Case Note & Summary
The dispute arose between a transport company and its agent regarding the possession of a godown after the termination of the agency. The appellant, Southern Roadways Ltd., engaged in transporting goods, appointed S.M. Krishnan as an agent in Madras. The company discovered mismanagement and misappropriation of funds by the respondent, leading to the termination of his agency effective October 14, 1988. The company informed the respondent of its intention to take possession of the godown on October 15, 1988, and appointed another agent in his place. However, the respondent obstructed the new agent and the company from conducting business at the premises. The company filed a suit seeking a declaration of its right to operate the business and a permanent injunction against the respondent. The trial court granted a temporary injunction, but the Division Bench of the Madras High Court vacated it, prompting the company to appeal to the Supreme Court. The Supreme Court held that the revocation of agency terminated the agent's authority and that the respondent had no right to interfere with the company's business or remain in possession of the premises. The court restored the temporary injunction granted by the trial court, emphasizing that the agent's possession was on behalf of the principal and that he could not claim any independent rights over the property. The appeal was allowed with costs.
Headnote
A) Agency Law - Revocation of Agency - Termination of Agent's Authority - Indian Contract Act, 1872, Sections 202, 205, 221 - Revocation of agency by the principal immediately terminates the agent’s actual authority unless coupled with an interest. The court held that the respondent had no right to remain in possession after termination of agency and could not interfere with the company's business. (Paras 416B-C) B) Agency Law - Agent's Lien - Conditions for Exercising Lien - Indian Contract Act, 1872, Section 221 - An agent's lien on the principal's property can only be exercised when there is no agreement inconsistent with the lien. The court found that the agreement expressly authorized the company to occupy the godown upon revocation of agency. (Paras 416C-D) C) Agency Law - Possession of Property - Nature of Agent's Possession - Indian Contract Act, 1872 - An agent who receives property on behalf of the principal holds it on behalf of the principal and cannot claim independent possession. The court emphasized that the respondent's possession was on behalf of the company and not his own right. (Paras 419F-G)
Issue of Consideration
Whether the agent after revocation of his authority is entitled to remain in possession of the premises of the principal and interfere with the business thereof.
Final Decision
The Supreme Court allowed the appeal, restoring the temporary injunction granted by the trial court, affirming that the respondent had no right to remain in possession or interfere with the company's business after the termination of agency.
Law Points
- Revocation of agency
- Agent's authority
- Principal's rights
- Temporary injunction
- Lien on property
