Babu Ram v. Ram Dayal

Brodhurst and Tyrrell, JJ.:— This suit has been erroneously dismissed as barred by limitation by both the Courts below. The plaintiffs are merchants who employed the defendants as brokers for the sale of certain goods, the defendants being bound on the sale of the goods to remit the prices realized to the plaintiffs. The plaintiffs allged that the defendants furnished an account and sent certain moneys, but kept them out of the account, and did not remit the price of some jeera seed, which is claimed in this action. The defendants' main answer was that they had the plaintiffs' [545] authority for writing the debt off against debts due to them by the plaintiffs. The court below has dismissed the suit under art. 89 of the Limitation Act; apparently the learned Judge's reasons were that the agency had determined within the meaning of s. 201 of the Contract Act more than three years before this suit was brought, and because the plaintiffs showed carelessness in not demanding the account of 33 bags for six years, and are not entitled to plead ignorance when they took none of the legitimate steps open to them. The learned Judge thought that the termination of the agency was to be ascertained and to run from the time of the plaintiff's knowledge of the defendants' breach of duty, but that has nothing to do with the termination of an agency under art. 89 of the Limitation Act. The terminus a quo of that article is “when the account is during the continuance of the agency demanded and refused, or where no such demand is made, when the agency terminates.” There is no question of knowledge or carefulness involved in this article. Now the Court of first instance found that on or about December, 1886, the plaintiffs demanded an account of the price of these 33 bags and the defendant refused to pay, that was some six months before the suit was brought. Then arises the question whether these accounts were demanded and refused during the agency or not. It was argued with much ingenuity that under s. 201 of the Contract Act the agency had terminated immediately on the sale of the goods by the business of the agency being completed. But s. 218 of the same statute provides that an agent is bound to pay to his principal all sums received on his account. Clearly then the business does not terminate on receipt of the money by the agent, inasmuch as there is a subsequent obligation to account for the sums and do pay them. Moreover there was no allegation that their business relation had terminated when the action was brought in the Court below, and there was no justification in law or in fact for holding that the agency terminated as soon as the defendants sold the property. Applying therefore art. 89 of the Limitation Act, the suit is not barred, and the case must go back to the Court of first instance, and the costs will abide the result.

Cause remanded.