1

Question 1

Issue: Can Principal Scaria sue Agent M for breach of his agency?

Rule: Chapter X of the Indian Contract Act, 1872 has several sections that lays down general
principles to deal with agency.

Section 188- An agent, having an authority to do an act, has authority to do every lawful
thing which is necessary in order to do such an act.1

Section 189- An agent has authority, in an emergency, to do all such acts for the purpose of
protecting his principal from loss and would be done by a person of ordinary prudence, in his
own case, under similar circumstances.2

Section 190- An agent cannot lawful employ another to perform acts which he has expressly
or impliedly undertaken to perform personally, unless by the ordinary custom of trade a sub-
agent may, or, from the nature of agency, a sub-agent must, be employed.3

Section 191- A “sub-agent” is a person employed by, and acting under the control of, the
original agent in the business of the agency.4

Section 192- The agent is responsible to the principal for the acts of the sub-agent. The sub-
agent is responsible for his acts to the agent, but not to the principal, except in cases of fraud,
or willful wrong.5

Section 214- It is the duty of the agent, in cases of difficulty to use all reasonable diligence in
communicating with his principal, and in seeking to obtain his instructions.6

Analysis: The Law Commission of India suggested many measures that could make the
concept of agency more comprehensive under the Indian Contract Act, 1872 because the
statute is not extensive.7 According to Section 182 of the Act, there has to be an agent and a
principal for an agency. However, calling them agent and principal is not enough and the true
nature of their relationship should be taken into consideration. Moreover, according to
Section 185, no consideration is required for this agency.

1
Indian Contract Act, 1872.
2
ibid.
3
ibid.
4
ibid.
5
ibid.
6
ibid.
7
Law Commission, Contract Act, 1872 (1958).
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Section 188 of the Indian Contract Act states that an agent has the authority to do every
lawful thing which is needed for doing an authorized act. These can also include implied
authority to do anything which is incidental to the ordinary conduct of an agency. This is
allowed for the effective performance of duties. Moreover, an agent has authority, in an
emergency, to do all such acts for the purpose of protecting his principal from loss as would
be done by a person of ordinary prudence, in his own case under similar circumstances. 8 This
section is supposed to protect the agent. This is because the Indian Contract Act is not
exhaustive of the rights of an agent against the principal. 9 It is also the duty of an agent, in
cases of difficulty, to use all reasonable diligence in communicating with his principal, and
in seeking to obtain his instructions.10

On considering the facts of the present case, we can understand that Agent M is the sub-
agent, Mohini is the agent, and Principal Scaria is the principal according to Section 191 of
the Act. The sub-agent according to Section 192 is responsible for his acts to the agent and
not to the principal. Here the fact that Mohini has employed a sub-agent is valid under
Section 190 because the “nature of the agency” which is property-brokering usually requires
a property-broker. The principal as a general rule may not take direct action against the sub-
agent. The reason for the foregoing rule is that generally speaking, there need not be any
privity of contract between the ‘ultimate’ principal and the sub-agent. Therefore, the subagent
is usually liable to his principal, which is the agent appointed by the ‘ultimate’ principal. If
the principal is a party to the appointment of the subagent or in some manner it is indicated
that it was the intention of the parties that privity of contract should be established between
them, this rule will not apply, and the sub-agent has both the rights and the liabilities of an
agent vis-à-vis the ‘ultimate’ principal. This is not the case over here because Principal Scaria
is not a party to the appointment of Agent M. It can also be argued that this is not a case of
sub-agent but that of a substituted agent. Although, it is not.

Mohini has approached Agent M to help her purchase a 25450 sq. yd. bungalow which is to
be open from at least two sides and has a garden 1/3 rd the size of the total area of the
bungalow. However, she omits to tell Agent M that she is purchasing the property on behalf
of her father. So, this is not a case of substituted agent and instead is that of a sub-agent.
Agent M had no idea that he was property-brokering for Principal Scaria. Devalue found

8
Indian Contract Act, 1872, s 189.
9
Narandas Morardas Gajiwala v. SPAM Papammal AIR 1961 SC 3.
10
Indian Contract Act, 1872, s 214.
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itself under the throes of a terrible virus, Nvid- 19. So, this can be considered as an
emergency but since Agent M is a sub-agent, there is no privity of contract between him and
Principle Scaria. He should have contacted Mohini without trying to take a decision because
she stood as a principal to him in this case. Although, he was trying to think of her loss in the
emergency situation, there was no attempt on his part to try and communicate with her. Agent
M was acting outside his cope of authority. Mohini had not told Agent M that she was finding
the property on behalf of her father, so he was completely unaware of that. Agent M is
working under Mohini and is only responsible to her since he has been appointed by her. In
fact, Mohini is responsible to Principal Scaria for the acts of Agent M because he has not
been appointed by Principal Scaria. Keeping all this in mind, there is no agency between
Agent M and Principal Scaria.

Conclusion: Principal Scaria cannot sue Agent M for breach of agency.

Question 2
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Issue: Can Sumeru claim for damages against JMS?

Rule: Section 148 of the Indian Contract Act, 1972 tells us the essential elements for a
bailment:

 Delivery of goods to one person by another for some purpose

 There should be a contract
 When the purpose of the contract is accomplished, the goods need to be disposed of or
returned
 The directions of the bailor must be followed

Analysis: The creation of bailment does not always require consent of the bailor. In the
case at hand, Mr. Samsher Kataria had called up the JMS which towed Sumeru’s vehicle for
trespassing into private property. The bailment in the present case looks beneficial from the
viewpoint of the bailee only. Section 151 says that the bailee is bound to take as much care of
the goods bailed to him as a man of ordinary prudence would, under similar circumstances,
take of his own goods of the same bulk, quality and value as the goods bailed. 11 This is
applicable in all cases of bailment. The onus is in the bailee, here JMS, to prove that he had
taken necessary precautions and care required of him / her under the law. Since, JMS failed,
Sumeru can ask for damages. Under Section 154, any use of the good bailed which is not
according to the directions given by the bailor, the bailee has to compensate the bailor for any
damages that result out of such use and the amount of care does not matter. Again, Sumeru
can ask for damages from JMS. Section 160 says that is the duty of the bailee to return, or
deliver according to the bailor’s directions, the goods bailed, without demand, as soon as the
time for which they were bailed has expired, or the purpose for which they were bailed has
been accomplished.12 Even if the purpose of bailment is not accomplished, JMS had to give
back Sumeru’s BMW car on the morning of January 11. Furthermore, if, by the default of the
bailee, the goods are not returned, delivered or tendered at the proper time, he / she is
responsible to the bailor for any loss, destruction or deterioration of the goods from that
time.13 The bailee is always liable in such cases and Act of God or inevitable accident cannot
work in such cases. Initially, there could be no statutory bailment without a contract. Now,
we can refer to the case of State of Gujarat v. Memon Mahomed Haji 14 which tells us that

11
Indian Contract Act, 1872.
12
ibid.
13
Indian Contract Act, 1872, s 161.
14
State of Gujarat v. Memon Mahomed Haji AIR 1967 SC 1885.
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there can be bailment even without a contract. The State Government had argued that the
vehicles were not bailed to the Custom Authorities because Section 148 of the Indian
Contract Act has the words “upon a contract” but there was no contract according to the
circumstances of the case. The respondents had argued that the vehicle was in possession of
the State Government and they were bound to take care of it. Eventually, the court held in
favor of the respondent and it was held that the bailment is dealt with by the Indian Contract
Act only in cases where it arises from a contract, but it is not correct to say that there cannot
be a bailment without an enforceable contract 15. There can be a bailment and the bailor and
bailee’s relationship in respect to a specific good is present even when there is no enforceable
contract. It was also said that “the State Government was aware that if the said order was set
aside, the property would have to be returned to the owner thereof in the same state in which
it was seized except as to normal depreciation… the State Government was during the
pendency of the appeal under a statutory duty to take reasonable care of the said vehicles
which on the said appeal being decided against it were liable to be returned to their owner.” 16
Even the Law Commission of India had stated that “In our opinion, the present definition of
the bailment should not be altered. But the case of what has been described as quasi-contract
of bailment should be provided for in a separate section stating that the bailor and Bailee in
such cases, must, so far as may be, perform the same duties, as if they were bailors and bailee
under contract express or implied as provided in Section 148.” 17 Sumeru should not have to
pay JMS for the towing and other incidental fees and instead should receive damages
estimating up to Rs. 10 lakhs and should also claim the value of the car.
Conclusion: There can be a bailment without an enforceable contract. Therefore, Sumeru can
claim for damages against JMS.

15
ibid.
16
ibid.
17
n 7.