SADASIVAM Vs. K. RAMANATHAN CHETTIAR AND ANR.

JUDGEMENT

(1.) The Plaintiff is the Appellant. He was substituted in place of the original Plaintiff. He is an assignee from the original Plaintiff. The original Plaintiff entrusted a sum of shares to the first Defendant, who was his financier. The first Defendant entrusted those shares to the second Defendant instructing him to sell them. The second Defendant has sold some of the shares, but has not paid the money either to the first Defendant or to the original Plaintiff. The Appellant's assignor F.W. 1 had given the first Defendant a letter releasing him from all liabilities in respect of the transaction relating to shares. The suit was filed against both the Defendants for recovery of the amounts realized by the second Defendant by the sale of the shares. The trial Court decreed the suit against the first Defendant after holding that the letter issued by P.W. 1 releasing the first Defendant was obtained from him under coercion and, therefore, the first Defendant was liable. The trial Court also held that the second Defendant was not liable because there was no privity of contract between P.W. 1 and the second Defendant. The first Defendant appealed to the Subordinate Judge of Coimbatore. The latter disagreed with the conclusion of the trial Court that the letter releasing the first Defendant from all liabilities was obtained under coercion and, therefore, he held that the first Defendant would not be liable. As regards the second Defendant the Appellate Court held that it was not in a position to grant any decree against him. The reasoning on which this decision is based is found in paragraph 11 of his judgment, which is as follows:

(2.) In this Court it is argued on behalf of the Appellant that the lower Appellate Court was wrong in holding that in the absence of an appeal by the second Defendant against the judgment dismissing the suit against him, no decree can be given against him. Reliance is specifically placed on Order XLI , Rule 33, Code of Civil Procedure, for this purpose. In this, I think, the Appellant is undoubtedly right. The decision of the Supreme Court in Panna Lal v/s. State of Bombay : A.I.R. 1963 S.C. 1516 supports the proposition that where a Plaintiff files a suit against two Defendants and the suit is decreed against one of them, but dismissed against the other and the person against whom the suit has been decreed files an appeal and the Appellate Court finds that the decree against him cannot be sustained, it is open to the Appellate Court to pass a decree against the person against whom the suit has been dismissed, if he is the Respondent in the appeal. In this case, the second Defendant was a Respondent in the appeal filed by the first Defendant before the lower Appellate Court and, therefore, it was open to the lower Appellate Court to have passed the decree against the second Defendant, it had held that the second Defendant was otherwise liable. The question, therefore, is whether the second Defendant is liable. It may be mentioned at this stage that the sum with which we are now actually concerned is Rs. 1, 485 representing the sale price of 10 shares of the Premier Mills. The second Defendant claimed that he had some claim against the first Defendant in respect of the other shares which had been handed over by the first Defendant and which he sold on his behalf.

(3.) The first question is whether the second Defendant could be held to be a sub -agent. Under Sec. 190 of the Indian Contract Act: