(1) As these two appeals are interconnected they arc disposed of bythis common judgment. A. S. 934/86 preferred by the plaintiff arises out of suit o. S. 63/80 on the file of the ii additional subordinate judge, kakinada. Transferred a. S. No. 2367 of 1987 filed by the defendant (plaintiff in o. S. 63/80) arises out of o. S. 23 of 1981. The plaintiff appellant m/s. Popular shoe mart - in a. S. 934 of 1986 is a manufacturer of footwear and also distributor of various other brands of foot - wear like carona, b. S. C. Etc. , with several branches in the state. The branch in kakinada with which the suit is concerned was opened in 1969 in a building situated on the main road. The branch was shifted subsequently to the premises bearing municipal no. 28 - 1 - 26 belonging to one krishna murthy taken on lease for a period of ten years on a monthly rental of rs. 625/ - for the first four years and at rs. 650/ - for the remaining six years with effect from the date of taking possession as per the terms and conditions contained in the lease deed ex. B - 19. The building was leased out, it is recited in ex. B - 19, to enable the first defendant to carry on business in foot - wear. It was agreed between the parties and so recited in ex. B - 19 that the first defendant deposited rs. 10,000/ - towards advance rent which was to be adjusted against monthly rentals at the rate of rs. 200/ - per month. The building was purchased by the second defendant, the wile of the first defendant, under a registered sale deed, the original of ex. B - 20 dated 7 - 6 - 78, for a consideration of rs. 60,000/ -. The case of the plaintiff is that the first defendant was appointed as manager to run the business in accordance with the terms and conditions mutually agreed between them and incorporated in exs. A - 3 dated 1 - 7 - 67, a - 4 dated 6 - 4 - 69 and a - 5 dated 1 - 12 - 1970. A fresh agreement superseding the previous agreements was entered into on 5 - 4 - 74. Ex. A - 6 is the english version of the agreement and a - 6 (a) its telugu version. The first defendant being the manager, it was pleaded by the plaintiff, the relationship between them is one of employer and employee and, therefore, the lease of the plaint schedule premises was taken for the benefit of the plaintiff benami in the name of the first defendant. The branch exhibited the sign - board of the plaintiff - company and the business was run for the benefit of the plaintiff which was also known to the second defendant. The goods despatched by the plaintiff from time to time were sold by the first defendant at the prices fixed ; the registration certificate under a. P. General sales tax was issued by the authorities in the name of the plaintiff and the bills also were issued by the branch in the plaintiff's name. The first defendant was placing indents for goods required for the branch from time to time with the plaintiff and he also was sending sales, expenditure and stock statements to the head office. The agreements provide for payment of commission at a certain per centage on the amounts of sales effected in respect of different brands and varieties of foot - wear. The first defendant was to defray the expenses of the branch - rent, salaries of the staff etc. - from out of the commission amount and the net amount received by the first defendant was for managing the branch. It was alleged in the plaint that the first defendant stopped sending the statements of sales expenditure for the fortnight ending 15 - 12 - 79 onwards and with a mala fide intention, on 18 - 12 - 79 the first defendant filed a suit o. S. 956/79 renumbered as o. S. 23 of 1981 on the file of the district munsif, kakinada seeking a permanent injunction restraining the plaintiff from interfering with his stock, furniture etc. , in the plaint schedule premises. It was alleged in that suit that a registered notice was issued by the first defendant on 17 - 12 - 79 terminating the agency with effect from 14 - 12 - 79 and that the sale proceeds up to 14 - 12 - 79 and the stock on band were adjusted towards the amount of deposit and commission due to the first defendant and, therefore, he became the owner of the stock in trade. It was asserted by the plaintiff that he was willing and prepared to pay the correct rent to the second defendant for the suit premises and in fact rents for the months of december, 1979 and january, 1980 were sent by money orders to the second defendant but the latter refused the same with mala fide motives. The suit was, therefore, instituted seeking a declaration (1) that the lease of the plaint schedule premises in the name of the first defendant was benami for the plaintiff, (2) that the first defendant was bound to render a true and complete account of the stocks received up to the date of the termination of the agreement 14 - 12 - 79 and hand over the stocks and furniture and (3) a permanent injunction restraining the defendants 1 and 2 from carrying on business in the plaint schedule premises.
(2) Resisting the suit it was contended by the first defendant in thewritten statement that the lease was obtained by him for his own benefit and not for the benefit of the plaintiff. The telugu agreement a - 6 (a) is not part of the english agreement a - 6 and the latter alone governs the rights of the parties. There is no reference in the english agreement a - 6 about the conferment of any benefit on the plaintiff ic respect of the lease of the plaint schedule premises. He also denied that he acted as the manager and asserted that he acted only as an agent to carry on the business on commission basis. The sign - board did not mention that it is a branch shop. He claimed that besides the security amount of rs. 40,000/ - he was entitled to commission. The rcason for his terminating the agency was that the managing partner of the plaintiff - firm wanted to grab a major portion of the commission amounts unauthorisedly. After terminating the agency the first defendant claimed that he was entitled to deal with the premises as he pleased. The second defendant was not willing to accept sub - tenancy of the plaintiff and, therefore, it was not open to the plaintiff to claim any benefits under the lease agreement ex. B - 19 between the first defendant and the previous landlord krishna murthy.
(3) As already noticed supra, the first defendant filed the suit o. S. 956/79 in the court of the district munsif seeking a permanent injunction against the plaintiff in o. S. 63/80 restraining him from interfering with the furniture and stocks in respect cf the plaint schedule premises and the suit o. S. 956/79 was subsequently transferred to the file of the court of the subordinate judge and renumbered as o. S. 23/81. Oa a joint memo filed by both the parties the two suits were clubbed and the evidence recorded in o. S. 63/80 was treated as common to both the suits.
(4) The learned judge after considering the evidence held that thetelugu agreement ex. A - 6 (a) was not part of the english agreement a - 6, and, therefore, clause 25 of the telugu agreement which conferred the rights on the plaintiff in respect of the lease of the plaint schedule building was unenforceable. There was no relationship of master and servant between the plaintiff and the first defendant and the latter was only an agent of the former. It could not be the intention of the parties to enforce clause 25 of the telugu agreement ex. A - 6 (a) in 1974 when the lease agreement ex. B - 19 was executed by the previous landlord in favour of the first defendant on 30 - 11 - 71. The failure on the part of the plaintiff to get the tenancy attorned in his favour after the building was purchased by the second defendant negates the assertion that the second defendant had knowledge that the lease ex. B - 19 was for the benefit of the plaintiff. The accounts of the plaintiff did not disclose that any amount was given to the first defendant for payment as advance to the landlord and it could not be said that the lease was benami for the plaintiff. The agreement between the plaintiff and the fist defendant docs not contain any clause empowering the plaintiff to transfer the first defendant to any other branch, no fixed salary was paid to the first defendant, the provisions of shops and establishments act were not made applicable to him and as he was getting commission on the sales effected in the shop, the learned judge held that the relatienship between them was that of principal and agent but not master and servant. Being an agent, the learned judge held, the first defendant has a right to terminate the agency at any time. If the plaintiff had any grievance about the failure of the defendant to render account he must come forwsr d with a separate suit for accounts. In view of these findings, the learned judge dismissed the suit o. S 63/80 with costs. As a result of the dismissal of the suit o. S. 63/80, the learned judge decreed the suit o. S. 23/81 (filed by the first defendant in o. S. 63/80) with costs.
(5) The parties in these two appeals are referred to the plaintiff anddefendants 1 and 2 as arrayed in o. S. 63/80. The points that arise for determination are ;
(1) whether the lease of the suit premises obtained in the name of the fist defendant would enure to the benefit of the plaintiff ? (2) whether the first defendant was an employee or agent of the plaintiff ? if he was the agent whether he was entitled to terminate the agency without reasonable notice ? (3) whether the first defendant is bound to render true and correct account to the plaintiff?
(6) Point (1) ex. B - 19 is the lease deed, dated 30 - 11 - 71 in respect ofthe suit premises executed by the landlord krishna murthy in favour of the first defendant. There is no clause in the lease deed conferring any rights in respect of the suit premises in fa our of the plaintiff. The claim ofthe plaintiff in regard to the suit premises is based on clause 25 of the telugu agreement ex. A - 6 (a). The agreement ex. A - 6 (a) contains the signatures of the plaintiff as well as the first defendant; it bear the heading agency branch shoe business agreement". Clause 25 of ex. B - 19 bears the heading "shop rent agreement" and it recites that whether the rent agreement is executed in favour of cither the plaintiff or first defendant or some other person, the first defendant agrees that the plaintiff alone shall have rights under the rent agreement. Before the branch was shifted to the suit premises the business was carried on in the building opposite the suid premises and the rental agreement in respect of that building was obtained in 1967 by the plaintiff. In his evidence as p. W - 1 pitchaiah, the managing partner of plaintiff - firm, stated that although ex. B - 19 was concluded between the first defendant and the landlord krishna murthy the lease was obtained for the benefit of the plaintiff's company. Exs. A - 3, a - 4 and a - 5 (dated 1 - 7 - 67, 6 - 4 - 69 and 1 - 12 - 70 respectively) are the agreements between the first defendant and the plaintiff regarding their business relations. These three agreements were prior to ex. A - 6 dated 5 - 4 - 74. The lease agreement ex. B - 19 was long prior to ex. A - 6. There is no clause in the english agreement ex. A - 6 analogous to clause 25 of telugu agreement ex. A - 6 (a). The telugu agreement a - 6 (a) was tagged on to the english agreement a - 6 and it is the case of the plaintiff that the telugu agreement forms part and parcel of the english agreement. The first defendant srini - vasa rao in this evidence as d. W - l stated that he had taken the suit premises on lease for bis own benefit and there is no relationship of tenant and landlord between the plaintiff and the second defendant, his wife who subsequently purchased the building under the original of ex. B - 20 dated 7 - 6 - 78 for a consideration of rs. 60,000/from the original owner krishna murthy. In the cross examination he stated that he is illiterate and he signed on four agreements in telugu at the same time in 1972.
(7) The plaintiff failed to prove that the telugu agreement a - 6 (a) is part and parcel of the english agreement a - 6. The telugu agreement although contained the signatures of the plaintiff and the first defendant, bears no dates. Merely because the teiugu agreement was tagged on to the english agreement ex. A - 6 it cannot be believed that the former is part and parcel of the, latter. Even p. W - 1 in his evidence admitted that the teiugu agreement of the year 1969 was attached to the english agreement of 1960 mistakenly. He could not explain why dates were not put on the teiugu agreements. He admitted that english agreements alone were taken to the auditor. It must also be noticed that both the agreements are physically separable. It cannot, therefore, be said that the teiugu agreement ex. A - 6 (a) is part and parcel of english agreement a - 6.
(8) Shri poornayya, learned counsel for the second defendant andsbri m. S. R. Subrahmanyam learned counsel for the first defendant argued that as the case of the plaintiff was based qn the plea that the lease was benami for the benefit of the plaintiff, the suit must be dismissed in view of section 4 of benami transactions (prohibition) act, 1988 under which no suit claim or action to enforce any right in respect of any property held benami is maintainable. When the suit was instituted in 1980, there was no law prohibiting benami transactions. Benami transaction is defined by clause (a) of section 2 of the act as meaning any transaction in which property is transferred to one person for a consideration paid or provided by another person. The definition of property by clause (c) of section 2 includes any right or interest in movable or immovable, tangible or intangible property. The lease deed ex. B - 19 recites that rs. 10,000/ were deposited as advance by the first defendant with krishna murthy, the then landlord to be adjusted at the rate of rs. 200/ - - per month against the monthly rental payable. There is no evidence whatsoever to show that the consideration in any manner for obtaining the lease of the suit premises came from the plaintiff. The account books of the plaintiff do not show that funds were provided by the plaintiff to the first defendant. On the other hand the evidence on record discloses that the consideration in its entirety came exclusively and solely from the first defendant. The lease deed was executed in favour of the first defendant and as the latter was not an employee of the plaintiff it cannot be said that the suit premises was obtained benami for the benefit of the plaintiff. The trial court, therefore, rightly rejected the plaintiff's claim that the transaction was benami. The position would have been different had there been no finding on this aspect. When once evidence was adduced and a finding recorded to the effect that the transaction was not benami, i am not inclined to agree with the contentions of the learned counsel for the defendants 1 and 2 that merely because the plea of benami was raised in the suit, at the appellate stage this court should dismiss the suit on that ground.
(9) Shri venkatram reddy, learned counsel for the plaintiff - appellantcontends that even though the second defendant is not a party to the teiugu agreement ex. A - 6 (a) , clause 25 therein which confers rights on the plaintiff binds the plaintiff and the first defendant inter se notwithstanding the provisions of the rent control act. The definition of tenant under section 2 (ix) includes any person by whom or on whose account rent is payable and, therefore, the learned counsel argued that as the rent was payable on account of the plaintiff, the latter must be deemed to be a tenant. In any event, the learned counsel contended that after the second defendant became the owner of the building on 7 - 6 - 78, knowledge about the existence of the condition stipulated in clause 25 of ex. A - 6 (a,) must be imputed to her. In support of these contentions reliance was placed upon kishan lal vs. Ganpat ram 1, muralidhar vs. State of u. P. 2 and srikanth neemkar vs. G. Yeltoji rao 3.
(10) In kishanlaps case the tenant m/s. Singer sewing machinecompany by its unilateral action required the landlord to treat its manager one khosla as the tenant. The controller as well as the appellate authority, the district court, held that possession of the building was handed over by the tenant to khosla without the consent of the landlord. The high court in exercise of its revisional jurisdiction under article 227 took the view that after the communication sent by the tenant to the landlord the former had no interest left in the tenancy and the tenancy being from month to month terminable at the will of the landlord could not be the subject matter of transfer or of sub - letting. The high court, therefore, held that the order passed by the district court affirming the view of the controller was without jurisdiction. The supreme court held that the company (tenant) did not serve notice as required by the law nor did the landlord agree to accept the unilateral determination of the tenancy by the tenant. Khosla being the assignee of the tenancy rights was liable to be sued in the court of the controller for an order in ajectment. The following observations in iv. H. King vs. Republic of india 4 were quoted with approval :
"there is a clear distinction between an assignment of a tenancy on the one hand and a relinquishment or surrender on the other. In the case of an assignment, the assignor continues to be liable to the landlord for the performance of his obligations under the tenancy and this liability is contractual, while the assignee becomes liable by reason of privily of estate. The consent of the landlord to an assignment is not necessary, in the absence of a contract or local usage to the contrary. But in the case of relinquishment it cannot be a unilateral transaction; it can only be in favour of the lessor by mutual agreement between them. Relinquishment of possession must be to the lessor or one who holds his interest; and surrender or relinquishment terminates the lessee's rights and lets in the lessor"
.
The observation in king's case are of no assistance to the appellant - plaintiff in the case on hand. The rights which the plaintiffis claiming under clause 25 of ex. A - 6 (a) cannot be treated as assignment of tenancy in its favour. The previous landlord krishna murthy was not and could not be aware of clause 25 since ex. A - 6 (a) which was claimed to have been executed on 5 - 4 - 74 was more than 2 years subsequent to the execution of the lease deed ex. B - 19 dated 30 - 11 - 79. Admittedly there was no attornment of tenancy in favour of d - l. Except in cases where a person is a beneficiary under terms of a contract or [where a contract is part of family arrangement he cannot sue for the enforcement of the contract to which be was not a party (vide m. C. Chacko vs. State bank travancore a. I. R. 1970 s. C. P. 505). Ex. B - 19 being a document governing the rights of the parties thereto krishna murthy the then landlord and the first defendantand after the attornment of tenancy in favour of the first defendant when the building was purchased by the second defendant, the plaintiff being a total stranger - an undisclosed strangerto the lease deed has no right to seek enforcement of the conditions therein claiming himself to be the real tenant based upon clause 25 of a - 6 (a) to which the second defendant the land lady is not a party.
(11) By clause 25 of a - 6 (a) it cannot be said that the first defendanthad waived his statutory rights under the control act. The first defendant being the tenant of the premises under ex. B - 19 cannot be evicted therefrom except in the manner provided in the a. P. Buildings (lease, rent and eviction) control act, 1960. The rights conferred upon the tenant under the rent control act are based upon a public policy. It is not, therefore, open to the plaintiff to contend that the first defendant must be deemed to have waived his statutory rights. The benefits of the provisions of the rent control act cannot be said to have been waived by the tenant (muralidhan vs. State ofu. P. A. I. R. 1974 s. C. 1924 at p. 1930). There is no specific agreement between the plaintiff and the first defendant in respect of the suit premises and in the absence of the second defendant recognising the plaintiff as her tenant as was the situation in srikanth's case (3) , it is not open to the plaintiff to claim that the relationship between it and the second defendant was that of tenant and landlord. Sambasiva rao, j (as he then was) in venkateswarlu vs. K. Subrahmanyam 5 dealing with the question whether the transferee of a tenancy can come on record as the appellant in an appeal preferred by the transferer - tenant against an order of eviction passed by the rent controller, after considering the provisions of the rent control act, observed:
"it is thus manifest that it is only a person who has been agreed to by the landlord that can be called a tenant or when he dies, his surviving members of the family or a tenant who is holding over after the termination of the tenancy. The definition goes farther and declares that a person brought into occupation of the premises by its tenant is not a tenant. In other words even if there is an agreement between the tenant and the third person about the transfer of tenancy without the consent or agreement of the landlord, the third person will not become a tenant within the meaning of the act even though he has been in occupation pursuant to his agreement with the tenant"
.
These observations of sambasiva rao, j (as he than was) are very opposite to the case on hand. There is no clause in ex. B - 19, the lease agreement, conferring power on the tenant to assign tenancy in favour of others. The condition incorporated in clause 25 of ex. A - 6 (a) was not with the consent of the landlord. The a. P. Rent control act forbids creation of rights in third parties who are not parties to ths lease deed and the third parties cannot successfully raise the plea of waiver of statutory rights by the tenant. The lease period of ten years under ex. B - 19 expired on 29 - 11 - 1981 and this circumstance also disentitles the plaintiff from claiming any rights in respect of the suit premises, vide anand nivas (p) ltd. Vs. Anandji a. I. R. 1965 s. C. 414). The plaintiff is, there, not entitled to claim any rights in respect of the suit premises and the point is accordingly answered against the plaintiff.
(12) Point (2) shri venkatram reddy, learned counsel for the plaintiffhas contended that the first defendant was only an employee of the plaintiff - firm. The bills in conection with the sales of foot - wear were being raised in the name of the plaintiff. The registration certificate under the a. P. General sales tax act was issued in the name of the plaintiff. The prices for the various brands of foot - wear were fixed by the plaintiff. Periodical statements regarding cash balance and stock position were being submitted by the first defendant and he was also receiving instructions from the hsad office of the plaintiff with regard to the modalities of sales. Apart from all these circumstances, the various clauses in the english agreement a - 6, according to the learned counsel, cumulatively establish that the jural relationship between the plaintiff and first defendant was that of master and servant and not principal and agent.
(13) It is necessary to notice briefly some of the relevant clauses inthe english agreement ex. A - 6 dated 5 - 4 - 74. Clause 1 obligates the plaintiff to start a branch at kakinada under the name and style of "popular shoe mart" and by clause 2 the first defendant was required to act as manager of the branch. Under clause 3 the first defendant should keep an amount equal to the value of the goods supplied by the plaintiff as deposit with the plaintiff without any interest. The plaintiff, by clause 4, was required to supply foot - wear of different varieties to kakinada branch not exceeding the value of the amount deposited by the first defendant. The various rates at which commission was to be paid to the first defendant were incorporated in clause 5. Clause 7 forbade the first defendant to sell any goods other than those supplied by the plaintiff. Rent, electricity, establishment and other incidental expenses were required to be borae by the first defendant by clause 8. The first defendant was obliged to remit the sale proceeds to the plaintiff after keeping an amount not exceeding ths commission payable to him at the end of accounting year. If any loss caused dus to the negligence of the first defendant in the discharge of his duties he was required to indemnify the plaintiff. Clause 11 specifically states that the persons working or otherwise belonging to the first defendant shall not be treated as employees of the plaintiff. The first defendant by clause 12 was not entitled to any profit or liable to any loss sustained in the running of the branch. If the agreement was cancelled the first defendant was required to transfer all the assets like furniture etc, belonging to the plaintiff if so required by the latter at book value. In the preamble part of the agreement ex. A - 6 it was mentioned that because the sales tax act was amended by the government introducing single and multi point tax on shoes and as the tax rates were increased considerably and the managers in charge of agency branches requested the plaintiff to revise the rates of commission the agreement was concluded cancelling the previous agreements exs. A - 3, a - 4 and a - 5. The telugu agreement a - 6 (a) bears the heading "agency branch shoe agreement business". It contains certain extra clauses which are not found in the agreement a - 6. Appointment and removal of staff members, by clause 8 of the telugu agreement ex. A - 6 (a) was to be done by the first defendant with the permission ot the plaintiff. The daily sales amount not below rs. 500/and not exceeding ks. 1,000/should invariably be sent by first defendant by a bank draft to the plaintiff and the cash balance in the shop should not exceed rs. 50/. The plaintiff was empowered to take over the business by removing the first defendant as per clause 16. The plaintiff alone was empowered by clause 23 to change the conditions in the - agreement and in case the first defendant violatej any of the conditions (hi plaintiff was empowered to cancel the agreement.
(14) In this evidence asp. W - 1, the managing partner pitchaiah of theplaintiff - firm asserted that the first defendant was only a branch manager. Exs. A - h, a - 12 and a - 13 are the sales and commission statements for november 1979. The shop rent, salaries and electricity bills according to p. W - 1 were paid out of the sale proceeds. The sales were conducted in the name of the plaintiff and the bills were issued in the plaintiff's name. The sales tax registration was also in the name of the plaintiff and the sign beard of the shop disclosed that it was the plaintiff's shop. The stock were checked periodically by the plaintiff's representatives. He also produced the account bocks exs. A - 16 to a - 38. Exs. A - 41 to a - 60 were the letters received from the kakinada branch by the head office. Certified copies of income - tax returns exs. A - 68 and 69 for the years 1977 - 78 and 78 - 79 were produced to show that commission was paid to branch managers. P. W - 2 ugandhar was the branch manager of warangal shop. He stated that the warangal branch sends fortnightly and monthly statements to the plaintiff. Goods were not sold by the plaintiff to the warangal branch but the same were supplied when orders were placed. The sale proceeds are remitted directly to the lead office (plaintiff) by means of demand draft. He took the branches from the plaintiff at hanumakonda, karimnagar, kbammam and kothagudem. According to him the plaintiff has three types branches (1) those run by the plaintiff by employing salaried staff, (2) those run by the plaintiff by paying commission to the agents; and (3) those run by agents called agency branches. P. W - 3 is one radhakrishna murty, branch manager of nellore. According to him the lease in respect of the nellore branch shop was obtained in the name of p w - 1, the managing partner.
(15) As against the evidence adduced by the plaintiff, the firstdefendant went into the box as d w - 1 and stated that the plaintiff had nothing to do with the shop taken on lease by him from krishna murthy. He goes to head office to receive stocks and pay commission. He admitted that he terminated the agency by ex. B - 1 as p - w - 1 was taking share in the commission unauthorisedly.
(16) Section 182 of the contract act says that an agent is a personemployed to do any act for another or to represent another in dealings with third persons. The person for whom such act is done, or who is represented is called the 'principal'. A servant also is an agent but unlike agent he has no discretion to carry out the work entrusted to him whereas an agent has large discretion with regard to the time and mode of doing the work entrusted. The statement of law contained in halsbury's law of england as to the relation between master and servant and principal and agent was followed by the supreme court in lakshminarayan ram gopal and son vs. Hyderabad government 6 the court held : "the statement of the law contained in halsbury's laws of england - hailsham editionvol. 22, page 113 para. 192 may be referred to in this connection :
"the difference between the relations of master and servant and of principal and agent may be said to be this ; a principal has the right to direct what work the ugent has to do : but a master has the further right to direct how the work is to be done"
.
The position is further clarified in halsbury's laws of england - hailsham edition - vol. 1, at page 193, art. 345 where the positions of an agent, a servant and independent contractor are thus distinguished :
"an agent is to be distinguished on the one hand from a servant and on the other from an independent contractor. A servant acts under the direct control and supervision of his master, and is bound to conform to all reasonable orders given to him in the course of his work ; an independent contractor, on the other hand, is entirely independent of any control or interference and merely undertakes to produce a specified result, employing his own means to produce that result. An agent though bound to exercise his authority in accordance with all lawful instructions which may be given to him from time to time by his principal, is not subject in its exercise to the direct control or supervision of the principal. An agent, as such is not a servant, but a servant is generally for some purpose his master's impliej agent, the extent of the agency depending upon the duties or position of the servant"
.
(17) Admittedly the first defendant was getting only commission inrespect of the sales effected by him. He appointed the staff. The shop could be run even in partnership as can be seen from the evidence of p. W - 2 the agent at khammam who admitted that he ran the agency business at khammam and kothagudcm in partnership with others. The first defendant ha large discretion in the matter of effecting sales of the goods entrusted to him. The leese of the premises was in his name. Electricity charges, house ent and other incidental establishment charges were borne by him. He was lot liable to be transferred to any other branch and the provisions of the shops and establishments act were not made applicable to him. His name liid not figure in any of the registers maintained by the plaintiff. He himself was an employer in respect of the persons working in the shop. It must also be noticed that the telugu agreement ex. A - 6 itself is entitled "agency branch shoe business agreement. " how the registration of firm should be donc is specified in sec. 58 of the partnership act. In the prescribed form the particulars in section 58 are required to be stated ; one of the particulars that must be disclosed section 58 (c) is the names of any other places where the firm carries on business. Ex. A - 2 the registration extract of the plaintiff - firm does not show that the shop run by the first defendant at kakinada is a branch of the plain - tiff. In the circumstances, the mere description of the first defendant as manager in the english agreement ex. A - 6 and his submission of accounts to the plaintiff would not make him a servant of the plaintiff. The percentage of the commission also was fixed by the agreement and in the income - tax returns the commission paid to the first defendant was disclosed by the plaintiff. I, therefore, hold that the first defendant was an agent of the plaintiff but not his servant.
(18) The first defendant by his notice ex. B - l, dated 17 - 12 - 79addressed to the plaintiff had terminated the agency retrospectively from 14 - 12 - 79. In the notice the first defendant alleged inter alia that the plaintiff was not rendering accounts properly and stocks were not despatched in time as a result of which "the agents are generally put to loss. " the conduct of business by the plaintiff was not congenial to the market conditions and, therefore, the first defendant felt that there was no possibility of improving the prospects for carrying on business in future and accordingly he expressed in ex. B - 1 :
"i have decided to cease to be your agent and to put an end of the agency. The furniture etc. , belongs to me. The sale proceeds till the end of 14 - 12 - 79 and the stock on hand as on this closing date namely 14 - 12 - 79 as reduced by the commission due thereon have been adjusted by appropriating towards the amount of deposit and commission due to me inclusive of the commission on sales effected from 1 - 4 - 79 to 14 - 12 - 79 in relation with account available with me. The amount thus appropriated is rs. 60,876 - 63. The notice is issued to you to inform you that the relationship of principal and agent no longer subsists between you and roe and that you are in no way concerned with my business that i may or may not carry on. If you do not send a copy of account within 3 days from the receipt of this notice by you the necessary action follows."
(19) Issue no. 7 framed by the trial court specifically relates to thetermination of the agency. As issue no. 5 which related to the question whether the first defendant acted as manager or as an agent and issue no. 6 which related to the question whether the telugu agreement ex. A - 6 (a) formed part of ex. A - 6 were answered in favour of the plaintiff, the trial court did not discuss any of the aspects involved in regard to the question relating to the termination of agency. The trial court merely held :
"issue no. 7 in o. S. No. 63/80 : in view of my finding on issues 5 and 6 i hold or this issue that the termination of agreement by d - 1 is valid. D - 1 being an a agent has a right to terminate the agency agreerment at any tine. This is also decided in favour of d - 1"
.
The finding of the court below is clearly unsustainable. No time limit is set in the agreement a - 6 ; it does not contain any clause to bring about the termination of the agency. Clause 13 merely says that if the agreement is cancelled the first defendant shall transfer all the assets like furniture etc. , which belong to the plaintifl if the latter requires it at book value. Clause 14 provides that if any disputes arise the decision given by the plaintiff shall be final.
(20) Section 201 of the indian contract act deals with terminationof agency. It says inter alia that the principal has power to revoke his authority and the agent has power to renounce the business of the agency. Agency comes to an end when the business of the agency is completed or if the principal or the agent dies or becomes of unsound mind or the principal is adjudicated as an insolvent. Section 202 lays down that if the agent has himself an interest in the property which forms the subject - matter of the ugency, in the absence of any express contract the agency cannot be terminated to the prejudice of the agent's interest. Section 205 says that where there is an express or implied contract that the agency should be continued for a fixed period of time, the principal must make compensation to the agent, or the agent to the principal as the case may be for any revocation or renunciation of the agency without sufficient cause. Section 206 says that reasonable notice must be given "of such revocation or renunciation"; otherwise the resultant damage to the principal or the agent as the case may be must be made good to the one by the other. Sections 201 to 210 bear the heading ''revoca - tion of authority". In j. K. Sayani vs. Bright brothers 7 a division bench of madras high court held that the application of sec. 206 which deals with the notice of revocation or renunciation is not confined to cases governed by sec. 205 but it is comprehensive enough encompassing all cases of revocation both by the principal as well as renunciation by the agent. The di\ision bench observed :
"in our view
section 201 and sec. 204, if they are to be understood in the realistic, legalistic and equitable sense, then whenever one of the two parties as between the principal and the agent is aggrived by a premature determination of trie right of agency without reasonable cause, the other should be compensated. It is unnecessary that such compensation should be given only in a case where a period of time is fixed for the existence or continuance of such jural relationship. Section 206 in our view has to be understood as being general in. Scope and not being one which has an impinge only and only upon s. 205 for the only reason the word 'such' is used in section 206. As revocation and renunciation of the contract of agency may take place in myriad ways, the rights and obligations that flow from such termination can only be after the party who intends to snap such jural relationship, puts the other aggrieved party on reasonable notice. This could also be justified on the principles of natural justice."
The interests of both the plaintiff and the first defendant are involved in the agency business. Reasonable notice is a mandatory requirement under sec. 206 for termination of the agency. When reasonable notice is a necessary sinc - qua non for snapping the jural relationship of principal and agent it necessary follows that renunciation of the agency by the first defendant by ex. B - 1 is clearly illegal. The termination of the agency by the first defendant bring void and ex. B - l being a nullity, i, therefore, hold that it is open to the plaintiff to file a separate suit for damages and the limitation for instituting such a suit shall run from the date of this judgment.
(21) Point (3) the trial court dealt with the question of the liabilityof the first defendant to render account under issue no. 10. The learned judge expressed the view that as the suit was field mainly for a declaration of the leasehold riehts in respect of the suit premises the plaintiff cannot seek a decree picking up some items in the accounts and "if he plaintiff has any grievance about the items to be accounted he must come forward with a suit for accounts " the finding of the learned trial judge on this aspect is clearly erroneous. One of the specific reliefs sought in the plaint is: "xv (b) : directing the first defendant to render a true and complete account of all the stock received by him in the branch shop up to and as on the date of the termination of the agreement i. E. , 14 - 12 - 79 and hand over the stocks and furniture to the plaintiff an receiving from the plaintiff the value of the furniture less depreciation as per the terms of the agreement. " in view of this specific prayer in the plaint the learned counsel appearing for the first defendant has clearly conceded that the latter is bound to render a true nnd correct account. In view of my finding that the popular shoe mart is net the owner of the suit premises and as k. Srinivasa rao (d - 1 in o. S. 63/80) was only an agent of popular shoe mart, the decree granted in o. S. 23/81 in favour of srinivasa rao merits no interference. Transferred appeal 2367/87 preferred against o. S. 23/81, therefore, fails and accordingly it is dismissed without costs.
(22) A. S. 934/86 filed against o. S 63/80 is partly allowed. Thereshall be a declaration that the termination of agency by the first defendant srinivasa rao by ex. B - l is void and the plaintiff, popular shoe mart is, therefore, entitled to file a separate suit for damages and the limitation for tiling such a suit shall run from the date of this judgment.
(23) As the first defendant srinivasa rao is liable to render accountto the plaintiff, the matter is remitted to the court below shall frame an approptiate issue in that regard and after affording opportunity to both sides to lead evidence, decide the question in the light of the evidence adduced by the parlies. There shall be no order as to costs.