IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE THOTTATHIL B.RADHAKRISHNAN & THE HONOURABLE MR. JUSTICE P.BHAVADASAN TUESDAY, THE 2ND NOVEMBER 2010 / 11TH KARTHIKA 1932 AS.No. 935 of 1996() ----------------------------- O.S.391/1993 OF IIIRD ADDL. SUB COURT,ERNAKULAM ....... APPELLANT(S): DEFENDANT ----------------------------------------- M/S.KIMS AGENCIES, M.G.ROAD, ERNAKULAM REP. BY SEBASTIAN JOSEPH, WORKING AT HOTEL ORCHID, KADAVANTHARA, ERNAKULAM COCHIN 20. BY ADVS. SRIC.C.THOMAS, SRI. M.G.KARTHIKEYAN RESPONDENT(S): PLAINTIFF ----------------------------------------- THE KERALA STATE ELECTRONICS DEVELOPMENT CORPORATION LTD., (KELTRON), KELTRON HOUSE, VELLAYAMBALAM, TRIVANDRUM 695 033 AND HAVING ONE OF ITS AREA SALES OFFICE AT PULINAT BUILDING, M.G.ROAD, ERNAKULAM, COCHIN 15, REP.BY A.K.CHANDRASEKHAR, DIRECTOR, (FINANCE), KELTRON HOUSE VELLAYAMBALAM, TRIVANDRUM 695 033. BY ADV. SRI.A.N.RAJAN BABU THIS APPEAL SUITS HAVING BEEN FINALLY HEARD ON 22/10/2010, THE COURT ON 02/11/2010 DELIVERED THE FOLLOWING: tss THOTTATHIL B. RADHAKRISHNAN & P. BHAVADASAN, JJ. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - A.S. No. 935 of 1996 C.R. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 2nd day of November, 2010. JUDGMENT Bhavadasan, J , The defendant, who suffered a decree for money, is the appellant. The parties and facts are hereinafter referred to as they are available before the trial court. 2. The plaintiff alleges that the defendant was their dealer for sale of electronic goods manufactured by the plaintiff and articles were delivered as per the order placed by the defendant. Towards the articles so delivered, amounts were due, details of which are given in the plaint. Ultimately, it was found that an amount of Rs.1,61,656.99 was due with interest. Since the defendant did not pay the same, the suit was laid. 3. The suit was mainly resisted on the ground that the claim is barred by limitation. It is contended A.S.935/1996. 2 that the defendant was neither an agent nor dealer of the plaintiff. It was said that the articles were sold to the defendant and the time for payment of the amount begins to run from the date of delivery. It is also pointed out that some of the payments made by the defendant has not been accounted for. On these grounds the defendant prayed for a dismissal of the suit. 4. The court below raised necessary issues for consideration. The evidence consists of the testimony of P.W.1 and the documents marked as Exts.A1 to A18 from the side of the plaintiff. The defendants examined himself as D.W.1. On a consideration of the materials before it, the court below found that the claim of the defendant that the suit is barred by limitation cannot be countenanced, for more reasons than one. The amount as claimed by the plaintiff was found due and a decree followed. A.S.935/1996. 3 5. Learned counsel appearing for the appellant canvassed only the ground of limitation to contend for the position that the suit ought to have been dismissed. According to learned counsel, the documents produced by the plaintiff will clearly show that there was no agency relationship between the plaintiff and the defendant. Payment was due on each delivery and therefore time begins to run on delivery of each lot. There was no running account according to learned counsel for the appellant and therefore time has to be computed from each delivery. According to learned counsel it is Article 14 of the Limitation Act, which applies and if that be so, the suit is barred by limitation. In support of his contention, learned counsel relied on the decisions reported in Mukat Lal v. Gulab Singh (AIR 1931) Allahabad 229), Firm Gulabrai v. Firm Ilahi A.S.935/1996. 4 Bux (AIR 1945 Allahabad 185) and Md. Sultan & Co. v. Manickam (AIR 1961 Madras 388). 6. The question that arises for consideration is whether the claim is barred by limitation. The court below has elaborately considered this aspect and found that the defendant was an agent of the plaintiff and therefore Article 14 had no application. The question is whether the finding is justified. 7. In the plaint, it is clearly averred that the defendant had applied for dealership of Keltron goods and the same was granted to him. Credit facilities were offered to him and it is also stipulated that if the amounts were not paid within the time stipulated, penal interest will be levied. 8. Ext.A5 is the dealership application. Ext.A2 is the statement of accounts produced by the plaintiff in the suit relating to the transaction between the plaintiff A.S.935/1996. 5 and the defendant. Ext.A3 is the letter which has been written by the defendant to the plaintiff, in which it is stated that they are making a payment of Rs.1.2 Lakhs towards the outstanding amount due to the plaintiff and the balance amount will be paid within one year. Ext.A6 is the invoice, which contains the particulars regarding the items and other terms concerning payment. Ext.A14 is the sale policy document produced by the plaintiff. It shows that credit period of 40 days will be reckoned from the date of delivery chellan. Ext.A15 is the price list. Ext.A16 is the sale policy for Televisions of the plaintiff company. 9. Article 14 of the Limitation Act reads as follows: 14 For the price of goods Three The date of the delivery sold and delivered where years of goods. no fixed period of credit is agreed upon. A.S.935/1996. 6 10. If it is to be held that Article 14 is applicable, then the appellant has to succeed. If Article 14 is applicable, then the period begins to run from the date of delivery of goods. Decisions relied on by the learned counsel for the appellant also help him in that regard. In the decision reported in Md. Sultan & Co.'s case (supra) it was held that the starting point of limitation is the date of delivery of the items and not the whole undisputed amount. In the decision in Firm Gulabrai's case (supra) also it was held that in such cases Article 52 (corresponding to new Article 14) applies and holds that the date begins to run from the date of delivery. 11. Learned counsel also placed considerable reliance on the decision reported in Sher Behudoor v. Pasupathy (AIR 1973 Kerala 174), wherein it was held as follows: A.S.935/1996. 7 “Where there was no settlement by the defendant to pay in instalments nor the accounts were signed by the defendant or his agent, Art.14 is applicable and even though some payments by cheque were made by the defendant it cannot be construed as amounting to acknowledgment of debt under Section 19 of the Act.” 12. According to the learned counsel for the appellant, the invoice produced will clearly show that each delivery had to be followed by immediate payments and it was not as if the payments could be deferred or there was any credit facility. According to learned counsel, in order to apply Article 1 of the Limitation Act there should be creditor and debtor relationship, in which each of the parties should occupy the status of both debtor and the creditor. In the case on hand, that is not the state of affairs. If the date is to A.S.935/1996. 8 be computed from the date of delivery, it is pointed out that the suit is clearly barred. 13. Unfortunately for the appellant, it is not Article 14, which will apply. It is clear from the documents produced by the plaintiff that there is an agency relationship between the plaintiff and the defendant. It cannot be disputed that the defendant had applied for dealership and obtained the same. The concern of the defendant was only one of the outlets for the plaintiff to sell its goods. The documents clearly show that the defendant receives commission and that he has got credit facilities also. The claim of the defendant that he was paying amounts towards each delivery does not appear to be correct according to the documents produced by the defendant and so also the conduct of the defendant. Evidence of P.W.1 is clear that when articles were being delivered on credit basis A.S.935/1996. 9 and the payment made were being adjusted. He has also pointed out that if there was delay in payment, a penal interest of 20% was being levied. At the time of delivery, defendant used to give a slip known as delivery chellan. The evidence clearly show that the selling price is fixed by the company and the defendant has no liberty in that regard. 14. In fact a similar question was considered in the decision dated 6.7.2010 in A.S. 218 of 1996, wherein, in identical circumstances it was held that it was Article 3, which applied and not any other Article. 15. One may now have a look at Articles 3 and 4, which read as follows: 3 By a principal against Three When the account is, his agent for movable years during the continuance property received by the of the agency, demanded letter and not accounted for. and refused or, where no such demand is made, when the agency terminates. A.S.935/1996. 10 4 Other suits by principals Three When the neglect or against agents for neglect years misconduct becomes or misconduct known to the plaintiff. 16. It is by now well settled that in a case involving agency, it is Articles 3 and 4 that apply and no other Article is applicable. It is well accepted that Article 4 is the residuary Article and applies only if Article 3 has no role to play. As already noticed, the document produced by the plaintiff as well as the oral evidence clearly show that the goods were being delivered on credit basis and the defendant was getting a commission for the sales effected by him. One fails to understand what else the relationship could have been between the plaintiff and the defendant except an agency relationship. There is nothing to indicate that the defendant is under the direct control of the plaintiff or that he has to meet certain target. The agency in this case is express as revealed from the documents on A.S.935/1996. 11 record. Once it is shown that credit facility is offered and also that entire payment is not to be made on delivery, it follows that Article 14 can have no application. 17. For Article 3 to apply, four ingredients will have to be satisfied, they are, i) existence of agency, express or implied, ii) concerned property should be movable, iii) accounting for it should be an element, and iv) there should have been demand for account and refusal, or termination of agency where no demand has been made. An account, which the agent is liable to render, is one and indivisible and the agent cannot plead limitation as to any particular time. 18. It is an admitted fact that the agency of the defendant was terminated and thereafter the suit was laid. The appellant has no case that if the date of filing the suit is to be construed from the date of A.S.935/1996. 12 termination of agency, it is barred by limitation. It has already been noticed that the claim of the plaintiff that it is Article 14 which applies cannot be accepted. There could be no manner of doubt that it is Article 3, which is applicable and the suit is perfectly within time. The result is that the appeal is only to be dismissed. We do so with costs to the respondent throughout. Thottathil B. Radhakrishnan, Judge P. Bhavadasan, Judge sb.