1963 (1) TMI 59 - HC - Indian Laws

Defendant firms held liable for refunding monies, interest, and expenses in plaintiff's favor.

C. Gnanasundara Nayagar Versus Berton Export Co. a firm of Export Merchants and Anr.

The court confirmed the second defendant firm as the agent of the first defendant firm, exempting it from damages but holding it liable for refunding ... - Issues Involved:1. Whether the second defendant firm is the Madras agent of the first defendant firm.2. Whether Clause 26 of the indent exempts the agent from liabilities.3. Liability of the second defendant firm for damages.4. Liability of the second defendant firm for the refund claimed by the plaintiff.5. Liability of the first defendant firm for additional claims by the plaintiff.Detailed Analysis:1. Agency Relationship:The primary issue is whether the second defendant firm acted merely as brokers or as agents of the first defendant firm. The court confirmed that the second defendant firm was indeed the Madras agent of the first defendant firm. The evidence, including the language of Ex. A-2 and A-6, indicated that the second defendant firm was acting on behalf of the first defendant firm. The court dismissed the argument that the indent signed by the plaintiff indicated a direct contract with the first defendant firm. Therefore, Section 230 of the Indian Contract Act applied, establishing the second defendant firm as the agent of a disclosed foreign principal.2. Clause 26 Exemption:Clause 26 of the indent was scrutinized to determine if it provided an exemption to the agent from liability. The clause explicitly stated that the agent would not be held responsible for damages arising from deviations such as late delivery, delivery of incorrect or inferior goods. The plaintiff's argument that they were unaware of these terms due to illiteracy was rejected. The court held that ignorance of the terms could not be an excuse to evade the binding nature of the contract.3. Liability for Damages:The court held that although the second defendant firm was the agent of a disclosed principal, Clause 26 provided absolute immunity from liability for damages. The court reaffirmed that the agent (second defendant) would not be liable for damages due to the explicit terms of the contract.4. Refund Liability:The court examined whether the second defendant firm was liable for the refund of monies paid by the plaintiff. It was determined that while Clause 26 provided immunity from damages, it did not cover the refund of monies paid for goods not delivered as per the contract. The second defendant firm had directed the plaintiff to dispatch the letter of credit to the foreign principal, thereby undertaking the responsibility for either fulfilling the contract or returning the monies. Therefore, the court decreed that the second defendant firm was liable to refund Rs. 4,126 to the plaintiff, with interest from the date of the decree.5. First Defendant's Additional Liability:The court found that the first defendant firm, having failed to fulfill its contractual obligations, was liable for the additional claims made by the plaintiff. This included interest, expenses for letters of credit, landing and transport charges, and godown charges. The suit was decreed in favor of the plaintiff for the additional amount of Rs. 5,219, with full costs against the first defendant firm.Conclusion:The judgment delineated the liabilities of both the first and second defendant firms. The second defendant firm was confirmed as the agent of the first defendant firm and was exempt from damages but liable for the refund of monies paid. The first defendant firm was held liable for the full extent of the plaintiff's additional claims. The appeal was allowed in part, granting the plaintiff a decree for Rs. 4,126 against the second defendant firm and Rs. 5,219 against the first defendant firm, along with costs.