Madras High Court
Jayakrishna Trading Company ... vs Kandasamy Weaving Factory And Co. Rep. ... on 20 December, 1994
Equivalent citations: (1995)2MLJ255
Author: Ar. Lakshmanan
Bench: Ar. Lakshmanan
JUDGMENT AR. Lakshmanan, J.
1. The unsuccessful defendants 1 to 3 and 6 in OS. No. 145 of 1985 on the file of Sub Court, Sankari, are the appellants. Defendants 4 and 5 remained ex parte in the suit. The plaintiff is the sole respondent in this appeal. The respondent filed the suit for recovery the amounts in respect of goods sold and delivered. It is his case that the 1st defendant partnership firm and the 2nd defendant acted as agents of the respondent and introduced defendants 4 and 5 (who are not parties to this appeal) to the respondent and procured orders from the defendants 4 and 5. As per the agreement, the goods were to be supplied and despatched through a named Lorry Transport and Hundis accepted by defendants 4 and 5 were to be retired through the Allahabad Bank. Defendant No. 1 was entitled to 2% commission. Defendants 4 and 5 accepted Hundis but failed to make payment to an extent of Rs. 27,600. Therefore, the plaintiff filed the above suit and claimed interest at 21% per annum. The suit was laid for Rs. 34,425.30 together with future interest.
2. According to the respondent, the respondent is a partnership firm registered under the Indian Partnership Act carrying on business in the manufacture of grey cloth, stable, fibre sarees, lungis, etc., at Kumarapalayam. The 1st appellant/1st defendant is a partnership firm in which appellants 2 and 3/defendants 2 and 3 are partners and they are carrying on business at New Delhi and at Kumarapalayam in clothes under the name and style of M/s. Jayakrishna Trading Company. The 5th defendant is carrying on business under the same and style of M/s. V. Vendana. Defendants 2 and 3 who are the natives of Kumarapalayam represented in April, 1982 that they would like to have business with the plaintiff firm and accordingly, the plaintiff/respondent agreed to supply goods to the defendants 1 to 3 as they are well known to them. The 2nd defendant represented that the 4th defendant is a partner of the 5th defendant-firm having their business at Gautamnagar, that they will be purchasing the goods in large quantities and that the plaintiffs will sell them goods on credit and send lorry receipts through Allahabad Bank by hundis. In fact, the 2nd defendant sent a telegram asking for supply with detailed particulars saying that the other Mills are offering 56 x 60 at Rs. 6.15 in the market. The respondent quoted the final offer by telegram at Rs. 6.20 per month including the 2% commission and sample of goods were sent and delivery by June/July, 30,000 metres. The 5th defendant placed order through the 4th defendant with the plaintiff on 30.8.1982 for 15,000 metres as per the sample approved at Rs. 5.75 per metre. The terms and conditions regarding the payment was that the document R.R. to be sent through the Allahabad Bank, New Delhi on 15 days sight of hundi and 500 metres are to be delivered immediately and the rest of the consignment to be delivered in lots of 5000 metres each after a week. According to the plaintiff, this deal was confirmed by the 2nd defendant. On 1.9.1982, the 5th defendant sent a similar order to the plaintiff for 15,000 metres on the same terms and conditions and the plaintiff also confirmed the order on 17th September, 1982. The goods were despatched on 20.9.1982 and the relative invoices were also sent. The plaintiff/respondent had drawn eight hundis payable on 15 days sight and forwarded the same through the Allahabad Bank New Delhi, and sent a copy of that letter to the 1st defendant. Since defendants 4 and 5 were strangers to the plaintiff, the 2nd defendant assured that if the amount is not paid, the 1st defendant would pay the same. The plaintiff had also sent other consignments on 20.9.1982, 23.9.1982, 24.9.1992, 29.9.1982, 1.10.1982 and 6.10.1982 and few other subsequent days. But, money was not forthcoming for the goods. However, without paying the money, the defendants cleared the goods. In spite of repeated requests, defendants 4 and 5 did not pay the amount due to the plaintiff. Finally, the 2nd defendant as the representative of the 1st defendant wrote a letter on 30.12.1982 that if the defendants 4 and 5 did not pay the amount due to plaintiff they would pay the same. Therefore, defendants 1 to 3 are made parties to the suit. They are liable to pay the amount with interest at 21% per annum from the date of supply of the goods.
3. The third defendant filed a written statement. The said written statement was adopted by the sixth defendant. They contended inter alia that they were only agents and not liable to the amount and no interest was payable since there was no contract for payment of interest. Defendants 1 and 3 pointed out that the 2nd defendant was not a partner of the 1st defendant- firm and therefore, the 6th defendant who is another appellant was impleaded in the suit. According to the 3rd defendant, the 2nd defendant is not a partner of the 1st defendant- firm and one Manickam, the husband of one Prabha, requested the 3rd defendant to assist them in disposing of their huge stock of the plaintiff and at their request, the 3rd defendant agreed to act as their agent and to book orders for the plaintiff firm. It is denied that defendants 1 to 3 represented that they will purchase the goods by paying the value within 15 days. It is the specific case of the 3rd defendant that as a representative of the plaintiff, the 2nd defendant confirmed the order for the plaintiff and it is incorrect to state that the 2nd defendant confirmed the order. The letter dated 30.12.1982, cannot in any way, bind the 1st defendant and its partners, nor can it bind the 2nd defendant. Defendants 1 to 3 are not liable to pay the suit claim and any interest claimed in the suit. There is no cause of action for the plaintiff to file the suit against the defendants 1 to 3 and 6. The plaintiff has, with ulterior motive, filed the suit against the innocent defendants 1 to 3 and that the amounts are payable only by the defendants 4 and 5.
4. The trial court framed a solitary issue viz., Whether the plaintiff is entitled to the suit claim.
5. The respondent/plaintiff examined its former Manager as P.W.1 and marked Exs.A-1 to A-11. On the side of the defendants, the 3rd defendant was examined as D.W.1 the Exs.B-1 to B-13 were marked. The Trial Court decreed the suit ex parte against defendants 4 and 5 and decreed the suit against defendants 1 to 3 and 6, the appellants in the appeal. On the reading of the judgments it is seen that the trial court, after narrating the oral and documentary evidence analyzed only the following three aspects.
(a) The plea of the defendants that the plaintiff had unsold excess stock and they requested the defendants to procure orders to dispose of them was unsustainable as even according to the contesting defendants, the plaintiff supplied fabric for a lesser quantity and hence this plaintiff did not have surplus stock.
(b) (i) The second defendant had written Ex.A-11 a letter dated 30.12.1992 where he has accepted to pay the liability.
(ii) Even though defendants denied the letter dated 30.12.1992 (Ex.A-11) D.W.1 had admitted in cross-examination that 2nd defendant was corresponding in connection with business transaction.
(iii) 2nd defendant did not enter the witness box. (iv) Ex.A-11 was therefore valid.
(c) Ex.B-1 which is the partnership deed of D-1 clearly disclosed that it was a trading concern and therefore, defendants 1 to 3 and 6 were not commission agents.
6. The trial court decreed the suit as prayed for with interest at 21% per annum from the date of the suit till the date of decree and thereafter at 12% per annum till the date of realization.
7. We have carefully gone through the entire pleadings and the evidence tendered by both parties both oral and documentary. We have heard the arguments of Mr. R. Sankaranarayanan for the appellants and Mr. A.G. Rajan for the respondent/plaintiff.
8. Mr. R. Sankaranarayanan, learned Counsel appearing for the appellants (defendants 1 to 3 and 6) has argued the following grounds:
(a) The appellants are admittedly agents of the respondent/plaintiff and therefore, the respondent cannot enforce a contract against third party on the basis of a contract entered into in the capacity as agent and they cannot be sued by their principal on the basis of such contract.
(b) The respondent/plaintiff contended in the suit that the appellants/defendants 1 to 3 and 6 also acted as agents for defendants 4 and 5. In such an event, the appellants acted for a disclosed principal and therefore, they are not liable.
(c) The appellants are more agents and not del credere agents of the respondent plaintiff and therefore, they cannot be saddled with the liability of the parties from whom the appellants procured orders.
(d) The basis of the claim against the appellants has not been spelt out in the plaint evidence or arguments, Hence pleadings are insufficient.
(e) Ex.A-11 ought not to have been marked as exhibit as neither the author of the letter nor the receipient of the letter was examined and in any event Ex.A-11 was not written to the respondent.
(f) Ex.A-11 cannot constitute an independent contract between respondent/plaintiff and appellants/defendants.
(g) Ex.A-11 can at best be construed as a contract of guarantee and the same not being contemporaneous with the original contract between principal debtors viz., defendants 4 and 5 and respondents/plaintiff is invalid on its own.
(h) Ex.A-11 is not supported by any separate consideration and therefore, it is invalid in law.
(i) Even if Ex.A-11 constituted any liability it could bind only 2nd defendant as against one Manickam and the respondent/plaintiff.
(j) The undertaking if any given by the 2nd defendant in Ex.A-11 cannot bind either 1st defendant-firm or third defendant and sixth defendant who are partners of the said firm.
(k) At any rate, the appellants are not liable to pay interest at 21% per annum.
9. The above are the gist of the grounds of attack on the judgment of the trial court, by the learned Counsel for the appellants, Mr. Sankaranarayanan.
10. We shall now consider the arguments of the learned Counsel for the appellants with reference to the pleadings and the evidence available on record.
11. The trial court held that the 1st defendant was not a commission agent and it dealt with respondent/plaintiff as a trading concern. The trial court relied on Ex.B-1 which is a partnership deed of the 1st defendant firm. The trial court automatically assumed that the firm has necessarily, to trade and not act as commission agent. This inference, in our opinion, is illogical. The partnership firm, in our view can carry on business not mentioned in the deed and the principles applicable to company to act as per the objects clause in Memorandum of Association, is not applicable to the partnership. In any event, the trading business could include trading as commission agent also. The inference of the trial court is, therefore, unsustainable and illogical.
12. Paragraph 6 of the plaint contains the material averments regarding the suit transaction. It reads as follows:
The plaintiff quoted the final offer by telegram at Rs. 6.20 per metre including the 2% commission and sample goods were sent and delivery June/July, 30,000 Meters.
13. The above averments disclose the jural relationship between the respondent/plaintiff and the 1st defendant. It only refers to the final offer made by the respondent/plaintiff at Rs. 6.20 per metre including 2% commission (to the agent).
14. In the written statement, the 3rd defendant has pleaded that they acted as representatives of the plaintiff. It is useful to extract the relevant passage from the written statement of the 3rd defendant.
As a representative of the plaintiff, the 2nd defendant confirmed the order for the plaintiff.
D.W.1 has also, in his oral evidence, categorically deposed that the 1st defendant acted as the agent of the respondent/plaintiff. The documents filed by the appellants as well as the respondent/plaintiff, would prove this point. In this connection, we may refer to Exs.B-3 and B-6 to B-10. Ex.B-3 is a certificate given by the respondent- plaintiff dated 11.10.1982 stating that the 1st defendant was their agent. The certificate reads as under:
To whom it may concern This is to inform you that we have appointed M/s. Jayakrishna Trading Company, 41/2972 Beadonpura, Karol Bagh, New Delhi as our Agent to book orders for Grey Cloth.
15. Exs.B-6 to B-10 are invoices sent by the plaintiff to the defendants 4 and 5. These voices clearly indicate the legal character of the 1st defendant. The name of the 1st defendant/Jayakrishna) is referred to in the invoices and is described as "Agent". These documents are signed by the respondent/plaintiff. The 5th defendant, in the column provided for customer's signature', has signed. Thus, it is seen from the above documents that there is unequivocal admission by the respondent/plaintiff that the 1st defendant was their agent. As stated above. Ex.B-3 is the certificate given by the respondent/plaintiff that the 1st defendant was their agent. Ex.A-8 filed by the respondent/plaintiff buttresses the case of the defendants. It could be seen from Ex.A-8 that the defendants were following up the matter with defendants 4 and 5 on behalf of the respondent/plaintiff. The letter was sent by the 1st defendant to the plaintiff in the suit. In that letter, they acknowledged the receipt of the telegram and letters sent by the respondent/plaintiff. The letter also refers to the subject regarding the clearing of the Bank Hundis by M/s. Vandana (5th defendant). It is stated therein that the 5th defendant was out of station for the post 15 days and as soon as he returns from the out station, the defendants shall arrange for clearance of the Hundies at the earlier and also intimate the same to the respondent/plaintiff. If the 1st defendant is not the agent, he would not have sent a communication like Ex.A-8.
16. Ex.A-11 which appears to be the sheet anchor of the respondent/plaintiff's case, discloses that the defendants acted as agents of the respondent/plaintiff. The evidence of P.W.1 also supports the case of the defendants. Few extracts are given below:
17. The evidence of P.W.1 r ad with the plaint averments that the plaintiff quote the price of Rs. 6.20 which included 2% commission to the agent, in our view, establishes Jural Relationship of Principal and Agent, between the plaintiff and 1st defendant. Further, if the respondent/plaintiff dealt with the 1st defendant on a principal to principal basis, then the suit would have been filed only against defendants 1 to 3 and 6 and not against defendants 4 and 5. The Hundies marked as Exs.A-3 to A-7 show that the respondent/plaintiff dealt with defendants 4 and 5 only as principal and the Hundies were accepted by defendants 4 and 5 alone as could be seen from the endorsement made by them all Hundies. Hence, the argument of the learned Counsel for the respondent that the appellant was not an agent, does not hold good and we reject the said argument. Let us now come to the legal aspect of the matter.
18. Section 226 of the Contract Act deals with enforcement and consequences of agents' contracts. It postulates that contracts entered into through an agent and obligations arising from act done by an agent, may be enforced in the same manner and will have the same legal consequences as if the contracts had been entered into and the acts done by the Principal in person.
19. In the instant case, the defendant had acted as agent, entered into contract with defendants 4 and 5. The Principal viz., respondent/plaintiff has to enforce the said contract only against defendants 4 and 5 who remained ex parte in the suit. The suit filed by the respondent/plaintiff against agent, in our opinion, would be tantamount to filing a suit by principal against himself. Even if Ex.A-11 is treated as an independent contract it is also not supported by any consideration, as rightly contended by the learned Counsel for the appellants and therefore it is void. Ex.A-11 does not in absolute terms make a promise. The said letter makes it clear that the 2nd defendant, the author of the letter would be liable only if defendants 4 and 5 fail to make payment. It further require that the respondent/plaintiff should take steps against defendants 4 and 5 and keep the 2nd defendant informed about it. Thus, Ex.A-11, in our opinion, cannot also be construed as an independent contract between the 2nd defendant and the plaintiff. Hence, no liability can and would arise under Ex.A-11.
20. Therefore, under Section 230 of the Contract Act, no agent can be personally bound by the contract entered into by him on behalf of principal unless there is a contract to that effect. It is useful to re-produce Ex.A-11 as under:
Jayakrishna Trading Company ...
41/2972 Beadonpura, Karolbagh, New Delhi 110 005. India.
Phone 575015 30th December, 1982.
21. On a careful and anxious reading of Ex.A-11, in our opinion, it does not constitute such a contract as the liability if held to be accepted, is conditional and not absolute. The suit, in our opinion, against the defendants 1 to 3 and 6 is, therefore, not maintainable.
22. The respondent/plaintiff has treated the defendant acting as the agent of the defendants 4 and 5. P.W.1 in his evidence stated that the 1st defendant booked orders on behalf of defendants 4 and 5. In such a case, the respondent/plaintiff can maintain a suit only against the 4th defendant and 5th defendant and not against defendants 1, 2, 3 or 6 as they area agents acting for a disclosed principal viz., defendants 4 and 5.
23. Section 230 of the Contract Act excludes the contract being enforced against the agent and a special contract can be presumed to exist on the case of undisclosed principal only. In this connection, Section 230 (2) has to be considered.
24. The law is that the agents are not normally liable for the dues from the creditors. Such liability would arise only if the agent is a del credere agent. A del credere agent guarantees on some extra remuneration the solvency of the party with whom he gets the principal to contract and also indemnifies the principal against any damage arising from the failure of the other party to fulfil the contract. Therefore, his liability is secondary, arising only on the insolvency or failure of the other party. But, if the other party refrains due to genuine dispute, he is not liable.
25. In other words, a del credere agent is one who, in consideration of extra remuneration called del credere commission; undertakes that persons with whom he enters into contract on principal's behalf will be in a position to perform that duties. The extra remuneration is charged for the risk of bad debts. In the instant case, the debt from defendants 4 and 5 became bad according to the respondent/plaintiff. But, the admitted case is, that a commission of 2% alone was payable and no del credere commission was payable. Hence, in our opinion, the 1st defendant is not at liable as del credere agent.
26. The plaint in this case does not state in what capacity the appellants/defendants 1 to 3 and 6 are sought to be made liable. The evidence of P.W.1 suffers from contradictions. P.W.1 at one breath concedes agency and later repudiates it. The pleadings or evidence do not discloses a claim or guarantee.
27. Ex.A-11 is a letter by the 2nd defendant to one J.K.S. Manickam, who is not a party to the proceedings. The said J.K.S. Manickam is the husband of one Swayam Prabha, who is a partner of the plaintiff-firm. The 2nd defendant is not a partner of the 1st defendant- firm. He is the husband of the 6th defendant. Ex.A-11 letter had been exchanged between two parties who in no way have a right to transact business on behalf of both the plaintiffs firm or the 1st defendant firm.
28. The method of proving a document is set out in the Indian Evidence Act. Section 47 of the Indian Evidence Act deals with the opinion on handwriting. Ex.A-11 could have been proved by the method provided under Section 47 of the said Act. As per the said section, if a document is alleged to be signed or to have been written by any person, a signatures or handwriting of so much of the documents as alleged to be in his handwriting must be proved to be in his handwriting. In the instant case, the contentions and signature in Ex.A-11 should be proved to be in the hand-writing of the 2nd defendant. D.W.3 has challenged the documents stating that it is not in the handwriting of the 2nd defendant. Ex.A-11 should have been proved by the plaintiff by first examining the recipient of the document viz., J.K.S. Manickam. This document is not a document exchanged between the parties to the suit.
29. An objection was taken by the defendants for marking this document in the course of trial. The examination of the 2nd defendant will arise only if the primary burden of proof of Ex.A-11 is discharged by the plaintiff. The Court below also has not rendered any finding with regard to the objection of marking Ex.A-11 either at the time when it was taken Or at the time when the judgment was delivered. In this connection it is necessary to point out that when the admissibility of a document is challenged on the ground of method of proof, the Court should pass an order on the objection then and there. In support of this contention, the learned Counsel for the appellant relied on he decision reported in A. Devasikamani Gounder v. M.A. Andamuthu Gounder (1955)1 M.L.J. 457, wherein it has been held as follows:
If an objection is taken to the admissibility of a document for want of stamp and registration, it is the duty of the Court to decide both the questions at once. If the Court finds that the document is unregistered, when it requires registration, it has to reject the document itself. It cannot ask the document to be stamped first and thereafter decide whether it would require registration.
30. Ex.A-11 cannot be termed as an independent contract as it is not supported by consideration and the consent, if any, is not free as could be gathered from the discussions in paragraphs supra in regard to Ex.A-11. It can at best be considered as a contract of guarantee The contract of guarantee is one where the promiser promises to perform a promise or discharge a liability of a third person in case of his default. In the instant case, Ex.A-11 is very clear. The document clearly states that the 2nd defendant had accepted the liability if defendants 4 and 5 failed to pay the same. This document, therefore, in our view, cannot be construed in any other fashion other than a guarantee. An indemnity would normally be at the inception of the contract as the liability is not contingent. Secondly the indemnity is normally contemplated in matters where the promisee would be exposed to some litigation or expense or claim on account of the contract of the promise of third person. This is evidenced by reading Sections 124 and 125 of the Indian Contract Act together.
31. Section 124 of the Indian Contract Act reads as follows:
A contract by which one party promises to Save the other from loss caused to him by the conduct of the promiser himself, or by the conduct of any other person, is called a 'contract of indemnity.
Section 125 of the Indian Contract Act reads as follows:
The promises in a contract of indemnity, acting within the scope of his authority, is entitled to recover from the promisor-
(1) all damages which he may be compelled to pay in any suit in respect of any matter to which the promise to indemnify applies;
(2) all costs which he may be compelled to pay in such suit if, in bringing or defending it, he did not contravene the orders of the promisor, and acted as it would have been prudent for him to act in the absence of any contract of indemnity, or if the promisor authorized him to bring or defend the suite; a (3) all sums which he may have paid under the terms of any compromise of any such suit, if the compromise was not contrary to the orders of the promisor, and was one which it would have been prudent for the promisee to make in the absence of any contract of indemnity, of if the promisor authorised him to compromise the suit.
32. Section 125 of the Indian Contract Act deals with the rights of a promisee in a contract of indemnity. A guarantee necessarily consists of three contracts within itself. The first contract is between the principal-debtor (defendants 4 and 5) and the creditor (plaintiff). The second contract is between the surety (2nd defendant) and the creditor (plaintiff). The third contract is between the surety (2nd defendant) and the principal debtor (defendants 4 and 5). Again, a contract of guarantee comes into existence because the surety at the request of the principal debtor proceeds to give the guarantee.
33. In the instant case, on the date of Ex.A-11, there were not three contracts because the principal debtor was not in the picture. In other words, the principal debtor was not aware of the contract between the creditor and the surety. Therefore, the third contract, namely, the contract between the principal debtor (defendants 4 and 5) and the creditor (plaintiff) was absent. Again, the surety (2nd defendant) did not give guarantee at the request to the principal debtor (defendants 4 and 5). The guarantee is, therefore, as rightly pointed out by the learned Counsel for the appellants, invalid in law. The contract between the principal debtor and the surety is emphasised because the surety is entitled to rely on the principle of subrogation. The surety would get rights under Section 141 of the Indian Contract Act. The principal debtor would in such a case plead that he did not request the surety to give the guarantee.
34. For the above proposition of law, the learned Counsel for the appellants relied on the following two decisions reported in Ramachandra B. Loyalka v. Shapurji N. Bhownagree A.I.R. 1940 Rom. 315 and Punjab National Bank Ltd. v. Bikram Cotton Mills. In the first cited decision it has been held as follows:
A contract of guarantee involves three parties, the creditor the surety and the principal debtor and a contract to which those parties are party. There must be a contract, first of all, between the principal debtor and the creditor. That lays the foundation for the whole transaction. Then there must be a contract between the surety and the creditor, by which the surety guarantees the debt, and no doubt the consideration for that contract may move either from the creditor or from the principal debtor or both. But, if those are the only contracts, the case is one of indemnity. In order to constitute a contract of guarantee there must be a third contract by which the principal debtor expressly or impliedly requests the surety to act as surety. Unless that element is present, it is impossible to work out the rights and liabilities of the surety under the Contract Act.
35. Even if it is assumed in the instant case that Ex.A-11 is a valid contract of guarantee, then, the said guarantee suffers for lack of consideration. The guarantee was admittedly not given at the time of original sale of goods by the plaintiff to defendants 4 and 5. It was faintly pleaded in the plaint that the 2nd defendant gave a promise to pay the money in the event of default by defendants 4 and 5. This was specifically denied in the written statement. This promise was alleged to have been given over the phone by the 2nd defendant. The plaint was verified by one Swayam Prabha. From the particulars of persons to whom such assurance was alleged to have been given, it has to be presumed that Swayam Prabha alone obtained a promise over the phone. She was not examined as a witness to prove this statement. P.W.1 did not state anything to this effect. No questions were asked on this line to D.W.1 in the cross-examination. Therefore, this allegation, in our view, has to be rejected. Thus the contract of guarantee has to find its existence only in December, 1982. When Ex.A-11 was written this contract of guarantee requires separate consideration and original consideration between the plaintiff and defendants 4 and 5 is not sufficient. This has been so held in the decision reported in the The Union of India v. Bank of India 94 L.W. 451. In that case, a Bench of this Court in paragraph 27 has observed as follows:
As per the legal position enunciated in the above paragraphs the mere factum of forbearance to sue is not sufficient to constitute consideration for a person becoming a surety for a debt, but there must be a promise or undertaking to forbear, or an actual forbearance at the surety's express or implied request and the promise by the creditor to forbear to form a consideration, should be such as is capable of being enforced. In this case Ex.A-26 talks of the plaintiff granting time as long as it thinks fit. Such a vague provision without any specified time limit is incapable of being enforced by the surety. Therefore, it cannot be taken to be a sufficient consideration to support the contract of guarantee. Further, any promise made by the bank either to extend time or to forbear to sue if it is to be treated as consideration for the guarantee bond given by the 5th defendant that promise should be such as is enforceable against the bank. As already stated the bank has given up its case of forbearance to sue as forming consideration for the guarantee bond but has restricted its case in the evidence only to the plea of extension of time. The extension of time sought for either by defendants 1 to 3 or by the 5th defendant is not specific and Ex.A-26 proceeds on the basis that the bank can give such time as it thinks fit. Such a vague term is no possible of enforcement by the 5th defendant who has executed the guarantee. Besides, there is absolutely no evidence at all adduced by the bank to show that there was a promise to extend time by the bank at the instance of the 5th defendant. Unless the bank's promise to extend the time for payment of the dues by defendants 1 to 3 was at the instance of the 5th defendant it cannot be said that the guarantee bond given by him is supported by proper consideration.
36. It is reiterated that Ex.A-11 does not amount to forbearance to sue. There is no evidence to show that the plaintiff undertook not to sue or did anything further in consideration of the contract of guarantee. It is in evidence that the plaintiff proceeded to lodge a criminal complaint and prosecuted the same and it was ultimately dismissed. It is thus evident that there was no forbearance to sue. Therefore, the contract of guarantee is not supported by consideration. Even if it is presumed that Ex.A-11 constituted a guarantee, it could not bind the 2nd defendant alone and the suit should be laid only by J.K.S. Manickam, who is the promisee. The plaintiff is a stranger to the contract between the 2nd defendant and the said J.K.S. Manickam, and under Ex.A-11, a stranger to the contract cannot sue. Therefore, the suit should necessarily fail. Even if it is assumed that Ex.A-11 could be enforced by the plaintiff, even then, it can only be against the 2nd defendant. The 1st defendant is a partnership firm and it consists of partners, defendants 3 and 6. It is proved that by Ex.B-1, defendants 3 and 6 are agents amongst themselves being partners of the 1st defendant firm, and both of them can bind the 1st defendant and the other partner. But, the 2nd defendant is not a partner and therefore, he could not bind the 1st defendant- firm. Defendants 3 and 6, being themselves agents they cannot delegate the right to the 2nd defendant. It is settled law that a delegate cannot further delegate.
37. The net result is, the appellants are not liable at all to the abovesaid sale price of Rs. 27,600, and the question of paying interest thereon does not arise at all.
38. Since we are dismissing the suit claim against the appellants (defendant's 1 to 3 and 6), we are not dealing with the question of interest claimed in this matter.
39. Since some money has been paid by the appellants/defendants 1 to 3 and 6 during the pendency of the appeal in this Court, we order restitution of the money paid by them to the plaintiff. Since the appeal is filed in this Court only by defendants 1 to 3 and 6, the appeal is allowed and the suit is dismissed only against them, with costs.