BAJAJ AUTO LTD., MANUFACTURER OF TWO AND THREE WHEELERS AUTO VEHICLES, REGISTERED UNDER THE COMPANIES ACT AND REPRESENTED BY POWER OF ATTORNEY HOLDER SRI. VENKATESH S/O H.V. VENKAT RAO Vs. TAMILNADU MERCANTILE BANK LTD., A SCHEDULED BANK UNDER T

JUDGEMENT

(1.) HEARD the counsel for the Appellant. The Appellant was the fourth Defendant in the suit filed by Respondent No. 1 herein.

(2.) THE brief facts of the case are that the Plaintiff had received an application from the first Defendant for purchase of an auto -rickshaw under a scheme called, the 'Prime Minister Rojgar Yojana' and the Plaintiff had sanctioned a term loan of Rs. 46.600/ - for purchase of a new auto -rickshaw from the second Defendant. The second Defendant is authorised dealer of the fourth Defendant. A quotation was issued by the second Defendant in respect of the proposed purchase. The Plaintiff, in turn, as security for due repayment of the term loan, had obtained documents such as, a Promissory Note, a delivery letter, a hire -purchase agreement and a deed of hypothecation etc., in respect of the vehicle and the loan which was repayable in 60 monthly instalments of Rs. 780/ - was released in favour of the purchaser. However, the loan amount covered under a demand draft for Rs. 49,909/ - was issued favouring the second Defendant towards the cost of the vehicle, apart from road tax, insurance charges and cost of accessories. This was issued to the second Defendant under a covering letter and the second Defendant, promptly collected the proceeds of the demand draft but, it is the case of the Plaintiff that the second Defendant however failed and neglected to deliver the vehicle to the first Defendant. In that circumstance, the Plaintiff was constrained to call upon the second Defendant to deliver the vehicle by several letters. When the second Defendant did not comply, the Plaintiff relentlessly made a demand for refund of the amount. Ultimately on 18.3.1998, the second Defendant is said to have addressed a letter to the Plaintiff enclosing a cheque for a sum of Rs. 49,908/ -, which however, when presented to the banker of the second Defendant, was dishonoured, on the ground that there were insufficient funds. This having been brought to the attention of the second Defendant, the Plaintiff was directed to re -present the cheque which was dishonoured yet again. It is in that background that a legal notice was issued calling upon the second Defendant to pay the amount and incidentally, the fourth Defendant was also called upon to pay the amount jointly and severally along with the second Defendant. On failure of the Defendants to comply, a suit was filed seeking recovery of a sum of Rs. 68,451./ - along with interest and such other costs. The suit was practically not contested though Defendant No. 3 had entered appearance to set up certain defences which were not tenable, denying his liability. Defendant No. 4 had remained unrepresented. However, it was stated that there was a memo of appearance filed on behalf of Defendant No. 4 by a counsel and the suit having been decreed, the same was challenged in appeal by the fourth Defendant. The lower appellate court, however, has opined that the suit was of the year 2000 and the liability having been found to be joint and several, the fourth Defendant being the principal of the second Defendant was also, in the opinion of the lower appellate court, equally liable and having regard to the sheer efflux of time, the lower appellate court was of the opinion that there was no warrant for granting any opportunity to the fourth Defendant to contest the suit, while taking note of the fact that the fourth Defendant had never had a say in the proceedings and that the fourth Defendant's claim that it was never represented by any counsel, it could not be said that the suit was not contested. It is that which is sought to be challenged in the present second appeal.

(3.) THE learned Counsel for the Appellant would contend that there is no relationship of principal and agent as between the second Defendant and this Appellant, as contended by the Plaintiff. The Appellant was the manufacturer of the vehicle in question and the normal business practice of the Appellant was that vehicles are sold at wholesale price to its dealers, such as the second Defendant and it is the dealer who marks up the price and sells at a retail price, keeping for himself the profit margin. In such a relationship, it cannot be said that the second Defendant was the agent of the Appellant and there was no such relationship of agency as between the Appellant and the Respondent. The counsel would submit that the appeal be allowed.