P.Appasamy v. Samy Lourde Joseph

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 8.2.2008C O R A M:THE HONOURABLE MR.JUSTICE C. NAGAPPANAppeal Suit No.1351 of 1995P.Appasamy...Appellant (2nd Defendant) Vs1.Samy Lourde Joseph2.Oumadevi...Respondents (Plaintff and first Defendant) Appeal against the judgment and decree dated 23.8.1995passed in O.S.No.221 of 1994 on the file of the IAdditional Subordinate Judge, Pondicherry. For Appellant ... Mr. V. Lakshmi NarayananFor Respondent No.1 ... Mr. S. BalasubramanianFor Respondent No.2 ... No Appearance JUDGMENTThis appeal is preferred against the judgment anddecree, dated 23.8.1995 made in O.S.No.221 of 1994 on thefile of I Additional Subordinate Judge, Pondicherry. Thesecond defendant is the appellant. 2. The first respondent herein filed the suit seekingfor a judgment and decree directing the defendants to pay asum of Rs.1,83,400/- to the plaintiff with subsequentinterest at the rate of 12% per annum and for costs ofthe suit. https://hcservices.ecourts.gov.in/hcservices/ The case of the plaintiff is that the seconddefendant, as a power of attorney of first defendant, hasentered into a sale agreement with the plaintiff on6.6.1992 to sell the suit property for a sum ofRs.3,50,000/- and on the date of the sale agreement, thesecond defendant received advance amount of Rs.1,50,000/-and further agreed to complete the sale within threemonths, failing which, he agreed to repay the advanceamount in double and the plaintiff has to lose the advanceamount if the default is on his part. It is furtherstated by the plaintiff that he made several efforts byapproaching the second defendant to register the sale deedand that efforts became fruitless and the plaintiff came toknow that the suit property belonged to one Kokilambal andshe had executed a settlement deed on 5.11.1979 in favourof S.P.Poyyathappan alias Appan and Manoranjithammal andthe defendants 1 and 2 have no right over the suitproperty. According to the plaintiff, the firstdefendant, without any title or right over the suitproperty, executed a power deed in favour of seconddefendant in respect of the suit property and in turn, thesecond defendant executed the sale agreement in favour ofthe plaintiff and the act of the defendants amounts tocheat the plaintiff and the plaintiff issued lawyer'snotice on 28.2.1994 and though the defendants received thenotice, they did not send any reply or repaid the advanceamount and hence the suit. 3. The first defendant remained absent and was setexparte.4. The second defendant, in his written statement, hasadmitted that he, as power of attorney of the firstdefendant, entered into a sale agreement with the plaintiffon 6.6.1992 and agreed to sell the suit property for a sumof Rs.3,50,000/-, but has denied that he received advanceamount of Rs.1,50,000/- and agreed to complete the saleagreement within three months and he has further denied theplaint averment that the plaintiff has made several effortsto get the sale deed registered and they became fruitless.The second defendant has also denied the plaint avermentthat the suit property belonged to one Kokilambal who hadexecuted a settlement deed in favour of two persons andthe defendants have no right over the suit property.According to the second defendant, the first defendantexecuted the power deed in favour of the second defendantin respect of the suit property and in turn, he executedthe sale agreement in favour of the plaintiff and according https://hcservices.ecourts.gov.in/hcservices/ to him, he never personally received a sum of Rs.1,50,000/-as advance and he acted only on the direction of the firstdefendant and within the scope of the power deed executedby the first defendant. The second defendant has furtherdenied that the act of the defendants amounts to cheat theplaintiff. It is further stated by the second defendantthat the sale agreement was entered into by him only onbehalf of the first defendant and not in any of hispersonal capacity and he has not received any considerationfrom the plaintiff and therefore he is not having anypersonal liability in the sale agreement and it will notbind the second defendant personally. 5. The trial court framed eight issues and theplaintiff examined himself as P.W.1 and marked Exs.A1 toA4 on his side and the second defendant examined himselfas D.W.1 and no document was marked on their side. On aconsideration of oral and documentary evidence, the TrialCourt held that the second defendant is also liable alongwith the first defendant for the suit claim and granted adecree directing the defendants to pay jointly andseverally the suit amount with interest at 12% per annumand costs. Aggrieved by the same, the second defendanthas preferred the present appeal. 6. The second respondent/first defendant, thoughserved in the appeal, does not appear in person or throughcounsel and her name is printed in the cause list. For thesake of convenience, in this judgment, the parties arereferred to as arrayed in the suit. 7. The point for determination in the appeal isas to whether the appellant, being the power agent of thefirst defendant, is not liable to pay the suit claim. POINT:- 8. The learned counsel for the appellant submitsthat the Trial Court has failed to note that under theprinciples of contract law, the appellant/agent does notcarry any personal liability for the transaction enteredinto by him for his principal and in the absence of anyplea of fraud, which requires specific pleading and clearproof, the conclusion of the Trial Court that the seconddefendant, as a power agent, is also personally liable toreturn the advance amount paid by the plaintiff, iserroneous and unsustainable in law and in support of hissubmission, he relies on a decision ofthe Division Bench of this Court in THE PUDUKOTTAH TEXTILES https://hcservices.ecourts.gov.in/hcservices/ LTD. AND ANOTHER Vs. B.R.ADITYAN, reported inAIR 1976 MADRAS 341. 9. Per contra, the learned counsel for the firstrespondent submits that the plaintiff has not seen thefirst defendant and has entered into the sale agreementonly with the second defendant, who is the appellant hereinand the conclusion of the Trial Court that the defendantsare liable for the suit claim, is just and proper.10. Ex.A1 is the sale agreement, dated 6.6.1992,entered into between the plaintiff and the second defendantas power agent of the first defendant with regard to thesuit property agreeing to sell the same for a considerationof Rs.3,50,000/- and acknowledging the receipt of a sum ofRs.1,50,000/- as advance from the plaintiff. Ex.A2 is theregistration certificate of power deed, dated 13.2.1991,executed by the first defendant in favour of the seconddefendant empowering the second defendant to sell, mortgageand lease the suit property. It is not in dispute thatthe second defendant executed Ex.A1 sale agreement as powerof attorney of the first defendant in favour of theplaintiff. The specific case of the plaintiff is that hisefforts to obtain a sale deed for the suit property fromthe defendants became fruitless and he has sought forreturn of the advance amount paid together with interest inthe suit. 11. The first defendant remained absent and was setexparte in the suit.12. The second defendant contended that Ex.A1 saleagreement was entered into by him with the plaintiff onlyon behalf of the first defendant and he has not receivedany amount personally and he is not having anypersonal liability for the suit claim. There is noallegation of fraud made by the plaintiff in the plaint andhe has only stated that the act of the defendants amountsto cheat the plaintiff. The plaintiff examined himself asP.W.1 and in his testimony, he has only stated that thesecond defendant has entered into Ex.A1 sale agreement withhim as power of attorney of the first defendant and theplaintiff came to know that the suit property does notbelong to first defendant and it is originally owned by oneKokilambal and he asked for return of the advance amountfrom the defendants and that was not given, pursuant towhich, he issued Ex.A3 advocate's notice dated 28.2.1994and the same was received by the defendants as evidenced byEx.A4 postal acknowledgement. There is no allegation of https://hcservices.ecourts.gov.in/hcservices/ any misrepresentation made by the defendants in the plaintaverments and the plaintiff in his oral testimony also doesnot say so. In such circumstances, the finding of theTrial Court that the first defendant, as principal and thesecond defendant, as agent, hatched a plan to cheat theplaintiff, is not warranted either on facts or in law andcannot be sustained. 13. The second defendant, when he acted as agent,obviously had the implied authority to act for the firstdefendant in the matter of sale of the suit property. Itis not the case of the plaintiff that there was anycontract making the second defendant, as agent, personallyliable for honouring the sale agreement and executing thesale deed. As per the recitals in Ex.A1 sale agreement,the second defndant has received the advance amount for andon behalf of the first defendant. There is neither pleanor evidence that the second defendant had any personalinterest or secured a benefit under the sale agreement.In such circumstances, the contention of the learnedcounsel for the appellant that the plaintiff could onlyobtain the relief as against the first defendant, who isthe principal and not against the second defendant, who isan agent of the first defendant/principal, is wellfounded. The Division Bench, in the decision referredabove, has laid down the law in clear terms and the sameis extracted below for better appreciation:-" 7. .... It is a well established principleof law that qui facit per alium facit per se, hewho acts through another, acts for himself. Inthe instant case, the company acted through itsDirector-in-charge. Virtually, therefore it wasthe incorporated company, who was acting foritself, though in the garb of its agent orDirector-in-charge, namely the second defendant.In such circumstances, Section 230 of the IndianContract Act makes it clear that in the absence ofany contract to that effect an agent cannotpersonally enforce contracts entered into by himon behalf of his principal, nor is he personallybound by them. The learned Counsel for therespondents was unable to refer to us any contractto the contrary in the instant case whereby thesecond defendant took over for himself thepersonal responsibility of honouring or executingthe so-called contract in the suit. In theabsence of any such contract, an agent cannot bepersonally bound by all such acts done by him for https://hcservices.ecourts.gov.in/hcservices/ and on behalf of his principal. In the case underconsideration, the second defendant received theadvance, for and on behalf of the first defendant,but mistakenly encashed it prematurely withoutadverting to the fact whether a contract has beenfully forged or concluded as between the parties.It is common ground that the cheque was issued inthe name of The Pudukkottah Textiles Limited.The moneys went to the benefit of the firstdefendant. The second defendant obviously actedfor and on behalf of the first defendant and didnot receive any benefit from the so-calledcontract. In these circumstances, we agree withthe learned Counsel for the appellant that theplaintiff could only obtain relief as against thefirst defendant who is the principal in thebargain and not as against the second defendant,who is an agent to such a principal. Followingthe well-known principle laid down inSection 230 of the Contract Act as also theaccepted law that an agent is not personallyliable for the acts done by him for and on behalfof his principal and in which he had no interestor secured a benefit, we are of the view that thelearned trial Judge was wrong in having decreedthe suit against both the defendants. In thesecircumstances, we modify the decree of the trialCourt and decree the suit as against the firstdefendant with costs. In so far as the suitagainst the second defendant is concerned, it isdismissed, but there will be no order as tocosts." 14. The above decision applies in all fours to thefacts of the present case. The second defendant obviouslyacted for and on behalf of the first defendant and hecannot be personally made liable for the suit claim as perthe principle laid down in Section 230 of the Contract Act.The conclusion of the Trial Court that the second defendantis also liable for the suit claim, is erroneous in law andliable to be set aside. The Point is determinedaccordingly. https://hcservices.ecourts.gov.in/hcservices/

15. The appeal is allowed and the judgment and decreeof the Trial Court is modified to the effect that thesuit as against the second defendant shall standdismissed. However, there shall be no order as to costsin the appeal.VksSd/Asst. Registrar/true copy/Sub Asst.RegistrarTo1. The I Additional Subordinate Judge, Pondicherry.2. The Section Officer, V.R.Section, High Court, Madras.•One cc to Mr. V. Raghavachari, advocte sR 6384VC (co)sg 22/02/08A.S.No.1351/1995 8.2.2008