Chelur Corporation v. Kerala Agricultural University and Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT: THE HONOURABLE MR.JUSTICE N.K.BALAKRISHNAN** **TUESDAY, THE 11TH DAY OF JUNE 2013/21ST JYAISHTA 1935** **RSA.No. 939 of 2012 ()** **----------------------AGAINST THE JUDGMENT IN AS 252/2007 of II ADDL.DISTRICT COURT,ERNAKULAM DATED 30-11-2011** **AGAINST THE JUDGMENT IN OS 995/2000 of I ADDL.MUNSIFF COURT,ERNAKULAM DATED 03-02-2007** ## **APPELLANT(S)/R1/DEFENDANT NO.1:** **------------------------------------------------------------** **THE CHELUR CORPORATION REPRESENTED BY ITS MANAGING PARTNER CHELUR BUILDINGS, M.G.ROAD, COCHIN-16.** **BY ADVS.SRI.SHAJI P.CHALY SMT.K.JASMIN BABY SRI.R.SANJITH SMT.LIJITTA G.MATHEW SMT.C.S.SINDHU KRISHNAH** ## **RESPONDENT(S)/APPELLANT/R2,3,:** **------------------------------------------------------------** **1. THE KERALA AGRICULTURAL UNIVERSITY REPRESENTED BY ITS ASSOCIATE DIRECTOR REGIONAL AGRICULTURAL RESEARCH STATION, KUMARAKOM 686563 KOTTAYAM, REPRESENTED BY ASSOCIATE DIRECTOR DR.JOSEPH PHILIP, AGED 56 YEARS, S/O.PHILIP.** ## **2. THE BRANCH MANAGER** **THE CHELUR CORPORATION, VAYASKARA BUILDING, M.C.ROAD KOTTAYAM. 686 001** **3. M/S.RAYOLA CORPORATION (P)LTD. MADRAS, KOLLIVAKKAM, CHENNAI, TAMILNADU 600 041.** **4. M/S.RIALTO ENTERPRISES (P)LTD MADRAS, KOLLIVAKKAM, CHENNAI, TAMILNADU 600 041.** **THIS REGULAR SECOND APPEAL HAVING COME UP FOR ADMISSION ON 11-06-2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **JJJ** ## **N.K. BALAKRISHNAN, J.** ------------------------------------------ R.S.A. No. 939 of 2012 -----------------------------------------Dated this the 11[th] day of June, 2013 ## **J U D G M E N T** The 1st defendant in a suit for money is the appellant. The suit was dismissed by the trial court. In appeal the learned Additional District Judge granted a decree in favour of the plaintiff directing the appellant herein (who is the 1st defendant in the suit) to pay Rs.15,094/- with interest thereon @ 9% per annum from 24.03.1998 till 12.06.2000 and thereafter @ 6% per annum till realisation and also cost of the suit. 2. It is not disputed that the plaintiff invited quotation for supply of two typewriters under buy-back scheme. It is also not disputed that the appellant herein (1st defendant) submitted a quotation on 10.03.1997 quoting Rs.15,094/-, as evidenced by Ext.A1. ## **R.S.A. No. 939/2012** **-2-** 3. It was vehemently argued by the learned counsel for the appellant/1st defendant that the 1st defendant was only an agent of principal M/s.Rayola Corporation Pvt. Ltd., Madras (the 3rd defendant in the suit). The learned counsel also takes exception to the finding of the lower appellate court that there was no privity of contract between the plaintiff and the 3rd defendant. It is also contended that Ext.A4 letter would make it clear that the 1st defendant requested that full payment should be made in favour of the 3rd defendant and the Demand Draft was taken by the plaintiff in the name of the 3rd defendant and the amount was encashed only by the 3rd defendant and so it cannot be said that the 1st defendant was responsible for non-supply of typewriters or for return of the money. 4. According to the learned counsel, the lower appellate court failed to take note of the fact that the 1st defendant was acting only as an agent of the 3rd and 4th **-3-** ## **R.S.A. No. 939/2012** defendant and if that be so the 1st defendant cannot be mulcted with liability in view of Section 230 of the Indian Contract Act. This aspect was ignored by the lower appellate court, the learned counsel argued. It is also argued by the learned counsel that the original contract set up by the plaintiff with the 1st defendant stood substituted by another contract and so the principle of novation also is applicable but that was also not seriously considered by the lower appellate court. 5. It was further argued that as under section 226 of the Contract Act, Contracts entered into through an agent and obligations arising from acts done by an agent, may be enforced in the same manner and will have the same legal consequences as if the contracts had been entered into and the acts done by the principal in person and if that be so, for the liability of the acts or omissions on the part of the agent, the principal has to be sued. ## **R.S.A. No. 939/2012** **-4-** 6. It is argued that, as a general rule, in a contract made by an agent with the authority of his principal, it may be enforced against the principal and since in this case, according to the 1st defendant, the name of the principal was not undisclosed and since the name of the principal as M/s.Rayola Corporation Pvt. Ltd. was disclosed and since the Demand Draft was drawn in the name of the 3rd defendant, the plaintiff cannot feign ignorance that the 1st defendant was only an agent of the 3rd defendant. 7. The learned counsel has also relied upon Section 230 of the Contract Act which reads: "In the absence of any contract to that effect an agent cannot personally enforce contracts entered, into by him on behalf of his principal, nor is he personally bound by them." 8. The learned counsel submits that since, here, the agent/1[st] defendant disclosed that the 3[rd] defendant is the **-5-** ## **R.S.A. No. 939/2012** principal and since the Demand Draft was drawn in the name of the 3[rd] defendant and since there was no difficulty for the plaintiff to sue the 3[rd] defendant, the decree granted by the lower appellate court cannot be sustained. 9. It is not a case where the plaintiff and the 1[st] defendant agreed to substitute a new contract for the original contract or that the original contract need not be performed. As such the lower appellate court was perfectly justified in holding that the principle of novation contained in section 62 of the Contract Act has no application and that the original contract entered into between the 1[st] defendant and the plaintiff subsisted even though as per the request made by the 1[st] defendant, the payment was made in favour of the 3[rd] defendant. The lower appellate court has also relied upon the decision of **State Bank of India v. Mrs.T.R. Seetha Varma and others (AIR 1995, Kerala 31)** where it was held that novation is not consistent with ## **R.S.A. No. 939/2012** **-6-** the original debtor remaining liable in any form, since the essential element of novation is that the rights against the original contractor shall be relinquished and the liability of the new contracting party accepted in its place. Here, it is the consistent case of the plaintiff that the original contract was subsisting. The contract was only between the plaintiff and the 1[st] defendant and as such section 62 of the Contract Act has no application. 10. It is not disputed that as per Ext.A7 letter, the 1[st] defendant instructed the plaintiff (Kerala Agricultural University) to make full payment by way of Demand Draft in favour of the 3[rd] defendant or the 1[st] defendant himself for the purpose of collecting and supplying the typewriters by the 1[st] defendant. It was only an option given to the plaintiff either to draw the Demand Draft in the name of the 1[st] defendant or in the name of the 3[rd] defendant. That does not mean that there was any substitution of the original by a ## **R.S.A. No. 939/2012** **-7-** new contract. It is also pertinent to note that receipt of the Demand Draft of Rs.15,094/-, drawn in favour of the 3[rd] defendant, was acknowledged by the 1[st] defendant. It is also not disputed that the typewriters were not supplied at all. 11. After thoroughly scanning the evidence the lower appellate court found that the 1[st] defendant undertook to supply typewriters before 31.3.1998 and it was only on the assurance so given by the 1[st] defendant the Demand Draft was drawn in the name of the 3[rd] defendant and handed over the same to the 1[st] defendant. The factum of receipt of the Demand Draft by the 1[st] defendant was not disputed. The evidence would clearly show that it was only because of the assurance given by the 1[st] defendant and acting on the promise so made by the 1[st] defendant, the plaintiff – University parted with the amount. It was observed by the lower appellate court that what is contained in Ext.A7 is only ## **R.S.A. No. 939/2012** **-8-** an instruction regarding the mode of payment and nothing else and as such it cannot be said that there was no privity of contract between the plaintiff and the 1[st] defendant or that the original contract stood substituted. It was only as per the original terms of the contract the price of the typewriter was fixed and it was based on that the 1[st] defendant agreed to supply the same. That contract remains unaltered. The fact that as instructed by the 1[st] defendant the Demand Draft was drawn in the name of the 3[rd] defendant will not alter the position. The Demand Draft was in fact accepted and acknowledged by the 1[st] defendant. There is nothing in evidence to show that there was any privity of contract between the plaintiff and the 3[rd] and 4[th] defendant. 12. It was observed by the lower appellate court that simply by referring the 3[rd] defendant as principal in one or two communications, the 1[st] defendant cannot wriggle out of ## **R.S.A. No. 939/2012** **-9-** the liability nor can it be contended that the remedy of the plaintiff is to sue the 3[rd] defendant. Though, subsequently the 3[rd] and 4[th] defendant were impleaded, it was found by the courts below that the suit as against them stood barred by limitation. The contention that only because D3 and D4 could not be saddled with the liability, as the claim against them was barred by limitation, the plaintiff has proceeded against the 1[st] defendant, cannot be sustained. The original case set up by the plaintiff itself is that the contract was between the plaintiff and the 1[st] defendant. That contract subsisted. Having received the amount by way of Demand Draft, the 1[st] defendant failed to supply the typewriter as promised by him. Therefore, I find no infirmity in the judgment rendered by the lower appellate court. No substantial question of law is involved in this case. 13. The lower appellate court has directed payment of Rs.15,094/- with interest on the principal till the date of suit **-10-** ## **R.S.A. No. 939/2012** only at 9% per annum and the post decree interest only at 6% per annum. Due to lack of evidence, the claim made by the plaintiff for damages was turned down. I find no reason to interfere with the judgment of the lower appellate court. In the result, this Regular Second Appeal is dismissed in limine. Sd/N.K. BALAKRISHNAN, JUDGE //True Copy// P.A. to Judge jjj