TMI Blog1959 (12) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... ey further explained that the goods in question arrived in Madras by S. S. Exchange in or about the middle of July, 1949, as anticipated. But unforeseen difficulties were experienced in clearing the goods from the Customs Authorities at the Madras Port Trust. The aforesaid Authorities wrongly decided that the import licence of the defendant-firm (No. 31744/U.S.A./D.C.C) did not permit them to import the suit goods which were accordingly confiscated under the Sea Customs Act, delivery being permitted only upon payment of a heavy penalty. The defendant-firm appealed to the Chief Controller of Imports, New Delhi, and, though that authority took the favorable and correct view, further difficulties were experienced, as the Collector of Customs had no power under the Sea Customs Act to review his own order. The matter had to be thus placed before the Central Board of Revenue, and they passed an order as late as 14-1-1951 allowing the defendant firm to clear the goods, upon which the firm promptly cleared the goods through their agents, Messrs. Thomas Cook and Sons. But, in the meantime, the plaintiff had rushed into court with this action, which, according to the defendant-firm, wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis of the arguments upon this aspect. For, it is needless for us to observe that, if we accept the findings of the lower court upon the two vital issues, the dismissal of the entire suit upon the ground that the materials were not sufficient for ascertainment of damages, would be clearly unsustainable. We would have no alternative but to allow the appeal, and either to remand the suit for fixing of the quantum of damages to the extent permitted by the record and the findings, or to permit both parties to adduce evidence upon this matter. The arguments of learned counsel for the defendant-firm may be clearly and tersely summarised as follows:(1) The contract was, both essentially and in form, between the foreign merchant (Messrs. Thermoid Company) and the plaintiff. The offer was to the merchant resident abroad, the acceptance was by him, and the contract was between these two principals, as juridical entities. The defendant-firm throughout acted as an agency for establishing the necessary contacts, and Sec. 230(1) of the Contract Act has no application at all in this case. (2) In any event, and even assuming that the defendant-firm entered into the contract on behalf of a fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jeure or to any other causes. Paragraph 29: Chimanlal Desai and Co. are acting as agents, not as principals in this transaction. Paragraph 33: I/We further agree that if you open a credit for goods ordered, it will be entirely on my/our account and risk and I/We will honour all drafts, presented even should the goods not arrive, or be refused landing, through any act of War or restrictions imposed by Government Ordinance or by any other cause whatsoever. The further pieces of evidence to be referred to, are the letters forming the correspondence between the Customs Authorities and the defendant firm, and between the plaintiff and the defendant firm (Exs. A-11 to A-15,A-16(a) A-21, A-26, A27, A29, A30, A31 etc.). They very clearly establish (1) that the goods were detained by the Customs Authorities under the Sea Customs Act, upon an error, and refused delivery except on payment of heavy penalty, (2) that the defendant firm, to whose name M/s. Thermoid Co., had shipped the goods, said who held the necessary import licence, had to appeal to the Chief Controller of Imports, New Delhi, and to obtain rectification of the error and (3) that, even after this, there was cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tually, we find that learned counsel for the plaintiff in the Court below admitted that the indent form Ex. A-1(a) was taken in that manner, as if it was a direct contract between Thermoid Co., and the plaintiff . We would emphasise that the form of the contract, the offer and the acceptance are the vital ingredients to establish the nature of the contractual relationship, and that it would merely add an element of confusion to import irrelevant considerations such as the possession of a licence to import the goods by the agent of the foreign principal, or the circumstance of a demand for payment of sales tax. The true question is whether in such a context of facts, the defendant firm must be held to have entered into the contract on behalf of the foreign principal, and hence to be personally bound within the scope of S. 230(1) of the Contract Act. 7. We might first extract section 230(1) itself, for we think that, where a principle has been embodied in statute in this country, the wording of the section is of greater importance than a reference to the background of the English authorities, which may undoubtedly be of great value, but which may be equally misleading in certa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tract, because the communication has been inevitably through him as the holder of the import licence, or as the architect of the contract as the learned counsel for the appellant (Mr. R. Gopalaswami Ayyangar) urges? We consider that it would be unwise to import such facts into the determination of what is essentially a question of juridical relationship. For, once we do this, it would be difficult to determine how far such factors can be relevantly assessed, and what weight should be placed upon him. Confining ourselves, for the moment, to the strict language, and import of our enacted law (section 230 sub-sections (1)), it seems clear that, for the personal liability of the home agent to accrue, it must be shown that the entered into the contract by or on behalf of his principal, by signing on behalf of his principal, or in some other way proving the fact that the contract was one between the merchant here and the home agent on behalf of a foreign principal. Where the contract is between two principals, in form and substance, the inconvenience of suing the foreign principal here, the fact that the merchant ordering the goods might not have looked to the credit or performance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity of contract between the principal and the other contracting party, and it clearly appears from the terms of the contract, or from the surrounding circumstances, that it was the intention of the agent and of the other contracting party to establish such privity of contract. 10. It will thus be clear that, by the law in England, the question whether the agent of a foreign principal is liable upon the contract of a home merchant with a foreign principal, is one depending upon the ascertainment of the intentions of the parties. Since, in English Law, the agent or the principal can be sued at option, but not both, which is hence quite distinct (from the specific terms of Sec. 233 of the Indian Contract Act rendering both liable to be sued, the true test in this country might not be the ascertainment of respective intentions at all, and this factor of precaution will have to be borne in mind, in citations of English authorities upon the aspect. It appears to us that, in at least certain of the Indian decisions, the distinction is not clear, and that a certain element of confusion has crept in, because the ascertainment of probable intention has been imported into the situation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly as the person responsible for establishing the necessary contacts. The same kind of intellectual difficulty is apparent in Ganpat v. Forbes, Forbes, Campbell and Co., AIR 1930 Bom 569. Blackwell, J. referred to the observations in J. R. Pillani v. Bansilal Motilal, AIR 1929 PC 132, and observed that the Indian Contract Act was not an exhaustive Code, and that the English authorities may be looked into for ascertaining when an agent who contracts for a foreign principal is personally liable. But, here again, it is rather difficult to see how the agent is not personally liable (Sec. 230 sub-sec. 1), where he has entered into the contract on behalf of his principal, and the presumption arises. The most definite way in which such a presumption could be rebutted, would obviously be a term in the contract itself to the opposite effect, namely, that the home agents of the foreign principal were not personally liable upon the contract. The English Law being different, based as it is upon the ascertainment of intentions of parties, without any necessary presumption of this kind, it becomes somewhat misleading when those cases are cited and applied, overlooking the explicit terms o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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