JUDGMENT Allsop and Verma, JJ. - This appeal arises out of a suit for recovery of a sum of Rs. 5,000 with interest on the basis of a promissory note dated June 11, 1934 and for a sum of Rs. 673-8-0 on account of part of the consideration for a deed of sale which did not pass. The Plaintiff, Ram Chand, was the owner of a house in the city of Muttra. He transferred it by a deed of sale to the Defendant, Hira Lal. This deed was executed on June 11, 1934 and Hira Lal agreed to pay a sum of Rs. 18,900 for the house. Part of this sum had been paid as earnest money. A sum of Rs. 11,728 was paid in cash. A sum of Rs. 672, which is now claimed, was left with the vendee for payment to a creditor of the vendor's and Hira Lal executed the promissory note to which we have already referred for the sum of Rs. (sic) the balance of the consideration. Hira Lal did not pay the sum of Rs. 672 to the creditor and he now says that he is not liable to pay that sum or to pay the sum of Rs. 5,500 due upon the promissory note. His allegation is that he was induced to buy the house by means of a fraud practised upon him and that consequently his agreement to pay the sums which are now m suit is void. His story is that the negotiations for the sale took place between him and a man called Goberdhan Das who was acting as the agent of the vendor. He says that Goberdhan Das assured him that he could safely buy the house for the sum which he agreed to pay because there was already in the field another purchaser one Mst. Lakshmi Bai who could be induced to buy the house for a sum of Rs. 26,000. Hiralal has said that he was taken by Goberdhan Das and another man to see a woman who posed as Mst. Lakshmi Bai and told him that she would buy the house as alleged by Goberdhan Das. It was the result of these statements that he eventually bought the house for Rs. 18,900, After the sale had been completed, he discovered that there was no real Mst.
Lakshmi Bai and told him that she would buy the house as alleged by Goberdhan Das. It was the result of these statements that he eventually bought the house for Rs. 18,900, After the sale had been completed, he discovered that there was no real Mst. Lakshmi Bai who was willing to pay anything to him for the house and the consequence was that he found himself the owner of a house for which he was supposed to pay Rs. 18,900 and which was really not worth more than about Rs. 7,000. 2. The learned Judge of the Court below came to the conclusion that Goberdhan Das had defrauded Hira Lal and that Ram Chand, the owner of the house, was party to the fraud. We do not think it is necessary to discuss the evidence upon the question whether Hira Lal was defrauded because there seems to be no reason to doubt that Goberdhan Das did deceive him by putting forward a fictitious purchaser, but we have to enquire into the question whether Ram Chand was a party to the deception. The learned Judge of the Court below seems to us to have acted upon suppositions because we have not been shown any real evidence on which he could base the conclusion that Ram Chand knew that Goberdhan Das had made this representation to Hira Lal about the existence of the woman, Mst. Lakshmi Bai, who was an intending purchaser of the house. The learned Judge says that there is one glaring fact which no amount of subtle argument can controvert and that is that the only person who gained by the transaction was Ram Chand, the Plaintiff. Apart from this fact, the learned Judge refers to the evidence of a man called Kali Chand who, he says, is a person of unimpeached respecbility and undoubted honesty. The evidence given by this man is, in our judgment, quite irrelevant. He stated that he knew Goberdhan and Ram Chand and that he himself had purchased a house from Ram Chand through Goberdhan. He said that that was about five or six years before he gave evidence. The price he paid was Rs. 7,500. He said that Goberdhan had told him at the time that he could sell the house after a few days for Rs. 12,000 if he bought it for Rs. 8,000.
He said that that was about five or six years before he gave evidence. The price he paid was Rs. 7,500. He said that Goberdhan had told him at the time that he could sell the house after a few days for Rs. 12,000 if he bought it for Rs. 8,000. He then said that he eventually had to sell the house at a loss of about Rs. 1,300 or Rs. 1,400. If this evidence was intended to show that Ram Chand and Goberdhan had committed a previous fraud of the kind which was imputed to them in the suit with which we are dealing, the evidence was irrelevant as being evidence of similar but unconnected facts. However, even if the evidence was relevant, it does not establish the existence of any previous fraud by these people. The witness was compelled to admit in cross-examination that he had received a firm offer of Rs. 11,000 for the house from one Mst. Jumna Kunwari and that he would not sell it to her because he demanded a sum of Rs. 12,000. He never said that Ram Chand or Goberdhan had told him that there was any particular purchaser who was willing to pay Rs. 12,000 for the house. If he had sold the house to Mst. Jumna Kunwari he would have profited to the extent of Rs. 3,500 nstead of suffering a loss, as he alleged, of about Rs. 1,300 or Rs. 1,400. The evidence of Kali Charan, even if admissible, does not in any way lead to the conclusion that Ram Chand and Goberdhan were in the habit of committing frauds of the nature alleged in the case before us. When that evidence is excluded, we are left apparently only with the fact that Ram Chand would have profited by the transaction. It seems to us that the learned Judge is not right in saying that he was the only person who could have profited by the transaction because Goberdhan was apparently negotiating for the sale on the basis of receiving a commission. It may be that the fact that Ram Chand was benefited by the sale might lead to some vague suspicion that he might have been a party to the fraud, but there is certainly no evidence to justify the conclusion that he was definitely a party to it.
It may be that the fact that Ram Chand was benefited by the sale might lead to some vague suspicion that he might have been a party to the fraud, but there is certainly no evidence to justify the conclusion that he was definitely a party to it. The learned Judge seems to have thought that Goberdhan and Ram Chand must have been acting in collusion because on previous occasions Goberdhan had acted as the agent of Ram Chand for the negotiation of the sales of houses. It does not seem to us that the conclusion of the learned Judge is justified. Hira Lal said in his statement that there was some discussion between him and Ram Chand about the payment of the costs of executing the deed of sale and that Gobardhan, who was present, told him not to haggle about a small matter of that kind when he would shortly make a profit of Rs. 7,000. Hira Lal stated that Ram Chand said nothing at the time. From this it is suggested that Ram Chand by his silence was implicated in the fraud practised by Goberdhan. It is impossible to believe that Hira Lal could really have thought that Ram Chand knew of the existence of a purchaser who was willing to pay Rs. 26,000, for the house when he was selling it for Rs. 18,900. If Hira Lal had really believed that Ram Chand knew of the existence of a purchaser of this nature, his suspicions would immediately have been aroused. Even if the evidence is true, all that could possibly have happened was that Goberdhan in a vague way suggested that the house was being sold for a price which would enable Hira Lal to sell it again at a profit and Ram Chand may well have thought that this was a mere jest and was not to be taken seriously. Hira Lal could certainly not have believed that Ram Chand knew that he could sell the house for Rs. 7,000 more than what he himself was paying for it. We are satisfied that there is no evidence to establish that Ram Chand had anything to do with the fraud practised upon Hira Lal. 3.
Hira Lal could certainly not have believed that Ram Chand knew that he could sell the house for Rs. 7,000 more than what he himself was paying for it. We are satisfied that there is no evidence to establish that Ram Chand had anything to do with the fraud practised upon Hira Lal. 3. Learned Counsel for Hira Lal has urged before us that the agreement connected with the sale is void even if the fraud was practised not by Ram Chand but by Goberdhan as his agent, He has relied upon the provisions of Sections 17 and 19 of the Indian Contract Act. His contention is that fraud by an agent invalidates an agreement just as much as fraud by the principal. He has referred us to the case of Mullens v. Miller 22 Ch. D. 194. The decision in that case was based partly upon a finding that there was a misrepresentation by a principal and partly upon a finding that there was a misrepresentation by an agent who had been employed to find a purchaser for certain premises. The learned Judge expressed the opinion that a person who had been appointed as an agent to find a purchaser had implied authority to describe the premises and if in describing them he was guilty of misrepresentations which would lead to the conclusion that they were more valuable than they really were, these misrepresentations would prevent the principal from obtaining specific performance of an agreement to sell which had been entered into by proposed vendee as a result of the misrepresentations made to him. It does not seem to us that that decision is of much assistance to us in deciding the case with which we are dealing. It is a decision on the English law of contract and we are governed by the rules set forth in a statute. Even if we are to examine this case or in some measure to rely upon it is not a case which is on all fours with the case before us. Under the provisions of Section 238 of the Indian Contract Act a fraud or misrepresentation practised or made by an agent invalidates a contract into which the agent enters on behalf of his principal.
Under the provisions of Section 238 of the Indian Contract Act a fraud or misrepresentation practised or made by an agent invalidates a contract into which the agent enters on behalf of his principal. The provisions of that section do not apply to the case with which we are dealing because the agreement to sell was entered into between Ram Chand himself and Hira Lal and the deed of sale was executed by Ram Chand. It is, of course, obvious that there may be cases outside the scope of the provisions of Section 238 of the Contract Act in which a fraud or misrepresentation practised or made by an agent may invalidate an agreement entered into by the principal. There may, for instance, be cases where the principal refers the other party to the agreement to some person for information and in that case the person supplying the information would doubtless be the express agent of the principal for the purpose of furnishing the information. If the information which he furnished was wrong so as to amount to a fraud or a misrepresentation, we do not doubt that the principal would be bound. There may be cases of a similar nature where a person might be acting by implication as an agent for furnishing information. Such a case would be that to which we have referred, namely, the case which was involved in the dispute in Mullens v. Miller. The case, however, with which we have to deal is entirely different. We have to see whether Hira Lal, when he received the information about the existence of Mst Lakshmi Bai and her willingness to purchase the property of Ram Chand for Rs. 26,000, could have been under the impression the Goberdhan in giving him the information was acting as the agent of Ram Chand. There was certainly no express authority to Goberdhan to give any information about the house or at any rate there is no evidence before us of any such express authority. Whether such an authority was implied or not would depend upon the impression which was created by the circumstances upon the mind of Hira Lal. We have already explained that Hira Lal could not possibly have believed that Ram Chand would sell him the house for Rs. 18,900 if he knew that Mst. Lakshmi Bai was willing to buy it for Rs.
We have already explained that Hira Lal could not possibly have believed that Ram Chand would sell him the house for Rs. 18,900 if he knew that Mst. Lakshmi Bai was willing to buy it for Rs. 26,000 When Goberdhan gave this piece of information to Hira Lal, Hira Lal must have been aware or must have thought that Ram Chand could know nothing about the matter. It might perhaps have been inferred by him that Goberdhan was authorised to describe the house to him and tell him all the circumstances which would affect its value, but he could not have believed that Ram Chand would authorise Goberdhan to tell him about the existence of a purchaser who was already in the field with an offer of Rs. 26,000. Even if we assume that Goberdhan was authorised to describe the house and give information about its value, the information which is the basis of the alleged fraud had nothing whatsoever to do with the value of the house. Hira Lal admits that Goberdhan told him that the house was worth much less than Rs. 26,000 and that it would not be possible for those who had influence on Mst. Lakshmi Bai to induce her to buy the house for that price unless Hira Lal bought it himself for a sum of Rs. 19,000. It is obvious that Hira Lal was not under any misapprehension about the value of the house. He bought it as a speculation. He must have known that it was the duty of Goberdhan Das as the agent of Ram Chand to tell the latter that there was a purchaser in the field at a price of Rs. 26,000 and yet he himself acting on the assumption, as he must have acted, that Goberdhan Das had withheld this information from Ram Chand, bought the house for Rs. 18,900. It is clear that he must have been under the impression that he and Goberdhan Das between them would do Ram Chand out of about Rs. 7,000. It does not seem to us that the misrepresentation or fraud that was alleged had anything to do with the real value of the house The fact of the matter on the allegations made by Hira Lal is that he was attempting to cheat Ram Chand out of Rs.
7,000. It does not seem to us that the misrepresentation or fraud that was alleged had anything to do with the real value of the house The fact of the matter on the allegations made by Hira Lal is that he was attempting to cheat Ram Chand out of Rs. 7,000 and in these circumstances we cannot think that he believed that Goberdhan was the mouthpiece or agent of Ram Chand when he told him about the existence of Mst. Lakshmi Bai. We cannot, therefore, think that there was any fraud by an agent in the person of Goberdhan Das which would bind the principal, Ram Chand. If Hira Lal had come into on a different allegation, namely, that he and Goberdhan Das and Ram Chand were all in a conspiracy to defraud Mst. Lakshmi Bai, there might have been some force in his contention that the deed of sale was fictitious, but that was not the case put forward by Hira Lal and indeed it would have been difficult for him to allege that there was a fictitious sale when he asserted that he had paid over Rs. 11,000 in cash at the time when the deed of sale was executed in his favour. We are satisfied that the agreement is not vitiated by the fraud of the alleged agent, Goberdhan Das. 4. The result is that we must set aside the decree of the learned Judge of the Court below who dismissed the suit. We are satisfied that the Plaintiff-Appellant is entitled to recover the money which he has claimed. As this money represents the unpaid purchase price of the property, he is also entitled to a decree under Order XXXIV, Rule 4 of the Cede of Civil Procedure which he has asked the Court to pass. The result is that we direct that a decree be drawn up in favour of the Plaintiff-Appellant in terms of the relief claimed in the plaint. The Plaintiff-Appellant will get his costs in both Courts from the Defendant-Respondent. The date on or before which payment must be made under the provisions of Order XXXIV, Rule 4 is October 15, 1942. A decree shall be drawn up accordingly. Appeal allowed.