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Report No. 13

173. Section 233.-

According to English Law, in cases contemplated by section 233, the liability of the principal and agent would be alternative and not joint.1 There is a difference of opinion as to whether the section marks a departure from English Law. Coutts Trotter, C. J. in Kutti Krishna Nair v. Appa Nair, 49 Mad 900 held that the English law was intended to be reproduced in the section and that the third party may sue both the agent and the principal alternatively or he can sue any one of them but he cannot sue both of them jointly.

On the other hand, the Bombay2 High Court and, in a later case, the Madras High Court3 took the contrary view that the section created a joint liability. We think that the section deals with substantive rights and not procedural remedies, and that the latter view is correct. Further, we recommend that a provision be made that a judgment against the principal or the agent, although unsatisfied is, so long as it subsists, a bar to any proceedings against the agent or the principal, as the case may be.

1. Bowstead; Op. Cit 11th Edn., 202.

2. Shiv Lal v. Birdichand, 19 Bom LR 39.

3. Shamsuddin v. Shaw Wallace & Co., AIR 1939 Mad 520 (523).

174. We recommend that the English rule that where inquiry or loss is caused to a third person by the wrongful act or omission of an agent who is acting within the scope of his authority, the principal is liable jointly and severally with the agent, should be expressly provided for.1

1. Vide section 238A, App I.

175. It is well established that in cases where the property of the principal is disposed of by an agent in a manner not expressly or ostensibly authorised, the principal is entitled, as against the agent and third persons, subject to any enactment to the contrary, to recover the property wheresoever it may be found.1

1. Halbury's 3rd Edn., Vol. I, 211; Vol. 14, pp. 628-9.

This rule should be adopted, together with its exceptions.1

1. Vide section 238B, App I.

Indian Contract Act, 1872 Back

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