1) Narandas Morandas Gajiwala v SPAM Pappammal AIR 1967 SC 333.

FACTS:
Narandas Morardas Gaziwala and Ors. a partnership firm, carrying on business in lace and
silver thread at Surat had dealings with another firm, Krishna and Company – who acted as
their agents for selling their goods in the three districts in the State of Madras on commission
basis. Murugesa Chettiar, one of the partners of Krishna & Co. tool over all the assets and
liabilities of the firm on dissolution of the firm. In respect of their dealings Krishna & Co.,
became indebted in 1951. On April 1, 1951 Murugesa Chettiar (hereinafter referred to as the
plaintiff) executed a promissory note in favour of Narandas Morardas Gaziwala for a sum of
Rs. 7,500/- the amount ascertained as due and payable by Krishna & Co. The plaintiff
instituted a claim in the District Munsif’s Court, Kancheepuram praying for rendition of
accounts from April 1, 1951 till the date of the suit in order to ascertain the amount due and
payable to him. The Surat firm in return instituted a claim in the court of Subordinate Judge,
Chingleput against the plaintiff seeking to recover the amount due under the promissory note.
Both the suits were tried together by consent of parties.
ISSUES:
(i) Whether the plaintiff, being the agent, is entitled to sue the defendant-Surat firm for
accounts?
(ii) Whether the plaintiff is entitled to set up a parole agreement to prove the condition
precedent as to the enforceability of the promissory note?
HELD –

1. There is no provision in the Indian Contract Act that an agent can sue the principal for the
rendition of the account. The statute is not exhaustive and the right of the agent to sue the
principal for accounts is an equitable right arising under special circumstances and is not
a statutory right. Such special circumstances may arise where all the accounts are in the
possession of the principal and the agent does not possess accounts to enable him to
determine his claim for commission against his principal. The right of the agent may also
arise in an exceptional case where his remuneration depends on the extent of dealings
which are not known to him or where he cannot be aware of the extent of the amount due
to him unless the accounts of his principal are gone into.
2. The SC upheld the HC’s stand that the transactions in respect of which the plaintiff is
entitled to commission are peculiarly within the knowledge of the principal alone.
Therefore the SC held that in the special circumstances (remuneration depended on the
volume of transactions) of this case, the plaintiff is entitled to sue the Surat firm for
accounts.
3. The court also agreed upheld the HC’s finding that the Surat firm had actually made
direct sales to customers in contravention of the contract of sole agency granted to the
plaintiff.
4. On the question of parole agreement SC dismissed the Surat Firm’s contention and
upheld the HC’s finding that there was a collateral oral agreement that the obligation
under the promissory note will not be enforced for 5 years and unless the amount was due
after accounting for the period of the commission agency. The SC held that the
agreement was not related to the mode of discharge of the obligation under the
 promissory note but was a condition precedent to the enforceability of the promissory
note and it is open to the plaintiff to adduce evidence of oral agreement under the 3rd
proviso to s. 92 of the Evidence Act.

2) Kuchwar lime and stoe co. v dehri rohtas light railways and company ltd. Air 1969 sc 193
A quantity of coal was booked by a Colliery to the appellant Company carriage to Banjari station
on the respondent Railway’s line and the freight on the consignment was to be paid by the
appellant Company. The Company declined to take delivery of a part of the consignment which
reached Banjari on November 12, 1954 on account of inferior quality of the coal. After some
correspondence between the parties as well as with the Coal Controller, the Railway sold the coal
by public auction on June 2, 1955, after serving a notice on the appellant. It thereafter filed a suit
against the Company claiming outstanding amount of freight and demurrage charges for 202
days during which six wagons in which the coal was loaded were detained and ‘sought a decree
for Rs. 17,625/14/- after giving credit for the amount realized from the sale of the coal.

ISSUES:

1) Whether consignee liable to pay after refusing to accept consignment?

2) If railway entitled to demurrage for full period or obliged to unload and claim demurrage
only for reasonable period?

Contentions

Company

(i) The Company being a consignee of the goods booked by the Colliery there was no privity of
contract between the Company and the Railway and no claim for demurrage or freight lay at
the instance of the Railway against the Company;

(ii) In any event the Railway ought to be awarded demurrage for only 22 days out of the total
period for which the wagons were detained.

(iii) It is only in those cases where delivery of goods is taken by the consignee that the liability to
pay demurrage may be imposed upon him.

It is clear that the Colliery supplied coal in pursuance of the “sanction order” in favour of the
Company and arranged to transport it in wagons which were allotted for that purpose by order of
the Deputy Coal Commissioner. Under the forwarding notes the freight was made payable by the
Company. In these circumstances, it would be reasonable to infer that the Colliery was acting as
an agent of the Company in entering into the contract of consignment and the liability for
payment of freight and of demurrage charges for failure to take delivery of the goods lay upon
the Company.
The High Court erred in holding that the Company was liable to pay demurrage for the full
period of 202 days. Railway was entitled to demurrage for the detention of wagons for only one
month and cannot claim the entire amount. The Railway was in the position of a bailee qua the
Company and was bound to minimize the loss. It could have sold off the coal under s, 56 of the
Railways Act. Even assuming that in view of the Colliery Control Order, the Railway could not
sell the coal without the Coal Commissioner’s sanction, it could have unloaded the coal from the
wagons and put the wagons to use. Hence, the consignee could be liable only for wharfage.

(w.r.t 3rd contention of the company) There was no force in the contention that it is only in those
cases where delivery of goods is taken by the consignee that the liability to pay demurrage may
be imposed upon him. Even where the consignee does not ultimately take delivery, if the wagon
is detained for his benefit, normally the Railway would be entitled to hold him liable for
demurrage.

3) Lakshminarayan Ram Gopal v Govt. of Hyderabad AIR 1954 SC 364

The Mills Company was registered on the 14th February, 1920, at Hyderabad in the then
territories of His Exalted Highness the Nizam. The appellants were registered as a private
limited company at Bombay on agreement was entered into between the Mills Company. and
the appellants appointing the appellants its Agents for a period of 30 years on certain terms
and conditions therein recorded. The appellants throughout worked only as the Agents of the
Mills Company and for the Fasli years 1351 and 1352 they received their remuneration under
the terms of the Agency agreement. A notice was issued under section 13 of the Hyderabad
Excess Profits Tax Regulation by the Excess Profits Tax Officer calling upon the appellants
to pay the, amount of tax appertaining to these chargeable accounT ing periods. The
appellants submitted their accounts and contended that the remuneration received by them
from the Mills Company was not taxable on the ground that it is was not income, profits or
gains from business and was outside the pale of the Excess Profits Tax Regulation. This
contention of the appellants was negatived and on the 24th April, 1944, the Excess Profits
Tax Officer made an order assessing the income of the appellants for the accounting periods
1351 and 1352 Fasli at Rs. 8,957 and Rs. 83,768 respectively and assessed the tax
accordingly. An appeal was taken by the appellants to the Deputy Commissioner of Excess
Profits Tax who disallowed the same. An application made by the appellants under section
48(2) for statement of the case to the High Court was rejected by the Commissioner and the
appellants filed a petition to the High Court under section 48(3) to compel the Commissioner
to state the case to the High Court. An order was made by the High,Court on this petition
directing the Commissioner to state the case and the statement of the case was submitted by
the Commis- sioner on the 26th February, 1946.

ISSUES –

1) Whether the Petitioner Company is a partnership firm or a registered firm ?

(2) Whether under the terms of the agreement the petitioner is an employee of the Mills
Company or is carrying on business ?

(3)Whether the remuneration received from the MILLs is on account of service or is the
remuneration for business ?

(4)Whether the principle of personal qualification referred to in section 2, clause (4), of the
Excess Profits Regulation is applicable to the Petitioner Company ?

Held –

Held, that the position of the appellants in the light of the principles stated above and the terms
of the Agency Agreement was that of the agents of the Dewan Bahadur RamGopal Mills Ltd.,
and they carried on the general managementof the business of the company subject to the
control and supervision of the Directors.The control and supervision of the Directors was,
however, a general control and supervision and within the limits oftheir authority the
appellants as the agents of the companyhad perfect discretion as to how that work of general
management was to be clone both in regard to the method and the manner of such work and
therefore the circumstances ofthe case together with the of power of sub-delegation reserved
under the Articles of Association established beyond doubt that the appellants were the
agents of the company and not merely the servants of the company remunerated by
wages or salary. Held further, that various factors along with the fixity oftenure, the nature of
remuneration and the assignability of their rights were sufficient to prove that the activities of
the appellants as the agents of the company constituted a business and the remuneration which
the appellants received from the company under the terms of the Agency Agreement was
income, profits or gains from business and the appellantswere rightly assessed under the
provisions of Hyderabad Excess Profits Tax Regulation.

4) Snow white indl copr v collector of central excise AIR 1989 SC 1555
The assessee-appellants, a partnership firm carrying on manufacturing business in Madras
entered into an agreement with a company based in Calcutta for sale of their product through
the latter's sales organisation in all the States of India. In the said agreement the assessee was
referred to as the 'manufacturer' and the company as the 'sole selling agents' of the product.
The agreement itself was described as an 'agreement of sale'. It provided inter alia that the
stocks left over unsold beyond two years from their receipt with the selling agents could be
returned to the appellants who were bound to replace them, that the appellants should take all
suitable action for recovery of damages from the carriers, that they would supply the selling
agents with all the necessary publicity material and also advertise at their cost through the media,
that the selling prices and transfer prices of the product would be mutually agreed from time to
time between them and the selling agents, that any reduction in price during the currency of the
agreement was to be duly reflected in the price of stock lying unsold with the selling agents, and
that on termination of the contract either by the assessee or by the selling agents, the unused
stock lying with the latter was to be returned to the former. The appellants were assessed to
excise duty under the Central Excises and Salt Act, 1944 for the period July, 1977to March,
1979 on the basis of the price at which the selling agents had sold the goods to their customers
in the course of the wholesale trade. They however, claimed thatthe assessable value should be
the price at which the excisable goods were sold by them to the selling agents and sought
refund of the excess excise duty thus paid. The Assistant Collector of Excise and the Collector
rejected the said claim.

Held –
Whether there was an agreement for sale or anagreement of agency to sell must depend
upon the facts andthe circumstances and the terms of each case. Such facts andterms must
be judged in the background of the totality of the circumstances. All the terms and
conditions should be
properly appreciated. The terminology used by the parties is not decisive of the legal
relationship.

5) Krishna v Ganpathi AIR 1955 Mad.648

The dispute in this case relates to three items of properties, viz., two parcels of land used for
raising paddy and arecanut in Kedila village and a coffee estate in Coorg, ten miles from
Mercara. The points which fall for consideration are twofold, viz., whether in regard to these
items of properties Ganapathi Bhatta was benamidar and apparent owner and whether Section
66, C.P.C. applies to the transactions relating to the two items or Kedila properties, in regard to
which two sale certificates have been issued in favour of Ganapathi Bhatta.

6) the valapad cooperative stores ltd v kh srinivas iyer brothers palaghat air 1964

The Valappad (Co-operative Stores Ltd., a society registered under the Madras Co-operative Societies
Act (Act VI of 1932) hereinafter called the Society is ttie cetenaant in both cases. The two suits were
instituted tor recovery or money by the two different plaintiffs for the purchase of goods by the Society
from them. The bills on which the claim of the plaintiff in O.S. 477 of 1955 was based are Exts. B-1 to B-3
dated 11-4-1955 and those on which claim oT the plaintiff in O.S. 495 of 1955 was based are txts. B-35
to B-37 dated 9-3-1955. The case of the plaintiffs was that the Society purchased goods from them and
was Indebted for the amounts claimed in the respective plaints.
The substantial defence raised by the defendant was that the Secretary of the Society was entrusted
with funds for purchasing the goods, that he had no authority to purchase the goods on credit, that the
secretary had misappropriated the funds entrusted by the society for pur-chasing goods and that as the
secretary was not authorised to purchase the goods on credit the defendant was not liable for the
purchase price claimed.
There is a clear distinction between the proper use of the two expressions "implied authority"
"ostensible autho-rity." The former is a real authority, the exercise of which is binding not only as
between the principal and third parties, but also as between principal and agent. It diners only from an
express authority in tnat it is conferred by no express words in writing, but is to be gathered from
surrounding circumstances. The term "ostensible authorinty, on the other hand, denotes no authority at
all. It is a phrase conveniently used to describe the position which arises when one person has clothed
another with, or allowed him to assume, an appearance of authority to act on his behalf, without
actually giving him any authority either express or implied, by which appearance of authority a third
party is misled into believing that a real authority exists. As between the so-called principal and agent
such "ostensible authority" is of no effect.

7) Syed Abdul Khader v Rami Reddy AIR 1979 SC 553

A power of attorney , by which a person was appointed as a caretaker of certain agricultural

lands, was signed by the three owners of the lands and one of the arguments was that the
appointment was ineffective because how could three persons become the principals of one agent
and that too by single power of attorney.
Held – justice desai – coprincipals may appoint an agent to act for them and in such case become
jointly liable to him and may jointly sue him.

8) harshad shah v LIC of India AIR 1997

aswantrai G. Shah, the husband of appellant No.2, hereinafter referred to as `the insured') took out four
insurance policies for Rs.25,000/- each with double accidental benefits on March 6, 1986 through Shri
Chaturbhuj H. Shah [respondent No.3] who was a general agent of the LIC [respondent No. 1]. Premium
under the said policies was payable on half yearly basis. The insured deposited the first half yearly
premium was deposited on September 6, 1986 and the second half yearly premium fell due on March 6,
1987 but it was not deposited within the prescribed period. On June 4, 1987 respondent No.3 met the
insured and obtained. from him a bearer cheque dated June 4, 1987 for Rs.2,730/- drawn on Union Bank
of India, Malad, Bombay, towards the half yearly premium on all the four policies. The cheque was
encashed by the son of respondent No.3 on June 5, 1987. The said amount of premium was deposited
by respondent N.3 with the LIC on August 10, 1987. In the meanwhile on August 9, 1987 the insured met
with a fatal accident and he died on the same day. Appellant No. 2, the widow of the insured, as the
nominee under the policies, submitted a claim to the LIC on the basis of the said four policies but the
claim was repudiated by the LIC on the ground that the policies had lapsed on account of non-payment
of the half yearly premium which fell due on March 6, 1987 within the period of grace. Appellant No.2
along with the Consumer Education & Research Society [appellant No.1], a society registered under the
Societies Registration Act and mainly devoted to the promotion and protection of consumer interest,
submitted a complaint before the Gujarat State Consumer Disputes Redressal Commission at
Ahmedabad wherein a claim was made for payment of Rs. 4,32,000/- to appellant No.2. The said claim
comprised Rs. 1,00,000/- payable under the four policies Rs. 25,000/-each, Rs.1,00,000/- payable
towards double accidental benefit, Rs.1,32,000/- payable by way of interest @ 18% Per annum on the
aforementioned amount of Rs.2,00,000/- from June 6, 1987 to March 31, 1991 and Rs.1,00,000/- as
compensation for annoyance, agony, hardship and humiliation caused to the dependents of the insured.
The said complaint was transferred by the Gujarat State Consumer Disputes Redressal Commission to
the Maharashtra State Consumer Disputes Redressal Commission at Bombay, (hereinafter referred to as
`the State Commission').

Issue - The question that falls for consideration in these appeals by special leave is whether payment of
premium in respect of a life insurance policy by the insured to the general agent of the life insurance
Corporation of India [for short `LIC'] can be regarded as payment to the insurer so as to constitute a
discharge of liability of the insured.

Held - Rule 8 of the Life Insurance Corporation Rules, 1981 prohibits agents from collecting premium on
behalf of LIC. Acoordingly, an implied or apparent authority could not be inferred for that purpose. The
fact that lic accepted the premium amout from him, which he had taken from his clients, would not
create an apparent authority in favour of agent.

Sections-

1. Sec 213 (duty to maintain agent’s accounts)

2. Sec 182 (“Agent and “Principle” defined)
3. Sec 184 (who may be an agent) Sec 185 (Consideration not necessary)
4. Sec
5. Sec 185 (Creation of an agency) (Agent and servant)
6. Sec 188 (Extent of Agent’s Authority) (Apparent and Ostensible Authority)
7. Sec 182, 185 (Creation of an Agency)
8. Sec 185 (creation of an agency) 237 (Liability of principle inducing belief that agent’s
unauthorized acts were authorized)
9. Sec 185 (Agent and servant) 188 (Ostensible and apparent authority)
10. Sec 230, 233