DAMODAR DAS Vs. SHEORAM DAS

JUDGEMENT

(1.) This was a suit for an adjustment of accounts between the plaintiff and the defendants. The defendants are commission agents, carrying on business in Calcutta, and they have acted as agents for the plaintiff in a considerable number of transactions. On the 2 March, 1902, accounts were settled between the parties, and a sum of Rs. 684-5-6 was found due to the plaintiff. The case was originally tried before the Subordinate Judge of Bareilly, and the result of his decree was an appeal by the plaintiff and also an appeal by the defendants. The lower appellate Court disposed of both appeals in one judgment and found in favour of the defendants for a sum of Ra. 1,401-4-0 principal, and Rs. 232-5-6 interest from the institution of the suit to the date of the decree at 6 per cent, per annum. He made a similar order in the plaintiff's appeal which was No. 411. The plaintiff has brought this second appeal without instituting a second appeal against the decree in appeal No. 411. As a preliminary objection, it was urged before us that the present appeal could not be sustained on the ground that the decree in No. 411 had become final and operated as res judicata. In our judgment there is no force whatever in this objection. There was in fact but one decree settling the accounts between the parties. No doubt this decree was written out in duplicate in both the appeals to the lower appellate Court. We overrule this preliminary objection, and in doing so we may refer to the case of Mariam-nissa Bibi V/s. Joynab Bibi (1906) I.L.R., 33 Calc., 1101 and also to the case of Panchanada Velan v. Vaithinatha Sastrial (1905) I.L.R., 29 Mad., 333.

(2.) To go to the merits. It must be remembered that throughout there existed between the parties the relation of principal and agent. The several items in dispute require separate consideration. The first item is a sum of Rs. 1,452-15-9. This sum represents a profit made by the defendants under the following circumstances. The defendants as agents for the plaintiff entered into certain contracts for the sale of certain grain for future delivery. The defendants by means of goods of their own discharged these contracts, and when plaintiff sent on goods to the defendants, the contracts being already fulfilled, the latter resold the goods and realized the substantial profit of Rs. 1,452-15-9. The defendants did not inform the plaintiff that they had by means of their own goods fulfilled the contracts made on his behalf, nor did they inform him that they were reselling the goods forwarded by the plaintiff. The plaintiff claims that in the adjustment of the accounts between himself and the defendants he is entitled to have this sum of Rs. 1,452-15-9 put to his credit. The defendants, on the other hand, contend that inasmuch as the plaintiff was bound to discharge the contracts that had been entered into on his behalf, it made no difference to the plaintiff that the defendants resold the plaintiff's goods and made a profit, that the plaintiff lost nothing, and the sum of Rs. 1,452-15-9 should not be brought into the accounts at all. The learned District Judge in dealing with this matter (at page 18 of the paper- book) says: "It seems to me that in all three cases the Court below has been under a misapprehension as to the nature of the transactions in question. In each case the defendants duty, when they got instructions from the plaintiff to make a forward contract for the sale of goods, was simply to make the contract as soon as possible at the market rate prevailing at the time for the delivery desired. That being done, the plaintiff was bound to deliver at the rate contracted for at the time agreed on, whether the result was a loss or gain to him, and it follows that the defendants were not bound to credit him with more than the price contracted for. It was not the defendants duty (and indeed this has never been contended) to hold on behalf of the plaintiff until they thought a favourable opportunity had arrived for selling. In fact, the plaintiff had a. sort of representative in Calcutta, Durga Prasad who used to advise him as to when he should sell or buy. The defendants had simply to obey orders. When the contract had been completed on behalf of the plaintiff the matter passed out of his hands and the goods, which he was bound by the contract to deliver, ceased for all intents and purposes to be his own, and it mattered nothing to him who actually took delivery of his particular consignment and indeed it may well be asked why the plaintiff selling on a particular date at the market rate then prevailing should expect to receive payment at a higher rate than he had contracted for." We do not at all agree with the view taken by the learned Judge as to the result of the dealing by the defendants in the plaintiff's goods. Notwithstanding his reference to Durga Prasad it cannot be for a moment; disputed that the defendants were the agents for the plaintiff. So long as the relation of principal and agent continued between the plaintiff and defendants, the plaintiff was entitled to the exercise of the disinterested skill, diligence and zeal of the defendants for his exclusive benefit.

(3.) It is a well recognised principle of law that an agent is not entitled to make a secret profit by dealing in the agency on his own account. Section 216 of Act No. IX of 1872 expressly provides that where an agent without the knowledge of his principal deals in the business of the agency on his own account instead of on account of his principal, the principal is entitled to claim from the agent any benefit which may have resulted to him from the transaction. Section 211 provides that the agent is bound to conduct the business of his principal according to the directions given by the principal, If he does otherwise and a loss is sustained, he mutt make good the loss; if profit accrues, he must account for it. An agent must never place himself in a position in which it is possible that his duty to his principal and his own interests would stand in opposition to each other, and on this principle it has been held that an agent employed to settle a debt cannot purchase it upon his own account. So long as the relation of principal and agent continues, the agent is only entitled to his ordinary compensation for his services; all other profits and advantages made by him in the business belong to his employers. The law is well put in Story on Agency, para. 207: "It may also be stated as generally true that all profits which are made by the agent in the course of the business of the principal belong to the latter. Indeed, this doctrine is so firmly established upon principles of public policy that no agent will be permitted to take beyond a reasonable compensation for his services or any profit incidentally obtained in the execution of his duty, even if sanctioned by usage. Such a usage has been severely stigmatized as a usage of fraud and plunder. When the profits are made by a violation of duty, it would be obviously unjust to allow the agent to reap the fruits of his own misconduct, and when the profits are made in the ordinary course of the business of the agency, it must be presumed that the parties intended that the principal should have the benefit thereof." It seems to us perfectly clear that the defendants are bound to account for the profit which they made by the resale of the plaintiffs goods, and it is no answer to the plaintiff's claim to say that the plaintiff lost nothing by the transaction. Accordingly we hold that the plaintiff is entitled in the settlement of the accounts between him and the defendants to take credit for this-sum of Rs. 1,452-15-9.