The Kerala Agro Industries VS Beta Engineers

IN THE HIGH COURT OF DELHI AT NEW DELHI RFA No. 418 2003 Judgment reserved on : 22nd December 2011 Date of Pronouncement : 9th January 2012 M S. THE KERALA AGRO INDUSTRIES CORPORATION LTD. & ANR. APPELLANTS Through: Mr. C.N. Sreekumar Advocate with Ms. Resmitha R. Chauhan Advocate. M S. BETA ENGINEERS HON‟BLE MR. JUSTICE VALMIKI J.MEHTA To be referred to the Reporter or not ..... RESPONDENT Through: Mr. B.S. Arora Advocate. VALMIKI J. MEHTA J. This Regular First Appeal filed under Section 96 of the Code of Civil Procedure 1908 impugns the judgment of the trial Court dated 30.1.2003 decreeing the suit of the respondent plaintiff for recovery of ` 4 99 500 with pendente lite and future interest @ 24% per annum. The facts of the case are that the respondent plaintiff filed the subject suit for recovery of monies against the appellants defendants for having supplied a total of 417 numbers of Golden Rocker Sprayers and 100 numbers of knapsack sprayers. The respondent plaintiff is a manufacturer and supplier of Agriculture Anit Malaria and other pest control sprayers and RFA No. 418 2003 spare parts. Originally the order which the respondent plaintiff claimed was placed upon it on 3.12.1999 was for 300 golden rocker sprayers 100 numbers of knapsack sprayers however subsequently the quantity of Golden Rocker Sprayers was increased to 400 numbers vide telegram dated 27.12.1999 which was said to have been sent by the appellants defendants and thereafter to 417 numbers. The respondent plaintiff claimed that a total amount of ` 8 48 053 became due from the appellants defendants and for which the bill bearing No.1558 dated 28.12.1999 was sent to the appellants defendants. The appellants defendants paid a sum of ` 4 lacs leaving a balance of ` 4 48 053 and for recovery of which the subject suit was filed. The appellant No.1 defendant M s. Kerala Agro Industries Corporation Ltd. a Kerala State Government undertaking contested the suit and the basic point of defence was that out of the total sprayers supplied the representative of the respondent plaintiff one Mr. M.A. Jose had taken back 195 numbers of rocker sprayers and 45 numbers of knapsack sprayers and therefore unless credit is given for these sprayers having taken back no payment could be made. In fact considering that out of the total bill of ` 8 48 053 a sum of ` 4 lacs was already paid it was urged before this Court that a very negligent amount if at all would remain due respondent plaintiff once the value for 195 numbers of Golden Rocker Sprayers and 45 numbers of knapsack sprayers is reduced from the claim of RFA No. 418 2003 the respondent plaintiff. The main issue which was argued before the trial Court was with respect to whether Mr. M.A. Jose was the agent of the respondent plaintiff and whether he had received back 195 numbers of Golden Rocker Sprayers and 45 numbers of knapsack sprayers from the appellants defendants. The relevant issue in this regard which was framed by the trial Court was modified as issue No.3 which reads as under: “MODIFIED ISSUE NO.3 “Whether Sh. M.A. Jose was authorized by the plaintiff to collect sprayers back from the defendant on behalf of the plaintiff and the said goods were returned by the defendant to him as alleged in the Written Statement If so to what effect. OPD” The trial Court has held that Mr. M.A. Jose was not the agent of the respondent plaintiff for receiving back of the goods. It is also held that Mr. M.A. Jose acted in excess of authority in receiving back the goods and therefore the respondent plaintiff was not liable. The relevant observations made by the trial Court in this regard read as under: Perusal of the telegram Ex.P.4 shows that if has been sent by Mr. S.C. Bose i.e. DW.1 Divisional Engineer of the defendant company. The said telegram is not sent by Mr. Jose as is being claimed by the defendants. So it is proved that the goods in question were sent by the plaintiff to the defendants in pursuance of the order Ex.P.3 followed by enhanced order vide telegram Ex.P.4 dated 27.12.1998. As already mentioned above receipts of goods as mentioned as mentioned in the Bill Ex.DW.1 p.1 is not disputed by the defendants in any manner whatsoever. However the plea of the defendants is that they had placed an order for supply of 300 Rocker Sprayers and RFA No. 418 2003 100 Knapsack Sprayers 9 litre capacity but the plaintiff sent excess supply. Their plea is that the excess goods were received from the plaintiff vide the said bill with an understanding between the defendants and Mr. Jose Local Representative of the plaintiff that Mr. Jose would take back part goods and so that goods were returned to Mr. Jose for and on behalf of the plaintiff company. It is not disputed that the plaintiff had sent the goods in question to the defendants vide Bill Ex.DW.1 P.1. As mentioned in the quotation Ex.P.2 the orders taken directly or through the Representative of the plaintiff were subject to confirmation by the plaintiff. The plaintiff vide their letter Ex.D.1 PX had sought confirmation from the defendants regarding order for enhanced number of goods. The said letter is duly admitted by the defendants during admission denial of documents vide endorsement dated 09.7.2002. The defendants vide telegram Ex.P.4 which is dated 27.12.99 asked the plaintiff to send the enhanced number of goods as mentioned in the telegram. As already mentioned above the said telegram is duly proved to have been sent by the defendants to the plaintiff. It is further shows that the confirmation for supply of enchanced number of goods sought by the plaintiff vide their letter Ex.D1 PX was sent by the defendants to the plaintiff vide telegram Ex.P.4. That means the concluded contract came into existence between the parties vide telegram Ex.P.4. This further shows that the terms and conditions as mentioned in the quotations Ex.P.2 has been duly accepted by the defendants . As per the terms and conditions contained therein the goods once sold were not to be taken back by the plaintiff. There is no clause in that contract under which the defendants could return part of goods to Mr. M.A. Jose a Representative of the plaintiff. There is nothing on record by the defendants to prove that the plaintiff vide any written communications or by their conduct representations made the defendants to believe that Mr. M.A. Jose was authorized to enter into any agreement with the defendant for an on their behalf and to take back any part of goods from the defendants for and on behalf of the plaintiff. The terms and conditions contained in Ex.P.2. go to show that even the orders received through the Representative were subject to confirmation by the plaintiff and so there is no question of Mr. M.A. Jose being RFA No. 418 2003 authorized to take part of goods supplied by the plaintiff to the defendants vide Bill Ex.DW.1 P.1 in pursuance of a concluded contract between the plaintiff and the defendants. Besides the plaintiff has placed on communications dated 29.12.1999 21.1.2000 and 01.03.2000. Letter dated 29.12.1999 another letter dated 21.1.2000 and the Fax message dated 01.3.2000 have been admitted by the defendants during admission denial of documents. They did not dispute the contents of the said documents at any point of time and therefore can be read in evidence against the defendants. Vide letter dated 29.12.1999 the plaintiff had requested the defendants to release the payment for the goods supplied by them to the defendants. Similarly vide letter dated 21.1.2000 the plaintiff while referring to invoice No.1558 Ex.DW.1 P.1 again asked for payment from the defendants for the goods supplied. Similarly letter dated 01.3.2000 has been admitted by the defendants during admission denial of the documents. Its contains where also not disputed by the defendants and therefore the document and its contents are deemed to have been proved by the defendants. Vide this letter also the plaintiff has reiterated their demands for the goods supplied vide invoice bill No.1558 which is Ex.DW.1 P.1. As borne out from the invoice bill Ex.DW.1 P.1 copy of which has also been admitted by the defendants and Mark Ex.P.6 shows that the goods were received by the defendants from the plaintiff. However the defendants did not send reply to any of the communications dated 29.12.1999 21.1.2000 and 01.3.2000 disputing their liability of the entire amount of the bill i.e. Rs.8 48 053 on the plea that they had returned back part of goods to Mr. M.A. Jose under an expressed or implied authority by the plaintiff to him. The defendants brought the fact regarding return of part of goods to Mr. M.A. Jose for the first time vide their reply Ex.P.10 D.A. in reply to the letter dated 06.6.2000sent by the plaintiff. Vide letter dated 06.6.2000 the plaintiff had informed the defendants about the non payment of the full amount of Rs.8 48 053 against bill No.1558 dated 28.12.1999. Admittedly the said letter was received by the defendant and was replied by the defendants vide letter dated 22.6.2000 which is Ex.P.10 D.A. It was vide this reply dated 22.6.2000 that the defendant RFA No. 418 2003 informed the plaintiff for the first time that Mr. M.A. Jose Representative of the plaintiff had collected back 215 Rocker Sprayers and 64 Knapsack Sprayers from them till 14.2.2000. Non information on the part of the defendant in that regard despite receipt of admitted letter dated 21.1.2000 and 01.3.2000 which were received by the defendants subsequent to alleged taking back of aforesaid quantity of Rocker Sprayers and Knapsack Sprayers by Mr. M.A. Jose is not explained. The defendants did not inform the plaintiff for the reasons best known to them. This further goes to show that had the defendants given back part of goods to Mr. M.A. Jose at the instructions or under the authority of plaintiff the defendants would have certainly informed the plaintiff in that regard. Their silence in that regard for a period of almost six months leads to irresistible inference that they did not do so as they knew very well that they had given back a part of goods admittedly received against bill No. 1558 dated 28.12.1999 as per understanding between the defendants and Mr. Jose and not at the instructions of the plaintiff either expressed or implied authority of the plaintiff for that purpose. Besides in reply Ex.P.10 D.A dated 22.6.2000 by the defendant to the plaintiff‟s demand of balance payment of Rs.4 48 053 against the aforesaid bill No. 1558 dated 28.12.1999 out of the total bill amount of Rs.8 48 053 . The defendant did not allege that 215 Rocker Sprayers and 65 Knapsack Sprayers out of those received against the aforesaid bills were returned to Mr. Jose entire under any written authority by the plaintiff in his favour or that the plaintiff had at any point of time acted so as to make the defendants believe that the plaintiff has authorized Mr. Jose to collect back the said goods from the defendants. These facts go to show that the plea of the defendant that Mr. M.A. Jose had been given back 215 Rocker Sprayers and 65 Knapsack Sprayers out of the goods admittedly received against the bill No. 1558 dated 28.12.1999 under any expressed or implied authority by the plaintiff in favour of MR. Jose in an afterthought. This plea of the defendants also cannot be believed in view of accepted terms and conditions of the concluded contract between the plaintiff and the defendants according to which goods once sold could not be returned back by the defendants. The above RFA No. 418 2003 evidence goes to show that the defendant has failed to prove that Mr. M.A. Jose was authorized to receive back 215 Rocker Sprayers and 65 Knapsack Sprayers out of the said articles received vide Bill No. 1558 dated 28.12.1999 for and on behalf of the plaintiff. Issue is accordingly decided against the defendants and in favour of the plaintiff. xxxx xxxx The proposition of law laid down by the Hon‟ble Calcutta High Court by Hon‟ble Patna High Court and by Hon‟ble Apex Court in the above noted three cases is squarely applicable to the facts of this case. In the light of the findings on Issue No.3 above it is held that by operation of Section 237 of the Contract Act the plaintiff is not bound by the aforesaid acts of Mr. M.A. Jose as the defendant has failed to prove that the plaintiff has by his words or conduct induced the defendants to believe that the alleged acts of Mr. M.A. Jose were within the scope of his authority given by the plaintiff. Therefore the return of 215 Rocker Sprayers and 65 Knapsack Sprayers by the defendants to Mr. Jose assuming the same were received back by Mr. M.A. Jose is no answer to the plaintiff‟s claim in the suit. Hence the plaintiff is entitled to recover a principle sum of Rs.4 48 053 along with the interest of Rs.51 447 till the date of institution of the suit. Issue is accordingly decided in favour of the plaintiff and against the defendants.” A reading of the aforesaid paras of the impugned judgment shows that the trial Court arrived at a conclusion that Mr. M.A. Jose was not the authorized agent and he acted in excess of the authority consequently the respondent plaintiff is not bound by the action of Mr. M.A. Jose in receiving back 195 numbers of rocker sprayers and 45 numbers of knapsack sprayers. This conclusion was arrived at firstly on the ground that there was no term and condition in quotation Ex.P2 dated 29.4.1999 that Mr. M.A. Jose could RFA No. 418 2003 receive back any goods which were sold by the respondent plaintiff to the appellants defendants. Another reason for arriving at the conclusion that Mr. M.A. Jose was not the agent was that because as per the trial Court there was nothing on record to prove that the respondent plaintiff by any written conduct representation made appellants defendants believe that Mr. M.A. Jose was authorized to take back the goods. Yet another reason for holding that the case of appellants defendants is not correct because it was held by the trial Court that respondent plaintiff wrote letters dated 29.12.1999 21.1.2000 and 1.3.2000 asking for payment and to which letters no disputes were raised that payment was not liable to be made on account of goods having been returned to the respondent plaintiff through Mr. M.A. Jose. I am afraid that the impugned judgment has wholly mis construed the relevant documents which have been filed and exhibited in the trial Court. In fact the trial Court has committed clear cut illegality in avoiding to make reference to the various relevant portions of the documents correspondence existing on record. Once we look at the relevant portions of the documents and correspondence on record it becomes clear that Mr. M.A. Jose was in fact the agent of the respondent plaintiff and therefore the appellant defendant was fully justified in taking Mr. M.A. Jose as the agent of the respondent plaintiff who could receive back the goods. RFA No. 418 2003 Before I refer to the documents correspondence on record it is relevant first to refer to Sections 182 186 187 and 188 of the Contract Act 1872 and which Sections read as under: “182. „Agent‟ and „principal‟ defined. An „agent‟ is a person employed to do any act for another or to represent another in dealings with third person. The person for whom such act is done or who is so represented is called the „principal‟. 186. Agent‟s authority may be expressed or implied The authority of an agent may be expressed or implied. 187. Definitions of express and implied authority An authority is said to be express when it is given by words spoken or written. An authority is said to be implied when it is to be inferred from the circumstances of the case and things spoken or written or the ordinary course of dealing may be accounted circumstances of the case. 188. Extent of agent‟s authority An agent having an authority to do an act has authority to do every lawful thing which is necessary in order to such act. An agent having an authority to carry on a business has authority to do every lawful thing necessary for the purpose or usually done in the course of conducting such business.” A reading of the aforesaid provisions shows that the relationship of principal and agent can be express or implied or partly express or partly implied. The relationship of principal and agent therefore can also arise on account of the principal and agent conducting themselves as such. Once a person is taken as an agent unless therefore there are words restricting the authority of the agent ordinarily an agent would be entitled to represent the principal within the ordinary scope of business conducted by the agent on RFA No. 418 2003 behalf of the principal. At this stage it is necessary to refer to some of the relevant observations of the Supreme Court on the aspect of relationship of principal and agent as contained in the judgment reported as Chairman Life Insurance Corpn. and Ors. Vs. Rajiv Kumar Bhasker 6 SCC 188. The summary of different paragraphs of this judgment pertaining to relationship of principal and agent are contained in head note D of this judgment which reads as under: “The relationship of principal and agent can only be established by the consent of the principal and the agent. The consent need not necessarily be to the relationship of principal and agent itself. The “principal” and “agent” will be held to have consented if they have agreed to a state of facts on which the law imposes the consequences which result from agency even if they do not recognize it themselves and even if they have professed to disclaim it. Nor is the use of or omission of the word “agent” conclusive. The consent must however have been given by each of them either expressly or by implication from their words and conduct. Agency is a legal concept which is employed by the Court when it becomes necessary to explain and resolve the problems created by certain fact situations. When the existence of an agency relationship would help to decide an individual problem and the facts permit a court to conclude that such relationship existed at a material time then whether or not any express or implied consent to the creation of an agency may have been given by one party to another the Court is entitled to conclude that such relationship was in existence at the time and for the purpose in question. Ostensible or apparent authority comes about where the principal by words or conduct has represented that the agent has the requisite actual authority and the party dealing with the agent has entered into a contract with him in reliance on that representation. The principal in these is stopped from denying that actual RFA No. 418 2003 authority existed. In the commonly encountered case the ostensible authority is general in character arising when the principal has placed the agent in a position which in the outside world is generally regarded as carrying authority to enter into transactions of the kind in question. Ostensible general authority may also arise where the agent has had a course of dealing with a particular contractor and the principal has acquiesced in this course of dealing and honoured transactions arising out of it. xxxx underlining added) xxxx A reading of the ratio laid down by the Supreme Court in the case of Rajiv Kumar Bhaskershows that even if principal and agent deny that they are having the relationship of principal and agent they will have to be taken as principal and agent if they are held to have consented and acted as per a state of facts which imposes the consequences of relationship of principal and agent and it is not necessary that the agent is described as an „agent‟. The Supreme Court clearly observes that when the facts of a case permit to conclude that there existed a relationship of principal and agent between two persons then whether or not any express or implied consent to the creation of an agency may have been given by one party to another a Court is still entitled to conclude that relationship of an agency was in existence between a principal and an agent. A principal by ostensible words of conduct can represent that agent has the requisite actual authority and the person dealing with the agent can place reliance on such a representation and whereupon the principal is estopped from denying that actual authority vests RFA No. 418 2003 in an agent to act as an agent. The ostensible general authority can also arise from a course of dealing. In view of the aforesaid legal position let us see the facts which have emerged on record. It is also relevant to note before referring to the actual documents correspondence on record that the relationship between the parties for supplying of sprayers did not arise for the first time under the subject order dated 3.12.1999 but existed from over a year earlier inasmuch as other orders were also placed upon the respondent plaintiff by the appellants defendants and with respect to which payments were made and there are no disputes with respect to the earlier supplies. With this preface let us see the documents correspondence on record as to whether the same bring out a course of dealing giving ostensible general authority to an agent whereby the principal can be said to have represented that the agent is duly authorized to act on behalf of the principal respondent plaintiff. The first letter necessary to be referred in this regard is the letter dated 18.11.1998 sent by the respondent plaintiff to the appellants defendants. This letter is marked by the respondent plaintiff to Mr. M.A. Jose specifically referring him as a Sales Executive. Then there is the letter dated 15.12.1999 making reference to the subject order dated 3.12.1999 which specifically refers to Mr. M.A. Jose as “our representative Mr. Jose”. At this stage it must be kept in mind that the RFA No. 418 2003 Supreme Court in Rajiv Kumar Bhasker’s casehas held that an agent need not be called by the term „agent‟ and thus „representative‟ surely is an agent. Copy of this letter dated 15.12.1999 is in fact marked to Mr. Jose. It was Mr. M.A. Jose who received payments on behalf of respondent plaintiff and one such payment is evidenced by the receipt dated 15.3.2000 Ex.P8 DA and which was a receipt showing that Mr. M.A.Jose had received a demand draft of `1 73 077 . There is in fact also a letter written by Mr. M.A.Jose on the letter head of the respondent plaintiff and which is dated 12.1.2000 asking for handing over back 35 numbers of Rocker sprayers. That the requisite numbers of Rocker sprayers and Knapsack sprayers as stated by the appellants defendants have been given back to Mr. M. A. Jose is established beyond doubt by means of the delivery challans duly receipted by Mr. M. A. Jose and which are dated 12.1.2000 Ex.DW1 6) 2.2.2000 14.2.2000 and 15.3.2000 Ex.DW1 12). The respondent plaintiff in fact in its plaint also admits that Sh. M. A. Jose was working for the respondent plaintiff on commission i.e. as a commission agent for the respondent plaintiff. The appellants defendants have also pleaded and which pleadings have been proved by the deposition of its witness Sh. G. Subhash Chandra Bose DW1 appellants defendants have always been consistently dealing with the respondent plaintiff only through Mr. M. A. Jose and such course of dealings RFA No. 418 2003 included placing of orders upon the respondent plaintiff through Mr. M.A.Jose an aspect admitted by the respondent plaintiff in the letter dated 15.12.1999 Ex.P5 DA. This witness DW1 has also deposed with respect to goods in question being received by the appellants defendants through Mr.M.A.Jose and also making of payment to Mr. M. A. Jose. In my opinion in the face of the aforesaid documentary evidence being the plaint where the respondent plaintiff admits that Mr. M.A.Jose was working on commission with the respondent plaintiff i.e. as a commission agent the specific admission in the letter dated 15.12.1999 Ex.P5 DA that Mr. M.A.Jose was their representative by stating “our representative Mr. Jose” and copy of this letter is marked to Mr. Jose the fact that Mr. Jose received payment on behalf of the respondent plaintiff vide Ex.P8 DA dated 15.3.2000 in my opinion leaves no manner of doubt that Mr. Jose was in fact an agent acting for and on behalf of the respondent plaintiff. Surely if “a representative” a term mentioned in the letter dated 15.12.1999 Ex.P5 DA and by which the subject order was placed is not an agent then what else is a representative. A representative is indeed a very wide term and such representative can therefore unless the scope of authority is specifically curtailed without doubt would have led the appellants defendants to believe that the appellants defendants could even return the goods to the said agent Mr. M. A. Jose. Any doubt as to the complete authority of the agent Mr. M. RFA No. 418 2003 A. Jose to act for and on behalf of the respondent plaintiff is clear from the course of dealing including of Mr. M. A. Jose having received the payment as evidenced by Ex.P8 DA dated 15.3.2000. Though the respondent plaintiff has conveniently chosen to deny the document being the letter dated 12.1.2000 Ex.DW1 5 and which is a letter on the letter head of the respondent plaintiff by which Mr. M.A.Jose took back 35 numbers of Rocker sprayers in my opinion such a convenient denial cannot take away the validity and effect of this letter dated 12.1.2000. Whatever doubt remains becomes clear from the document being letter dated 1.7.2000 Ex.DW1 13 and at the back of which are contained the minutes of the meeting when the brother of the partner of the respondent plaintiff one Sh. Hari Prakash visited the office of the appellants defendants. These minutes of meeting clearly show that it is Mr. M. A. Jose who took Mr. Hari Prakash to the office of the appellants defendants and the appellants defendants have never dealt with anyone else except Mr. Jose. The presence of Mr. Jose when this meeting took place on 3.7.2000 becomes clear from the endorsement in Hindi written by Sh. Hari Prakash on Ex.DW1 12 which states that he has heard both the parties i.e. the appellants‟ defendants‟ representative on one hand and Mr. M. A. Jose on the other. In my opinion what appears from the facts of the present case is that either a fraud is sought to be perpetrated on the appellants defendants by RFA No. 418 2003 the respondent plaintiff along with its representative Mr. M.A.Jose or more probably the respondent plaintiff has fallen out with this agent Mr. M.A.Jose who had received back 195 numbers of Rocker sprayers and 45 numbers of Knapsack sprayers from the appellants defendants. In fact in my opinion it can be said that there is a fraud being played upon the appellants defendants by the respondent plaintiff along with Mr. M.A.Jose because in the cross examination of the witness of the respondent plaintiff Sh.Anil Kumar PW1 this witness in categorical terms admitted on 1.11.2002 respondent plaintiff has taken no action whatever against Mr. M.A.Jose for taking back the goods without instructions. Surely once it came to light that Mr. M.A.Jose had received sprayers of a huge amount of over `4 00 000 then surely if there is the taking of these sprayers without authority of the respondent plaintiff then the respondent plaintiff surely would have sent at least notices and complaints to Mr. M. A. Jose mentioning of his illegal conduct and fraud being played and possibly even file a case for fraud however admittedly no such thing was done by the respondent plaintiff and entitling the drawing of conclusion of a possible collusion for the purpose of committing fraud by the respondent plaintiff along with Mr. M. A. Jose on the appellants defendants. Even if there is no issue of fraud possibly it appears that there could have been certain dues of the respondent plaintiff to Mr. M. A. Jose and therefore in spite of Mr. M. A. RFA No. 418 2003 Jose allegedly having illegally taken back sprayers of huge value of over 4 00 000 however no action whatsoever was taken against Mr. M. A. Jose possibly because of certain dues which could have existed of the respondent plaintiff towards Mr. M. A. Jose. Learned counsel for the respondent plaintiff laid great stress on the fact that in Ex.P2 dated 29.4.1999 it is specifically mentioned that goods once sold shall not be taken back under any circumstances and therefore Mr. M.A.Jose had no right to receive back the goods. I really fail to understand his argument because once goods are sold surely it could have been appellants defendants for return of certain goods and if a principal can agree to an alteration of the term of the supply surely an agent could also have done so. In addition I may also mention that the order dated 3.12.1999 and the respondent‟s plaintiff‟s letter dated 15.12.1999 Ex.P5 DA does not talk of contractual relationship with respect to this earlier terms and conditions contained in Ex.P2 dated 29.4.1999 and which have specifically not been incorporated in the contract dated 3.12.1999 15.12.1999. Learned counsel for the respondent plaintiff also placed reliance upon three judgments reports as Mohd. Ekram & Ors. vs. Union of India AIR 1959 Patna 337 Kamal Singh Dugar vs. Corporated EngineersRFA No. 418 2003 Pvt. Ltd. AIR 1963 Calcutta 464 and State of Orissa vs. United India Insurance Co. Ltd. AIR 1997 SC 2671 in support of the proposition that when the agent acts beyond the scope of his authority including by committing a fraud the principal will not be liable. In my opinion all these judgments are based on the assumption that Mr.M.A.Jose acted beyond the scope of his authority however before these judgments can apply it was necessary to prove that the authority agency of Mr. M.A.Jose was specifically restricted to not receiving back the goods and which was duly brought to the notice of the appellant defendant however I have already referred to in detail above respondent plaintiff itself referring to Mr. M.A.Jose as representative or commission agent and which terms are wide terms to show complete agency without any restriction of authority. That there was no restriction of authority becomes clear also from the course of dealing between the parties through Mr. M.A.Jose and as per which course of dealing Mr. M.A.Jose not only supplied these sprayers to the appellants defendants but in fact received payments with respect to the same. The judgments which are therefore cited on behalf respondent plaintiff have no application to the facts of the case. In the Mohd. Ekram & Ors.(supra) case relied upon the admitted position was that the railways re booked the consignment without expressed authority i.e. the agent was found to have acted beyond authority and so is the position in the other cases of Kamal Singh Dugarand RFA No. 418 2003 State of Orissa also has been collected by Mr. Jose. Our supply order KTR S 58F 1977 dt. 3 12 99 was also collected by Mr. Jose on consignment could be sent through direct truck only if an order of 400 pieces is given. It was also agreed that he will manage to dispose off the excess quantities if any on his own the understanding You have also confirmed that you have received the confirmation to supply 400 Rocker Sprayers 100 Knapsack Sprayers and other items through your representatives Mr. Jose vide your Lr. No.BE 12 99 1119 dt. 15 12 99. 4. We regret to inform you that the telegram dt. 27 12 99 as seen from the photocopy enclosed with your above letter) is not seen sent either by the undersigned or from this office. You may kindly trace the origin of the telegram which might also have been sent by your representative Mr. Jose. RFA No. 418 2003 5. It is a matter of great concern to us that even though all the transactions on your behalf were being done through your authorized representative Mr. M.A. Jose you have now disowned him through your letter under reference. However on receipt of your above letter by 2 PM on 1 7 2000 I have booked a trunk call to 0482 252307 to contact Mr. Jose at his residence. Unfortunately I could not get Mr. Jose as he has gone to Kottayam to receive one of your managers who is expected to arrive at Kottayam through K.K. express as told by the father of Mr. Jose who attended the phone. I have also passed the message such that Mr. Jose or the Manager of the Beta Engineers may contact me back immediately on their arrival. As explained above being the fact we The Kerala Agro Industries Corpn. Ltd. strongly feel that there is a small of fraud either on your part or on your representative‟s part. Under this circumstances in order to settle this issue we request that you may either depute one of your authorities along with Mr. Jose to this office to discuss the matter in detail and to find a solution or send us the credit note as demanded vide our Lr. No.KTR S 58F 883 dt. 22 6 2000. Thanking you FOR THE KERALA AGRO INDUSTRIES CORPN. LTD. Yours faithfully Sd REGIONAL ENGINEER Copy to: Sri M.S. Jose Kunchirakkattu Kadaplamattam Kortayam 686 571. The EngineerH.O. for information.” RFA No. 418 2003 In my opinion therefore not too much weight can be attached to the appellants defendants not replying to the letters dated 29.12.1999 21.1.2000 and 1.3.2000. A civil case is decided on balance of probabilities. A civil Court puts all the evidence which have been led in a melting pot so as to determine the final picture which has to emerge. In my opinion in view of the admitted documents correspondence on record there is no manner of doubt that Mr. M.A.Jose was an agent acting for the respondent plaintiff and in view of the ratio of the judgment of the Supreme Court in the case of Chairman LIC supra) Mr. M.A. Jose clearly had ostensible general authority which was clear from the correspondence between the parties and also the course of dealing and therefore the respondent plaintiff principal was clearly bound to honour the actions of the agent Mr. M. A. Jose of having received back the goods as held by the Supreme Court in the case of Chairman LIC (supra). The respondent plaintiff principal is estopped in the facts of the case from denying that actual authority existed in Mr. M.A. Jose in taking back the In view of the above appeal is accepted. Suit of the respondent plaintiff shall stand dismissed. Parties are left to bear their own costs. Decree sheet be prepared. RFA No. 418 2003 18. The bank guarantee furnished by the appellants defendants pursuant to the order dated 27.4.2005 shall stand discharged. The amount which has been deposited by the appellants defendants in this Court being the amount of `22 403 along with accrued interest be also released back to the appellants defendants. Trial Court record be thereafter sent back. JANUARY 09 2012 VALMIKI J. MEHTA J. RFA No. 418 2003 

Summary: The “principal” and “agent” will be held to have consented if they have agreed to a state of facts on which the law imposes the consequences which result from agency, even if they do not recognize it themselves and even if they have professed to disclaim it The facts of the case are that the respondent/plaintiff filed the subject suit for recovery of monies against the appellants/defendants for having supplied a total of 417 numbers of Golden Rocker Sprayers and 100 numbers of knapsack sprayers.The respondent/plaintiff is a manufacturer and supplier of Agriculture, Anit-Malaria and other pest control sprayers and spare parts. Originally, the order which the respondent/plaintiff claimed was placed upon it on 3.12.1999, was for 300 golden rocker sprayers 100 numbers of knapsack sprayers, however, subsequently the quantity of Golden Rocker Sprayers was increased to 400 numbers vide telegram dated 27.12.1999 which was said to have been sent by the appellants/defendants and thereafter to 417 numbers.The respondent/plaintiff claimed that a total amount of ` 8,48,053/- became due from the appellants/defendants and for which the bill bearing No.1558 dated 28.12.1999 was sent to the appellants/defendants. The appellants/defendants paid a sum of ` 4 lacs, leaving a balance of ` 4, 48,053/- and for recovery of which the subject suit was filed.ISSUE BEFORE THE COURT:Whether the judgment of trial court faced any misconduct?Whether the consent is mandatory between principal and agent?RATIO OF THE COURT:This court referred to the judgement of trial court that the trial Court arrived at a conclusion that Mr. M.A. Jose was not the authorized agent and he acted in excess of the authority, consequently the respondent/plaintiff is not bound by the action of Mr. M.A. Jose in receiving back 195 numbers of rocker sprayers and 45 numbers of knapsack sprayers. This conclusion was arrived at firstly on the ground that there was no term and condition in quotation, Ex.P2 dated 29.4.1999 that Mr. M.A. Jose could receive back any goods which were sold by the respondent/plaintiff to the appellants/defendants.Another reason for arriving at the conclusion that Mr. M.A. Jose was not the agent was that because as per the trial Court, there was nothing on record to prove that the respondent/plaintiff by any written communication or by its conduct/representation made the appellants/defendants believe that Mr. M.A. Jose was authorized to take back the goods. Yet another reason for holding that the case of the appellants/defendants is not correct because it was held by the trial Court that respondent/plaintiff wrote letters dated 29.12.1999, 21.1.2000 and 1.3.2000 asking for payment, and to which letters no disputes were raised that payment was not liable to be made on account of goods having been returned to the respondent/plaintiff through Mr. M.A. Jose.This court observed some wholly misconstrued the relevant documents which have been filed and exhibited in the trial Court. In fact, the trial Court has committed clear cut illegality in avoiding to make reference to the various relevant portions of the documents/correspondence existing on record. Once we look at the relevant portions of the documents and correspondence on record, it becomes clear that Mr. M.A. Jose was in fact the agent of the respondent/plaintiff and therefore the appellant/defendant was fully justified in taking Mr. M.A. Jose as the agent of the respondent/plaintiff, who could receive back the goods. BeforeThe court refered to the documents/correspondence on record, it is relevant first to refer to Sections 182, 186 of the Contract Act, 1872 and which Sections read as under:“182. Agent and principal defined. – An agent is a person employed to do any act for another, or to represent another in dealings with third person. The person for whom such act is done, or who is so represented, is called the principal.186. Agents authority may be expressed or implied – The authority of an agent may be expressed or implied.The court stated that the relationship of principal and agent can be express or implied or partly express or partly implied. The relationship of principal and agent therefore can also arise on account of the principal and agent conducting themselves as such. Once a person is taken as an agent unless therefore there are words restricting the authority of the agent, ordinarily an agent would be entitled to represent the principal within the ordinary scope of business conducted by the agent on behalf of the principal. At this stage it is necessary to refer to some of the relevant observations of the Supreme Court on the aspect of relationship of principal and agent as contained in the judgment reported as Chairman, Life Insurance Corpn. and Ors. Vs. Rajiv Kumar Bhasker (2005) 6 SCC 188 “The relationship of principal and agent can only be established by the consent of the principal and the agent. The consent need not necessarily be to the relationship of principal and agent itself. The “principal” and “agent” will be held to have consented if they have agreed to a state of facts on which the law imposes the consequences which result from agency, even if they do not recognize it themselves and even if they have professed to disclaim it. Nor is the use of or omission of the word “agent” conclusive. The consent must, however, have been given by each of them, either expressly or by implication from their words and conduct. Agency is a legal concept which is employed by the Court when it becomes necessary to explain and resolve the problems created by certain fact situations. When the existence of an agency relationship would help to decide an individual problem, and the facts permit a court to conclude that such relationship existed at a material time, then whether or not any express or implied consent to the creation of an agency may have been given by one party to another, the Court is entitled to conclude that such relationship was in existence at the time, and for the purpose in question.The court observed that in the face of the documentary evidence being the plaint where the respondent/plaintiff admits that Mr. M.A.Jose was working on commission with the respondent/plaintiff, i.e. as a commission agent, the specific admission in the letter dated 15.12.1999, Ex.P5/DA that Mr. M.A.Jose was their representative by stating “our representative Mr. Jose” and copy of this letter is marked to Mr. Jose, the fact that Mr. Jose received payment on behalf of the respondent/plaintiff vide Ex.P8/DA dated 15.3.2000, in my opinion, leaves no manner of doubt that Mr. Jose was in fact an agent acting for and on behalf of the respondent/plaintiff. Surely, if “a representative”, a term mentioned in the letter dated 15.12.1999, Ex.P5/DA and by which the subject order was placed, is not an agent then what else is a representative.A representative is indeed a very wide term and such representative can, therefore, unless the scope of authority is specifically curtailed, without doubt, would have led the appellants/defendants to believe that the appellants/defendants could even return the goods to the said agent, Mr. M. A. Jose. Any doubt as to the complete authority of the agent, Mr. M. A. Jose to act for and on behalf of the respondent/plaintiff is clear from the course of dealing including of Mr. M. A. Jose having received the payment as evidenced by Ex.P8/DA dated 15.3.2000. Though, the respondent/plaintiff has conveniently chosen to deny the document being the letter dated 12.1.2000, Ex.DW1/5, and which is a letter on the letter-head of the respondent/plaintiff by which Mr. M.A.Jose took back 35 numbers of Rocker sprayers, in my opinion, such a convenient denial cannot take away the validity and effect of this letter dated 12.1.2000The court observed that the judgement of trial court faced misconduct and this court stated that not too much weight can be attached to the appellants/defendants not replying to the letters dated 29.12.1999, 21.1.2000 and 1.3.2000.This court decided a civil case on balance of probabilities. A civil Court puts all the evidence which have been led in a melting pot so as to determine the final picture which has to emerge. In my opinion, in view of the admitted documents/correspondence on record, there is no manner of doubt that Mr. M.A.Jose was an agent acting for the respondent/plaintiff, and in view of the ratio of the judgment of the Supreme Court in the case of Chairman, LIC (supra),Mr. M.A. Jose clearly had ostensible general authority which was clear from the correspondence between the parties and also the course of dealing, and therefore, the respondent-plaintiff/principal was clearly bound to honour the actions of the agent, Mr. M. A. Jose of having received back the goods as held by the Supreme Court in the case of Chairman, LIC (supra). The respondent-plaintiff/principal is estopped in the facts of the case from denying that actual authority existed in Mr. M.A. Jose in taking back the goods.DECISION HELD BY COURT:At last the court stated that appeal is accepted. Suit of the respondent/plaintiff shall stand dismissed. Parties are left to bear their own costs. Decree sheet be prepared.The bank guarantee furnished by the appellants/defendants pursuant to the order dated 27.4.2005 shall stand discharged. The amount which has been deposited by the appellants/defendants in this Court, being the amount of `22,403/-, along with accrued interest be also released back to the appellants/defendants. Trial Court record be thereafter sent back.