SUPREME COURT OF INDIA

Before:- Ruma Pal and C.K. Thakker, JJ.

Civil Appeal No. 635 of 2005. D/d. 20.1.2005.

Cochin Frozen Food Exports Pvt. Ltd. - Appellant

Versus

Vanchinad Agencies and others - Respondents

Contract Act, 1872, Section 230 Exception (1) - Applicability of section 230 Exception (1) - Non disclosure of foreign principal if necessary to attract - Held, disclosure or non disclosure of principal as far as section 230 exception (1) is concerned is not material - Principal must be resident abroad - High Court order that since name of foreign principal disclosed and it was made a party before it - Suit for recovery of price of goods not maintainable against its Indian agent not proper - Matter remitted back to determine if parties concerned were in fact agent of foreign principal.

[Paras 5 and 6]

ORDER

Ruma Pal, J. - Leave granted.

2. The appellant had filed a suit, inter alia, against the respondents. The present respondents were Defendants 1, 4 and 5 in the suit and are referred to as such hereafter. Defendant 2 is a company incorporated under the laws of France and carrying on business in France. Defendant 3 was the shipping agent of Defendant 2 and is also incorporated and resident in France. The suit was for the price of goods alleged to have been supplied by the plaintiff to Defendant 2 through the (sic shipping agent, Defendant 3) and Defendant 1. Defendant 1 was claimed to be Defendant 2's agent in India. The trial court dismissed the suit of the appellant against Defendants 1, 4 and 5 but decreed it in respect of Defendants 2 and 3 for the price of the goods supplied by the plaintiff together with interest at 12%.

3. The appellant preferred an appeal from the decree insofar as the suit had been dismissed against Defendants 1, 4 and 5. The grievance of the appellant was that Section 230 of the Contract Act, 1872 (for short 'the Act') permitted a suit to be filed against an agent of a foreign principal. The High Court, however, came to the conclusion that since the name of the foreign principal had already been disclosed and had been made a party, Defendants 1, 4 and 5 could not be made liable.

4. The High Court misconstrued Section 230 of the Act. The section reads as follows:

'230. Agent cannot personally enforce, nor be bound by, contracts on behalf of principal.'In the absence of any contract to that effect, an agent cannot personally enforce contracts entered into by him on behalf of his principal, nor is he personally bound by them.

Presumption of contract to contrary.'Such a contract shall be presumed to exist in the following cases'

(1) where the contract is made by an agent for the sale or purchase of goods for a merchant resident abroad;

(2) where the agent does not disclose the name of his principal;

(3) where the principal, though disclosed, cannot be sued.'

5. The section provides that, as a general rule, an agent cannot be made liable for a contract entered into by such agent for and on behalf of his principal. There are three exceptions to this general exemption from liability. The first exception is the one with which we are concerned in this case. It provides that if the principal is abroad then the agent could be sued and be made liable on a contract entered into by such agent on behalf of such principal. The second exception deals with the case of an undisclosed principal and the third with the case where the principal's name though disclosed, cannot be sued by reason of any disability. The disclosure or non-disclosure of the principal as far as the first exception is concerned is immaterial. The only requirement is that the principal should be resident abroad.

6. The High Court was entertaining a first appeal. Since the appeal was dismissed on the ground of maintainability, the High Court did not consider the merits of the dispute between the parties. We are of the view that the High Court's finding on the question of maintainability cannot be sustained. The suit was maintainable against Defendants 1, 4 and 5. This should not be taken as a finding that Defendants 1, 4 and 5 were in fact the agents of the foreign principal. That is a dispute which will have to be resolved as a question of fact on the evidence adduced.

7. We, accordingly, allow the appeal, set aside the decision of the High Court and remand the matter back to the High Court for disposal of the first appeal on merits.

8. There shall be no order as to costs.

Appeal allowed.