Das, J.:— This Rule was obtained by the defendant against a decree passed by Sri S.N Bagchi, learned Small Cause Court Judge, Asansol. The plaintiff came to court on the allegation that in July and August, 1945, the defendant sold to the plaintiff certain bales of textile goods. The defendant was paid the full value of the goods, as appeared in the memo, submitted by him to the plaintiff. Later on, it was discovered, at the time of delivery, that the goods, as contained in the bales, did not correspond with the memo and there was short delivery in respect of some of the bales. The plaintiff, thereupon, claimed the price of the goods, which was paid for, but could not be delivered by the defendant to the plaintiff. The price of the goods which were not so delivered was Rs. 180-2-9. The plaintiff claimed this sum as also a sum of Rs. 66-8-3 as interest, on account of detention of the money.
The defendant filed written statement and his principal defences were: (i) that the defendant was a mere handling agent of the Government and sold the goods to the plaintiff merely as an agent of the Government and as such the suit was not maintainable against him; (ii) that the price paid was not in excess of the price of the goods delivered to the plaintiff; (iii) that the plaintiff was not entitled to interest on the price of the goods which were alleged not to have been delivered by the defendant to the plaintiff.
The learned Small Cause Court Judge was of the opinion that the claim was true and decreed the suit for Rs. 180 as. 2 pies 9, the claim for interest, viz., Rs. 66-8-3 being disallowed.
The findings of the learned Small Causes Judge may be summarised as follows:—
(i) That in 1945–1946 the defendant acted as “handling agent” of the Government, although he had not entered into an agreement with the Government as stipulated, that, on this ground, the defendant was not in law the handling agent of the Government, but was a licensee on commission basis.
(ii) That the procedure for the sale of textiles at the time was that the handling agent of the Government in Calcutta. (G.D Banerjee and Co.), used to send textile goods to the Sub-divisional Officer at Asansol and the latter used to order the defendant to release the goods either on payment of price in cash, the price to be paid being the ex-mill price plus 11½ per cent, as commission, that the price paid was debited to the account of the handling agent at Calcutta, that the defendant, after releasing the articles from the Sub-divisional Officer at that price, used to sell to retailers, for example, the plaintiff, on receipt of the price of the articles sold, the price being the ex-mill price plus 13½ per cent. The Government, through the Civil Supply Department, exercised supervision and control over the sale of the textiles and the distribution thereof.
(iii) That, in point of fact, there was short delivery of the goods, as alleged by the plaintiff, the result being that both the plaintiff and the defendant had to pay the price of the bales in excess of the actual value and the Calcutta handling agent had also to pay excess price to the mills.
As the learned Judge points out, the facts found by him disclosed a lamentable state of affairs so far as the despatch of the goods from the mills, the marking of the price and the distribution of the goods were concerned. We are not concerned, however, with this matter in this case, the matter being entirely for the Civil Supply Department. The real question is whether liability for the price of the goods is to be fixed upon the defendant or not on the facts of the present case.
Mr. Apurbadhan Mukherji, appearing for the defendant, has contended—
That, on the case made in the plaint that the defendant was the handling agent, no liability for the short delivery of the goods can be fixed upon the defendant, the person liable on the case as made being the Government.
This contention is not sound. It is true that, in the plaint, the defendant is described as a handling agent. The real significance of the expression, which was loosely used, depends on a fair reading of the plaint as a whole. The facts which bear upon the question of liability, have been set out in the plaint and the question whether, on those facts, the defendant can be regarded as an agent of the Government in the legal sense of the word, has to be answered by a reference to the provisions of the relevant Act and the facts of this case. The relevant Act is the Cotton Cloth and Yarn (Control) Order of 1945. This order defines the expressions manufacturer and dealer. Section 10B fixes the maximum ex-factory price of certain classes of textiles and also determines the retail and the wholesale price thereof. Section 12 imposes a prohibition against the sale of cloth at above the rate so fixed. Section 18A requires a manufacturer to sell the textiles mentioned in the order only to a licensee dealer. Section 18B empowers the Textile Commissioner to regulate the distribution of the textiles.
The order, therefore, does not affect the mutual relations of manufacturers, wholesale dealers and retailers, but merely imposes a restriction as regards the price of the textiles and the persons who are entitled to deal with them in the market.
Agency is founded upon a contract, either express or implied, by which one of the parties confides to the other the management of some business to be transacted in his name or in his account, and by which the other assumes to do the business and to render an account of it.
In this case, in my opinion, it would be a misnomer to describe the defendant as an agent of the Government. The defendant is, therefore liable to the plaintiff for the price of the goods paid for but not delivered by the defendant to the plaintiff.
But, conceding that the defendant can be regarded as an agent of the Government, let us consider whether, on the facts of the present case, the defendant (the alleged agent) is also liable for the claim. Section 230 of the Indian Contract Act says that, in the absence of a contract to the contrary, an agent cannot he personally liable for contracts entered into by him on behalf of the principal. A contract to the contrary is presumed, where the contract is made on behalf of an undisclosed principal or on behalf of a merchant resident abroad in regard to contracts for sale and purchase of the goods or on behalf of a principal who cannot be sued.
The test of the liability of an agent to third parties is whether credit was given to the agent or to the principal. Whether credit was so given may be proved as a fact or may be reasonably inferred from the nature and terms of the particular contract and surrounding circumstances, Bowsteed on Agency, 9th Ed. p. 314. Thus in Walter Smith v. Ahmed Abdunbhoy Peerbhoy(1) the personal liability of the agent was inferred from the course of conduct between him and the principal.
In the present case, the contract was professedly made by the defendant in his own name and not as an agent and credit was given to the defendant. An agent, who signs a contract in his own name without qualification, though known to be an agent, is understood to contract personally, unless a contrary intention plainly appears from the body of the instrument; Universal Steam Navigation Company, Limited v. James Mackelvie and Company(2). Exhibit 2 series prima facie show that the transaction was entered into by the defendant personally. The fact that the license number was mentioned does not show a plain contrary intention. The course of conduct between the defendant and the Government is also consistent with the view that the defendant was not an agent on behalf of the Government. In this view the defendant is personally liable for the claim.
Mr. Apurbadhan Mukherji also contends that the principal (the Government) is also liable, that, as such, the Government was a necessary party. The liability of the principal and the agent, when concurrent, is neither joint nor joint and several, but is alternate. The person contracting with the agent has an election whether to sue the agent or the principal; though once he makes the election and sues the agent to judgment, he cannot afterwards bring a second action against the principal even though the judgment is unsatisfied and the plaintiff had no knowledge of the existence of the principal [Shivlal Motilal v. Birdichand Jivraj.] It was therefore not necessary for the plaintiff to implead the Government also as a defendant. This contention must also be overruled.
The result, therefore, is that this Rule is discharged with costs—hearing fee one gold mohur.
Rule discharged.
S.K.D