Indian Kanoon - Search engine for Indian Law

7. Where one man employs an agent, there cannot be any difficulty. Section 201. Contract Act, which does not make an exception in favour of a special contract, says that the agency is terminated by the death of either the principal or the agent. If the same person continues to be empolyed on the same terms as before under the legal representative of the deceased principal, in the eye of the law a new agency is constituted, and for the purpose of limitation a suit for accounts for the old agency must be brought within three years of the termination of the said agency e.g. from the principal's death, assuming that there had been no previous demand and refusal to account: Madhusudan Sen v. Rakhal Chandra 1916 Cal 680 at pp. 254-255; Bir Bikram v. Jadab Chandra 1935 Cal 817. This, I gather, is also the principle formulated by the Judicial Committee of the Privy Council in Nobin Chandra Barua v. Chandra Madhab Barua 1916 P C 148 where Lord Parmoor said that the legal representatives of Nanda Kumar Barua had a right to demand accounts from the agent appointed by Nanda Kumar for a period of three years from the death of Nanda Kumar under the last part of Article 89, Limitation Act.

8. Cases, however, where two or more persons appoint an agent by the same act or instrument, and where only one of such principals dies, present difficulties. These cases cannot be answered simply by the terms of Section 201, Contract Act. The principle that the death of the principal terminates the agency as embodied in Section 201, Contract Act, is a principle taken from the English law. In England, however, cases where the appointment of an agent had been made by a firm have presented difficulties when one member of the firm subsequently died. It has been held that death of one of the partners does not ipso facto terminate the agency, but the scope of the agency and the business for which the agent was employed are material factors: Taskar v. Shepperd (1858) 6 H & N 575 and Phillips v. Hull Alhambra Palace Co. (1901) 1 K B 59. In Re Sital Prosad 1917 Cal 436, a case which has been followed by the Madras High Court in Ponnusami Pillai v. Chidambaram Chettiar 1918 Mad 279, Mookherjee, J. examined the position in detail and laid down the law in these terms: