the broker requires him to do so and till recent times this duty was scrupulously performed by every broker
What are called the bought and sold notes were sent by him to his principals by way of information that he had acted upon their instructions but not as the actual contract which was to be binding upon them
This clearly appears from the practice still followed of sending the bought note to the buyer and the sold 96 note to the seller whereas if these notes had been meant to constitute the contract the bought note would be put into the hands of the seller and the sold note into the hands of the buyer that each might have the engagement of the other party J and not his own
But the broker to save himself trouble now omits to enter and sign any contract in his book and still sends the bought and sold notes as before
If these agree they are held the constitute a binding contrat if there be any material variance between them they are both nullities and there is no binding contract
This last proposition though combated by the plaintiff s counsel has been laid down and acted upon in such a long series of oases that I could not venture to contravene it if I did not assent to it but where there is no evidence of the contract unless by the bought and sold notes sent by the broker to the parties I do not see how there can be a binding contract unless they substantially agree for contracting parties must consent to the same terms and where the terms in the two notes differ there can be no reason why faith should be given to the one more than the other
These observations seem to establish two propositions first that if the bought and sold notes show a material variation neither of them nor both of them taken together can be re
lied upon for the purpose of proving the terms of the contract and second if the bought and sold notes agree they are held to constitute a binding contract
To the same effect is the observation made by the Privy Council in Ah Shain Shoke vs Moothia Chettyl when Sir Richard Couch observed that Moothia Chetty one of the respondents said in his evidence he did not consider the contract as concluded until bought and sold notes were signed
He was right in this
They were the only evidence of the contract
 It is in the light of this legal position that we must consider the effect of the bought and sold 1 1899 L R 27 IA 30 97 notes in the present case
The notes referred to the appellant and added AC Khaitan  Sons Ltd There is no disparity in the notes at all and so the two notes can be safely taken to evidence the terms of the contract
When along with the name of the appellant the notes specifically refer to a Khaitan  Sons Ltd with the preceding words Ac   there can be no doubt that the appellant is shown by the notes to be acting on account of the disclosed principal
The appellant realised that the effect of the reference to Khaitan  Sons in the notes would inevitably be to support the plea of the respondent that it was not entitled to bring the present action and so it pleaded that the said reference was the result of a mistake
Therefore there can be no doubt that if the material question had to be considered in the light of the bought and sold notes alone the appellant was acting on behalf of the disclosed principal and on the contract thus entered into it had no right to sue end can claim no cause of action in its favour
In Gadd vs Houghton 1 James L J Observed when a man says that he is making a contract on account of  some one else it seems to me that he uses the very strongest terms the English language affords to show that he is not binding himself but is binding his principal
In that case fruit brokers in Liverpool gave a fruit merchant a sold note which read thus We have this day sold to you on account of James Morand  Co Valentia 2000 cases Valentia oranges of the brand James Morand  Co at 12s
per case free on board and the brokers signed the note without any addition
The purchaser brought an action against the broker for non delivery of the oranges
It was held that the words on account of James Morand  Co showed the intention to make the foreign principals and not the brokers liable and that the brokers were not liable upon the contract
It would be noticed that 11876 98 in dealing with the question about the brokers liability two points fell to be Gonsidered
The first point in support of fixing the liability with the brokers was that the brokers had signed this note without describing themselves as acting for the disclosed principals and the argument was that when a man signs a contract in his name he is prima facie a contracting party and liable and there must be something very strong on the face of the instrument to show that the liability does not attach to him
This principle was accepted by the learned judge who decided the case but it was pointed out that there was another fact which had an overriding effect and that was that the note showed that the brokers were acting for the diclosed principal and that fact clearly repelled the brokers  liability in regard to the contract
In dealing with the argument about the effect of the signature Mellish L J Observed when the signature comes at the end you apply it to everything which occurs throughout the contract
If all that appears is that the agent has been making a contract on behalf of some other person it seems to me to follow of necessity that that other person is the person liable
This is one of the simplest possible case
How can the words on account of Morand  Co  be inserted merely as a description  The words mean that Morand  Co are the people who have sold
It follows that the persons who have signed are merely the brokers and are not liable
We have referred to there observations made by Mellish L J because as we will presently point out they would be of material assistance in deciding the point which Mr Pathak has raised on the strength of the two subsequent letters
Thus the bought and sold notes in this case unambiguously indicate that the appellant was acting for a disclosed principal and the contracting party was the disclosed principal and no other
It is however urged by Mr Pathak that before determining the terms of the contract and the 99 parties to it we must read the notes in question along with the two letters
We have already seen the sequence of the documents
First the notes were delivered by the brokers to the appellant and the respondent
Then the respective parties filed confirmation slips and then followed the two letters exchanged between them
Mr Pathak contends that in its letter addressed to the respondent the apellant has definitely stated that they  had bought from the respondent 1000 bales in question
Mr Pathak places considerable emphasis on the use of the word we without reference to the principal and he also relies on the fact that the letter is signed by the appellant without describing itself as acting on behalf of the principal already disclosed
Similarly he relies on the statement of the respondent s letter to the appellant that the respondent had sold to the appellant to you the bales in question
According to Mr Pathak the significance of these letters should not be underestimated in determining the parties to the contrat
There is no doubt and indeed it is a matter of common ground before us that the letters do not constitute all the terms of the contract and all that is urged by Mr Pathak is that they should be consider along with the notes
The notes refer to the fact that if any dispute arises in the deal it is subject to the arbitration by the Bengal Chamber of Commerce
They also refer to the sales tax number which is to be furnished by the buyers otherwise they would be charged
These terms undoubtedly constitute terms of the contract but the argument is that in the correspondence which took place between the parties there is no reference to the principal and indeed the correspondence proceeds on the basis that the appellant acts for itself and not for a disclosed principal and that Should be borne in mind in deciding whether the appellant was acting for tho disclosed principal or not
100 In support of his argument that the signature of the appellant to its letter of January 3 1951 and the use of the word we in the first paragraph of he letter indicate that the appellant was acting for hi itself
Mr Pathak relies on a decision of the King section Bench Division in H O Brandt  Co vs HN Morris o Ltd 1
In that case the plaintiffs who carried on business in Manchester gave to the defendants a bought note dated September 3 1914
This note was addressed to the defendants and was headed From Messrs HO Brandt  Co 63 Granby Row Manchester For and on behalf of Messrs Sayles Bleacheries Salesville Rhode Island U section A
The note stated we have this day bought from you 60 tone pure an line oil and it was signed H O Brandt  Co
The plaintiffs sued for non delivery of the oil
Their claim was resisted on the ground that they had entered into the contract on behalf of a disclosed principal and therefore were not entitled to be sued
It was held by Viscount Reading C J and Scranton L J Neville J dissenting that the plaintiffs were the contracting parties and were entitled to sue upon the contract
The majority decision was based on three grounds
The first ground was that the plaintiffs had signed the note without describing themselves as acting on behalf of the principal and so it was held following the language used by Mellish L J in the case of Gadd 2 that prima facie when a man signs a document in his own name and states therein I have this day bought from you he is the person liable on the contract
The second consideration was that the reference to the foreign principal was made in the note in order to declare the destination of the goods
There wax evidence adduced in the case to show that during wartime the destination of goods intended for export had to be made known
Therefore the reference to the foreign principal was treated as having been made for the purpose of meeting the said 1 2 18761 exhibit D 357
101 requirement and the third circumstance was that the plaintiff s statement at the head of the note that they were acting for and on behalf of a foreign principal could not get rid of the prima facie presumption that a person signing a contract in his own name is personally liable on it
It would thus be seen that the rule of construction which prescribes that if a person signs a contract prima facie he is the contracting party prevailed in that case because the reference to the disclosed principal was otherwise explained as serving another purpose altogether
The said rule of construction prevailed also for the additional reason that the plaintiffs were acting for a foreign principal
It would be remembered that 8 230 of the Indian Contract Act provides that 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
There are however three cases specified in the section where such a contract would be presumed to exist one of these cases is where a contract is made by an agent for sale or purchase of goods for a merchant resident abroad
In other words under section 230 if an agent enters into a contract for a disclosed foreign principal the main provision of section 230 will not apply because there would be a presumption that there is a contract to the contrary under which the agent would be personally bound by the contract notwithstanding the fact that he has entered into it on behalf of a foreign principal
Therefore we are not prepared to hold that the decision in the case of H C Brandt  Co 1 lays down an unqualified rule of construction on which the appellant can rely
In fact it may be pointed out that Neville J who dissented from the majority view has significantly observed that I rather gaudier that I should not have found myself in isolation on this point were it not for the fact that during the war there is an obligation to disclose the destination 1 1917 2 KB784
102 of the goods
this observation shows that reference to the disclosed principal was not given its full effect in considering the question about the liability of the agent because it was held by the majority decision that the said reference was primarily if not exclusively made for the purposes of disclosing the destination of the goods
In support of his argument that the relevant recitals in the two letters show that the contract had been entered into by the appellant on its own behalf Mr Pathak has also referred us to the statement of the law made by Bowstead on Agency
The question whether the agent is to be deemed to have contracted personally it is observed in the ease of contract in writing other than a bill of exchange promissory note or cheque depends upon the intention of the parties as appearing from the terms of the written agreement as a whole the construction whereof is a matter of a law for the Court a if the contract be signed by the agent in his own name without qualification he is deemed to have contracted personally unless a contrary intention plainly appear from other portions of the document b if the agent add words to his signature indicating that he signs as an agent or for or on behalf of a principal he is deemed not to have contracted personally unless it plainly appears from other portions of the document that notwithstanding such qualified signature he intended to bind himself
 In conclusion it is added that effect should be given to every word used and none should be rejected unless it is apparent that they have been introduce per incuriam P 266 article 116
These observations do not carry the appellant s case very for because all that they show is that in determining the question as to whether the agent has entered into the contract on behalf of the principal or not the way he has signed the document has to be considered along with the other recitals made in the relevant documents
103 What then would be the effect of the relevant recitals in the letter on which Mr Pathak relies In this connection it is necessary to recall that we are reading these letters along with the bought and sold notes and that the bought and sold notes have unequivocally and clearly indicated that the appellant was acting on behalf and on account of the disclosed principal Khaitan  Sons
If we read the letters in the light of the bought and sold notes it would be clear that the signature of the appellant will not have much significance nor would the use of the word we by the appellant or you by the respondent make any difference
Parties knew that the appellant was acting on behalf of the disclosed principal
It is not suggested that in such a case every time the agent has to sign expressly stating that he is acting on behalf of the disclosed principal
Therefore if the appellant was acting for the disclosed principal the fact that he did not add the relevant description to his signature or used the word we in the operative portion of the letter would not materially alter the fact spoken to by the notes that the appellant was acting on behalf of the disclosed principal
It cannot be suggested that these letters intended to alter the position disclosed by the notes
The letters like the confirmation slips are and must be presumed to be consistent with the notes and so it would be unreasonable to attach undue importance to the signature and to the use of the relevant words we and you on which reliance has been placed
In our opinion therefore the appellate Court was right in holding that even if the bought and sold notes are read along with the confirmation slips and the two letters of January 3 1961 and January 15 1951 the conclusion is inescapable that the appellant entered into the contract on behalf of the disclosed principal Khaitan  Sons Ltd If that be so it follows as a matter of law that the appellant is not entitled to bring the present suit
104 Mr Pathak faintly attempted to argue in the alternative that even if the appellant was acting on behalf of the disclosed principal it would be entitled to sue because from the subsequent conduct of the parties a contract to the contrary could be reasonably inferred
We have however not allowed Mr Pathak to argue this point
It was conceded by the appellant before the Appellate Court that if it was held that the plaintiff firm was acting as agent for Khaitan  Sons Ltd the suit was not maintainable
This concession was made in view of the provisions of section 236 of the Contract Act
Besides the alternative plea which Mr Pathak wanted to raise does not appear to have been expressly pleaded or considered in the trial court
In the result the appeal fails and is dismmissed
In the circumstances of this case we direct that the parties should bear their own costs in this Court


Summary:
The appellant sued the respondent for damages for breach of contract
The respondent pleaded that the appellant had contracted as agent for its disclosed principal and had no right to sue
The bought and sold notes issued by the brokers showed that the appellant had entered into the contract on account of the disclosed principal but in the confirmation slips and subsequent letters exchanged between the parties no reference was made to the principal nor did the appellants describe themselves as acting or signing on his behalf
 Held that it is well established in commercial usage that the bought and sold notes issued by the brokers where 82 there is no variation or disparity between them constitute the contract that must bind the parties
But where the bought and sold notes show material variations neither of them nor both of them taken together can be relied upon for proving the terms of the contract
Since there was no disparity in the instant case between the two notes which specifically mentioned the appellants as acting on account of the disclosed partner it must be held that the appellants had entered into the contract on behalf of the disclosed partner and as such was not entitled to sue
Cowie vs Ramfry 1846 3 Moo
I A 448 sievewright vs Archibald   Ah Shain Shoke vs Moothia Chetty 1899 L R 27 I A 30 and Gadd vs Houghton 1876 I exhibit D 357 referred to
Held further that in deciding whether or not the agent had entered into the contract on behalf of the principal the way he signed the document must be considered in the light of the recitals in the relevant document
In the instant case the letters and the confirmation slips must be read in the light of the bought and sold notes and presumed to be consistent with them and it would therefore be unreasonable to attach undue importance to the signature or how the parties described themselves