Kadiresan Chettiar vs Ramanathan Chetti and Another

Coutts-Trotter, C. J.

This appeal reveals a history of delay and waste of time startling even in Indian litigation. The transactions under review took place as long ago

as 1907 and 1908. The plaint was filed in January 1910 and preliminary proceedings were protracted by a series of appeals until October 1917.

The real trial of the case did not begin until August 1919, though it is only fair to say that a great deal of those last two years was taken up in the

proceedings on a commission issued to Rangoon. The judgment under appeal was delivered at the end of March 1920 and the appeal reaches us

only now in February 1925, It reaches us in the form of a judgment divided into 130 numbered paragraphs covering 67 closely printed foolscap

pages accompanied by a documentary record in three volumes covering 787 similar pages, When the case came before us, Mr. Grant, for the

appellant, cited to us about 30 documents at most, and Mr. Alladi Krishnaswami Ayyar for the respondents did not add more than a dozen in

support of his argument. Making all allowances for the fact, that matters sometimes are legitimately gone into at the trial, which in appeal, can be

sifted out because they have been shown to lead nowhere, I have no doubt, that in this, case the record has been loaded with an immense amount

of irrelevant matter and that there has been a disastrous waste both of the time of the Courts and of the money of the litigants.

With all this mass of paper, the facts are comparatively simple and are not seriously in dispute. The parties are Nattukottai Chetties who stood

one to the other in the relation of principal and agent, the plaintiff (respondent) being the principal. The agency was one of the familiar kind. The

principal lived in Devakotta and sent out successive agents for the customary period of three years to transact business on his behalf in Rangoon.

The plaintiff''s agent from 1903 to 1906 was one Kulandaivelu Chetti and after his three years were up, he was succeeded by the 1st defendant.

The terms of the 1st defendant''s appointment are primarily contained in Ex. A, dated 27th November 1906, the salary chit executed by the 1st

defendant to the plaintiff. I may mention in passing, that the last sentence but one of that document, which is unintelligible in the official translation,

properly translated from the Tamil, should run as follows, ""In transacting your business, I shall not prefer my relatives nor show favour to my

friends."" But it is common ground that besides Ex. A, we must have regard to the power of attorney originally executed in favour of Kulandaivelu

by the plaintiff. Kulandaivelu executed a document Ex. 29 (a), dated 2nd August 1907, which clearly clothed the 1st defendant with all powers that

Kulandaivelu had vested in him under his power of attorney Ex. 29; and that he had power to do under Ex. 29 itself.

It is perhaps not very clear on the documents, but it is conceded on behalf of the plaintiff, that Ex. 29 may be taken as defining the powers not

only of Kulandaivelu but of his successor (1st defendant). I will return to the documents hereafter, when I come to consider the exact nature of the

authority conferred upon the 1st defendant. It is sufficient for the present to say that it is of the kind common among Nattukottai Chetties. The

business carried on by Nattukottai Chetties and their agents, in its general nature, is very familiar to the Courts of this Presidency. No doubt they

are primarily money-lenders but it has been repeatedly held by this Court that they are also bankers. I take it that the distinction between the two

classes is broadly this; a money-lender lends his own moneys, whereas a banker lends the moneys of others, viz., his customers. A Nattukottai

Chetti combines both functions; he lends both his own moneys and his customers. He from time to time, also engages in various other financial

activities, which need not be discussed here though traces of them appear in the record. The first test must be whether the powers which the

defendant says that he was entitled to exercises come within the scope of Exs. A and 29 or whether they do not; the next, whether there was any

special mandate, expressed or necessarily implied from the principal himself to expand, vary or restrict those general powers. But before

embarking on that discussion, I had better set out the facts.

In the first months of the defendant''s agency nothing of moment took place. But in March 1907 the defendant began to buy shares in various

concerns in Rangoon. I will now set out these transactions and their history.

The first purchase was of 10 shares in the Burma Bank and that was communicated to the plaintiff in a letter, dated 21st March 1907, Ex. 23

and the material passage is at page 37 of the large bound volume. The answer was Ex. B-25, dated 2nd April 1907, and the material passage is at

page 39 of the same volume, There the plaintiff says that the agents of the Burma and other banks (Clearly Rangoon Banks) have been in this part

of the world and that local people do not require these shares, and then he says:

We also do not require these shares. Do not buy any more. Try to sell to the best advantage even these already bought.

This is clearly not a repudiation of the transaction though it is no doubt a disapproval of it. Were the letter to bear the construction that has been

put upon it by the learned Subordinate Judge, it is to be read as a general direction not to buy any share in any concern. I am quite unable so to

read it, but that is not very material in my view. The next transaction is a purchase of tramway shares in May 1907 and it is suggested that the

defendant concealed this from the plaintiff with the object of treating this purchase as his own and reserving it to himself if the shares went up, and

of putting it in the plaintiff''s account if the shares went down. This is quite a possible view, but as regards the main point in this case, it is only

prejudice. I think it is true enough to say that the conduct of the defendant was shifty, secretive and possibly dishonest. But while I should not differ

from the trial Judge in that conclusion, my opinion is that he has allowed his reprobation to distort his whole view of the real points he had to try,

and has decided this case on prejudice and contrary to law. In truth as I conceive the matter, we are hardly concerned with what the defendant did

or did not do, but with what the plaintiff did.

In August 1907, the defendant made a further purchase of 290 Specie Bank. shares and entered this in the plaintiff''s account only in November

1907 having, previously entered it in a rough book in the shape of a loan against a person called Pandya. These transactions are comparatively on

a small scale and for reasons, which I will give later, it is unnecessary to trouble about them, for, in October and November the defendant entered

into purchases of Rangoon Oil Company shares on a much more formidable scale. He bought over 300 Rangoon Oil Company shares, committing

the plaintiff to a liability of some three lakhs. These were ultimately sold at a very heavy loss and it is in respect of that loss substantially that this suit

was brought. It is almost pathetic to reflect that if these shares had been retained, the present value of the B. O. C. shares which are now their

equivalent is over a crore of rupees.

The first point argued by Mr. Grant was that these transactions were in fact within the scope of the agent''s authority as defined by Exhibits A

and 29. The Subordinate Judge describes these purchases as wagering transactions (a technical term little understood in India), which they

certainly were not but they undoubtedly were highly speculative transactions and it is clear, from the letters, that the first defendant knew perfectly

well that they were transactions which, if the principal had been consulted, would have been entirely disapproved. There are several letters from

the principal, which I need not refer to in detail enjoining upon the defendant to confine himself to normal Chetti business and that not on a large

scale. Moreover the all important fact is that the first defendant by his letter, dated 8th November 1907, announced to the plaintiff the purchase of

20 shares only and entirely concealed the fact that his commitments at that time amounted to the much larger figure which I have mentioned. I am

content to take it, that whatever the extent of his general powers under Exhibit 29 may be, the first defendant was quite conscious that he had no

authority to enter into large speculative transactions of this character.

The only other question is. whether these transactions were or were not ratified by the plaintiff. To that, on the face of it, there can only be one

answer. These shares were paid for and taken up by a series of pledges of blocks of them and by utilizing funds of the plaintiff in the defendant''s

hands. They were ultimately sold and this suit is brought for the balance of loss after crediting the proceeds of the sales.

On this is said to arise the point of law which has been strenuously urged in this case. Mr. Krishnaswami Aiyar argued the case on the

assumption, that, in these transactions, the first defendant must be treated for all purposes as being in the position of a trustee; and if that be so, his

position appears to be established by the series of English cases which he cited. They were as follows:

In re Whiteley Whiteley v. Learoyd [1886] 33 Ch. D. 347 In re Turner Barker v. Ivimey [1897] 1 Ch. 536 In re Lake Ex parte Howe

Trustees [1903] 1 K. B. 439 and Re Salmon Priest v. Uppleby [1889] 42 Ch. D. 351.

I think I may take the principle laid down by these cases to be sufficiently summed up for our purposes in the judgment of the Court of appeal

in Re Salmon Priest v. Uppleby [1889] 42 Ch. D. 351. That was a case where money was invested by a trustee according to the terms of the trust

but without due care. It was held that in such a case the property purchased became part of the trust estate and that no duty was cast upon the

cestui que trust to elect whether he would accept or reject it but that he could take for what it was worth as part of the estate and then sue the

trustee for the deficiency caused by his lack of care in making the investment. But it is pointed out that, where an investment is quite outside the

terms of the trust, a further duty is cast upon the cestui que trust--either to accept or reject the investment and that if he accepts it he must accept it

as a complete discharge of the trustee. If he rejects it, he must treat the property as being the trustee''s property and not his own, and can call him

to account for the whole of the trust fund. But he can exercise no lien over the property which the trustee had bought, and cannot deal with it or sell

it in extinction pro tanto of his claim against the trustee. The distinction is conveniently summed up in Godfroi on Trusts, p. 373. It follows of

course, and so the cases say, that the trustee must be given an opportunity to take over the property, and it is not suggested that anything of the

kind happened here.

The question is whether the first defendant is to be treated as being in the position of a trustee so as to be considered as falling within one or

other of those rules, or rather, I should say, of the first for the second will not help the plaintiff. In my opinion, in these transactions he was never in

the position of a trustee and the question does not arise. It is not contested that in certain circumstances an agent may be placed in a position

closely analogous to that of a trustee and that the rules applicable to a trustee may then be applicable to him. Such a case was Burdick v. Garrick 5

Ch. Ap. 233 where the circumstances in which an agent occupies that position are defined in the judgment of Lord Hatherley. The test is whether

the agent is entrusted. with funds of his principal for the purpose of their being employed in a particular manner, which it is his duty to keep distinct

and separate from his own moneys. If he then makes use of them for any other purposes than those to which he has instructions to apply them his

liability is that of a trustee. Applying that test, it is quite obvious here that this was not the case of an agent having in his hands money ear-marked

for any purpose either particular or general and that he was merely accountable to his principal in an ordinary common law suit for moneys

received by him. No doubt he might also be liable in damages for neglect in the conduct of the principal''s business but that does not arise here.

With the greatest respect to Mr. Krishnaswami Ayyar''s argument, I think it was founded on a basis which does not exist. The agent here had

no money of the principal in his hands earmarked for any purpose. He did not originally buy the shares with the money of the principal in his hands

at all. He bought the shares on credit for the most part, no doubt his principal''s credit, and the payments that he made, were made out of general

trading balance of the business in his hands, by moneys borrowed on pledge and by a special remission from the principal of a lakh of rupees. Even

supposing that he had the moneys of the principal in his hands, I do not think, that in the absence of any direction to use such moneys in a particular

way, he could, in any sense, be regarded as a trustee of those sums or the shares which come to represent them. I cannot sum up the position

better than in the words of Channel, J., in Henry v. Hammond [1813] 2 K. B. 515 where he says this:

It is clear that if the terms upon which the person receives the money are that he is bound to keep it separate either in a bank or elsewhere and to

hand that money so kept as a separate fund to the person entitled to it, then he is a trustee of that money and must hand it over to the person who

is his cestue que trust. If, on the other hand, he is not bound to keep the money separate but is entitled to mix it with his own money and deal with

it, as he pleases, and when called upon to hand over an equivalent sum of money, then, in my opinion, he is not a trustee of the money but merely a

debtor. All the authorities seem to me to, be consistent with that statement of the law.

Applying that principle here, it is clear from Exhibit 29 that nothing in this case, in the nature of a mandate, had been given to keep his own and

the principal''s moneys separate and in the absence of any specific direction, as an ordinary mercantile agent he was entitled to mix up his own and

his principal'' s moneys and in this case he seems to me to have been expressly entitled to do so. Exhibit 29 says this:

I further empower my said attorney from time to time to pay into or deposit with any bank or other person on my behalf and either in my own

name or otherwise all moneys received by him under and by virtue of these presents; to withdraw the same and lay out or invest the same or any

part thereof either in my name or his own name or otherwise on such securities upon such terms subject to such conditions and in such manner in

all respects as my attorney shall think fit and from time to time receive the issues, profits and interests and income arising therefrom and to resell;

assign, transfer and dispose of the said securities

and so forth. That seems to absolve me from the task, for which I confess myself most imperfectly equipped, of entering into the intricacies of the

doctrine of Trusts. I respectfully agree with the observations of Lord Bramwell on that subject in the New Zealand Land Co. v. Watson [1881] 7

Q. B. D. 374 and with those of Channel, J., in Henry v. Hammond [1813] 2 K. B. 515.

The result is that this is an ordinary case of the accountability of an agent to his principal and their relation is not that of trustee and cestui qui

trust but that of debtor and creditor. On that footing the evidence here is overwhelming and however much the principal disliked these transactions

and however often he threatened as at one time he undoubtedly did to repudiate them and ultimately purported to do so wholly, yet he in the result

received moneys arising from their disposal, which he could only do on the basis that he adopted the shares as his own property. No authority is

needed to support the proposition, that, when the act of an agent has been effectively ratified by conduct, he is relieved of personal liability to the,

principal for acting in excess of his authority. That is the English Law and it is entirely in consonance with the provisions of Sections 196 and 197 of

the Indian Contract Act indeed illustration A of Section 197 expressly covers this case.

I am, therefore, of opinion that the appeal should be allowed except as to the sum of Rs. 4,000, arising out of the transactions in Tramway and

Specie Bank shares to which I have referred. This, in the event of his succeeding on the main issue, Mr. Grant said, that he would not trouble to

press. I would let the decree stand for that sum with costs here and below. As to the balance, in my opinion, the appeal must be allowed with costs

throughout.

Since writing this judgment, I have had the benefit of perusing the dissenting judgment which my brother Krishnan, J., is about to deliver.

Needless to say, I have carefully re-scrutinized my own, in order to see if I could detect some error or fallacy underlying it, and I have been unable

to alter my original opinion. My learned brother lays stress on the principle that ratification is a question of intention. To that general proposition,

considered, as all general propositions must be in the light of the facts of the particular case before us, I am only able to give a qualified assent. It

seems to me that the question is not what the plaintiff intended to do but what he did; or, if anyone prefers so to put it, that his acts are conclusive

evidance of his intention. The whole frame of the plaintiff''s suit was to debit the defendant with cost price of the shares, to credit him with the sums

realized on their resale, and sue him for the difference. The learned Subordinate Judge expressly accepts that basis, and draws up an account on

exactly those lines in paragraph 27 of his judgment. I am unable to see how that could be done except on the basis that the plaintiff treated the

resale as being a resale of his own property, of the proceeds of which he took the benefit and for which he had to give credit (it comes to the same

thing) to the defendant. If he did that, it seems to me to follow inexorably that he must be treated as, having ratified their original purchase I am

unable to see how he could treat himself as enriched by the proceeds of the sales and accordingly bound to give credit for them to the defendant,

except on the basis that it was his shares that were sold, and that the proceeds belonged to him. That seems to me merely another way of saying

that he thereby ratified their original purchase; and if he did so, his suit as framed is unmaintainable.

As my learned brother is of a different opinion, the matter will be referred to a third Judge u/s 98 of the Civil Procedure Code. The question

referred is as follows.

Whether the facts of this case amount in law to a ratification by the principal of the purchase of the Rangoon Oil Company'' s shares by the

agent?

Krishnan, J.

(After setting out the facts and discussing the evidence his Lordship proceeded.) In these circumstances I agree with the Subordinate Judge

that the purchase of 283 shares in question was an unauthorized act on the part of the agent. If he was acting honestly and bona fide he could easily

have informed his principal of his intention to buy and got his permission for it; but he did not do so.

The next question for decision is whether plaintiff has ratified this transaction and adopted it as his own though unauthorized in the first instance.

It was this part of the case that was particularly pressed by the learned counsel for the defendant. Ratification may be express or implied u/s 197,

Contract Act. It was not pleaded in the case that there was any express ratification, but it was urged that ratification should be implied from

plaintiff''s letters and conduct after the oil shares had been purchased. Now ratification implies an intention to ratify on the part of the principal; and

any act of his can be relied on as amounting to ratification, only if done after he had full knowledge of the material facts of the transactions ratified:

see Section 198 of the Contract Act. We have, therefore, only to consider what plaintiff did after he was informed of the purchase of these shares

and knew the material facts about it. (His Lordship further discussed the evidence and continued). The next ground on which the plea of ratification

is rested is that plaintiff directed the sale of oil shares in his letter No. 45, Exhibit 19, dated 29-1-1908, and adopted the shares as his in the

agreement Exhibit W and in the criminal case filed by him against the defendant charging him with criminal breach of trust. In this connexion it must

be remembered that as soon as plaintiff received information about the purchase of these shares by Exhibit C-3 be wrote Exhibit B-5 on 7-1-1908

in which he set out his complaints against his agent and repudiated the purchase of these shares altogether. He says there:

when it is a business done without our order and with the object of securing your own gain, we shall not at all be responsible in respect of shares.

As there is no permission of ours you should discharge the entire debts and realize our moneys and send R. M. for payments here.

There is a clear repudiation here. It was argued for the plaintiff that after such a repudiation there could not be a ratification by conduct.

Though I am not prepared to accept this argument as correct, vide Halsbury''s Laws of England, Vol. I, p. 178, and the cases cited there,

nevertheless when dealing with subsequent conduct as implying ratification, it seems to me that there must be clear evidence to show that the

principal has gone back on his original expressed intention and has decided to ratify the agent''s action.

The fourth paragraph in Exhibit 19, the plaintiff''s letter to defendant on 29th January 1908 is said to contain a ratification. In it he says that

if his credit is kept up and the creditors paid off and his capital recovered he would not mind the present suffering.

The shares, it will be remembered, had all been pledged by the 1st defendant to various people as shown in 13 (b) to pay their prices. He then

enquires about the dividends likely to be paid on the shares and states that he had heard the price of each share was Rs. 850. He asks defendant

to inform him about the rise in price and says:

sell the shares you have in proper time for good value and convert them into money and pay the creditors and pay the balance that remains to A.

L. R. M., etc., Chetti and inform me by letter.

At the time he wrote this letter the shares had fallen in value to about Rs. 370 or Rs. 380 as defendant said in his reply, Exhibit C-4, of 6th

February. Plaintiff was in ignorance of the real price of the shares when he wrote Exhibit 19 so that, even if there is anything in it to indicate in a

remote way an intention to ratify, it could not be treated as a ratification in law, as the principal was acting in ignorance of material facts. He

evidently proceeded on the footing that the sale of the shares would bring in enough money to pay off the creditors, that is, the pledgees, and leave

a balance to be paid over to the Chetti named. What he said under that mistaken impression cannot be taken as a ratification. As soon as he knew

the real state of affairs by defendant''s reply, Exhibit C-4, he wrote Exhibit B-1 and repudiated the transaction.

As regards the agreement W it might have amounted to a ratification, if it had been carried out; but it was not carried out by the defendant

who, on the other hand, repudiated it. Being against public policy inasmuch as it was intended to stifle a criminal prosecution for a

noncompoundable offence it was invalid in law and could not be enforced. The criminal complaint, Exhibit BB, contains nothing that could be

construed as a ratification. This ground also then fails. (His Lordship further discussed the evidence and proceeded.) These are the facts on which

the plea of ratification is founded on this part of the case. The Subordinate Judge holds that these facts do not disclose a case of ratification, and

after careful consideration I am inclined to agree with him. I think they only show an attempt on the part of the principal, after he had expressly

repudiated the share transaction, to try and realize what he could of the loss caused by the defendant from the assets into which defendant had

improperly and unauthorizedly converted his moneys. It seems to me difficult to hold from these facts alone that plaintiff had changed his mind and

had decided to adopt the share transaction as his own and to give the defendant a complete discharge as argued by his learned counsel. To my

mind, it is clear that he was only pursuing what he conceived to be his remedy against his defaulting agent to recoup a part of the loss he had

suffered. As I have already observed ratification implies an intention to ratify, and unless on all the facts proved one can reasonably infer such an

intention there can be no ratification. The illustrations to Section 197 of the Contract Act relied on by the learned counsel only show that in the

absence of other evidence to explain the conduct of the principal the circumstances mentioned in the illustrations will be treated as implying

ratification.

The case cited in 107, English Reports page 70, is a very exceptional one. In that case the principal had directed his agent to send the

purchase money of his goods by bills of exchange; but instead of that the agent had invested the money in the purchase of sugar, which was an

unauthorized act of his. The principal repudiated the transaction in his letter, but had, at the same time, asked the agent to insure the sugar when

sending it to England. The only question decided in the case is whether in these circumstances there was evidence to go to the jury on the question

of ratification and their Lordships held there was. There was clearly such evidence and it was for the jury to say whether they would attach more

importance to the direction to insure or to the repudiation. It seems to me that that case does not help us at all. The learned vakil for the respondent

drew our attention to a number of cases where it was held that it was open to the cestui que trust to follow the property when his money is invested

by the trustee unauthorizedly or improperly in it, in the former case the trustee being given an option to take over the transaction himself and make

good the money of the cestui que trust. The following cases were cited: Mant v. Leith [1852] 15 Beav. 524 in re Whiteley Whiteley v. Learoyd

[1886] 33 Ch. D. 347 Salmon Priest v. Uppleby [1889] 42 Ch. D. 351 In re Turner Barker v. Ivimey [1897] 1 Ch. 536 In re Lake Ex parte

Howe Trustees [1903] 1 K. B. 439.

It was argued that an agent dealing with the principal''s money was in the position of a trustee and therefore the principal was entitled, as a

matter of law, to a lien on the assets into which the agent had converted the principal''s money unauthorizedly and his action in pursuing such a

remedy can never be treated as ratification. As observed by the learned Chief Justice the cases cited all refer to trustees and it is doubtful how far

the principle of those cases can be applied to the case of a principal and agent, where the agent invests the principal''s moneys in unauthorized

securities or buys them on his credit. But in my view it is not necessary for the purpose of this case to decide that question. What we have to

decide here is only whether certain acts done by the principal amount to ratification of a particular transaction of the agent. It may be that the

plaintiff acted wrongly in trying to realize his moneys by selling up his agent''s property, but the circumstances in this case show that he was not

doing it with any intention of ratifying the agent''s unathorized act; it seems to me difficult to infer any ratification. Whether plaintiff was justified or

not in selling up the 175 small oil shares he got possession of under Ex. W it seems clear to my mind that he was not doing it with any intention of

ratifying.

There is no evidence so far as I can see to show that plaintiff ever took over the oil shares or assented to their being pledged under his own

vilasam. It was defendant who pledged the shares on his own motion though in plaintiff''s vilasam. They were sold by the pledgees as they were

entitled to under the law and not under any authority or order given by the plaintiff nor were the sale-proceeds received by the plaintiff except as

regards the 175 small oil shares already referred to. The pledgee sold and took the saleproceeds towards their pledges.

The question of ratification is, it seems to me, after all an inference of fact. On the facts of this case, I regret that with all respect for the opinion

of the learned Chief Justice, I am unable to hold that any ratification has been proved. In my opinion this contention fails and I would reject it.

The case then came on before Odgers, J.

Odgers, J.

(His Lordship set out the facts and while discussing the evidence proceeded.) Lord Russell, L. C. J., in Marsh v. Joseph [1897] 1 Ch. 213

said:

Where the supposed ratification relates to acts as to which there is no pretence of any a priori authority, as in this case, where it is not a question

merely of excess of authority, full knowledge of the facts and unequivocal adoption after such knowledge must be proved, or, in the alternative,

circumstances of the alleged ratification must be such as to warrant the clear inference that the principal was adopting the supposed agent''s acts,

whatever they were or however culpable they were.

Can it possibly be said that Ex. 19 amounts to an unequivocal ratification of the agent''s acts considering both its language which is certainly not

a clear and absolute ratification in the light of the considerations set out above and the fact that it comes between two absolute repudiations? It

seems to me it cannot. There is also the fact that Ex. 19 was written after the plaintiff knew for the first time the true state of facts. The price of the

share was Rs. 850. They were bought at an average price of Rs. 1,150 or a loss of Rs. 300 a share, and the total loss on those shares was there

fore about Rs. 90,000. As their Lord ships of the Privy Council observed in Hope, AIR 1925 161 (Privy Council) :

What motive could the appellants possibly have for adopting a contract which, at the time they are supposed to have so done, meant a certain

loss?

Again at page 18:

Their Lordships can find nothing to lead them to suppose that the appellants did such an absurd and purposeless thing as to ratify this action of their

agents, when she already knew of its disastrous results.

(His Lordship further discussed the evidence and continued.) The question is, whether on these facts set out above the plea of ratification is

made out. I have held it is not, and there is therefore no need to examine the propositions of law which have been strongly argued before me,

though I may refer to the following passages to establish the proposition, that a principal, though he had not ratified is entitled to follow the property

into which his money has been converted in the hands of others. Story on Agency, page 294:

Where an agent to loan money takes insufficient security, the principal is not bound to accept and discharge the agent, or to reject the security and

look only to the responsibility of the agent. He may keep the security and hold the agent bound for any deficiency.

Wallis, C. J., seta out the passage above from Story in Lakshumanan Chetty v. Chidambaram Chetti [1919] 9 L. W. 251 and says that it is

good law as well as good sense; but his remark is obiter: See also Bowstead on Agency, Article 110:

Subject to the provisions of Articles 80, 82 to 86, and 88. where an agent disposes of the money or property of his principal in a manner not

authorized by him, the principal is entitled, as against the agent and third persons, to recover such money or property, wheresoever it may be

found.

On the best consideration I can give to the case, I have come to the conclusion that the plea of ratification by the principal has not been made

out. I therefore agreeing with the conclusion arrived at by Mr. Justice Krishnan answer the question referred to me u/s 98, Civil P. C., in the

negative.

(The case came again before their Lordships Krishnan and Odgers, JJ.).

Krishnan, J.

(After dealing with the question of price of 175 oil shares and accepting the finding of the Sub-ordinate Judge his Lordship continued.)

The second point urged is that the defendant as agent should get credit for all the barred debts and for all the reductions allowed by the

creditors from whom he had borrowed for the plaintiff. His contention is that he is only liable for loss and that any debt which he had borrowed for

the principal can be treated as an item of loss against him only if it had been enforced against the principal and only to that extent. I think this

contention is unsound as it is based on a misconception of the nature of the plaintiff''s suit. Plaintiff is suing to make the defendant account for all the

money the defendant had raised by borrowing on the plaintiff''s credit. The defendant as an agent is bound to account for all these moneys. The

fact that some creditors have at the request of the plaintiff given him concessions or that others have not enforced their debts against him in time has

nothing to do with the liabilities and rights as between the plaintiff and defendant. This is not a suit for damages for loss caused by the agent''s

misconduct or negligence for Section 211 of the Contract Act to be applied. The method of taking accounts in such a case as the present one is

laid down by Wallis, C. J., in Muthia Chetty v. Alagappa Chatty [1918] 41 Mad. 1 The English case cited, Cassaboglon v. Gibb [1883] 11 Q. B.

D. 797 was a case of damages and does not therefore apply here. There is no reason why the defaulting agent should get the benefit of any

advantages gained by the plaintiff by his own exertions. In this view it is unnecessary to consider the details of the concessions and barred debts

referred to by the defendant. This point also fails. (Rest of the judgment is not material1 for this report.)

Odgers, J.

(After dealing with the other points his Lordship continued.)

The Subordinate Judge has made these defendants liable for some other items. Appeal No. 248 of 1920 is by these defendants to set aside the

decree passed against them in toto. We have considered this appeal along with the last objection raised by the appellant in Appeal No. 322. It is

the plaintiff''s case that his moneys were abstracted by the 1st defendant and sent to the firm to Tongi through the firm at Kulalumpur. It may be

mentioned that the firm at Tongi consists of all but one of the members of this family. There is no stranger who is a partner in that firm. The

Kulalumpur firm consists entirely of the members of the 1st defendant''s family. Plaintiff contends that because his money was fraudulently taken

away by the 1st defendant and utilized for the benefit of the firm of which the defendant''s family are the chief partners, Defendants 1, 2 and 3 must

be made liable for the repayment of those moneys so far as such payments were made. The learned vakil for the plaintiff originally put the argument

on a narrower ground, that is, on the ground that Defendants 2 and 3 abetted the 1st defendant in making the secret profits in his agency at

Rangoon and being such abettors they were liable to make good any benefit they obtained by such abetment. As there is no evidence whatsoever

to show any abetment he abandoned that case and insisted that if he shows that his client''s moneys were really utilized for the benefit of the family

by the 1st defendant the members of the family would be liable. As a proposition of law we are unable to agree to this. If the members of the

defendants'' family knew that the 1st defendant was making improper and secret profits or otherwise abstracting the money of the plaintiff and

persuaded him or got him to send those moneys and use them for the benefit of the family it may be that the family would be liable. The evidence in

this case falls far short of this requirement. All that is shown is that the father wrote sometimes to his son, the defendant, that he should try and pay

off their pressing debts. This does not suggest that the father knew anything about the 1st defendant''s peccadilloes in Rangoon or that he suggested

that the defendant should utilize the plaintiff'' s money to pay off his debts. In these circumstances we are unable to agree with the Subordinate

Judge that any claim has been made out against the members of the defendants'' family as to any of the amounts mentioned in Sch. 3.

In the result Appeal No. 248 of 1920 will be allowed and the decree against Defendants 2 and 3 set aside with costs against the plaintiff in

both Courts. With regard to Appeal No. 322 it may be mentioned that it has not been pressed against the 14th defendant at all. On the last point it

has failed, but on the other points the appeal has succeeded as we have already found. The decree of the Subordinate Judge will be varied by

adding the amounts that the 1st defendant has been found to be liable to account for in addition to what the Subordinate Judge has found. Plaintiff

will have his costs from the 1st defendant to the extent he has succeeded in this appeal; to the extent that he has failed he will pay the costs to the

defendants. One set. Respondents 8, 9 and 10 say that they were brought on record here unnecessarily and that seems to be so as no particular

relief is asked for against them. The appeal will be dismissed against them with costs, viz., vakils fee Rs. 50. In Appeal No. 230 of 1920 the

vakil''s fee will be fixed at Rs. 3,000. The appeal against 14th deft. in Appeal No. 322 of 1920 is dismissed. No, costs.