TEXAS COMPANY Vs. BOMBAY BANKING COMPANY LIMITED

JUDGEMENT

(1.) The appellants are a Corporation, incorporated under the laws of the State of Texas in the United States of America, and either owning or having control over extensive oil fields. Their head office for India is in Bombay, and for the purpose of securing distribution of kerosene oil throughout the district of Bengal, they entered into an agreement in writing, on October 25, 1911, with one Prabhakar Govind Vaidya, whereby he was appointed for five years their exclusive agent for the sale of such oil within named areas on certain specified terms.

(2.) So far as they are material to the present dispute, these terms provided that, on receipt by the company of an order from the agent for kerosene oil, they would give to him a delivery order for the quantity required in exchange for a deposit by him with the company of such an amount of certain specified securities as should, at the market rate at the date of the deposit, represent 5 per cent, excess of the market rate of the oil, and that they should have power to realize the securities after seven days notice of the failure by the agent to remit the sale proceeds of the oil in respect of which the deposit was made. The price at which the oil was to be sold by the agent was to be named by the company from time to time, and the agent guaranteed that the full sale proceeds should be paid to the company, his commission being four annas per eight gallons of oil. Sales were to he for cash, credits were to be at the risk of the agent, and the agent expressly agreed to remit to the company all sale proceeds directly they became due, without any deduction on any account.

(3.) The only other material provision of this agreement was Clause 23, which is in the following terms : The agent has deposited with the company the sum of Rs. 5,000 in 5 per cent. Tansa Bonds as a guarantee of good faith which amount is liable to confiscation by the company for any breach of any clause of this agreement, and it is hereby expressly agreed and understood that the interest accruing on such Tansa Bond deposit will be paid to the agent by the company so long as the agent faithfully observes and performs the conditions of this agreement.