Case ID: 6200

Judgment:
ivil Appeal No. 4 177 of 1989. From the Judgment and Order dated 28.3.1989 of the Madras High Court in O.S.A. No. 48 of 1989. K.K. Venugopal	 K. Chandra Mouli	 Ms. Meenakshi Sundaram and K.K. Mani for the Appellant. Dr. Y.S. Chitale	 V.G. Pragasam	 Satya Mitra Garg	 V. Prakash and R. Venkataramani for the Respondent. The Judgment of the Court was delivered by K. JAGANNATHA SHETTY	 J. Special Leave granted. The question raised in this appeal is whether the agent after revocation of his authority is entitled to remain in possession of the premises of the principal and interfere with the business thereof. The learned single Judge of the Madras High Court in Original Suit C.S. No. 1317 of 1988 has granted temporary injunction restraining the respondent from interfering with the appellant 's transport business. But the Division Bench by judgment delivered on March 28	 1989	 vacated that temporary injunction. The present appeal is directed against the judgment of the Division Bench. The facts are substantially undisputed. The appellant company under the name as Southern Roadways Ltd. is engaged in the business of transport of goods and parcels to differ ent places in Southern India. It has appointed commission agents at various stations for the purpose of carrying on its business. S.M. Krishnan respondent was one such agent appointed at Madras city. Clause III of the agreement by which he was appointed provides that the respondent should arrange a suitable godown and engage employees. Clause XI provides for his removal from service at any time without notice. It also provides that upon removal of the agent the company could occupy the godown. The company could also utilise the services of employees engaged by the respondent. As per the agreement perhaps at the 413 suggestion of the respondent	 the Company took on lease a godown at No. 10	 Srinivasan Road	 T. Nagar	 Madras. The godown was put in possession of the respondent for the purpose of carrying on his agency business of the company. In the course of the company 's audit	 it was discovered that the respondent had mismanaged the business and misap propriated the income of the company. By letter dated Octo ber 13	 1988	 the company terminated his agency with effect from October 14	 1988. He was informed that the company would be taking possession of the godown and carrying on the business on its own. By subsequent letter	 he was also intimated that the company has taken possession of the godown on October 15	 1988 and another agent called R. Sundarajan	 was appointed in his place. The respondent however	 prevented R. Sundarajan and also the company from carrying on business at the godown premises. The company	 therefore	 had to institute a suit for declaration of its right to carry on business in the said premises. Permanent injuction restraining the respondent from interfering was also sought for. The suit was based on two separate grounds. The first related to legal right of the company to carry on its business after termination of agency of the respondent; the second concerned the factum of taking actual possession of the premises on October 15	 1988. Pending suit	 the company moved the High Court for temporary injunction. The temporary injunction restraining the respondent from interfering with the possession of the premises and the business thereof. The learned single Judge (M. Srinivasan	 J.) acceded to that request. The judge said: "As pointed out already	 in this case	 there is no denial of the lease arrangement between the owner of the premises and the plaintiff. The defendant does not claim to be the owner of the premises nor does he put forward any rival title as against the plaintiff. The only claim of the defendant is that he is in pos session and that he has been paying the rent to the owner. He does not claim that he took possession as a lessee from the owner. Though there is a specific averment in the plaint and the affidavit of the plaintiff that there is a lease arrangement between the plaintiff and the owner	 there is no denial of the same by the defendant. In these circumstances	 the defendant cannot claim that he is in posses sion pursuant to any right enured in him. " 414 As to the possession of the premises	 he said: "The claim made by the plaintiff that it took possession on 15.10.1988 is acceptable in view of the fact that the defendant was never the lessee under the owner of the premises. The defendant was only looking after the business as an agent of the plaintiff and as such he was permitted to enter the premises and he cannot claim independent possession. " Finally	 he concluded: "In the circumstances of the case	 there can be no doubt that the plaintiff has been in legal and actual possession of the premises on the date of suit. The fact that the business has been temporarily shifted to another place in view of the threat meted out to the plain tiff 's agent will not disentitle the plaintiff to get injunction. The plaintiff is certainly entitled to carry on its business at No. 10	 Srinivasan Road	 T. Nagar	 Madras 600017	 having taken the premises on lease. It is ot open to the defendant to prevent the plaintiff from carrying on such business. " The respondent was thus restrained by means of temporary injunction from interfering with the company 's transport business in goods and parcels at the suit premises. The respondent took up the matter in appeal before the Division Bench of the High Court. The Division Bench con sisting of Sathidev and Padmini Jesudurai	 JJ.	 accepted the appeal and vacated the temporary injuction. The conclusion of learned Judges is largely based on the actual possession of the premises claimed by the Company. They found it hard to accept that claim and observed: "The plaintiff will not be entitled to the relief sought for unless it establishes that its claim that possession of the property was handed over to it on 15.10.1984 is true. The defendant has consistently been contending that possession was not handed over to the plaintiff on 15.10.1984 and that he continues to be in actual and physical possession of the property even now. No material has been placed before the Court to substantiate the claim of the plaintiff that possession was taken over on 15.10.1984. " 415 They continued: "In the face of these documents and in the absence of any material to show that posses sion of the suit property was taken by the plaintiff on 15.10.1988	 it would be impossi ble for this Court to grant the plaintiff	 the relief of injuction." As to the company 's right to treat the respondent as trespasser	 the Division Bench observed: "Before the defendant could be characterised as a trespasser	 the validity of the termina tion of the agency and the rights of the parties	 following that	 have also to be determined and this could be done only during trial." At the outset	 we may state that we are not so much concerned with the rival claims relating to actual posses sion of the suit premises. Indeed	 that is quite irrelevant for the purpose of determining the rights of the company to carry on its business. Mr. Venugopal	 learned counsel for the appellant also discreetly did not advert to that contro versy. He	 however	 rested his case on certain facts which are proved or agreed. They may be stated as follows: The company was and is the tenant of the suit premises and has been paying rent to the owner. The lease in respect of the premises has been renewed up to November 22	 1983. It was the company which has executed the lease and not the respondent. The respondent as agent was allowed to remain in possession of the premises. It was only for the purpose of carrying on company 's business. His agency has been termi nated and his authority to act for the company has been put an end to. These facts are indeed not disputed. On these facts the contention of counsel is that when the agency has been terminated	 the respondent has no legal right to remain in the premises or to interfere with the business activities of the company. The force of this argument cannot be gainsaid. Counsel	 in our opinion	 appears to be on terra firma. The principal has right to carry on business as usual after the removal of his agent. The Courts are rarely willing to imply a term lettering such freedom of the principal unless there is some agreement to the contrary. The agreement between the parties in this case does not confer right on the respondent to continue in possession of the suit premises even after termination of agency. Nor does it preserve right for him to interfere with the com 416 pany 's business. On the contrary	 it provides that the respondent could be removed at any time without notice and after removal the company could carry on its business as usual. The company under the terms of the agreement is	 therefore	 entitled to assert and exercise its right which cannot be disputed or denied by the respondent. Even otherwise	 under law revocation of agency by the principal immediately terminates the agent 's actual authori ty to act for the principal unless the agent 's authority is coupled with an interest as envisaged under section 202 of the . When agency is revoked	 the agent could claim compensation if his case falls under section 205 or could exercise a lien on the principal 's property under section 22 1. The agent 's lien on principal 's property recognised under section 22 1 could be exercised only when there is no agreement inconsistent with the lien. In the present case the terms of the agreement by which the re spondent was appointed as agent	 expressly authorises the company to occupy the godown upon revocation of agency. Secondly	 the lien in any event	 in our opinion	 cannot be utilised or taken advantage of to interfere with principal 's business activities. There is yet another significant factor to be borne in mind when we deaf with the rights of an agent. An agent who receives property or money from or for his principal obtains to interest for himself in the property. When he receives any such property he is bound to keep it separate from his own and that of others. Long ago	 Lord Cottenham	 L.C. (Foley vs Hill; 	 1843 60 All E.R. (Reprint) 16 at 198) said: ". So it is with regard to an agent dealing with property; he obtains no interest himself in the subject matter beyond his remuneration; he is dealing throughout for another	 and though he is not a trustee according to the strict technical meaning of the word	 he is quasi a trustee for that particular transac tion for which he is engaged. " Out of this practice there has emerged a rule	 which is a normal incident of agency	 that an agent cannot deny principal 's title to property nor he can convert it into other kind or use. Fridman 's Law of Agency (5th Edition page 150) also supports this view: "Respect of Principal 's title: "The agent cannot deny the title of the prin cipal to goods	 417 money	 or land possessed by the agent on behalf of the principal. The possession of the agent is the possession of the principal for all purposes	 including the acquisition of title under statutes of limitation	 even where in fact the agent	 though in ignorance of his claim	 is entitled to the land	 unless the agent possesses not as agent but on his own behalf	 in which event his possession will be personal and not for his principal." As to the nature of agent 's possession in respect of principal 's property	 this Court in a recent judgment ren dered in Smt. Chandrakantaben and Anr. vs Vadilal Bapalal Modi and Ors.	 [1989] 2 SCC 630 said at 643: "It is well settled that the possession of the agent is the possession of the principal and in view of the fiduciary relationship defend ant 1 cannot be permitted to claim his own possession. This aspect was well emphasised in David Lyell vs John Lawson Kennedy	 [1889] 14 HL (E) 437 where the agent who was collecting the rent from the tenants on behalf of the owner and depositing it in a separate ear marked account continued to do so even after the death of the owner. After more than 12 years of the owner 's death his heir 's assignee brought the action against the agent for possession and the agent defendant pleaded adverse possession and limitation. The plain tiff succeeded in the first court. But the action was dismissed by the Court of Appeal. The House of Lords reversed the decision of the Court of Appeal and remarked: "For whom	 and on whose behalf	 were those rents received after Ann Duncan 's death? Not by the respond ent for himself	 or on his own behalf	 any more than during her lifetime." Emphasising the fiduciary character of the agent his possession was likened to that of trustee	 a solicitor or an agent receiving the rent under a power of attorney. Another English case of Williams vs Pott	 LR 12 Eq Cas 149	 arising out of the circumstances similar to the. present case was more interesting. The agent in that case was the real owner of the estate but he collected the rents for a considerably long period as the agent of his principal who was his mother. After the agent 's death his heir claimed the estate. The mother (the principal) had also by then died after pur porting by her will to devise the disputed lands to the defendants upon certain 418 trusts. The claim of the plaintiff was dis missed on the plea of adverse possession. Lord Romilly	 M.R.	 in his judgment observed that since the possession of the agent was the possession of the principal	 the agent could not have made an entry as long as he was in the position of the agent for his mother	 and that he could not get into possession without first resigning his position as her agent which he could have done by saying: "The property is mine; I claim the rents	 and I shall apply the rents for my own purposes. " The agent had thus lost his title by reason of his own possession as agent of the principal. " We wish to add that it is not every agent who is in a fiduciary position vis a vis his principal. For example is A appoints B to be his agent merely to sign a memorandum and places no particular trust in B	 the doctrine of fiduciary relations would not apply. Like wise	 where the principal authorises an agent to do particular or specified acts	 the doctrine of fiduciary relation may not arise. What we want to emphasise is	 in all cases of general agency	 the rela tion may be generally fiduciary	 but in other kinds of agencies	 the relation may vary with the confidence which the principal chooses to repose in the agent. It may also depend upon the power which the agent exercises over the subject matter under the terms of the contract of agency or by virtue of the incident of law and usage of the business which the relationship implies. Thus the fiduciary element in agency	 though the key to much of the law governing this relation	 is not the essential element in the relation. (See Modern Law Review	 Vol. 17 pp. 31 32). The crux of the matter is that an agent holds the prin cipal 's property only on behalf of the principal. He ac quires no interest for himself in such property. He cannot deny principal 's title to property. Nor he can convert it into any other kind or use. His possession is the possession of the principal for all purposes. As the Kerala High Court in Narayani Amma vs Bhaskaran Pillai	 AIR 1969 Kerala 214	 observed at 217: "The agent has no possession of his own. What is called a caretaker 's possession is the possession of the agent. " So much is	 we think	 established law as regards agent 's right to property belonging to the principal. Dr. Chitale	 learned counsel for the respondent	 however	 cited in this context	 two decisions: (i) Abdul Nabi Sahib vs Bajab Sahib and Anr.	 AIR 1944 Mad 221 and (ii) 419 Jemma vs Raghu	 AIR 1977 Orissa 12. In the former case of the Madras High Court	 the suit was for a permanent injunc tion restraining the defendant from interfering with the plaintiff 's peaceful possession and enjoyment of the suit properties and performance of the religious services. The defendant admitted that he was agent of the plaintiff but set up title to the property in himself as donee. He has also set up title by adverse possession. On these claims	 Kunhi Raman	 J.	 observed: "Since the plaintiff had not got possession of the property	 it would not be sufficient to show that he was in constructive possession and the theory of constructive possession as between the principal and agent	 cannot be relief upon by the principal for the purpose of meeting the contention of the description raised on behalf of the defendant	 who is the agent." If the defendant in the above case	 has admitted that he was the agent of the plaintiff and yet set up title to the property of his principal	 the above observation may not be consistent with the settled principle of law. We have al ready stated that the agent acquires no interest in the property of the principal and he cannot	 therefore	 non suit the principal on the possessory title as agent. The second case in Jemma vs Raghu	 referred to us is the decision of the Orissa High Court. That case dealt with the general principle that the plaintiff who is not in posses sion of the suit premises is not entitled to relief of injunction. The plaintiff must ask for recovery of posses sion. But this principle has no application with regard to dispute between the principal and agent in respect of prin cipal 's property. In this case	 the respondent 's possession of the suit premises was on behalf of the company and not on his own right. It is	 therefore	 unnecessary for the company to file a suit for recovery of possession. The respondent has no right to remain in possession of the suit premises after termination of his agency. He has also no right to interfere with the company 's business. The case	 therefore	 deserves the grant of temporary injunction. The learned single Judge of the High Court in our judgment	 was justified in issuing the injunction. The Division Bench of the High Court was clearly in error in vacating it. In the result	 we allow the appeal with costs. In rever sal of the order of the Division Bench	 we restore the temporary injunction granted by learned single Judge of the High Court. Y. Lal Appeal allowed.

Summary:
The appellant company is engaged in the business of transport of goods and parcels in Southern India and for that purpose has appointed agents at various stations. The respondent was one such agent appointed at Madras. As pro vided in clause III of the Contract	 the respondent was to arrange a suitable godown and engage employees. The Company took on lease a godown at No. 10	 Srinivasan Road	 T. Nagar	 Madras and the same was put in possession of the respondent for the purpose of carrying on his agency business of the Company. During the course of the Company 's audit	 it transpired that the Respondent not only mismanaged the business but had misappropriated some of the income of the company. The appellant	 therefore	 terminated his agency with effect from 14.10.1988 in terms of clause XI of the Contract and in formed him that the company would be taking possession of the Godown premises for carrying on the business on its own	 as provided in the contract. Thereafter the respondent was informed by a letter that the company has taken possession of the Godown on 15.10.88 and another agent R. Sundarajan had been appointed in his place. But the respondent prevent ed R. Sundarajan and also the company from carrying on the business at the godown premises. The company	 therefore	 filed a suit for declaration of its right to carry on the business in the premises and for a permanent injunction restraining the respondent from interferring with its pos session on the ground that after the termination of the agency of the respondent	 the company acquired a right to carry on the business of the company and further the company had since acquired the possession of the premises on 15.10.88. Pending decision of the suit	 the appellant prayed for the issuance of a temporary injunction. The Trial Judge of the Madras High Court granted temporary injuction re straining the 411 respondent from interfering with the appellant 's business but on appeal by the respondent the Division Bench of the Madras High Court vacated that temporary injunction. Hence this appeal by the appellant company. Allowing the appeal	 this Court	 HELD: Under law	 revocation of agency by the Principal immediately terminates the agent 's actual authority to act for the Principal unless the agent 's authority is coupled with an interest as envisaged under section 202 of the . When agency is revoked	 the agent could claim compensation if his case falls under section 205 or could exercise a lien on the Principal 's property under section 221. The agent 's lien on Principal 's property recog nised under section 221 could be exercised only when there is no agreement inconsistent with the lien. [416B C] In the present case	 the terms of the agreement by which the respondent was appointed as agent	 expressly authorise the company to occupy the godown upon revocation of agency. Secondly the lien	 in any event	 cannot be utilised or taken advantage of to interfere with Principal 's business activi ties. [416C D] An agent who receives property or money from or for his Principal obtains no interest for himself in the property. When he receives any such property he is bound to keep it separate from his own and that of others. [416E] (See Foley vs Hill	 All E.R. Reprint 16 at 198; It is not every agent who is in a fiduciary position vis a vis his principal. For example if 'A ' appoints 'B ' to be his agent merely to sign a memorandum and places no particular trust in 'B ' the doctrine of fiduciary relations would not apply. Likewise where the Principal authorises an agent to do particular and specified acts	 the doctrine of fiduciary relation may not arise. [418C D] In this case	 the respondent 's possession of the suit premises was on behalf of the company and not on his own right. It is	 therefore	 unnecessary for the company to file a suit for recovery of possession. The respondent has no right to remain in possession of the suit premises after termination of his agency. He has also no right to interfere with the Company 's business. The case	 therefore	 deserves the grant of temporary injunction. [419F G] 412 Smt. Chandrakantaben and Anr. vs Vadilal Bapalal Modi and Ors.	 [1989] 2 SCC 630 at 643; Narayani Amma vs Bheska ran Pillai	 AIR 1969 Kerala 214; Abdul Nabi Sahib vs Bajab Sahib & Anr.	 AIR 1944 Mad 221 and Jamma vs Reghu	 AIR 1977 Orissa 12	 referred to.