Madras High Court
P.Appasamy vs Samy Lourde Joseph on 8 February, 2008
Author: C.Nagappan
Bench: C. Nagappan
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 8.2.2008
C O R A M:
THE HONOURABLE MR.JUSTICE C. NAGAPPAN
Appeal Suit No.1351 of 1995
P.Appasamy ... Appellant
Vs
1.Samy Lourde Joseph
2.Oumadevi ... Respondents
Appeal against the judgment and decree dated 23.8.1995 passed in O.S.No.221 of 1994 on the file of I Additional Subordinate Judge, Pondicherry.
For Appellant ... Mr. V. Lakshmi Narayanan
For Respondent No.1 ... Mr. S. Balasubramanian
For Respondent No.2 ... No Appearance
JUDGMENT
This appeal is preferred against the judgment and decree, dated 23.8.1995 made in O.S.No.221 of 1994 on the file of I Additional Subordinate Judge, Pondicherry. The second defendant is the appellant.
2. The first respondent herein filed the suit seeking for a judgment and decree directing the defendants to pay a sum of Rs.1,83,400/- to the plaintiff with subsequent interest at the rate of 12% per annum and for costs of the suit.
The case of the plaintiff is that the second defendant, as a power of attorney of first defendant, has entered into a sale agreement with the plaintiff on 6.6.1992 to sell the suit property for a sum of Rs.3,50,000/- and on the date of the sale agreement, the second defendant received advance amount of Rs.1,50,000/- and further agreed to complete the sale within three months, failing which, he agreed to repay the advance amount in double and the plaintiff has to lose the advance amount if the default is on his part. It is further stated by the plaintiff that he made several efforts by approaching the second defendant to register the sale deed and that efforts became fruitless and the plaintiff came to know that the suit property belonged to one Kokilambal and she had executed a settlement deed on 5.11.1979 in favour of S.P.Poyyathappan alias Appan and Manoranjithammal and the defendants 1 and 2 have no right over the suit property. According to the plaintiff, the first defendant, without any title or right over the suit property, executed a power deed in favour of second defendant in respect of the suit property and in turn, the second defendant executed the sale agreement in favour of the plaintiff and the act of the defendants amounts to cheat the plaintiff and the plaintiff issued lawyer's notice on 28.2.1994 and though the defendants received the notice, they did not send any reply or repaid the advance amount and hence the suit.
3. The first defendant remained absent and was set exparte.
4. The second defendant, in his written statement, has admitted that he, as power of attorney of the first defendant, entered into a sale agreement with the plaintiff on 6.6.1992 and agreed to sell the suit property for a sum of Rs.3,50,000/-, but has denied that he received advance amount of Rs.1,50,000/- and agreed to complete the sale agreement within three months and he has further denied the plaint averment that the plaintiff has made several efforts to get the sale deed registered and they became fruitless. The second defendant has also denied the plaint averment that the suit property belonged to one Kokilambal who had executed a settlement deed in favour of two persons and the defendants have no right over the suit property. According to the second defendant, the first defendant executed the power deed in favour of the second defendant in respect of the suit property and in turn, he executed the sale agreement in favour of the plaintiff and according to him, he never personally received a sum of Rs.1,50,000/- as advance and he acted only on the direction of the first defendant and within the scope of the power deed executed by the first defendant. The second defendant has further denied that the act of the defendants amounts to cheat the plaintiff. It is further stated by the second defendant that the sale agreement was entered into by him only on behalf of the first defendant and not in any of his personal capacity and he has not received any consideration from the plaintiff and therefore he is not having any personal liability in the sale agreement and it will not bind the second defendant personally.
5. The trial court framed eight issues and the plaintiff examined himself as P.W.1 and marked Exs.A1 to A4 on his side and the second defendant examined himself as D.W.1 and no document was marked on their side. On a consideration of oral and documentary evidence, the Trial Court held that the second defendant is also liable along with the first defendant for the suit claim and granted a decree directing the defendants to pay jointly and severally the suit amount with interest at 12% per annum and costs. Aggrieved by the same, the second defendant has preferred the present appeal.
6. The second respondent/first defendant, though served in the appeal, does not appear in person or through counsel and her name is printed in the cause list. For the sake of convenience, in this judgment, the parties are referred to as arrayed in the suit.
7. The point for determination in the appeal is as to whether the appellant, being the power agent of the first defendant, is not liable to pay the suit claim.
POINT:-
8. The learned counsel for the appellant submits that the Trial Court has failed to note that under the principles of contract law, the appellant/agent does not carry any personal liability for the transaction entered into by him for his principal and in the absence of any plea of fraud, which requires specific pleading and clear proof, the conclusion of the Trial Court that the second defendant, as a power agent, is also personally liable to return the advance amount paid by the plaintiff, is erroneous and unsustainable in law and in support of his submission, he relies on a decision of the Division Bench of this Court in THE PUDUKOTTAH TEXTILES LTD. AND ANOTHER Vs. B.R.ADITYAN, reported in AIR 1976 MADRAS 341.
9. Per contra, the learned counsel for the first respondent submits that the plaintiff has not seen the first defendant and has entered into the sale agreement only with the second defendant, who is the appellant herein and the conclusion of the Trial Court that the defendants are liable for the suit claim, is just and proper.
10. Ex.A1 is the sale agreement, dated 6.6.1992, entered into between the plaintiff and the second defendant as power agent of the first defendant with regard to the suit property agreeing to sell the same for a consideration of Rs.3,50,000/- and acknowledging the receipt of a sum of Rs.1,50,000/- as advance from the plaintiff. Ex.A2 is the registration certificate of power deed, dated 13.2.1991, executed by the first defendant in favour of the second defendant empowering the second defendant to sell, mortgage and lease the suit property. It is not in dispute that the second defendant executed Ex.A1 sale agreement as power of attorney of the first defendant in favour of the plaintiff. The specific case of the plaintiff is that his efforts to obtain a sale deed for the suit property from the defendants became fruitless and he has sought for return of the advance amount paid together with interest in the suit.
11. The first defendant remained absent and was set exparte in the suit.
12. The second defendant contended that Ex.A1 sale agreement was entered into by him with the plaintiff only on behalf of the first defendant and he has not received any amount personally and he is not having any personal liability for the suit claim. There is no allegation of fraud made by the plaintiff in the plaint and he has only stated that the act of the defendants amounts to cheat the plaintiff. The plaintiff examined himself as P.W.1 and in his testimony, he has only stated that the second defendant has entered into Ex.A1 sale agreement with him as power of attorney of the first defendant and the plaintiff came to know that the suit property does not belong to first defendant and it is originally owned by one Kokilambal and he asked for return of the advance amount from the defendants and that was not given, pursuant to which, he issued Ex.A3 advocate's notice dated 28.2.1994 and the same was received by the defendants as evidenced by Ex.A4 postal acknowledgement. There is no allegation of any misrepresentation made by the defendants in the plaint averments and the plaintiff in his oral testimony also does not say so. In such circumstances, the finding of the Trial Court that the first defendant, as principal and the second defendant, as agent, hatched a plan to cheat the plaintiff, is not warranted either on facts or in law and cannot be sustained.
13. The second defendant, when he acted as agent, obviously had the implied authority to act for the first defendant in the matter of sale of the suit property. It is not the case of the plaintiff that there was any contract making the second defendant, as agent, personally liable for honouring the sale agreement and executing the sale deed. As per the recitals in Ex.A1 sale agreement, the second defndant has received the advance amount for and on behalf of the first defendant. There is neither plea nor evidence that the second defendant had any personal interest or secured a benefit under the sale agreement. In such circumstances, the contention of the learned counsel for the appellant that the plaintiff could only obtain the relief as against the first defendant, who is the principal and not against the second defendant, who is an agent of the first defendant/principal, is well founded. The Division Bench, in the decision referred above, has laid down the law in clear terms and the same is extracted below for better appreciation:-
" 7. .... It is a well established principle of law that qui facit per alium facit per se, he who acts through another, acts for himself. In the instant case, the company acted through its Director-in-charge. Virtually, therefore it was the incorporated company, who was acting for itself, though in the garb of its agent or Director-in-charge, namely the second defendant. In such circumstances, Section 230 of the Indian Contract Act makes it clear that in the absence of any contract to that effect an agent cannot personally enforce contracts entered into by him on behalf of his principal, nor is he personally bound by them. The learned Counsel for the respondents was unable to refer to us any contract to the contrary in the instant case whereby the second defendant took over for himself the personal responsibility of honouring or executing the so-called contract in the suit. In the absence of any such contract, an agent cannot be personally bound by all such acts done by him for and on behalf of his principal. In the case under consideration, the second defendant received the advance, for and on behalf of the first defendant, but mistakenly encashed it prematurely without adverting to the fact whether a contract has been fully forged or concluded as between the parties. It is common ground that the cheque was issued in the name of The Pudukkottah Textiles Limited. The moneys went to the benefit of the first defendant. The second defendant obviously acted for and on behalf of the first defendant and did not receive any benefit from the so-called contract. In these circumstances, we agree with the learned Counsel for the appellant that the plaintiff could only obtain relief as against the first defendant who is the principal in the bargain and not as against the second defendant, who is an agent to such a principal. Following the well-known principle laid down in Section 230 of the Contract Act as also the accepted law that an agent is not personally liable for the acts done by him for and on behalf of his principal and in which he had no interest or secured a benefit, we are of the view that the learned trial Judge was wrong in having decreed the suit against both the defendants. In these circumstances, we modify the decree of the trial Court and decree the suit as against the first defendant with costs. In so far as the suit against the second defendant is concerned, it is dismissed, but there will be no order as to costs."
14. The above decision applies in all fours to the facts of the present case. The second defendant obviously acted for and on behalf of the first defendant and he cannot be personally made liable for the suit claim as per the principle laid down in Section 230 of the Contract Act. The conclusion of the Trial Court that the second defendant is also liable for the suit claim, is erroneous in law and liable to be set aside. The Point is determined accordingly.
15. The appeal is allowed and the judgment and decree of the Trial Court is modified to the effect that the suit as against the second defendant shall stand dismissed. However, there shall be no order as to costs in the appeal.
8.2.2008 Index: yes.
Internet: yes.
vks To
1. The I Additional Subordinate Judge, Pondicherry.
2. The Section Officer, V.R.Section, High Court, Madras.
C.NAGAPPAN, J.
vks A.S.No.1351/1995 8.2.2008