KISHORI PROSAD BHAKAT Vs. SECRETARY OF STATE

JUDGEMENT

(1.) This is an appeal by the defendants in a suit for Rs. 1117 odd as compensation on an indemnity bond. The facts which are not; disputed were that at a place named Nithpur within the district of Dinajpur there was a post office. In May 1927, the defendants or their predecessors agreed to apply to the Telegraph Department that a telegraphic office should be opened at Nithpur. The Department were not willing to open a telegraphic office at the place unless local merchants would guarantee against loss. Thereupon six merchants who were predecessors of the appellants here executed an indemnity bond dated 26 May 1927 agreeing each to pay a certain indemnity if the Accountant General of the Tele-graph certified the loss and that his certificate would be final on the matter. Upon this the Accountant General certified a loss of working for the first year up to the e March, and again for the second year to the e March, and the loss of those two years amounted to the sum claimed which was amounting to Rs. 1100 odd which was demanded from the defendants and they did not pay and hence the suit was instituted in May 1933. The trial Court dismissed the suit. In appeal the learned Subordinate Judge has decreed the suit. The first point taken in appeal by the learned advocate for the appellants is that the Court of Appeal below misapplied Section 235, Contract Act, in holding defendant 2 liable for the sum claimed. It appears that defendant 2 signed the bond on behalf of his father, but the father afterwards repudiated the bond whereupon under Section 235 defendant 2 has been made liable by the Court of Appeal below. B. 235 runs thus: A person untruly representing himself to be the authorized agent of another, and thereby inducing a third person to deal with him as such agent, is liable if his alleged employer does not ratify his acts to make compensation to the other in respect of any loss or damage which he has incurred by so dealing.

(2.) Now there is no doubt that defendant 2 represented himself to be the authorized agent of his father and as such he made a contract with the telegraph office, but his father did not ratify his acts. Defendant 2 is therefore liable to make compensation to the plaintiffs in respect of any loss or damage which the plaintiff had incurred by dealing with him. It was urged by Mr. Gupta that the losses suffered by the plaintiff from the action of defendant 2 cannot be ascertained until action has been taken by the plaintiff against the other five persons who contracted with the plaintiff. In nay opinion that argument is not correct. The defendant, along with five other persons, signed a bond demanded by the Telegraph Department and he is liable for the loss caused to the plaintiff by professing to act for his father when his father did not ratify his act. He is not liable on the contract itself. He is only liable to the extent of the warrant. In In Re: National Coffee Palace Co,; Ex parte Panmure (1882) 24 Ch D 367,1 it was held by their Lordships that the measure of damages was what the plaintiff actually lost by losing the particular contract which was to have been made by the alleged principal if the defendant had the authority which he professed to have. In other Words, what the plaintiff would have gained by the contract which the defendant warranted should be the measure of the damages. Taking this view as to the measure of the damages, the decree of the Court of Appeal below in respect of defendant 2 appears to be right.

(3.) The next point taken by the learned advocate is that the contract of indemnity made in this case was against public policy having a tendency to induce the telegraph authorities to give the advantage of a public utility service not in accordance with the requirement of the general public, but in accordance with the requirements of private individuals who may have been in a position to pay for such service. After hearing Mr. Gupta in full I fail to see the force of the argument. Postal and Telegraph Departments are run by the Government on a mercantile basis, that is to say they open a post office at places where they believe the post office will pay for itself. They open a telegraph office where they have reasonable ground for believing that there would be a sufficient custom for the telegraph office to pay for itself. It cannot be said that they go against public policy in deciding this upon grounds of self-support wherever in a place they open a post office or a telegraph office. There is no doubt that wherever a general public require a post office or a telegraph office, that is to say, where they will sufficiently support the same by their custom, the authorities are always ready to comply with their demands. It is only in cases where there is some doubt whether in a particular place a post or telegraph office will pay for itself, or whether it will run at a loss, that if leading merchants or other people who will extend their custom to the office make their promises that the office will pay, the authorities ask them to make good their word by executing an indemnity bond, that is to say in the event of losses those men will be asked to make good the loss. On a plain view of the matter there does not seem to be any objection to this course on the ground of public policy.