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Hingu Lal v. Sarju Prasad
Factual and Procedural Background
The plaintiff instituted a suit for recovery of Rs. 200 which he alleged he had deposited with the defendant on 10 June 1928 and to require the defendant to render a complete account of the plaintiff's shellac business handled by the defendant; on rendition of account a further decree was sought for any balance found due. The defendant denied being the plaintiff's agent and denied receipt of the Rs. 200, contending instead that the sum had been deposited by one Mata Prasad and that the defendant had transacted shellac business for Mata Prasad and paid Mata Prasad what was due.
During trial the parties' examination produced an admission that, on account of the shellac transactions, a sum of Rs. 467-12-6 was due from the defendant, and the defendant stated that that sum had been paid to Mata Prasad. The defendant pleaded limitation.
The trial Court held that the suit was not barred by limitation and that payment by the defendant to Mata Prasad did not absolve the defendant because the contract had been with the plaintiff. On defendant's appeal the lower appellate Court did not decide the merits but held that the suit was barred by limitation, concluding that the agency had terminated at the end of 1928 when the plaintiff told the defendant not to enter into further transactions. A later registered demand was made on 17 May 1933 and the suit was filed on 31 May 1933. The present opinion is from a court hearing the plaintiff's second appeal from the appellate Court's decision.
Legal Issues Presented
- Whether the plaintiff's suit for money received by the defendant (amounting to Rs. 467-12-6 on account of shellac transactions) was barred by limitation under Article 89 of the Limitation Act.
- If limitation applies, whether limitation began to run from the date the agency terminated (as found by the lower appellate Court, end of 1928) or from the date of demand (17 May 1933), in light of competing case law on when an agency terminates for the purpose of Article 89.
Arguments of the Parties
Plaintiff / Appellant's Arguments
- The plaintiff asserted that Rs. 200 had been deposited with the defendant on 10 June 1928 and that the defendant acted as his agent in buying and selling shellac, keeping Rs. 200 as margin money.
- Learned counsel for the plaintiff relied on certain reported cases (referred to in the opinion as "12 All 5411" and "26 Cal 715.2") and argued that an agency in such circumstances does not terminate until the agent has paid to the principal the price realized on sale — invoking principles related to Sections 201 and 218 of the Contract Act — and that limitation therefore runs from the date of demand. On that basis counsel urged that limitation should run from the registered demand dated 17 May 1933 and the suit filed on 31 May 1933 was within time.
- The plaint was later confined (by a written statement recorded on 30 July 1934) to recovery of Rs. 467-12-6 arising from profits on the shellac transactions, and counsel sought that limitation be treated as running from the 17 May 1933 demand for that sum.
Defendant / Respondent's Arguments
- The defendant contended that he was never the plaintiff's agent and that Rs. 200 were never deposited by the plaintiff in the defendant's shop; rather, the sum had been deposited by Mata Prasad and the transactions and payments were between the defendant and Mata Prasad.
- The defendant pleaded limitation, and at least in the appellate Court it was argued (and accepted) that the plaintiff had given notice terminating the agency by the end of 1928, so that the cause of action accrued then and the suit filed in 1933 was beyond the three-year period under Article 89.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Case in "12 All 5411" (as cited in the opinion) | Stated (as relied upon by appellant) that agency does not terminate immediately on the sale of goods because there remains an obligation to account and to pay; where an agent receives the price, the agency continues until he has paid the price to the principal, and suit by the principal is within three years from date of demand. | The opinion records this view as one branch of authority relied on by the appellant, but treats those cases as part of a conflict of authority and distinguishes them on facts relevant to the present case (see reasoning about the nature of the commission-agent's business versus an agent entrusted with goods for sale). |
| Case in "26 Cal 715.2" (as cited in the opinion) | Same principle as above (authority holding that agency continues until the agent pays the price and limitation runs from demand). | Placed alongside the 12 All decision as supporting the view that limitation may run from demand; the court considered these decisions but found them distinguishable for the facts at hand and noted conflicting authority. |
| Privy Council in "24 All 27" | Accepted in the opinion as settling that Article 89 of the Limitation Act is the appropriate article governing facts like the present. | The court relied on this to identify Article 89 as the governing provision for suits by principals against agents for movable property received and not accounted for. |
| Madras High Court in "39 Mad 376" | Represents the view that dissented from the Allahabad/Calcutta approach (i.e., supported a differing conclusion on when agency terminates for limitation). | The opinion notes this case as dissenting from the views relied on by the appellant and treats the Madras decisions as part of the conflicting body of authority which the court considered in resolving the present dispute. |
| AIR 1926 Sind 264 (decision of Additional Judicial Commissioner of Sind) | The judge reviewed the conflicting authorities and observed that the distinction between an agent appointed to sell goods and a commission agent who buys and sells on instructions may be material to when the agency is treated as terminated for limitation purposes. | The opinion reproduces and relies on the Sind decision's analysis of the conflict, particularly its caution that the question of termination depends on the facts of each case and that a commission-agent situation may produce a different result from an agent entrusted with goods for sale. |
| AIR 1918 Mad 1325 | Recorded as another Madras decision approving the dissenting view (i.e., one of the Benches supporting the Madras approach). | Referenced to show that the Madras position had further support; the court treated these Madras authorities as part of the alternative line of reasoning to be weighed against the Allahabad/Calcutta line. |
Court's Reasoning and Analysis
The court proceeded by identifying Article 89 of the Limitation Act as the governing provision for suits by principals against agents for movable property received and not accounted for — a proposition said to be settled by the Privy Council decision in "24 All 27" (as cited in the opinion). Article 89 provides that such a suit must be brought within three years from (a) the time when the account during continuance of the agency is demanded and refused, or (b) where no such demand is made, when the agency terminates.
The court considered the conflict in the reported authorities: one line (represented by the Allahabad and Calcutta cases cited by the appellant) holds that where an agent receives the price of goods entrusted for sale the agency continues until the agent has paid that price to the principal, so that limitation runs from the date of demand rather than from the date of sale. Another line (represented by Madras decisions and the Sind decision) disagrees or confines that principle, particularly distinguishing between an agent entrusted with goods for sale (where the duty to pay over is central) and a commission agent instructed to buy and sell on behalf of a principal (where the agency business may terminate when the instructed transactions conclude).
The court emphasized that the termination of an agency must be determined on the facts of each case and expressly disclaimed laying down a general principle that would apply in all situations. On the facts before it, the evidence (including the plaintiff's own testimony) indicated that several transactions were entered into by the defendant on behalf of the plaintiff from about June 1928 to about December 1928, and that the plaintiff gave a clear instruction to the defendant toward the end of 1928 that he should not enter into any further transactions because the plaintiff was going out of station. The lower appellate Court found, on those facts, that the agency terminated at the end of 1928.
Applying Article 89 and the facts as found by the lower appellate Court, the court concluded that limitation began to run from the termination of the agency (end of 1928) rather than from the date of the later registered demand (17 May 1933). Because the suit was filed in 1933 — approximately five years after the agency was held to have terminated — the court found the suit barred by limitation. The court therefore agreed with the appellate Court's conclusion on limitation and declined to disturb the factual finding about termination of the agency.
Portions of the transcript reproduced in the opinion contain missing or uncertain words (represented in the text by "???"); the summary above confines itself to the clear, express findings and reasoning contained in the opinion.
Holding and Implications
APPEAL DISMISSED
Holding (core ruling): The court dismissed the plaintiff's second appeal, agreeing with the lower appellate Court that the plaintiff's suit was barred by limitation because the agency was found to have terminated by the end of 1928 and the suit filed in 1933 came after the three-year period under Article 89 had elapsed. The court ordered the appeal dismissed with costs and recorded that "leave to file an appeal by way of Letters ..." was allowed (the transcript contains an unclear word after "Letters").
Implications: The direct effect of the decision is that the plaintiff's claim for Rs. 467-12-6 (as confined in the plaint by subsequent statement) is time-barred and the appeal fails. The court expressly limited its conclusion to the facts of the case and did not purport to lay down a new, general rule on when agency terminates for limitation purposes; it treated conflicting authorities and resolved the matter on the factual finding that the plaintiff had effectively terminated the agency at the end of 1928. No new general precedent or broad principle beyond the factual conclusion was announced.
1. This is a second appeal by the plaintiff. He brought a suit for the recovery of a sum of Rs. 200 which he said he had deposited with the defendant and added to that a claim that the defendant may be ordered to render the entire account to the plaintiff in respect of the latter's business carried on in shellac by the defendant, and on rendition of account a further decree for that amount which may be found due to the plaintiff by the defendant may be passed in favour of the plaintiff. The case of the plaintiff, as developed in the plaint and in the Court below, was that the sum of Rs. 200 was deposited with the defendant on 10th June 1928 and shortly after, the plaintiff instructed the defendant to purchase and sell shellac on behalf of the plaintiff keeping Rs. 200 as a sort of margin money. The defence was that the defendant was never the agent of the plaintiff and that Rs. 200 were never deposited by the plaintiff in the defendant's shop. It was said that the aforementioned sum was deposited by one Mata Prasad and certain transactions in shellac were entered by the defendant on behalf of Mata Prasad and that accounts were subsequently settled and whatever was due to Mata Prasad was paid by the defendant to Mata Prasad.
2. It appears that during the pendency of the suit the parties were examined by the trial Court and it was admitted by them that on account of the transactions of shellac to which reference has already been made a sum of Rs. 467-12-6 was found due from the defendant and the defendant further said that this sum had been paid by him to Mata Prasad.
3. There was a plea of limitation also by the defendant, but the trial Court was of the opinion that the plaintiff's suit was not barred by time, and the payment, if any, made by the defendant to Mata Prasad, in the view which the trial Court took, did not absolve the defendant, because it was the plaintiff with whom the defendant entered into a contract and the payment ought to have been made by the defendant to the plaintiff. On appeal by the defendant the lower appellate Court did not go into the merits of the case but held that the plaintiff's suit was barred by time. The learned Civil Judge observes:
It appears from the evidence of Hingu Lal, plaintiff himself, that some time about the end of 1928 he asked the defendant Sarju Prasad not to enter into any further transactions as he was going out of the station. In other words, he clearly gave intimation to Sarju Prasad, respondent, that the agency was terminated, and that no further transaction should be made. If that is so, it is obvious that the right to recover the money due from the defendant, who was the agent of the plaintiff, accrued in the end of 1928. Under Article 89, Lim. Act, the plaintifi had only three years within which to file a suit, but it was filed about five years later in 1933. The suit is thus clearly barred by limitation.
4. Learned counsel for the plaintiff contends that the view of law taken by the lower appellate Court is erroneous and reliance is placed on the case in 12 All 5411 and on the case in 26 Cal 715.2 In these two cases it was held that the agency does not terminate immediately on the sale of the goods inasmuch as there is a subsequent obligation to account for the sums and to pay them. It was said that where an agent for the sale of goods receives the price thereof, the agency does not terminate with reference to Sections 201 and 218 of the Contract Act, until he has paid the price to the principal and a suit by the principal to recover the price is within time if brought within three years from the date of demand. The argument before me therefore is that in the present case a formal demand was made on 17th May 1933 by means of a registered notice and the suit instituted on 31st May 1933 was therefore not barred by time. In the plaint it is stated that the cause of action for the suit arose in the month of February 1933 on the day on which the money in deposit was demanded. It appears that formerly it was alleged that limitation began to run from February 1933 in connection with the sum of Rs. 200 which was deposited as, what I said, a sort of margin money, but later by a statement dated 30th July 1934, recorded on paper No. 68 C, the case was confined to the recovery of Rs. 467-12-6 due on account of the profits on the shellac transaction, and learned counsel for the appellant asks that for this limitation should run from 17th May 1933 when registered notice was given.
5. There can be no doubt that the appropriate article which governs facts like the present is Article 89 and this was settled by their Lordships of the Privy Council in 24 All 27.3 The only question that remains is as to whether limitation should run from the date of the demand (which is 17th May 1933 in the present case) or from any earlier date. It is provided in Article 89 that a suit by a principal against his agent for moveable property received by the latter and not accounted for should be brought within three years from the time when the account is during the continuance of the agency, demanded and refused, or, where no such demand is made, when the agency terminates. The view taken by the Allahabad High Court and the Calcutta High Court in the cases on which reliance is placed by learned counsel for the appellant was dissented from by the Madras High Court in 39 Mad 376.4 The contending views were considered by the Additional Judicial Commissioner of Sind in AIR 1926 Sind 264.5 The learned Judge after pointing out the conflict says that the Madras case referred to above was approved of by another Bench of the same High Court in AIR 1918 Mad 1325.6 He then refer, ring to the case before him observed:
The Allahabad and Calcutta cases, which I have referred to above, would appear to me clearly distinguishable on the facts from the present case. It was laid down in these two cases that the agency did continue till the agent paid the price of goods entrusted to him for sale but it cannot be overlooked that when an agent is appointed to sell certain goods on behalf of his principal, it is of the essence of his duties as an agent to pay to the principal the amount realized by his sale. But the same principle is not necessarily applicable in the case of a commission agent such as in the present case who is instructed to buy and sell goods on behalf of his principal and on carrying out his instructions the business of his agency terminates. The liability to account must not be confounded with the nature of the agency business. It is important to remember in this case that no goods were con-signed to the defendants for sale by the plaintiffs and I wish, therefore, to confine my decision not as laying down a general principle, but as to the-1 actual facts of this case. For the question of the termination of the agency must depend upon the circumstances of each individual case.
6. I wish to make it clear that I am not laying down any general principle, but I am confining my observations to the facts of the present case. If the contention of the learned counsel for the appellant were accepted it would appear that where an agent is appointed, say even for one particular transaction and that particular transaction has been completed by the agent, that is to say, the profits due to the principal have come into the hands of the agent and no demand is made, there would be no limitation and limitation would begin to run only from the date of the demand even if such demand is made fifty years afterwards. In the present case, however, it is not necessary to emphasize the anomaly of such a contention because my mind it is only the second clause of a third column in Article 89 which applies the facts of the present case. Limitation also begins to run where no demand made from the time when the agency ??? This is irrespective of the ??? of demand and this has got to be ??? on a consideration of the ??? of agency. In the Allahabad and the ??? cases mentioned above, there are no circumstances from which the ??? of the agency could be ??? except the one fact that the ice came into the hands of the agent in ??? with a certain transaction. It as therefore held that fact alone did it terminate the agency. In the present ??? we know that several transactions are entered into by the defendant on behalf of the plaintiff from June 1928 ??? about December 1928 and then the plaintiff distinctly asked the defendant ??? to enter into any further transactions the plaintiff was going out of the ??? On this statement of the plaintiff ??? lower appellate Court came to a ??? of fact that the agency terminated by ??? end of December 1928, and in second ??? it is not possible for me to come ??? a different conclusion on the question ??? to when the agency terminated.
7. That being so, I am of the opinion that he decision of the Court below is right, ??? I dismiss this appeal with costs, leave to file an appeal by way of Letters ??? is allowed.
W.D/A.L
8. Appeal dismissed.
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