Appeal No. 1196 of 1972

4th July, 1979.

Petitioner Counsel: R.T. Walawalkar
Respondent Counsel: S.M. Mhamane

Cases Cited:
AIR 1967 All. 382.
AIR 1963 Mad. 105.

JUDGMENT

JUDGMENT:- The plaintiff is a registered Co-operative Society, running shops in controlled and uncontrolled articles. Defendant No. 1 is also a registered society known as "Ahmednagar Education Society, Nagar" and defendant No. 2 is the Principal of the college of the said institution. Defendant No. 2 runs a hostel and boarding for the college. The Principal of the college supervises the functions and the activities of the said hostel and the boarding house attached to the college. It is alleged by the plaintiff that the students of the hostel and the boarding are running their mess and they had to purchase necessary provisions for the boarding students on credit. The plaintiff alleges that there had been dealings between the plaintiff and the defendants with regard to purchase of the goods and articles and other provi-sions. The plaintiff has supplied those goods at the instance of the Principal defendant No. 2 and from July 1961 to April 9, 1966 in all Rs. 20,299.09 were debited in the Khata of defendant No. 2 towards the price of the goods purchased by defendant No. 2 and in all Rs. 14,054.63 were paid from time to time and Rs. 6,244.46 remained to be paid by the defendants. It is alleged by the plaintiff that in spite of repeated demands for the payment of the said amount the defendants failed and neglected to pay the same. A notice was issued by the plaintiff, through his advocate, dated June 29, 1967, which is at Exh. 78 asking the defendant No. 2 to pay the balance of the amount. The said notice was not replied and the payment was not made. Therefore the plaintiff filed a suit on March 18, 1968 against both the defendants for recovery of an amount of Rs. 7,691.46 inclusive of interest on the principal amount.

2. The defendants resisted the said suit and contended that the suit is barred by time. It is further contended that the suit is not brought against the society and hence the said suit is not tenable. It is further alleged that the suit is not filed against the proper office bearers of defendant No. 1 which is a public trust and hence the suit is not competent. Lastly it is urged in the written statement that defendant No. 2 is not a registered institution and it is not a legal person, hence the suit is incompetent. Lastly a plea was taken by the defendants that there was no privity of contract between the plaintiff and the defendants and hence the suit is not maintainable.

3. On these pleadings of the parties, the learned civil Judge framed necessary issues, allowed the parties to adduce evidence in support of their respective contentions and on appreciation of the evidence, recorded the findings. In support of the plaintiff's case, the plaintiff produced a document which is at Exh. 94 is admittedly a letter written by the Principal of the Institution dated October 6, 1958 asking the plaintiff to supply the goods to the Boarding on credit. The Principal also had taken responsibility of paying the bills every month. The legal implication of this letter will be discussed later on in this judgment. The learned Judge of the trial Court was pleased to dismiss the plaintiff's suit by the judgment and decree dated April 30, 1970 holding that the plaintiff although has proved the suit items, and amounts thereof, however, the plaintiff has failed to prove that the said items were purchased by the defendants, through their Principal, for the boarding run by them. It is further held that the students run the boarding on a club system, and thus there was no privity of contract between the plaintiff and the defendants. The plaintiff feeling aggrieved by the aforesaid judgment and decree passed by the trial Judge in Regular Civil Suit No. 133 of 1968, preferred an appeal being Regular Civil Appeal No. 287 of 1970 to the District Judge, Ahmednagar. The said appeal was heard by the learned Extra Assistant Judge, Ahmednagar and by the judgment and decree dated July 14, 1972 the appeal of the plaintiff came to be dismissed confirming more or less the findings recorded by the trial Court. Against that judgment and decree, the present second appeal has been filed by the plaintiff challenging the legality and correctness of the decree, dismissing the plaintiff's suit.

4. Mr. R.T. Walawalkar, the learned counsel appearing on behalf of the appellant-plaintiff, urged that the document at exhibit 94 viz. a letter admittedly written by the Principal dated October 6, 1958 has been misconstrued by both the Courts below and thereby an erroneous finding has been recorded as to the contract between the plaintiff and the defendants. Mr. Walavalkar pointed out that both the Courts below have recorded a finding that the plaintiff has supplied the goods worth Rs. 20,000 and odd and the plaintiff has received an amount of Rs. 14,000 and odd from the Principal of of the Institution. It is further argued by Mr. Walavalkar that the suit of the plaintiff has been properly filed against the defendants. He pointed out section 6 of the Societies Registration Act, 1860 and contended that every society registered under this Act may sue or be sued in the name of the President, Chairman, or Principal, Secretary, or Trustees, as shall be determined by the rules and regulations of the society, and, in default of such determination, in the name of such person as shall be appointed by the governing body for the occasion: Provided that it shall be competent for any person having a claim or demand against the society, to sue the President or Chairman, or Principal Secretary or the Trustees thereof, if on application to the governing body some other officer or person be not nominated to be the defendant. Mr. Walavalkar further pointed out that the present suit has been filed in the name of General Secretary, Ahmednagar Education Society Limited and having regard to the provisions of section 6 of the Societies Registration Act the suit will be competent. Mr. Walavalkar argued that the defendants have not produced or relied upon some rules or regulations of the society or any resolution of the Society to show that the society has determined the name of such a person by the governing body of the said society. Lastly it is argued by Mr. Walawalkar that having regard to the contents of Exh. 94, the Principal of the institution has held out himself to be an agent on behalf of the institution namely Ahmednagar Education Society at Nagar and having regard to the concurrent finding of fact that the plaintiff has proved the supply of the goods worth Rs. 6,244.46 the plaintiff's suit deserves to be decreed with interest and costs.

5. Mr. S.M. Mhamane, the learned counsel appearing on behalf of the respondent-defendants, tried to meet every submission made by Mr. Walavalkar. According to Mr. Mhamane, Exh. 94 is a letter which is given in the year 1958. The claim of the plaintiff is with effect from 1961 to 1966. The said letter, exhibit 94 would not and cannot be the basis, for fixing the liability in the present case. Secondly, it is argued by Mr. Mhamane that the Principal, at best, has admitted the liability to the extent of Rs. 400 and to pay the bill every month at the expiry of the period of one month. Lastly Mr. Mhamane argued with reference to exhibit 94 that the Principal has exceeded his authority to write such a letter to the plaintiff. Relying upon some evidence on record Mr. Mhamane pointed out that the Boarding attached to the college was not run by the Ahmednagar Education Society the defendant No. 1. He also pointed out that no demand was made by the plaintiff to defendant No. 1. The advocate notice is addressed to defendant No. 2. It is further argued by Mr. Mhamane that the plaintiff has filed the present suit against the General Secretary of defendant No. 1 and so it is not maintainable. Lastly it is argued by Mr. Mhamane that the plaintiff has not produced the extracts of the Kird which were in their possession and therefore the suit is liable to be dismissed.

6. Having heard the learned counsel on both sides, in my view, both the courts below committed an error apparent on the face of record to construe the letter, Exh. 94. Letter Exh. 94 is not disputed by the defendants. It is also not disputed that since 1958, the plaintiff has been supplying the goods and articles. In the nature of things, the students could not have received the goods on credit without such a letter. It is necessary to carefully consider and comment on the letter at exhibit 94.

7. Exhibit 94 is addressed to the Chairman, Ahmednagar District Secondary Teachers Co-operative Credit Society Ltd. by the Principal, Ahmednagar Education Societies, Primary Training College, Ahmednagar. It is dated October 6, 1958. It is stated in the letter exhibit 94 that for the boarding of their college a request has been made to give the provisions on credit basis. In the said letter it is further stated that approximately the provisions such as Jwari, Bajri, pulses etc. may be required to the extent of Rs. 400. A further direction is given in the said letter that such grocery provisions should be supplied through the students of the college. So also a further request has been made to present, whatever the bill that might be made for each month and the said bill shall be paid every month. Lastly, it is mentioned that the Principal shall take the full responsibility in that behalf. The learned Judge of the appellate Court considered this document and observed that however that letter by itself also does not show that the plaintiff society was in any way asked to open an account in the name of the Principal himself, as was later on done by the plaintiff society. I must say that this observation is thoroughly incorrect and it amounts to a misreading of document, exhibit 94. The letter categorically speaks that credit may be given and to give credit means to open an accounts in the account books of the plaintiff society. The second observation made by the learned Extra Assistant Judge also suffers from a glaring mistake. It is observed that the wording of the letter exhibit 94 makes it clear that the purchases were to be made, not for the College, or tor the Ahmednagar Society, but were for the Boarding. It is mentioned in the said letter, exhibit 94:

It means for our college Boarding. This expression connotes that the Principal described the Boarding as a part of the college of the Educational institution of defendant No. 1. It may be that the grocery provisions may be required for the purpose of students, but the requirement is specifically provided by the Principal of the college for the boarding run by the educational institution. The learned Extra Assistant Judge, however, committed a mistake in reading exhibit 94. It is observed that the mere fact that the Principal described himself as such in the said letter, cannot mean that, in writing that letter he was acting as an agent for the Ahmednagar Education Society or the Secretary of that Society or as an agent of the college. This observation again is far away from the contents of the letter, exhibit 94. If the said letter is carefully read and understood, it follows that the Principal was holding out himself as an agent of the Ahmednagar Education Society who runs the college and to that college a boarding is attached, and the Principal takes upon himself the responsibility to supply the provisions to the said institution, asking to give credit and promising to pay the amount on the bill presented by the plaintiff month to month. The said letter does not state that a credit be given to the hostel or boarding, or bills to be presented to any authority other than himself. In my view, the learned Extra. Assistant Judge Ahmednagar has misread the entire letter, exhibit 94 and thereby committed a grave error in recording the finding against the plaintiff.

8. Mr. Mhamane strongly relied upon exhibit 100. which shows that the Boarding of the college was to run on a club system. Mr. Mhamane read out every paragraph of the said document, exhibit 100. I asked him as to whether Exh. 100 is a part of Rules and Regulations of the Society. Are there any bye-laws, rules or regulations framed by the society? He is unable to answer these questions. He submits that Exh. 100 is in the nature of prospectus addressed to the students who desire to seek permission in the said college. If these are prospectus of a college, such prospectus will not be binding on a third person much less, the plaintiff society. It is mere a pious desire of the Principal of the college to provide facilities to the students if they get admission in that institution. But plain reading of those various paragraphs in exhibit 100, will clearly show that the responsibility is that of the Principal to supervise and conduct the boarding through officers of the college. Exhibit 100 in no way will help the defendants to defeat the claim of the plaintiff on the ground that the hostel is run on a club system and the students were to pay the debt of the plaintiff-society. As stated earlier, the entire responsibility was taken by the Principal and the plaintiff society held him as an agent of the defendant No. 1 society. There is no dispute that right from the year 1958 an account has been opened in the name of the Principal of the College. The secretary or any officer of defendant No. 1 society had not objected to an opening of the account. It appears that an audit was made and there was a report of the auditor that the accounts of the boarding have not been properly maintained. We are not concerned with the audit report, but we are more concerned here with the fact that the Principal has taken the liability to pay the amount on behalf of defendant No. 1 society.

9. Section 237 of the Indian Contract Act, 1872 lays down:

"When an agent has, without authority, done acts or incurred obligations to third person on behalf of his principal, the principal is bound by such acts or obligations, if he has by his words or conduct induced such third persons to believe that such acts and obligations were within the scope of the agent's authority."

In the present case, it is clear that the Principal of the college had written a letter exhibit 94 in the year 1958 to provide grocery provisions on credit to the boarding meaning thereby to open an account in the shop of the plaintiff-society. The letter itself shows that he represented the college and held out himself to be an agent of defendant No. 1. There is nothing on record to show that the Principal of the College has a limited authority or had no authority to incur an obligation to a third person on behalf of his institution.In my view, having regard to the contents of the letter, exhibit 94, the Principal has held out himself to be an agent of the institution-defendant No. 1 and incurred an obligation to the plaintiff-society on behalf of his principal, and it is therefore the Principal is bound by such acts and obligation inducing the plaintiff-society to believe that such acts and obligations of the Principal of the college were within the scope of the agent's authority.

10. Now, it is well settled that a right of a third party against the principal on the contract of his agent, though made in excess of the agent's actual authority, was nevertheless enforced where the evidence showed that the contracting party has been led into an honest belief in the existence of the authority to the extent apparent to him.

11. The single Judge of the Allahabad High Court in Firm Rupram Kailash Nath v. Co-operative Union, Mallawah and another1, held that the Principal held liable to pay for the goods, as the plaintiff had no reason to believe that the agent was not acting within the scope of his authority in making the purchase on credit for the principal. The fact that the principal never opened credit account with the plaintiff held not be absolved his liability.

12. Similarly, the single Judge of the Madras High Court in K.S. Ramachandran v. Registrar of Co-operative Societies and another2, observed that the clerk of the society who was also functioning as the cashier, was held out by the society as a person competent to receive payments from members. He had ostensible authority to receive payments and was held out as the agent of the society to act on its behalf in the matter of the daily routine of receipt of money from the members. Hence section 237 of the Contract Act was applicable.

13. In view of the above proposition of law, it is clear that the Principal of the college has held out himself as an agent of defendant No. 1 and asked the plaintiff-society to open an account and supply the grocery provisions to the boarding run by the students. If the agent has acted even beyond his authority, the principal shall be liable to pay for the price of the provisions or goods supplied to the Principal or his students.

14. Mr Mhamane then argued that the suit as filed by the plaintiff against the defendants is not maintainable. He pointed out that the suit has been filed against the General Secretary, Ahmednagar Education Society Limited, Nagar. According to Mr. Mhamane the suit ought to have been filed against the institution itself and not the General Secretary of the said institution. He also argued that defendant No. 2 is not a legal person and therefore no decree can be passed against defendant No. 2 There is no substance in this contention of Mr. Mhamane. As stated above, section 6 of the Societies Registration Act, 1860 enables the plaintiff to file a suit against every society registered under the said Act in the name of the President, Chairman, Principal Secretary, or Trustees. The defendants have not led any evidence to show that the society has determined by any rule or regulation that the suit should be filed or that the society may sue or may be sued is any other name than that of the defendants. In the absence of such evidence by the defendants, the suit filed against the defendants is properly constituted and the decree can be passed against the defendants.

15. Lastly it is argued by Mr. Mhamane that the plaintiff has not produced the extracts of the ledger accounts along with the plaint, and therefore, the suit is liable to be dismissed. Under the provisions of Order 7 rule 14 of the Code of Civil Procedure it is laid down that where a plaintiff sues upon a document in his possession or power, he shall produce it in Court when the plaint is presented, and shall at the same time deliver the document or a copy thereof to be filed with the plaint. In case of failure to comply with the provisions, the consequences have been provided under the Order 7 rule 18 of the Code of Civil Procedure. Under Order 7 rule 18 of the Code of Civil Procedure it is laid down that a document which ought to be produced in Court by the plaintiff when the plaint is presented, or to be entered in the list to be added or annexed to the plaint, and which is not produced or entered accordingly, shall not, without the leave of the Court, be received in evidence on his behalf at the hearing of the suit. Now admittedly the extracts from the ledger accounts have been produced at the time of hearing of the suit. Leave has been granted by the trial Court to produce the said ledger accounts. It appears that no objection was taken by the defendants for production of such document. In view of that position it is not open for the defendants to challenge the admission of those extracts of the ledger account books, in this second appeal. Both the Courts below have concurrently held that the plaintiff-society has proved the liability of the defendants, but the plaintiff's suit has been dismissed on the findings on other issues. That being a concurrent findings of fact, however erroneous they may be cannot be allowed to be challenged in this second appeal having regard to the provisions of section 100 of the Code of Civil Procedure. Having held that the Principal of the institution has held out himself as an agent of defendant No. 1, any act or obligation of the Principal of the college would bind the principal viz. defendant No 1. In the letter at exhibit 94 the Principal has taken the responsibility to pay for the price of the goods supplied to the students and therefore there is no escape to pay the said amount to the plaintiff.

16. In the result, the second appeal is allowed. The judgment and decree passed by the Joint Civil Judge, Junior Division, Ahmednagar in Regular Civil Suit No. 133 of 1968, dated April 30, 1970 and that of the appellate Court in Regular Civil Appeal No. 287 of 1970 decided by the learned Extra Assistant Judge, on July 14, 1972, are set aside and the plaintiff's suit is decreed. The defendants are directed to pay to the plaintiff the principal amount of Rs. 6,244-46 together with interest from the date of institution of the suit till realisation of the said amount at the rate of 6 per cent per annum. The plaintiff shall be entitled to costs throughout.

Appeal allowed.