SOUTHERN ROADWAYS LTD., MADURAI, BY ITS SECRETARY. versus S.M. KRISHNAN

Citation: [1989] SUPP. 1 S.C.R. 410 · Decided: 05-10-1989 · Supreme Court of India · Bench: K. JAGANNATHA SHETTY · Disposal: Appeal(s) allowed

Judgment (excerpt)

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SOUTHERN ROADWAYS LTD., MADURAI, BY 
ITS SECRETARY. 
v. 
S.M. KRISHNAN 
OCTOBER 5, 1989 
[K. JAGANNATHA SHETTY AND A.M. AHMADI, JJ.] 
Indian Contract Act 1872: Sections 202, 205 and 221-Agent 
receiving property on behalf of Principal-Bound to keep it 
separate from that of others-Revocation of agency by Principal-
Right of agent. 
The appellant-company is engaged in the business of transport of 
goods and parcels in Southern India and for that purpose has appointed 
agents at various stations. The respondent was one such agent 
appointed at Madras. As provided in clause ill of the Contract, the 
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respondent was to arrange a suitable godown and engage employees. 
The Company took on lease a godown at No. 10, Srinivasan Road, T. 
Nagar, Madras and the same was put in possession of the respondent 
for the purpose of carrying on his agency business of the Company. 
During the course of the Company's audit, it transpired that the 
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Respondent not only mismanaged the business but had misappropriated 
some of the income of the company. The appellant, therefore, 
terminated his agency with effect from 14.10.1988 in terms of clause XI 
of the Contract and informed him that the company would be taking 
possession of the Godwon-premises for carrying on the business on its 
own, as provided in the contract. Thereafter the respondent was 
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informed by a letter that the company has taken possession of 
the Godown on 15.10.88 and another agent R. Sundarajan had been 
appointed in his place. But the respondent prevented R. Sundarajan 
and also the company from carrying on the business at the godown-
premises. The company, therefore, filed a suit for declaration of its 
right to carry on the business in the premises and for a permanent 
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injuction restraining the respodent from interferring with its possession 
on the ground. that after the termination of the agency of the respon- · 
dent, the company acquired a right to carry on the business of the 
company and further the company had since acquired the possession of 
the premises on 15.10.88. Pending decision of the suit, the appellant 
prayed for the issuance of a temporary injunction. The Trial Judge of 
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the Madras ·High Court granted temporary injuction restraining the 
410 
SOUTHERN ROADWAYS v. S.M. KRISHNAN 
411 
respondent from interfering with the appellant's business but on appeal 
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by the respondent the Division Bench of the Madras High Court vacated 
that temporary injunction. Hence this appeal by the appellant 
company. 
Allowing the appeal, this Court, 
HELD: Under law, revocation of agency by the Principal 
immediately terminates the agent's actual authority to act for the 
Principal unless the agent's authority is coupled with an interest as 
enyisaged under section 202 of the Indian Contract Act. When agency 
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is revoked, the agent could claim compensation if his case falls under 
section 205 or could exercise a lien ou the Principal's property under C 
section 221. The agent's lien on Principal's property recognised under 
section 221 could be exercised only when there is no agreement in-
consistent with the lien. [416B-C) 
In the present case, the terms of the agreement by which the 
respondent was appointed as agent, expressly authorise the company to D 
occupy the godown upon revocation of agency. Secondly the lien, in any 
event, cannot be utilised or taken advantage of to interfere with 
Principal's business activities. [416C-D) 
An agent who receives propety or money from or for his Principal 
obtains no interest for himself in the property. When he receives any 
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such property he is bound to keep it separate from his own and that of 
others. [416E) 
(See Foley v. Hill, 2 HLC 28---1843-60 All E.R. Reprint 16 at 198; 
It is not every agent who is in a ·fiduciary position vis-a-vis his 
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principal. For example if 'A' appoints 'B' to be his agent merely to sign 
a memorandum and places no particular trust in 'B' the doctrine of 
fiduciary relations would not apply. Likewise where. the Principal 
authorises an agent to do particular and specified acts, the doctrine 
of fiduciary relation may not arise. [418C-D) 
In this case, the resi)ondent's possession of the suit premises was 
on behalf of the company and not on his own right. It is, therefore, 
unnecessary for the company to file a suit for recovery of possession. 
The respondent has no right to remain in possession of the suit premises 
after termination of his agency. He has also

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