NARANDAS MOKARDAS GAZIWALA & ORS. versus S. P. AM. PAPAMMAL & ANR.

Citation: [1966] SUPP. 1 S.C.R. 38 · Decided: 25-03-1966 · Supreme Court of India · Bench: K. SUBBA RAO · Disposal: Dismissed

Judgment (excerpt)

38 
NARANDAS MOKARDAS GAZIWALA It ORS. 
v. 
S. P. AM. PAPAMMAL & ANR. 
March 25, 1966 
(K. SUBBA RAO AND V. RAMASWAM!, JJ.J 
Principal and Agent-Whether Agent can sue Principal for ren· 
dition of accounts. 
Indian Evidence Act, 1872, s. 92, Proviso 3-0ral agreement not 
to enforce promisso711 note till certain conditions precedent fulfilled-
Such oral agreement whether can be proved. 
An agent sued his principals for rendition of accounts for the 
period of the agency. The principals alw filed a suit claiming en-
forcement of a promissory note the agent had executed in their favour. 
The agent pleaded an oral agreement by which the prmeipals were 
not to enforce the promissory note during the period of the agency 
and unless the sum remained due and payable after accounting. The 
trial court granted a decree on the promissory note b11t directed that 
it should be adjusted against any sum found due after accounting in 
the agent's suit. The principals went to the High Court and failing 
there appealed to this Court. It was contended on behalf of the ap-
pellants that (1) an agent was not entitled in law to sue his prin-
cipal for accounts and (2) the parole agreement could not be proved 
in view of s. 92 of the lndian Evidence Act. 
HELD: (i) Though an agent has no statutory right .for an ac-
count from his principal, nevertheless there may be special circum-
lltances rendering it equitable that the principal should account to 
the agent. Such a case may arise when all the accounts are in the 
possession of the principal and the agent does not possess account. 
to enable him to determine his claim for commission against his 
principal. The right of the agent ma'' also arise in an exceptional 
case when his remuneration depends on the extent of dealings which 
are not known to him or where he cannot be aware of the extent of 
the amount due to him unless the accounts of his principal are gone 
into. In the special circumstances of the present case the agent was 
entitled to sue his principals for accounts for the material period. 
(42 H D-E] 
(ii) The parole agreement relied on in the case was a collateral 
agreement and was not related to the mode of discharge of the obliga-
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tion under the promissory note. It was a condition precedent to the 
enforceability of the promissory note and therefore evidence of oral 
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agreement could be adduced under the 3rd proviso to s. 92 of the Evi-
denc~ Act. ( 43H-44B] 
Case law referred to. 
OVJL APPELLATE JuRISD!CTION : Civil Appeals Nos. 177 and 
178 of 1964. 
Appeals by special leave from the judgment and decree dated 
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December 20, I 960, of the Madras High Court in Appeals Nos. 45 
and 202 of I 957. 
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N. M. GAZIWALA v. PAl'AMM.lL (Ramaswr1mi, J.) 
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S. V. Gupte, Solicitor-General. B. Datta. J. B. Dadachanji, for 
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the appellants. 
S. T. Desai and R. Gopalakrishnan, for the respondents. 
The Judgment of the Court was delivered by 
Ramaswami, J. These appeals are brought, 
by special leave, 
from the judgment and decree of the Madras High Court dated 
September 20, 1961 in A.S. Nos. 45 and 202 of 1957. 
Narandas Morardas Gaziwala and Lakshmi Chand & Co. 
were two firms of partnership carrying on business in lace and sil· 
ver thread at Surat in the State of Bombay. They had dealings 
with another firm at Kumbakonam-Krishna and Company-who 
acted as their agents for selling their goods in the three districts of 
Tanjore, Tiruchirapalli and Mathurai in the State of Madras on 
commission basis. The two partners of Krishna & Co. were Muru-
gesa Chettiar and his wife's sister's husband Gopal Chettiar. It 
appears that Krishna & Co. was acting as commission agents on 
behalf of the two firms at Surat from 1944 till 1951 when the part· 
nership of Krishna & Co. became dissolved by mutual agreement 
between the partners. Murugesa Chettiar, one of the partners of 
Krishna & Co. took over all the assets and liabilities of the firtn 
on dissolution and the other partner Gopal Chettiar retired from 
the firm. In respect of the dealings of the two firms at Surat (here-
inafter to be referred to as the Surat Firm) with Krishna & Co., 
the latter became indebted in 1951. On April I, 1951 Murugesa 
Chettiar (hereinafter referred to as the plaintiff) executed a pro-
missory note in favour of Narandas Morardas Gaziwala for a sum 
of Rs. 7,500/- the amount ascertained as due and payable by 
Krishna & Co. in respect of the dealings o

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