O. M. AGENCY (P) LTD. v. STATE OF KARNATAKA — 1990 DIGILAW 328 (KAR)

KA. SWAMI, J. ( 1 ) THIS appeal by the plaintiff is preferred against the Judgment and Decree, dated 31st October, 1989 passed by the VIII Additional City Civil Judge, Bangalore City in original Suit No. 554/1977. ( 2 ) RESPONDENTS 1 to 4 were defendants 1 to 4 in the suit. Therefore, in this Judgmentparties will be referred to with the position they occupied in the suit. ( 3 ) THE plaintiff sought for recovery of a sum of Rs. 65,540. 92 to gether with costsand current interest from the date of suit till the date of realisation. The decree was sought against all the defendants. ( 4 ) THE case of the plaintiff is that it was a distributing agent of fourth defendantand it also submitted the tender to the State Government as an agent of the fourth defendant for supply of drugs on rate contract basis; that the tender was accepted by the State Government and the plaintiff was intimated by the communication dated 16th June, 1973; that the submission of the tender, acceptance of the tender, conditions of the tender and the expenses incurred for securing the contract were all intimated by the plaintiff to the fourth defendant as an agent was required to do in such matters; that one of the conditions of supply of Megimide injections was that the time barred drugs were to be substituted within three months from the date of expiry; that the Megimide injections were the drugs having the date of expiry, therefore, as per Condition No. 19 of the tender conditions the drugs having date of expiry should be replaced with fresh stocks from the latest batch if returned within three months from the date of expiry; that the State Government returned the Megimide injections worth Rs. 60,876. 64 and deducted the same out of the other bills payable to the plaintiff; that the fourth defendant inspite of the request made and the letter addressed did not replace the Megimide ampules; that finally the plaintiff gave notice to the fourth defendant as well as defendants 1 to 3 and filed the suit. 60,876. 64 and deducted the same out of the other bills payable to the plaintiff; that the fourth defendant inspite of the request made and the letter addressed did not replace the Megimide ampules; that finally the plaintiff gave notice to the fourth defendant as well as defendants 1 to 3 and filed the suit. ( 5 ) DEFENDANTS I to 3 have resisted the suit and inter alia contended that the plaintiff alone was liable because it alone executed the contract; that the defendants 1 to 3 were not concerned with fourth defendant; that as Condition No. 19 of the tender conditions provided that the drugs having date of expiry should be replaced with fresh stocks from the latest batch if returned within three months from the date of expiry, drugs were required to be replaced and accordingly defendants 1 to 3 returned the drugs to the plaintiff who did not replace them. Neither the fourth defendant replaced them. As such defendants 1 to 3 were entitled to deduct 21,672 ampules of megimide injections being of the value of Rs. 60,876. 64 and therefore defendants 1 to 3 deducted the said amount out of the bill payable by them to the plaintiff in respect of the other supplies made by the plaintiff as per Ex. P-59. Hence, the stand of defendants 1 to 3 was that the deduction so made was permissible and they acted well within their authority in adjusting that amount as such they prayed that the suit was liable to be dismissed against them. ( 6 ) THE fourth defendant also filed the written statement denying the claim madeby the plaintiff against it. Hence, the stand of defendants 1 to 3 was that the deduction so made was permissible and they acted well within their authority in adjusting that amount as such they prayed that the suit was liable to be dismissed against them. ( 6 ) THE fourth defendant also filed the written statement denying the claim madeby the plaintiff against it. The specific case pleaded by the fourth defendant was that there was no relationship of principal and agent between the fourth defendant and the plaintiff; that the transaction between the plaintiff and the fourth defendant was one of principal to principal; that the fourth defendant specifically made it clear both to the plaintiff and defendants 1 to 3 that as it was manufacturing the Megimide injection drugs as a last batch and in a large quantity as required by defendants 1 to 3 it would not be liable to replace them; that the plaintiff having purchased the drugs in question from the fourth defendant he is not entitled to claim reimbursement of the amount even as an agent; that the reimbursement of the tender form fees, security deposit and other expenses incurred by the plaintiff for securing the contract in question was only to advance the business of the fourth defendant by encouraging their distributing agents and it was not done with a view to create a relationship of principal and agent nor it created any such relationship. Therefore, the fourth defendant took a stand that it was not liable to the claim made by the plaintiff. ( 7 ) THE trial Court on the pleadings of the parties framed the following issues:-"1. Whether the plaintiffs prove that they supplied Megimide injection ampules to defendants 1 to 3 throughout acting for and on behalf of the fourth defendant as their agents and the fourth defendant as principal approved, assented to and ratified every action taken by the plaintiff in regard to the tender and the supplies? 2. Whether the plaintiffs prove that the 3rd defendant deducted the amount of rs. 60,876. 64 ps. towards the value of date expired drugs from out of the moneys payable to the plaintiff in respect of delivery by him of other medicines to the 3rd defendant under Invoice No. 5778, dated 10-9-1976? 3. Whether the plaintiff is entitled to recover the sum of Rs. 60,876. 64 ps. from the defendants? 4. 60,876. 64 ps. towards the value of date expired drugs from out of the moneys payable to the plaintiff in respect of delivery by him of other medicines to the 3rd defendant under Invoice No. 5778, dated 10-9-1976? 3. Whether the plaintiff is entitled to recover the sum of Rs. 60,876. 64 ps. from the defendants? 4. Whether the plaintiff is entitled to recover interest at 12% on the said sum of Rs. 60,876. 64 ps. ? 5. Whether there was no privity of contract between defendants 1 to 3 and the 4th defendant? If so, whether the deduction of a sum of Rs. 60,876. 64 ps. is legally made by the 3rd defendant? 6. Whether the 4th defendant proves that at the time when they supplied the drugs in question to the plaintiff, there was a specific understanding that 4th defendant will not take back any portion of the drugs whose date gets expired? If so, whether the 4th defendant is not liable for the suit claim? 7. Whether the suit is bad for misjoinder of parties and cause of action? ( 8 ) TO what reliefs are the parties entitled?"8. In support of the case, the plaintiff examined two witnesses, P. W. 1-Sri V. K. Krishna Murthy, the Director of the plaintiff Company and P. W. 2-Sri V. M. Nagarajan, the Accountant in Bangalore Branch of plaintiff Company at the relevant point of time and also produced 72 documents which were marked as Exs. P-1 to P- 72. On behalf of defendants 1 to 3, one witness Sri H. N. Shankaranandappa was examined as D. W. 1. He was working as I Division Clerk in Government Medical stores at Bangalore at the relevant point of time. Defendants 1 to 3 did not produce any documents. ( 9 ) AS far as fourth defendant is concerned though it was represented by a counseland a written statement was filed but, no evidence was adduced on its behalf either oral or documentary except cross examining the witnesses examined on behalf of the plaintiff and defendants 1 to 3. ( 10 ) THE learned trial Judge has answered Issues 2, 5 and 6 in the affirmative and Issues 1, 3 and 7 in the negative. Regarding Issue No. 4 it has been held that the same is unnecessary. Accordingly, the trial Court has dismissed the suit in its entirety. ( 10 ) THE learned trial Judge has answered Issues 2, 5 and 6 in the affirmative and Issues 1, 3 and 7 in the negative. Regarding Issue No. 4 it has been held that the same is unnecessary. Accordingly, the trial Court has dismissed the suit in its entirety. Thus, the trial Court has held that the plaintiff in securing rate contract as per Exs. P- 4, P-5 and P-8 and in supplying the Megimide injections to defendants 1 to 3 did not act as an agent of fourth defendant and the fourth defendant did not act as principal and did not approve, assent and ratify the action taken by the plaintiff in regard to tender and supplies in question; that the amount of Rs. 60,876. 64 was deducted by defendants 1 to 3 from out of the money payable to the plaintiff in respect of supplies of other medicines made by him to the third defendant under Invoice No. 5778, dated 10-9-1976 as per Ex. P-59, that the plaintiff was not entitled to recover the sum of rs. 60,876. 64 from the defendants because defendants 1 to 3 were entitled to deduct that as per Condition No. 19 of the tender conditions since Magimide injections were the drugs having the expiry date and were returned within three months as per terms of the contract; that there was no privity of contract between defendants 1 to 3 and the fourth defendant regarding the supply of the drugs in question, as such the deduction of a sum of Rs. 60,876. 64 from the amount payable to plaintiff was legal; that the fourth defendant supplied the drugs on a specific understanding that it will not take back any portion of the drugs which had the expiry time. It also held that the suit was not bad for mis-joinder or non-joinder of parties. ( 11 ) HAVING regard to the contentions urged on both sides the following pointsarise for consideration: 1. Whether the deduction of a sum of Rs. 60,876. 64 as per Ex. P-59 out of the amount payable to the plaintiff by defendants 1 to 3 under Invoice No. 5778, dated 10-9-1976 Ex. P-51 is justified in law? 2. Whether the plaintiff proves that it was the agent of fourth defendant for securing the contract as per Exs. Whether the deduction of a sum of Rs. 60,876. 64 as per Ex. P-59 out of the amount payable to the plaintiff by defendants 1 to 3 under Invoice No. 5778, dated 10-9-1976 Ex. P-51 is justified in law? 2. Whether the plaintiff proves that it was the agent of fourth defendant for securing the contract as per Exs. P-4, P-5 and P-8 and executed the contract and supplied Megimide injections in question as an agent of fourth defendant? 3. Whether the fourth defendant was liable to reimburse the value of 21,672 ampules of Megimide injections amounting to Rs. 60,876. 64 being the amount deducted as per Ex. P-59 out of the amount payable to the plaintiff on the ground that Megimide injections had the expiry date and were returned according to Condition No. 19 of the contract? 4. Whether the plaintiff is entitled to interest at the rate of 12% on the sum of rs. 60,876. 64? ( 12 ) POINT No. 1:- In this case it is not in dispute that the plaintiff submitted the tender to the second defendant as per Ex. P-5 for supply of drugs on rate contract basis. Along with the tender a letter dated 15-5-1974 - Ex. P-6 was also submitted. There after the tender submitted by the plaintiff as per Ex. P-5 was accepted by the second defendant and he intimated the acceptance by the communication dated 16th june, 1973 as per Ex. P-8. Pursuant to that the plaintiff executed the contract as per ex. P-15, dated 6th July, 1973. In all these documents, except in Ex. P-6 there is no mention of fourth defendant as principal of the plaintiff. The contract also is not executed by the plaintiff in favour of first defendant as an agent of the fourth defendant. P-8. Pursuant to that the plaintiff executed the contract as per ex. P-15, dated 6th July, 1973. In all these documents, except in Ex. P-6 there is no mention of fourth defendant as principal of the plaintiff. The contract also is not executed by the plaintiff in favour of first defendant as an agent of the fourth defendant. For the purpose of holding the plaintiff liable under the contract it is sufficient to notice that whenever a person executes a contract eventhough the other party to the contract is made aware of the fact that he is acting as an agent of his principal, as long as the contract is executed by the agent in his name and not as an agent, the person or the authority in whose favour the contract is executed is entitled to hold the executant of the contract liable for performance of the contract and for recovery of loss or damages suffered under the contract. That it is so, is well settled. We can only notice in this regard some of the decisions. In Pandit Jiyaram v Pandit hukum Chand, 1969 Mercantile Law Report 34 SC, it has been held that "where an executor of a pronote signs it in his own name and on the fact of the pronote, it does not appear that he signed as the Director of a Company or a somebody's agent, he will be personally liable under that pronote. " We may also refer to a decision of the privy Council in Basme v Weekes, 1950 PC 441 wherein it is held that "an agent who signs a contract in his own name without qualification, though known to be an agent, is understood to contract personally, unless a contrary intention, plainly appears from the body of the instrument. " 12-A. In Hutcheson and Co. v Eaton and Son, 1884 (13) Queen's Bench Division 861, the position of law has been stated thus:"mere description of him as an agent whether as part of the signature or in the body of the contract is not sufficient indication of a contrary intention to discharge him from the liability incurred by reason of the unqualified signature". v Eaton and Son, 1884 (13) Queen's Bench Division 861, the position of law has been stated thus:"mere description of him as an agent whether as part of the signature or in the body of the contract is not sufficient indication of a contrary intention to discharge him from the liability incurred by reason of the unqualified signature". From the aforesaid decisions it is clear that if any person even acting as an agent executes the contract, but does not mention as to whether he is acting as an agent on behalf of his principal, he is personally liable. Testing the contract, entered into by the plaintiff with defendants 1 to 3 in the instant case, with reference to Ex. P-18, it is not possible to hold that the plaintiff is not personally liable to defendants 1 to 3. The contract is executed by the plaintiff in its own capacity and not as an agent of fourth defendant. It does not anywhere mention that it is being executed for and on behalf of fourth defendant as an agent of fourth defendant. There is no whisper about the agency whatsoever in the contract Ex. P-15. The fact that in Ex. P-6 a letter submitted along with the tender Form it is stated that the tender is being submitted by the plaintiff for and on behalf of its principal fourth defendant, did not have the effect of absolving the plaintiff from its liability to defendants 1 to 3 as long as the contract was executed by the plaintiff in its own capacity and not as an agent of fourth defendant. As far as the amount deducted from out of Ex. P-51 as per Ex. P-59 is concerned in this case it is sufficiently established on the basis of the evidence on record, and it is also admitted by P. W. 1 that the plaintiff signed the agreement on going through the terms and conditions of the tender. One of the conditions of the tender was to take back the time barred drugs and substitute them. One of the conditions of the tender was to take back the time barred drugs and substitute them. Accordingly the plaintiff took back the time expiry drugs and did not replace the same and the amount deducted by defendants 1 to 3 was the value of the drugs having date of expiry, which were not replaced as per Condition No. 19 of the tender conditions which specifically provided thus:"the drugs having date of expiry should be replaced with fresh stocks from the latest batch if returned within three months from the date of expiry. "that 21672 Megimide injections were returned well within time because they had the expiry date as per Condition 19 of the tender conditions, is not only admitted by p. W. 1 but is also further established by the communications addressed by second defendant to the plaintiff as per Exs. P-25, P-34 and P-38. The plaintiff also has not denied this liability. It only tried to persuade the fourth defendant to reimburse by addressing several communications, but the fourth defendant did not agree to reimburse. Therefore, we are of the view that a sum of Rs. 60,876. 64, being the value of the time barred 21,672 Megimide injections, had been rightly deducted, as the plaintiff was liable to reimburse to first defendant since Megimide injections had the expiry dates and were returned as per Condition No. 19 of the tender conditions. Point no. 1 is answered accordingly. ( 13 ) POINT Nos. 2 and 3:- There is no written document creating the relationship of principal and agent between the fourth defendant and the plaintiff. It cannot be disputed that an agency can be created by the express or implied agreement between the principal and agent, or by ratification of the principal of the acts of the agent done on his behalf. Implied agency arises from the conduct or situation of the parties or from necessity. As there is no express written contract between the parties, i. e. , plaintiff and fourth defendant creating the plaintiff as an agent of the fourth defendant we have to now see whether there has been an implied agreement of making the plaintiff as an agent of the fourth defendant in respect of the contract of supply of drugs on rate contract basis entered into by the plaintiff with first defendant as per Ex. P-15. P-15. ( 14 ) THE circumstances which are relied upon by the plaintiff to prove that it actedas an agent of the fourth defendant in securing the contract as per Ex. P-15 and supplied the Megimide injections as an agent are as follows: (1) That Ex. P-6 is the letter dated 15th May, 1973 addressed to the second defendant submitted along with the tender Form. In this letter it is stated thus:"we are enclosing herewith letter of authority in our favour issued by M/s. Indian Schering Limited, authorizing us to quote on their behalf. "m/s. Indian Sebering Limited is fourth defendant. In addition to what is stated above in Ex. P-6 it was further stated thus: "our Principal M/s. India Sobering Ltd. , Bombay have applied for certificates as per Item Nos. (1) and (2) with the concerned authorities at Bombay. " a copy of this letter was also sent to fourth defendant as evidenced by the endorsement contained at the end of Ex. P-6. (2) Ex. P-7 is a copy of the letter addressed to fourth defendant by the plaintiff informing the fourth defendant as to the details of the earnest money deposit paid to second defendant, in respect of which the tender was submitted regarding several items. All the 7 items mentioned in Ex. P-7 related to the tender submitted as per Ex. P-5. In that SI. No. 2 is referable to the supply of Mcgimide injections. (3) A copy of the letter Ex. P-8, dated 16th June, 1973 by the second defendant to the plaintiff accepting the rate contract as per the tender submitted by the plaintiff was also sent to the fourth defendant. Pursuant to that fourth defendant informed the plaintiff by the communication dated 27th June, 1973 - Ex. P-13. In that letter fourth defendant stated thus: "we thank you for your letter No. 13 of 25th June saying that the Director of health and Family Planning Services, Government of Mysore has approved megimide, Sorbitrate and Nco-Mcrcaxolc under the current rate contract. You have mentioned in your letter against rate for Bcmegride injection Rs. ( 15 ) 90 per 100 ml. x 6 ml. amps. Please note that this should be 6 x 10 ml. ampls. We are agreeable to your depositing a sum of Rs, 3,000/- by way of security deposit @ Rs. 1,000/- per rate contract on our behalf. You have mentioned in your letter against rate for Bcmegride injection Rs. ( 15 ) 90 per 100 ml. x 6 ml. amps. Please note that this should be 6 x 10 ml. ampls. We are agreeable to your depositing a sum of Rs, 3,000/- by way of security deposit @ Rs. 1,000/- per rate contract on our behalf. You may claim amount, as usual". From the aforesaid letter it can be gathered that the fourth defendant not only approved the act of submission of the tender by the plaintiff as an agent of fourth defendant but also accepted the rates and suggested certain corrections in the order of acceptance and further informed the plaintiff that it was agreeable for depositing a sum of Rs. 3,000/- by way of security at the rate of Rs. 1,000/- per rate contract on its behalf and the plaintiff can claim the amount as usual. Pursuant to this letter, the plaintiff addressed a letter dated 29lh June - 1973 Ex. P-14 to the second defendant for correcting the mistake regarding the packing in relation to contract No. 3, Item no. 2 Bcmegride injection. The said letter reads thus:"we thank you for your letter No. GNS/74/1973-74, dated 16th June, 1973. While going through schedule of items accepted by you, we find the following discrcpency. Against SI. No. 1 under Rate Contract No. 3, Item No. 2 Bcmegride injection by M/s. Indian Schering Limited, you have been quoted the packing as 100 ml. x 6 ampules. Please amend the packing as 10 ml. x 6 ampules under intimation to us. "pursuant to Ex. P-14 the second defendant intimated the plaintiff. (4) Under Ex. P-21, the plaintiff has informed the fourth defendant particulars of security deposit paid by it to the second defendant in respect of the rate contract One of the deposits pertains to Mcgimide injections. The fourth defendant acknowledging the leller dated 10-8-1973 Ex. P-21, sent to the plaintiff, its credit Note No. 50, dated 23rd August, 1973 Ex. P-22, crediting a sum of Rs. 3,000/- to the account of the plaintiff towards reimbursement of security deposit paid by the plaintiff to the second defendant in respect of the contract Nos. 3, 25, 42-B at the rate of Rs. 1,000/- per rate contract, which included the rate contract relating to Megimide injections. P-22, crediting a sum of Rs. 3,000/- to the account of the plaintiff towards reimbursement of security deposit paid by the plaintiff to the second defendant in respect of the contract Nos. 3, 25, 42-B at the rate of Rs. 1,000/- per rate contract, which included the rate contract relating to Megimide injections. The fourth defendant also reimbursed the plaintiff the other expenses incurred by it for securing the contract in question by its credit Note No. 271, dated 3-1-1974 ex. P-24 crediting a sum of Rs. 352/- to the account of the plaintiff. This was done by fourth defendant pursuant to the letter of the plaintiff dated 17-12-1973 Ex. P-23 informing the fourth defendant the expenses incurred by it in securing the rate contracts including the one relating to Megimide injections and the costs of tender form purchased by it from second defendant. (5) In addition to this, the fourth defendant also sent the non-conviction certificate to the plaintiff and the same was submitted to the second defendant by the plaintiff. 15. Thus, the plaintiff has gone on informing the fourth defendant from the time of submitting the tender till the supply of the drugs in question pursuant to the contract. The fourth defendant did not raise any objections pursuant to Ex. P-6 that the tender was submitted by the plaintiff as an agent of the fourth defendant. On the contrary, it approved the conduct of the plaintiff in submitting the tender as an agent of the 4th defendant. Not only this, the fourth defendant also directly corresponded with the second defendant regarding the mode of supply of Megimide injections and also informed the second defendant that as it was supplying the Megimide injections in large quantity and as it was going to stop the production it would not be replacing the Megimide injections. This is evidenced by the letters Exs. P-17 and P-20. Ex. P-17 was addressed to Sri Rudrappa, the then Joint Director of Health and Family planning Service, Government of Karnataka. In that letter the fourth defendant stated thus:"many thanks for the courtesy extended to our representative, Mr. T. K. Thulsi Babu when he called on you recently. We also thank you for the order for 25,000 ampules of Megimide and are particularly grateful for allowing us to effect the supply in 3 parts. In that letter the fourth defendant stated thus:"many thanks for the courtesy extended to our representative, Mr. T. K. Thulsi Babu when he called on you recently. We also thank you for the order for 25,000 ampules of Megimide and are particularly grateful for allowing us to effect the supply in 3 parts. As usual, or distributors, M/s. Oriental Mercantile agency Pvt. Ltd. , Race Course Road, Bangalore-1 will supply the stocks to you. During July we shall send 9,000 ampules and the balance in equal instalments during August and September, 1973. Since this is a large supply, we are specially manufacturing the stocks for you and desire you to kindly note that we shall not be in a position to take back the stocks at a later date. Thanking you once again, kind regards. "a copy of this letter was also sent to the plaintiff. Thus, the fourth defendant acknowledged the acceptance to tender by defendants 1 to 3 for supply of 25,000 ampules of Megimide injections and expressed that it was grateful for allowing it to supply in three parts. The supply of these drugs in three parts was requested by the fourth defendant through its letter dated 28th July, 1973 addressed to Sri T. P. Rudrappa, the then Joint Director of Health and Family Planning, Government of kaniataka, A copy of Ex. P-20 was also sent to the plaintiff. Therefore, ii is the case of the plaintiff that the fourth defendant a part from authorising the plaintiff to seek tender as ils agents it also further acted positively by approving the agency by directly corresponding with the State Government as per Exs. P-17 and P-20. On the basis of these correspondence it is the case of the plaintiff that it acted as an agent of the fourth defendant in supplying Megimide injections to defendants 1 to 3. ( 16 ) ON the contrary, it is the case of the fourth defendant that the plaintiff was only a distributing agent as evidenced by Ex. P-1 for selling the products of fourth defendant; that Megimide injection was one of the products of fourth defendant; that as a distributing agent it was also its duty to act to advance the interest of fourth defendant and in the interest of products of fourth defendant. P-1 for selling the products of fourth defendant; that Megimide injection was one of the products of fourth defendant; that as a distributing agent it was also its duty to act to advance the interest of fourth defendant and in the interest of products of fourth defendant. Therefore, to help the plaintiff in this regard the fourth defendant agreed to bear the costs incurred by the plaintiff for purchasing the tender form, for paying security deposit and other expenses. In addition to this, it was submitted by the fourth defendant that P. Ws-1 and 2 have admitted that Megimide injections were purchased by plaintiff from the fourth defendant and in the event of there being a relationship of principal and agent between the fourth defendant and the plaintiff there could not have been the purchase of the drugs in question by the plaintiff from the fourth defendant and in that event the first defendant would have been the purchaser inasmuch as there cannot be a sale between the principal and the agent which in law would amount to sale to itself and as such these circumstances negatived the case of the plaintiff that there was a relationship of principal and agent between fourth defendant and the plaintiff. In addition to this, it was alternatively contended on behalf of the fourth defendant that even if it were to be held that there was a relationship of principal and agent the 4th defendant could not be held to be responsible because as per Ex. P-17 it did not accept condition No. 19 of the tender conditions and as such it was not liable either to replace the time barred drugs or to reimburse the value thereof. 16. 1. Whereas on behalf of the plaintiff it was submitted that the fact that the plaintiff being a distributing agent was required to purchase the products of the fourth defendant under the terms of distributing agency Ex. P-1 should not be made use of to explain away the relationship of principal and agent, or at any rate it should not be held to militate against the agency created by the 4th defendant. 16. 2. Megimide injection in question, as admitted by P. Ws. 1 and 2, were purchased by the plaintiff from the fourth defendant. The following statements made by p. Ws. 16. 2. Megimide injection in question, as admitted by P. Ws. 1 and 2, were purchased by the plaintiff from the fourth defendant. The following statements made by p. Ws. 1 and 2 during the course of cross-examination made on behalf of the fourth defendant were speciflcally pointed out by learned counsel for the 4th defendant. P. W. 1"it is true that plaintiff acted as a distributor in respect of the goods sold to defendants 1 to 3. It is not true that there is no contract between the plaintiff and fourth defendant to pay the value of date expired drugs. There is no contract between plaintiff and 4th defendant for replacement of date expired drugs. "p. W. 2 it is true that the drugs in question were purchased by the plaintiff from the fourth defendant. It is true that the fourth defendant intimated by a letter to defendants 1 to 3 stating that the drugs in question were specially manufactured for the purpose of supply to them and that they will not manufacture such drugs in future. I have no document to show that tender forms were filed on behalf of fourth defendant. It was all oral. It is true that after the tenders were accepted we requested the fourth defendant to assist us in supplying the drugs to the Government. There is no letter or written instructions from the fourth defendant to the plaintiff to file tender on its behalf. " ( 17 ) IT is relevant to notice that a copy of the letter Ex. P-6 was sent to the fourth defendant in which it was specifically stated that the fourth defendant was the principal and the plaintiff was acting as an agent and a letter of authorisation was also stated to have been enclosed along with the tender Form. Even then the fourth defendant did not move its little finger. Even during the course of the trial it did not produce a copy of the letter of authorisation referred to in Ex. P-6 issued by the fourth defendant to the plaintiff, nor did it make any effort to call upon the defendants 1 to 3 to produce the same. In the written statement the fourth defendant has stated that at the request of the plaintiff it had given to it a letter of authority. The contents of that letter of authority were relevant to the case. In the written statement the fourth defendant has stated that at the request of the plaintiff it had given to it a letter of authority. The contents of that letter of authority were relevant to the case. Therefore, when the fourth defendant was denying that there was no relationship of principal and agent between itself and the plaintiff which started from the letter of authority as far as the contract in question is concerned, it was all the more necessary for the 4th defendant to produce the same. No doubt the burden was on the plaintiff to prove that there was a relationship of principal and agent between the fourth defendant and itself but in the light of the evidence which has come on record which goes to show that there was such relationship between the fourth defendant and the plaintiff in respect of a contract in question, non-production of a copy of the letter by fourth defendant or not calling upon the defendants 1 to 3 to produce the same will lead to an inference that if the fourth defendant were to produce a copy of the letter or if it were to have that letter produced by defendants 1 to 3 the contents of the same would have gone against it. The oral evidence referred to above as relied upon by fourth defendant cannot be held to disprove or take away the effect of the documentary evidence on record. Under the terms of the distributing agency the plaintiff was requireu to purchase the drugs. Therefore, the purchasing of Megimide injections in question and supplying the same to defendants 1 to 3 should not and cannot be used to reject the plea of agency. The contention that it amounts to sale by the principal to the agent cannot also be accepted. This is a case wherein the plaintiff apart from being the distributing agency, it was also made the agent for obtaining the contract Ex. P-15 as per the terms and conditions contained in Exs. P-4 and P-5 by specifically authorising the plaintiff to do so. The 4th defendant also met all the expenses required for obtaining the contract. This is a case wherein the plaintiff apart from being the distributing agency, it was also made the agent for obtaining the contract Ex. P-15 as per the terms and conditions contained in Exs. P-4 and P-5 by specifically authorising the plaintiff to do so. The 4th defendant also met all the expenses required for obtaining the contract. A person could be a distributing agent of a manufacturer, and at the same time he could as well be an agent of the very same manufacturer of the very same goods, in respect of which he is a distributing agency, for the purpose of securing and performing the contract for supply of such goods. There is no prohibition in law for a person to hold a distributing agency of A, as well as to act as an agent of A for securing the contract for sale of one of the products of A for which he is also a distributing agent. Both are matters of contract between the parties. Therefore, the contention of Sri Naik, learned counsel for the fourth defendant is rejected ( 18 ) THE fact that the fourth defendant informed the second defendant under Ex. P-17 that since it was a large supply and it was specifically manufacturing the stocks for defendants 1 to 3 it would not be in a position to take back the stock on a later date cannot be held to have altered the terms of the contract, because defendants 1 to 3 have not accepted the terms of Ex. P-17. Though defendants 1 to 3 may not be entitled to claim and recover from defendant-4, the loss or the damages arising out of the contract Ex. P-15, because Ex. P-15 was executed by plaintiff in its own capacity and not as an agent of the fourth defendant, but in the light of the fact that the fourth defendant made the plaintiff as an agent to secure the contract under Ex. P-15 and the terms and conditions of those contracts were also made known to the fourth defendant which the 4th defendant approved them and suggested certain corrections regarding the size of the parcels, it cannot escape from its liability to the plaintiff as its principal to reimburse it. The mere fact that it intimated the second defendant by ex. P-15 and the terms and conditions of those contracts were also made known to the fourth defendant which the 4th defendant approved them and suggested certain corrections regarding the size of the parcels, it cannot escape from its liability to the plaintiff as its principal to reimburse it. The mere fact that it intimated the second defendant by ex. P-17 that it would not be liable to take back the stock which term was not approved and accepted by the second defendant, is of no consequence because it has remained unilateral, inasmuch as no material is produced to prove that defendants 1 to 3 accepted the condition as stated by defendant No. 4 in Ex. P-17. In addition to this in Ex. P-16 which is a Schedule to Ex. P-15, it was specifically stated thus:"whatever may be the conditions of sale specified or indicated in the tender quotations it is only the conditions mentioned in this tender that will bind the health Department or the Indenting Department including these quoted by the tenders and accepted and inserted in this tender by the Department. "this would go to show that the terms and conditions stated in the contract executed as per Ex. P-15 alone governed the parties. Those terms and conditions were mentioned in the tender itself. One of the conditions of the tender, as stated in the earlier portion of this Judgment, was to replace the drugs having the expiry date. Therefore, the fourth defendant irrespective of the statement contained in Ex. P-17 which was not accepted by defendants 1 to 3 could not absolve itself from the liability to reimburse the plaintiff of any loss or damage which the plaintiff was called upon to meet by the first defendant. 18. 1. As far as deduction of sum of Rs. 60,876. 64 by defendants 1 to 3 from the amount payable to the plaintiff out of the bill Ex. P-51 is concerned, it is not in dispute that the said amount represented the value of 21,672 Megimide injections the validity of which had expired. Therefore, the fourth defendant was liable to reimburse the plaintiff that sum. It hardly requires to be stated that it is one of the rights of an agent against the principal which flows form the relationship of principal and agent, to seek reimbursement from the principal. Therefore, the fourth defendant was liable to reimburse the plaintiff that sum. It hardly requires to be stated that it is one of the rights of an agent against the principal which flows form the relationship of principal and agent, to seek reimbursement from the principal. Section 222 of the Contract Act embodies the aforesaid principle inasmuch as it specifically states that the "employer of an agent is bound to indemnify against the consequences of all lawful acts done by such agent in exercise of the authority conferred upon him. " Such liability to indemnify the plaintiff is not proved to have been excluded by any specific contract between the plaintiff and the fourth defendant. ( 19 ) WE may also refer to a decision in State of Mysore and Another v Mysore Spinning and Manufacturing Co. Ltd. , AIR 1958 SC 1002 on which reliance was placed by Sri Naik, learned counsel for the fourth defendant in support of his contention that there cannot be a sale from the principal to agent. There cannot be any quarrel with the proposition and there is no doubt that such a proposition is laid down in that decision. But, we have already pointed out that this is a case in which the plaintiff enjoys two capacities one as a distributing agent of the products of the fourth defendant under Ex. P-1 which included the Megimide injections and another as an agent of the fourth defendant for obtaining a contract to supply the drugs on rate contract to first defendant as per Ex. P-15. Therefore, the plaintiff was required to comply with the terms of the distributing agency as well as the obligations of the agent for securing the contract. If in complying with the terms of distributing agency he purchased the megimide injections for supplying the same towards the contract Ex. P-15 it cannot be treated to have ceased to be an agent of fourth defendant because the agency was created for a particular transaction continues until that transaction is over unless it is terminated. Here it is not the case of fourth defendant that the relationship of principal and agent was terminated by the time the drug was supplied under the contract. Here it is not the case of fourth defendant that the relationship of principal and agent was terminated by the time the drug was supplied under the contract. On the contrary, it is the definite case of the fourth defendant that the plainlilt 'was not at all made the agent which case is negatived by us for the reasons already stated above. Therefore, there is no scope for applying the decision of the supreme Court in the aforesaid case of Mysore Spinning and Manufacturing Co. Ltd. ( 20 ) IT was also contended by Sri Naik, learned counsel for the fourth defendant that there is a difference between a contract of sale and contract of agency for sale and in the instant case the plaintiff worked under a contract of sale, viz. , as distributing agent. The learned counsel also further drew our attention to the statement of law made under the caption "contract of Sale and Agency to Sell" at page 709 of Pollock and Mulla, 9th Edition on Indian Contract and Indian Specific Reliefs Act. Under that caption it has been stated thus: "a principal does not sell to his agent. There is a distinction between a contract of sale and contract of agency for sale. The essence of sale is the transfer of title to the goods for a price paid or promised to be paid. The essence of agency to sell is the delivery of the goods to a person who is to sell them not as his own property but as that of the principal who remains the owner of the goods and the agent is therefore liable to account for the proceeds. " Unfortunately, for the fourth defendant no evidence was adduced to show whether there was no accounting of the sale proceeds made by the plaintiff for the agency created for obtaining and performing the contract as per Ex. P-15. Therefore, it is not possible to appreciate this contention in the absence of the evidence adduced by fourth defendant. The same person can be both a distributing agent and an agent for obtaining and performing a particulars contract on behalf of the person for whom he is also the distributing agent. In fact, until the last moment the fourth defendant did not refuse its liability. The evidence on record as revealed from Exs. The same person can be both a distributing agent and an agent for obtaining and performing a particulars contract on behalf of the person for whom he is also the distributing agent. In fact, until the last moment the fourth defendant did not refuse its liability. The evidence on record as revealed from Exs. P-46, P-47, dated 10th march and 17th March, 1976 shows that the fourth defendant assured to settle this claim of the plaintiff. Ex. P-46 is a letter written by P. W. 1 to one Sri Motwani, marketing Manager of the fourth defendant in which early settlement was demanded by the plaintiff. In reply to the said letter Sri P. T. Motwani, Marketing Manager of the fourth defendant sent Ex. P-47, dated 17th March, 1976 stating that the plaintiff may get in touch with their Sales Manager Sri V. Dwarkanath at Madras for settlement. It was only when the legal notice was issued by the plaintiff to the fourth defendant as the fourth defendant failed to settle, the fourth defendant came out with the case that there was no relationship of principal and agent and it was only a case of principal to principal as in evident from the letter dated 2nd November, 1976 ex. P-54. ( 21 ) IN the light of the conclusions arrived at, by us the fourth defendant is liable to reimburse the plaintiff. Accordingly, Points 2 and 3 are answered in the affirmative. Thus, Points 2 and 3 are held against the fourth defendant and in favour of the plaintiff. ( 22 ) POINT No. 4. The contract in question is a commercial contract. The amount due to the plaintiff in respect of other bill has been adjusted. Thus, the plaintiff has been deprived of the amount from 20th December, 1976. In view of the conclusion arrived at by us that fourth defendant is liable to reimburse the plaintiff, the fourth defendant is also liable to pay the interest on Rs. 60,876. 64 from 20th December, 1976. The plaintiff has claimed interest at the rate of 12 per cent from 18-12-1976 upto the date of suit. This is a commercial transaction and there is no agreement for payment of interest because the claim arises by way of indemnification. 60,876. 64 from 20th December, 1976. The plaintiff has claimed interest at the rate of 12 per cent from 18-12-1976 upto the date of suit. This is a commercial transaction and there is no agreement for payment of interest because the claim arises by way of indemnification. There is no evidence placed by the plaintiff to show as to what was the rate of interest of the commercial Banks during the year 1976-77. In the memorandum of appeal the plaintiff has claimed future interest from the date of suit at 6% and paid the Court-fee on that. Taking into consideration all these circumstances, we hold that the plaintiff is entitled to 12% interest from 20th December, 1976 upto the date of suit amounting to rs. 4,464. 28 on the sum of Rs. 60,876. 64 and interest at the rate of 6% from the date of suit on the sum of Rs. 60,876. 64 till the date of realization. The plaintiff is also entitled to cost of notice. Point No. 4 is answered accordingly. For the reasons stated above, the appeal is allowed in part. The Judgment and decree of the Court-below are modified. The Decree of the Lower Court dismissing the suit of the plaintiff as against defendants 1 to 3 with costs in affirmed. The decree of the Lower Court dismissing the suit of the plaintiff as against fourth defendant is reversed. The suit of the plaintiff as against the fourth defendant is decreed for a sum of Rs. 65,540. 92 with interest at 6% from the date of suit on the principal sum of Rs. 60,876. 64 till the date of realization. The plaintiff is also entitled to the cost throughout from the fourth defendant. --- *** --- .