Vijiathammal vs M. Kadir Sultan and Another

Varadachariar, J.—This is undoubtedly a hard case but I regret I am unable to see my way to help the plaintiff. She seems to have left the

matter of the investment wholly in the hands of P.W. 4 who says that he acted on the advice of P.Ws. 1, 2, and 6.

The short question in the appeal is whether defendants 1 and 2, the principals are bound to repay a sum of Rs. 1,000 received as deposit by

their agent, the third defendant from the plaintiff. Both the courts find that money was not in fact carried into the account of the firm. There is

therefore no question of the defendants retaining any money of the plaintiffs in their hands or paying back any advantage received by them. The

point is simply whether the third defendant acted within the limits of his authority so as to bind his principals by the transaction independently of

whether he brought the money into the principals'' account or not.

Ex. I is the power of attorney defining the authority of the third defendant. One argument before me was that the power given to the agent under

Ex. I to purchase goods necessarily implies the power to borrow; and reliance was placed in this connection on Withington v. Herring (1829) 5

Bing. 443 : 130 E.R. 1132. Though the language used there is somewhat wide, that decision has been understood by text writers as relating to

incidental powers where the payment of money is necessary and incidental to the completion of the particular transaction for which the agent was

appointed. It seems to me too much to rely on that case as supporting the general proposition that an authority to purchase implies an authority to

borrow for the purpose. The reasoning of the Judicial Committee in Bryant, Powis, and Bryant, Ltd. v. La Banque Du Peuple (1893) A.C. 170 is

directly against any such general proposition. I may also refer to the way in which the question is discussed in the judgment of Farwell, J. in Jacobs

v. Morris (1901) 1 Ch. 261. The learned Judge states:

To begin with, there is a strong inherent improbability that a principal1 intends to give his attorney power to borrow money if he does not expressly

state it.

The decision was affirmed by the court of appeal in Jacobs v. Morris (1902) 1 Ch. 816. It must also be pointed out that in Withington v.

Herring (1829) 5 Bing. 443 : 130 E.R. 1132 the letter of credit which accompanied the power of attorney clearly showed that the principal

contemplated the agent borrowing, though he limited his borrowing to the extent of �10,000. On the other hand the evidence in the present case

as in Jacobs v. Morris (1902) 1 Ch. 816 shows that the principals had made other arrangements for meeting any emergencies that might arise, by

way of special arrangements with particular Chetti firms to apply any funds that the agent might require. I am therefore unable to hold that the

transaction in question is authorised by Ex. I.

Alternatively, it was argued that apart from the terms of Ex. I the principals had by their course of conduct led the public to believe that the third

defendant had such authority. Unfortunately, the plaint began with a reckless statement that part of the business of the defendants'' company was to

receive money as deposits and repay them with interest according to the terms agreed upon. There is no evidence in the case of any such business

having been carried on as part of the firm''s business. The plaintiff has not gone into the box to depose to any enquiries that she made or any

information as to the course of conduct which could be said to have led her to believe that the third defendant had such authority. P.W. 4 who

seems to have acted on her behalf says that he did not even look into the power of attorney and he did not make any enquiries as to what was the

business of the defendants'' company. He adds ""It was believing the words of Ramdas Naidu and Krishnamurthi Aiyar that I paid the money to the

third defendant"". Unfortunately it turns out that these two gentlemen were friends of the third defendant but certainly they were not authorised to

speak on behalf of the defendants'' company nor were they even employees of that company. Reliance was also placed upon the fact that P.W. 1

an agent of the R.M.M.S.T. firm recommended investment in the defendants'' firm; but his evidence only shows that he believed that the

defendants'' firm would be prepared to pay a higher rate of interest than his own firm was prepared to pay and he thought well of the solvency of

the defendants'' firm. Any information or belief that he had as to the authority of the third defendant is not relevant or binding as against the

defendants'' firm.

There is no question in the present case of the third defendant having acted within the limits of his ''apparent'' authority, because his apparent

authority is that contained in Ex. I. If the plaintiff wanted to rely upon the doctrine of ''holding out'', it was for her to prove that defendants 1 and 2,

by their conduct represented that the third defendant had authority to borrow or receive deposits and that the plaintiff acted on the faith of such

representation. There is no evidence establishing these facts. The second appeal therefore fails and it is dismissed with costs.