The main objective of this case analysis is to understand the rationale
behind the judgment passed in the case of the Valapad Co-Operative Stores Vs K.H.
Srinevasa Iyer Brothers and understand the facts and issues of this case. The
case of Valapad Co-Operative Stores Vs K.H. Srinevasa Iyer Brothers
based on the implied authority and apparent authority.
Implied Authority is an authority that isn't communicated or composed into the
agreement, yet the agent is accepted to have to execute the matter of protection
for the head. Implied authority is coincidental to communicate authority since
only one out of every odd single detail of an agent's authority can be
illuminated in the composed contract whereas Assume you visit a caf and the
server lets you know that you'd need to purchase a starter to get a free
Presently, the waiter has made an agreement with you in the interest of the
caf. The authority of the waiter is implied on the grounds that they have been
chosen as the main representative of the eatery to work with you. Whether
different get involved is irrelevant as it is guessed that the server would be
the main individual expected to finish your exchange. Experiencing the same
thing, assuming the administrator comes to you and illuminates that the server
submitted a mix-up and that there is no free refreshment accessible, this would
prompt an immediate infringement of an agreement that was made between you and
The eatery could put a punishment on the server; be that as it may, in light of
the implied authority, they would need to oblige the arrangement and give you a
free drink. Apparent authority is a class of lawful connections between a head
and an agent. It checks out at the authority of the agent according to the point
of view of the outsider. An agent is supposed to be acting inside the extent of
its clear or apparent authority (and hence ready to submit the head) if: The
chief somehow or another addresses or holds out the agent as having an authority
that is more extensive than the agent's genuine authority.
The individual making the portrayal about the agent's authority must itself have
genuine authority to make that portrayal, not simply evident authority. A
typical illustration of an issue including clear authority is in the same place
as an official of an organization given a title, status and offices that bring
about a distortion of the extent of that official's real authority, without
shields being set up to forestall such a deception. This study is divided into
many sub-section namely background, issues, judgement analysis and lastly
conclusion by the author.
The Valappad Co-operative Stores Ltd. is a general society registered under the
Madras Co-operative Societies Act (Act VI of 1932) here called the Society is
the respondent in this case. The suit was established for the recuperation of
cash by the offended party for the acquisition of products by the Society from
them. The bills on which the case of the offended party was based were
introduced in the court.
The instance of the offended party was that the Society bought merchandise from
him and was Indebted for the sums asserted in the particular plaints. These were
initially two cases that were after great deliberation by the court tied
together and the evidence for the first case that is O.S. 477 of 1955 was
taken. It can be concluded from the case facts that the secretary of the
Valapad co-operative society had bought some goods from Srinivasa Iyer, on
credit and when he was not able to pay back the amount of the goods, Srinivasa
Iyer sued Valapad cooperative society for money.
The plaintiff argued in this case that the defendant had appointed the secretary
to be an agency on the behalf of society and perform the buying and selling of
the goods. Hence if the secretary bought goods for me the plaintiff was on
credit it was for the society only and hence the case would be against the
society and the society will be the defendant.
To this, the defence counsel said that the secretary of the society was entitled
to the funds by the society for purchasing the goods and that he had no
authority whatsoever to purchase the goods on the basis of credit. According to
them by doing so the secretary has not only breached the trust of the society
but has also exercised power beyond his jurisdiction. According to them, the
secretary has misappropriated the funds granted to him by the society and that
he was not authorized to do so and hence the action of the secretary buying
goods on credit had no relation whatsoever with the society and hence the
society was not liable to pay the price that was claimed.
The preliminary court excused the suits observing that me Society didn't approve
the secretary to buy merchandise on credit and that the Society had not held out
that the secretary had an expert in the normal course of his work, to buy
products using a credit card from the offended parties. In the claim, the lower
appellant Court arrived at the resolution that the buys made by the secretary
were inside the extent of his power and that the valapad co-operative society
was limited by the demonstration of its approved agent and thusly declared the
suits. It is against these declarations that the current requests have been
recorded by the litigant.
The main issue, in this case, was whether the secretary of the society was
authorized to buy goods on credit from a third party and whether the secretary
will be considered an agent and will be judged on the basis of rules for the
agent or not. The judge, in this case, held that in order to understand whether
the secretary had the authority to buy the goods on credit from Shrinivasa the
court has to look into and understand the authority given to the secretary in
the books of the Constitution of the valappad co-operative society.
To which the rules in the Constitution of the valappad co-operative society is
mentioned in the judgement "The Board shall appoint a paid secretary preferably
from among the qualified candidates who have undergone training in any one of
the co-operative framing institutions and shall fix the condition of his service
including the security to be offered by.
He shall not be fined or otherwise punished except by the Board. In addition to
such powers and duties as may be entrusted to him by the Board, he shall be
responsible for the carrying on of the day-to-aay work of the stores on sound
line (B) for checking the stock as often as possible and at least once in a
month. For seeing that the accounts are maintained properly and all the books
are written tip and posted upto date and for the safe custody of the stock in
This case had to be decided on the basis of the actual authority of the agent as
evidenced fly the bye-laws of the Society. the situation, in this case, was that
the agent had the authority to carry on the business. Whether the existence of
that authority was known to the person dealing with the agent or not, the agent
must be deemed to have made a representation that he has authority under the
bye-laws to carry on the business and purchase the goods on credit.
That he had the authority to carry on the business is clear from the bye-laws of
the Society, but that he had the authority to purchase goods on credit is not
clear. It is not mentioned in the bye-laws. Therefore the question is whether a
person authorized to carry on the business of the Stores has got implied
authority to purchase goods on credit."
Before this case reached to higher courts the lower appellate court had passed a
judgement which was in favour of the plaintiff and said that the secretary
bought the goods under his authority only and that the secretary being authority
the society was bound by the working of him and hence was liable to pay for the
goods purchased by the secretary on credit. The judge while giving the judgement
referred to a lot of statements by learned scholars and provided their opinions
to explain his stance on the case.
While referring to thought in line of Kredit-bank Cassel G.M.B.H. v.
. He quoted "There must be reliance before the doctrine of
estoppel can be invoked. The person who professes to set for the company makes
an implied representation that he has authority so to do. In such a case the
other party to the contract will run the risk of mere being no article."
While referring to Mr. J. H. Watts, the learned editor of Smith's Mercantile Law
he successfully explained the difference between implies and ostensible
authority of an agent. This was the base of the case and helped explaining in
the judgement that the good purchase by the secretary on credit from the
plaintiff was actually in accordance to the authority given to him by the
society and that the society was bound to provide the defendant with the money
as the secretary bought the goods on behalf of the society.
In my interpretation the court held that decision on the view that the secretary
is liable for carrying on of the everyday work of the stores on sound lines, it
was available to him to buy merchandise on loan assuming he so bought; it was
restricted on the litigant. I believe that the conflict is sound. An individual
having the obligation to carry on the matter of the Store and its everyday work
on a sound line and who is additionally endowed with the chief business of the
Society should be considered to have implied authority to buy merchandise using
a credit card. The authority of an agent to tie the chief relies on the inquiry
of whether the agent was acting in the normal course of his business.
For this situation the Society having endowed the running of the matter of the
stores to the secretary, it should be taken that the secretary was depended with
so many powers as were vital and common peak the carrying on of that business
and it can't be said that the secretary was acting externally the extent of his
authority when he bought the merchandise using a credit card.
It is insignificant that the Society had outfitted adequate assets to the
secretary for buying merchandise since there is no proof to show that the
offended parties knew about this reality. Assuming there is any mysterious limit
on the typical and implied authority of an agent an outsider acting with honest
intentions won't be found by that mysterious restriction.
For this situation as the bye-regulations approved the secretary to carry on the
matter of the Stores and as the offended parties in selling the products using a
credit card had not a great explanation to speculate that the general public had
progressed assets to the secretary with which to buy merchandise, the Society
was limited by the demonstration of the secretary.
Regardless of whether it be accepted that the secretary was submitting extortion
off the general public, the general public will he bound given the secretary was
acting in the common course of his work and that the offended parties had no
information on the misrepresentation and hence on basis of this the court held
that the judgement of lower appellant court was confirmed as well as right.
This was a very crucial case and judgement in analysing the importance of agent
and his use of power. It is in cases like these only that we understand the
importance of interpretation of law. like in this case the condition of
purchasing products on credit was not mentioned in the by-laws of the society
but the court had to interpret it on the basis of other lines provided in the
It was mentioned in the by-law that:
"In addition to such powers and duties as may be entrusted to him by the Board
he shall be responsible for the carrying on of the day-to-day work of the stores
on sound line"
Even though the by-law has not mentioned of secretary purchasing goods on credit
basis still it can be interpreted that it was a on sound line and hence the
society was bound to pay the amount to the plaintiff. The judge in this case
brilliantly explained to us why and how the society was responsible and also set
a great example for cases similar to these that will come to the court in
- The Valapad Co-Operative Stores ... vs K.H. Srinevasa Iyer Brothers, ...
on 18 February, 1963, Indiankanoon.org, https://indiankanoon.org/doc/359124/
(last visited Mar 20, 2022).
- The Valapad Co-Operative Stores ... vs K.H. Srinevasa Iyer Brothers,
casemine (1963), https://www.casemine.com/judgement/in/56094dfee4b014971128015d
(last visited Mar 21, 2022).
- AIR 1964 Ker 176
- AIR 1964 Ker 176
- (1927) 1 KB 826