CASE LIST MID TERM I.

INDEMNITY

1. Adamson v. Jarvis The plaintiff, an auctioneer, sold cattle on the instruction of the defendant. It was found that the defendant was not the true owner of the cattle and the plaintiff was made liable to the true owner. The plaintiff therefore in turn sued the defendant to indemnify him for the losses suffered as a result of the defendants acts. The Court held that the plaintiff having suffered losses after acting on the defendants instructions, the defendant must indemnify the plaintiff. 2. Secretary of State v. Bank of India Ltd The bank received a note with a forged endorsement and sent it to the public debt office for renewal. The true owner of the note then claimed it from the State which in turn claimed indemnity form the Bank. The Court allowed the State to recover from the bank stating that there was an implied promise of indemnity. 3. Gajanan Moreshwar v. Moreshwar Madan You no longer have to suffer loss before you can claim indemnity. If the liability is absolute, the person can claim indemnity by asking the indemnifier to pay off the claim or else by paying into Court sufficient funds to pay off the claim. The loss should be caused by a human agency. 4. Osman Jamal & Sons Ltd v. Gopal Purshottam A company was acting as the agent of the defendant firm. They bought certain goods from the supplier which they failed to take. The supplier then became entitled to damages for breach. The company went bankrupt before paying the claim. Held, that the official liquidator could recover the amount even though the company had not paid the vendor. The Court directed the amount to be set aside so that the vendor could be paid. II. AGENCY

5. Surendro and Co, The Liquidator v. Punjab Tannery (Ratification) All acts of the promoter are in favour of a principal not yet in existence. The acts must be within the purview of the principal and the promoter can be treated as an agent of the company prior to incorporation. Therefore, the company once incorporated can ratify the actions of the promoter. 6. Gopimal Burga Das v. Jain Bank of India Minor, partner in firm purchases shares. He can act as agent of company, unless specifically prohibited. 7. Keighly Maxeted & Co v. Durant KM appointed D as their agent to buy Karachi wheat at a particular price. D searched but could not succeed and bought wheat at a higher price. He made the purchase in his own name without disclosing the representation. The Court held that civil obligations are not created on undisclosed intentions. Therefore, there was an obligation on the agent to disclose his representation. The discretion lied with the plaintiff whether to ratify the actions or not.

8. Sins & Co v. Midland Railway (Necessity) The defendant was supposed to deliver goods at a particular time and place. There was a general strike and due to the perishable nature of the goods, the defendant sold the goods in the open market and made profits. The plaintiff sued the defendant stating that the authority was to transport the goods and not to sell them. Therefore the act was beyond the SOA. Held, that the defendant acted in good faith and as they had acted in the interests of the plaintiff the doctrine of necessity would apply. 9. Sachs v. Milkos Defendant allowed his friend to store some stuff in his house. The friend goes abroad and three years later, the plaintiff wanted to dispose of this. The defendant wrote 2 letters asking the friend to take back the stuff. When there was no reply, decided to sell. 6 yrs later the friend surfaces and asks for the stuff to be returned. It was held that there was no doctrine of necessity. 10. English v. Dedham Vale Properties (Express or Implied)

Couple owned a house which they wanted to sell. They applied to convert the land for commercial use. That didnt happen so they approached the defendant and the price was fixed for the land. Following transfer of possession, the defendant used its connections and obtained the clearance in favour of the couple. The couple sued held that as the couple had not set aside the sale but had merely sued for damages, there was an implied ratification of the sale. Further, as the couple has no problems with the defendants going to the authorities, the company is a self appointed agent of the couple. Given the fiduciary nature of the principal-agent relationship, it is necessary for the agent to disclose all material facts and hence disclose all material facts. If the agent does not disclose all material facts, he must compensate for the difference in price as he is the one benefiting from the difference. 11. Kucawar Lime Stone co. v. Dehri Rahtas Railway Co Ltd

Coal was being transported to a particular place. The defendant waited for a week but the plaintiff did not pick up the consignment. They sent them a notice stating that the wagons were needed elsewhere. 15 days later, they sold the coal in the open market. The plaintiff sued for lack of authority to make sale. The Court held that unless there is an emergency situation, the plaintiff has no authority to sell. 12. Ramesh v. Convenor

A university sent the admission letter by post which did not reach the plaintiff and he could not apply on time. Can the university be held liable for not choosing a more efficient method? 13. UTI v. Ravindra Kumar Shukla

The dividends were sent by post which did not reach the plaintiff thereby depriving him of his profits. The defendants claimed that they had appointed a statutory agent. They claimed that the post office being an independent contractor, they were not liable for the same. Held, the post office is an agent of the sender and they are acting on the senders behalf. Therefore, the defendants can be held liable for the amount due. 14. Harshad Shah v. LIC of India

LIC agents were appointed on a part time basis with explicit instructions to solicit business. The plaintiff contacted an agent and an application was filed. The plaintiff paid the premium amount to the agent rather than LIC itself. The agent forgot to deposit the premium and as per procedure the policy lapsed. On the plaintiffs death, his heirs could not claim the policy.

The Court held that in this case there being express instructions to the agents not to accept premiums, the agent had acted as an agent of the customer rather than of the company. 15. Kavukutty Amma v. Kaliani Amma (Customary Practice)

Nair community had a customary practice where the husband and wife could not act as agents of each other. The question arose as to whether customary [practice would prevail over statutory authority in giving wife the right to represent the husband for necessities. The Court held that if a customary practice has been practiced for a long period of time and has not been breached in the past, then it prevails over statutory law. 16. Watteu v. Fenwick (Apparent or Presumed Authority)

The hotel manager of five star hotel, where smoking was allowed and branded cigars and cigarettes were kept, ordered for a years worth supply of cigars and cigarettes. The owner of the hotel refused to pay for the supply stating the manager had no authority to place such an order. In coming to a decision, the court looked at the customary role of agents. It stated that if there was actual authority to purchase cigars and cigarettes, then there can be extension of the same. In this case, the Court stated that the hotel manager has authority to buy cigars as an extension of his authority to buy food and beverages. As a result, the hotel can be held responsible. 17. Ishaq v. Madan Lal

The plaintiff appointed an agent to sell goods at the best price and relied on the agents ability to determine the best price. The agent sold the goods to a customer half on credit. The plaintiff sued stating the agent had no authority to sell on credit and the authority to sell was for cash. The Court held that the agent had the authority to make the sale and hence it could be implied that he had the authority to sell at half price. 18. Freeman & Locker v. Buchkurst Park Properties

Board did not appoint anyone as MD but projected man as an excellent director with authority to deal with third parties. The world knew him to be the director though there was nothing on paper. The director engaged with architect to design a factory. When this was put forth before the board which refused to accept stating the director had no authority to deal with the architect (ordinary director cant deal with third party). The Court looked into the Turquand Rule: (i) Act of the agent must be within MOA and AOA (ii) Representation by the BOD holding out actual authority to the director or any other officer. (iii) Representation that the agent has authority to deal with third parties. (iv) Constructive notice to the public that the AOA and the MOZ are not the only determinants of the agents authority. Expansion of the company needs a special resolution by the BOD. Incumbent on the third party to know which powers require general resolution and which require special resolution. Important for him to know the agents authority. If the rule stands, the third partys rights will be protected. The Court held that the director had acted beyond the scope of his authority as his actions needed authorisation by a special resolution of the BOD. 19. Mohinder Singh v. Udai Ram Singh (Partnership)

Out of five partners in total, two took a loan from one of the partners. When the time cam to repay, the partner wanted to sue all the partners. If the partner proceeds against the partners, he would also be liable for one fifth the amount. 20. Lilley v. Double Day (Duties)

The plaintiff instructed the agent to keep goods in warehouse A. The defendant keeps it in warehouse B, though the plaintiff is not sure bout the place, he doesnt protest. A fire breaks out and all the goods are destroyed. The plaintiff then sues the defendant for disregarding instructions. Held that the agent is liable. When express instructions are given, the duty of the agent is to follow them. 21. Panna Lal v. Mohan Lal

The plaintiff asks the agent to send goods via carriage. The customary practice is to insure the goods. Agent forgets to do so and the goods are destroyed. The agent having knowledge of the common practice and failing to follow the same will be liable to compensate the principal. 22. Keppel v. Wheeler

The defendant is appointed as an agent to find a purchaser for a house. He does so and even witnesses the meeting and agreement between the purchaser and the plaintiff. The next day, he finds a purchaser willing to pay a higher price. Using his discretion, he refrains from mentioning the same to the plaintiff. After the sale, the plaintiff finds out bout this and sues the defendant for the difference in profit. Held, the agents duty ends when the task is completed. Till then he has a duty to disclose all material facts. In this case, failing to disclose the fact, the agent can be held liable to the principal. 23. Saraswati Devi v. Motilal (Rights)

An agent was appointed to find a purchaser for a house. The agent did so and the buyer paid 30000 as advance and the agent asked for remuneration. Principal refused stating it would be given when the sale was complete. The principal then decides not to sell and refunds 30000. The tendering of the 30000 and the acceptance of the same was the completion of the agents task and in this case he was entitled to remuneration. 24. Green v. Barlett

An agent was appointed to find a bidder with reserve and keeping the discretion with the principal to refuse the offer. The bidder found by the agent was not accepted by the principal and the agent does not ask for commission. Mr X, who took part in the bid, asks the agent for the contact details of the principal. The agent provides him with the same and Mr X contacts the principal and a sale agreement is signed. The agent sues for commission from the transaction. Held, the agent played a role in facilitating the meeting between the two and hence can claim remuneration. 25. Drew v. Nunn (Termination)

A husband takes his wife to the store and holds her out as his agent. The wife starts purchasing on that authority. The husband goes insane and the owner keeps supplying. Who can the owner claim from? The Court held that knowledge of insanity is essential for termination of agency. Therefore, in this case both the husband and the wife can be held liable. 26. Arnold v. Toynbee

A solicitor is appointed on behalf of client. After filing the suit, the client goes insane. The solicitor continues with the suit and loses. The Court orders the client to pay the cost of litigation. Knowledge is important for termination of the agency. Held, the solicitor has to pay but can later claim from the client. 27. Armstrong v. Strain (Liability)

A man wants to sell a house but it was dilapidated. He appoints an agent to find purchaser after fixing it up superficially. The agent tells the buyer that it is a very nice house. The purchaser buys the house and within two months it collapses. The buyer sues the agent because: (i) hes the first point of contact (ii) he made a wring representation through the letter (iii) he made a wrong representation through the photo and hence the agent will actually be liable. The Court held the statements of the agent were in the nature of representation for the purpose of sale and not just as mere opinions. Being within the agents SOA, the principal will be liable. 28. Chicago City Rly Co v. McMahon

The plaintiff files a suit but hires a detective agency to find additional evidence. He asks the agency to use whatever means possible to find the evidence. The agents are caught giving bribes. Having expressly authorised the agents to use whatever means possible, the principal should have known that bribe was a possibility and hence will be liable along with the agency though the primary responsibility is on the principal. III. 29. GUARANTEE James Graham Co. v. South Gate Sands (Directors)

Tiber Company supplied timber to J on credit through a series of transactions. When due date came, he did not pay. The timber company agreed not to proceed with suit if directors of the company stand as surety. The directors agree provided the liability is joint. One of the directors is unavailable and his signature is forged. The fact that all three directors are necessary is a condition precedent and therefore the sureties will be absolved of liability. 30. Kay v. Groves (Continuing Guarantee)

Not a continuing guarantee. 5/10 basktes. 31. Hargopal Agarwal v. SBI

Directors stood as surety for a loan given to the company in the form of a continuing guarantee. When the company went into loss, they sent a copy of the resignation letter to the bank stating that from that day forward they would not be liable for any debt incurred from the date of resignation. The bank lent the company a further loan as it did not consider the letter to be a revocation of the guarantee. The Court held that the directors were within their rights to come out of the continuing guarantee and no notice was necessary. Notice means mere intention to leave. 32. Windfield v. Dast Croin (Servant/Continuing Guarantee)

Servant approached the master asking him to stand as surety for a transaction. The master agrees. The servant quits and the master cites this as the reason for no longer standing as surety. The Court held that the guarantee being a continuing guarantee, the master could leave when he wanted. 33. Maharashtra Electricity Board, Bombay v. The Official Liquidator, Erunakalam (Bank Guarantee) The bank stood as a surety with the MEB as the creditor. The agreement was that the bank had to repay within 48 hours of the creditor asking for the amount. However, company went into liquidation and the official liquidator asked the bank not to pay the creditor. The Court held that a bank guarantee was unconditional and payment on demand and the liquidator could not ask the bank not to pay. The bank had to discharge its liabilities as a surety to the creditor.

34.

UP State Sugar Corporation v. M/s. Sumac Intl Ltd

Plaintiff gives bank guarantee but went bankrupt and into liquidation. The Company then approached the court to prevent encashment of the bank guarantee. The purpose and nature of the bank guarantee is to safeguard commercial transactions. In allowing the petition, commercial transactions will suffer and the whole purpose will be defeated. Therefore, the Court held the bank cannot be stopped from honouring its obligations. 35. Kudremukh Iron Ore v. Karola Rubber Co

Arbitration clause exists between the creditor and the debtor. The debtor fails to carry out his obligations and tries to enforce arbitration proceedings. The enforcement of a bank guarantee cannot be stopped by an arbitration proceeding. 36. Kirloskar Pneumatic Co v. NTPC

There was a tender process where the bidders were required to give a bank guarantee along with the bid. After doing so the bidder withdrew the bid. The defendant was refrained from encashing the bank guarantee. 37. DTH Construction v. SAIL

There was a contract for dredging and deepening a reservoir. The contractor was given advance payment for the purchase of essential machinery on a bank guarantee. The contractor defaulted and the tried to prevent encashing of the bank guarantee citing impossibility of performance. The court held that this was not sufficient reason for preventing the realisation of the creditors debt. 38. Bank of Bihar v. Damodar Prasad (Liability)

DP was a surety for a debtor. On the failure to pay the debt, the BOB proceeded against him. DP approached the bank suggesting that BOB proceed against the debtor first. Held, liability of a surety is co-extensive with that of the principal debtor. Discretion lies with the creditor whom to proceed against. 39. Narayan Singh v. Chhator Singh (Statute)

Rajasthan relief of Indebtedness Act announced loan waiver. 40. 41. Union Bank of India v. Manju Narayan SBI v. Ind. Export Registration

3 decrees Creditor can proceed against the surety or any one of the three decrees? 42. Mamta Ghosh v. United Industries Bank (Right against Principal Debtor)

The Debtor started selling of his securities to declare himself insolvent. The surety goes to creditor and asks him to stop the debtor. Creditor refuses. Held, anticipatory breach and all parties have to be liable as per the ICA. Debtor can be stopped from selling. 43. Kamala Chandra v. Susila Bala (Co-sureties)

Co-sureties. If one of the sureties is declared insolvent. The other will have to pay the entire amount plus interest. 44. Banar v. Macdonald (Variation)

Defendant stood as a guarantor for the appointment of a cashier. The cashier was then promoted with increased risk factor. The cashier embezzled and the bank suffered a loss. The defendant claimed that there had been a variance in the contract and hence was not liable. The court held that the variation had been done without the consent of the surety and therefore would not be liable. 45. MS Anirudhan v. Thomcos bank

Debtor asks surety to guarantee a loan of 25000. The loan is actually 20000. Bank refuses and the debtor just changes the paper to 20000. Surety claims variation in contract/ held, if variation is to suretys benefit cant escape liability. If creditor is guilty of misrepresentation, regardless of whether it benefits the surety. IV. 46. BAILMENT Ashley v. Tolhurst

Car park key remains with owner therefore no transfer of possession. Just usage of space. Not bailment. 47. Ram Ghulam v. Govt of UP

Plaintiffs stuff was stolen and recovered by police. Then stolen from police station too. When there is no contract, theres no bailment 48. State of Gujarat v. Memon Mohammed

Bailment can happen without contract. Vehicle seized, lost. He claims back. Allowed, Implied Bailment. 49. State of Maharashtra v. Brittanica Biscuits

Price = biscuit+deposit for tin Sale coz not required to return tins. 50. United Breweries v. State of AP

Deposit kept for beer bottle and crate. Customers ensured better supply if they return bottles. Circular passed to make people know deposits being collected for bottle. Held, entire transaction needs to be looked at. The intention clearly was not to sell. Therefore bailment. 51. Kalyani Breweries v. State of WB

The deposit = cost of the beer bottles as well as no info to consumers to return the bottles. Therefore, sale. 52. Raj Steel & Ors v. State of AP

Packing value insignificant and therefore not bailment. 53. Uco Bank v. Chandra Sarkar

Baliee not responsible to the bailor Bailee does not represent the bailor in a contract with a third party. 54. Shantilal v. Tara Chand

Granary destroyed by flood. Bailee not responsible coz unexpected act.

55.

Orient Longman v. Jayanti Kabir

Maulana Azad wrote a book and asked 30 pages to be published after his death. Government decides to publish the whole thing. JK sues stating violation of express instructions. Can be held liable. 56. Shaw & Co v. Symmons & Sons

Books were given for binding to be returned within a specific time. Liability will be imposed for not returning within reasonable time even if youre not responsible for the damage. 57. UOI v. Steel Stock Holders Syndicate

Deterioration refers to physical deterioration and not fall in MV. 58. Eduligee v. Cafe John Brothers

Refrigerator given to bailee and was returned and payment not made. When possession ends, right of lien ends. 59. Ghasiram Agarwal v. State of WB

FCI has a godown in every city. There is no distinction between a government department and a private party in bailment. If FCI gets consideration from other government department, it will be the bailee. 60. Ultzen v. Nicolls

Customer in a restaurant takes off his coat and hands it to the waiter. After the meal, the customer finds that the coat is missing. Sues the restaurant. Held, the possession of the coat was transferred from the customer to the waiter and hence, the waiter had assumed the responsibility of a bailee. Therefore, the restaurant can be held liable. 61. Surendranath v. Kali Kumar Sen (Libaility)

Exhibition owner wanted elephant for forty days. The mahout went with the elephant. Elephant was injured. Held, the presence of the mahout meant that there was no transfer of possession and hence exhibition owner cannot be held responsible. 62. Reed v. Dean (Duties)

Plaintiff hired a boat from the defendant to go on a weeks vacation. While vacationing, the motorboat caught fire. The fire extinguisher did not work and the vacation was ruined. The plaintiff sues the defendant. Held, in a bailment for reward knowledge of the defect is irrelevant if bailee suffers injury. The defendant had an absolute duty to ensure that the boat was safe. Therefore, can be held liable. 63. Malfat v. Bateman

Plaintiff borrowed the defendants car (lent gratuitously) to go to a particular place. Midway, the car meets with an accident as bolts are not fixed properly. The plaintiff sues the defendant who contends that it being a gratuitous bailment, the defendant owes the plaintiff no obligation to check for faults. Held, in a gratuitous bailment, unless it is proved that the bailor deliberately failed to disclose faults, he cannot be held liable. 64. Hadley v. Drotwick Construction

Plaintiff lends the defendant a crane on the condition that they would find a competent person to manoeuvre it. The defendant not finding anyone placed a 16 yr old boy at its head. As a result of negligence, injury was caused. The plaintiff was blamed for not reporting faults in the crane. The bailment of the crane needs satisfaction of special conditions such as the need for an operator. The bailor can only ensure that there are no defects and rely on the conditions. Its upto the bailee and if he places a 16 year old boy as the operator, he is liable to compensate. 65. UOI v. Udho Ram Sons

A consignment of goods was given to the Indian Railways. The wagons were sealed in front of the owners. The train left Kolkata and 2 hours later the train was robbed and all goods stolen. The railways claimed immunity stating all reasonable care had been taken (sealed+RPF personnel). Held, railways possessing the resources to do so need to take extra measures and the standard of care expected of them is higher. 66. Bank of Australia v. Breill

If loan is taken by 2 partners for the benefit of the company, the remaining 3 partners have to also stand as agents and repay the loan. 67. UOI v. Mohd. Nazim POI and POP are substitute agents, not sub-agents. Thus both are equally liable and POI doesnt have control over POPs operation.