The above-mentioned case revolves around the concept of Agency. The plaintiff
and the defendant share a professional, intimate relationship wherein it
appeared that the latter, a legal practitioner, was a sort of an advisor to the
former, in cases of monetary investments, transactions, etc.
The principle of Agency, defined under Section 182 of the ICA (Indian Contract
Act, 1872) is a dual relationship namely between an Agent and a Principal, who
appoints the Agent, in order to deal with the third party, on behalf of himself.
This fiduciary relationship between the two is central to the notion of utmost
loyalty and belief due to the fact that the Agent is entrusted to be the legal
representative of the Principal in dealings with other parties and hence,
distinguishes itself from other ordinary people given the mere task to work for
someone. Similarly, the present case highlights this very distinction and clears
the misconception of various other relationships which appear to be similar to
that of an Agency, which in legality, are not.
In 1888, a home loan of Rs. 25,000 was executed by Radha Krishna Lal Sund, for
the Plaintiff (Suresh Chandra Bosu) and of the spouse of the Defendant (Radha
Kishore Bhattacherjee) half of which had a place with the Plaintiff and half to
the Defendant. Soon after, two supplemental bonds were executed to outfit extra
security for the previous total progressed.
In 1890, the mortgagor was sued and
later a pronouncement was acquired against him for over Rs. 36,000. In 1894, a
power of attorney was authorised by the plaintiff to the Defendant and two
different people by which they were approved to execute the pronouncement and
deal with the properties which had just been bought in execution procedures,
The Plaintiff alleged defendant for infidelity and stated that the
mortgagor had not a decent title to the properties covered by the security bonds
ascribing this to the carelessness, if not the fraudulent acts of the Defendant,
who, as indicated by the plaintiff was an agent acting on his behalf and
subsequently, a case is filed in court.
Out of the four main issues of this case, the two below mentioned issues are
pertinent to the current case analysis of Contractual Agency:
- Whether the Defendant was an Agent of the Plaintiff in regard of the
home loan exchange?
- Whether the Defendant was an Agent of the Plaintiff in regard of the
The subordinate judge, upon looking into the evidence and completing the due
procedure, finds the plaintiff’s appeal to be fallacious and favours the
defendant by stating that the Defendant can not be called as an agent of the
principal. However, on further appeal by the plaintiff to the High Court
(Calcutta), the judges discuss the speculate and deal with issues in thorough
With respect to the first issue, upon looking into evidence and the arguments
presented by both the parties, the High Court, in line with the previous
judgement given by the Subordinate Judge, stated that there was no doubt in the
fact that the Defendant is not an agent of the Plaintiff in regard to the home
loan exchange for the very fact that the plaintiff might have procured the
advice from the Defendant but by no means did he rely on it as his actions and
intentions did not seem to treat the Defendant as his agent. The court also
stated that the Defendant, for reasons of absence of deceit found, cannot be
held guilty for the monetary loss occurred by insufficient securities.
On the other hand, with regard to the execution procedures, the counsel
appearing for the defendant had agreed with the claims of the plaintiff and
stated that his client was responsible for rendering accounts for the plaintiff.
However, these accounts had been taken care of and subsequently undertaken by
The court, in this regard, stated that the argument put forth by the defendant
holds water and is sufficiently supported by evidence. According to the facts,
it is proved conclusively that the Plaintiff had himself looked into the
accounts, addressed the irregularities and cleared the air with the defendant
and had duly accepted that he had mistakenly overdrawn a certain sum of Rs 700.
Furthermore, discussions had taken place but despite of that, the plaintiff had
stayed on his words of the previous agreement.
The court, with respect to both the issues, has come to a conclusion by way of a
meticulous discussion and legal precedence. The court, in both issues, favours
the defendant as the arguments presented by them are well founded, whereas,
simultaneously, the claims made by the plaintiff are absolutely baseless.
In the instant case, the Apex Court has rightly stated that the Defendant cannot
be regarded as an agent of the Plaintiff in regard to neither the home loan
exchange nor the executing procedure. This case indirectly points out the
difference between a relationship of Agency and other fiduciary relationships.
With respect to the first issue, as stated by the court and hence mentioned in
the judgement, mere seeking of advice for personal reasons alone is not enough
to establish an Agency. A person, when entrusted to be the legal agent of
someone, is responsible for establishing contractual relations between his
principle and the third party and present himself as a legal substitute of his
principal in the outer world. In fact, the position of an Agent is something
which cannot be taken for granted, as any actions taken by the agent are
equivalent to be taken by the principle himself. This relationship, based on a
contract, can be created in an express or an implied manner.
However, in the present case, it is nowhere to be seen that the Plaintiff
entrusted the Defendant to act on his behalf and carry-on business as his
representative and mere dependency placed by the plaintiff on the defendant
would not mean that the latter is liable for the losses sustained by the former.
Unless it is conclusively proven that the advice given by the defendant was
binding on the plaintiff or that the plaintiff authorized the defendant, in any
way, to act on behalf of himself, we cannot say that there exists an agency.
On the other hand, the second issue, it is visible that the defendant had been
given the duty to render a particular account of the plaintiff and that he
agreed in court that such was the case. However, the plaintiff alleged that the
defendant had not rendered any such account and if done so, it was done without
his consent. As discussed earlier and seen in the judgement, such claim made is
groundless due to the reason that the facts itself, prima facie, prove that the
plaintiff himself had inspected into the account rendered and had fairly
discussed about this matter with the defendant.
He also had ample of time to make changes and amend the accounts, if needed.
Until the present case was not filed, there had been no argument with regard to
this topic which shows that it was a useless claim made by the plaintiff. It is
definitely true that the defendant, here, was an agent of the plaintiff, who had
the right to flawless accounts be maintained by the defendant, which in this
case, had been fulfilled. Moreover, with the time given to the plaintiff, there
is no question of claiming that errors had been made in the account or that such
account was never rendered in the first place.
Hence, we can safely say that the plaintiff, with his baseless arguments, cannot
be given the benefit of doubt in either of the issues raised and that the
judgement rightly favours the defendant.
The case raised other issues as well, those of fraud, negligence, etc. However,
it revolves around the notion of Agency. It is clearly seen that the Defendant
was not the agent of the plaintiff in regard to one issue, whereas he was an
agent in regard to the other issue, where he had duly performed his duties as an
agent and hence could not be held accountable for any of the loss suffered by
The case is famously known to pinpoint one of the main elements of Agency, ie.
the agent and principal stand on an equal footing so that the privity of
contract cannot be objected upon. Here, the defendant’s position was not of an
agent and when it was, it had been suitably met with.
- Mohesh Chandra Basu v Radha Kishore Bhattacharjee, (1907-08) 12 CWN 28,
- Indian Contract Act, 1872.