The Judgment of the Court was as follows:
1. The facts so far as they are relevant for the purpose of this appeal are these: The Defendant placed the Plaintiff in charge of certain litigations started by one Rasik Chandra Khan against the Defendant. The Plaintiff spent Rs. 700 out of his own pocket in conducting these criminal proceedings. The criminal proceedings came to an end in July, 1931. There was an adjustment of account between the Plaintiff and the Defendant in September, 1925. On the 5th January, 1938, the Plaintiff raised the present suit for recovery of these 700 rupees along with certain other sumo due to him from the Defendant.
2. The point, for determination in this appeal is whether the Plaintiff's suit to recover Rs. 700 from the Defendant advanced by him from his own pocket in conducting the criminal case is barred by limitation.
3. Mitter, J., has held that Art. 61 of the Indian Limitation Act applies to the facts of the present case. The learned Judge has further held that even if Art. 83 applies, the suit is barred by limitation.
4. The Plaintiff was the Defendant's agent for looking after the criminal litigations started by Rasik Chandra Khan against the Defendant. Under sec. 222 of the Indian Contract Act, the employer of an agent is bound to indemnify him against the consequences of all lawful acts done by such agent in exercise of the authority conferred upon him. It is not disputed in this case that the Plaintiff spent Rs. 700 out of his own pocket in exercise of the authority conferred upon him by the Defendant. Under Art. 83 of the Indian Limitation Act, a suit upon a contract to indemnify is to be brought within three years from the time when the Plaintiff is actually damnified. In the case of Kandaswamy Pillai v. Avayambal alias Thangachi Ammal(6), the Madras High Court said:
“The principal's duty to indemnify is no part of the contract (contract of agency). It, is an obligation imposed by the law and is attached to the relation of principal and agent constituted by act of parties.”
5. According to this view, the liability of the principal to indemnify the agent under sec. 222 of the Indian Contract Act is not a liability under a contract within the meaning of Art. 83 of the Indian Limitation Act. In the case of Manghi Ram v. Firm of Ram Saran Das-Maman Chand(7), the Punjab Chief Court held:
“Sec. 222 of the Contract Act purports to be and is an integral part of the law of contract and it merely affirms and expressly lays down one of the principles of the law of contract. In effect it says that, unless there be some agreement to the contrary, the establishment of the relation of principal and agent shall inevitably bring in its train the liability of the principal to indemnify the agent. The right, instead of being merely implied in accordance with general principles, is expressed clearly by the Statute.”
6. According to this decision of the Punjab Chief Court, the liability of the principal to indemnify the agent under sec. 222 of the Indian Contract Act is a liability under a contract within the meaning of Art. 83 of the Indian Limitation Act.
7. In the case of Ram Barai Singh v. Sheodeni Singh(8), Jenkins, C.J and Chatterjea, J., observed:
“As the contract is one of indemnity, the article that applies is Art. 83, possibly extended by Art. 116. But even if it be taken that Art. 83 alcne is the governing Article and the benefit of the extension provided by Art. 116 cannot be claimed, still the suit is within time, as it is within three years of the time when the Plaintiff was actually damnified. All that was urged against this view is that a contract in Art. 83 means an express contract. I can see no warrant for placing that restricted meaning on the words of Art. 83. It is a meaning which the words do not themselves require, nor mould it be in accordance with-the view of contract expressed in the Indian Contract Act.”
8. Once the relationship of principal and agent is established, sec. 222 of the Indian Contract Act comes into operation. The obligation of the principal to indemnify the agent, therefore, flows from the nexus of the principal and agent.
9. It is a part of the contract of agency, although it is an obligation imposed by statute. We are, therefore, of opinion that the liability under sec. 222 of the Indian Contract Act to indemnify the agent is a liability under a contract within the meaning of Art. 83 of the Indian Limitation Act.
10. The question then is, when was the Plaintiff actually damnified? An agent is damnified when he makes the payment on behalf of the principal; in other words, when the expenses incurred by him are recoverable. In this case, the agent made the payments long before three years before the institution of the present suit. The suit for recovery of money spent by the Plaintiff on behalf of the Defendant for conducting the criminal litigations must, therefore, be held to be barred by limitation under Art. 83 of the Indian Limitation Act.
11. The appeal accordingly fails and is dismissed. There will be no order as to costs.
C.C
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