The Hindu Business Line : HC holds Singapore importer, Indian agent liable to clear dues to leather machinery exporter

Chennai, Sept. 2 The Madras High Court has ruled that Section 230 of the Indian Contract Act embodied the principle of English Law relating to the personal liability of the agent of a foreign principal; it was, however, confined only to cases of a contract by an agent for sale/purchase for a merchant resident abroad.

Setting aside the orders of two lower courts (IV Addl City Court & IV Asst City Court, Chennai), which had held that it had not been proved by a Chennai-based company (Skandia Sales & Services P Ltd) that the second respondent (Mr T.R. Srinivasan) had acted as the agent of the first respondent (Bovine Leathers P Ltd, Singapore), Mr Justice K.K. Sridharan ruled that the substantial questions of law were answered in favour of the appellant (Skandia Sales).

In view of the purchase order and other surrounding circumstances projected by the appellant, the judge said, both the lower courts ‘miserably’ failed in their conclusion regarding the rule of the second respondent in the transaction.

The appellant contended that R2, describing himself as agent of R1, approached them for supply of leather processing machinery. R2 assured that R1 would effect the payment immediately on receipt of the machinery. The appellant shipped the machinery, which was also received by R1 at Singapore. When the bills were submitted to R1, they were not honoured. The appellant filed the suit for recovery of the bill amount.

The judge said that the pleadings and evidence clearly showed the involvement of R2 in the transaction. Citing the judgment of a Division Bench of this court (Gnanasundara v Berton Export Co – AIR 1964 Madras 113), the judge held that the English Law had stuck to the view that an agent of a foreign principal was presumed to be personally liable till the contrary was proved.

The judgment and decree of the lower courts were set aside and the suit was decreed making both respondents jointly and severally liable to discharge the suits claim to the appellant with interest.

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