SOUTHERN ROADWAYS LTD., MADURAI, BY ITS SECRETARY.versusS.M. KRISHNAN

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

                            OCTOBER 5, 1989
B
       [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.
c
          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
D   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
E 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
F 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
0 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
H 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     A
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,
                                                                            B
      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
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       E
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   F
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)
                                                                            G
      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 no right to interfere with
the Company's business. The case, therfore, deserves the grant of           H
temporary injunction. [419F-G)
    412        SUPREME COURT REPORTS              [1989] Supp. 1 S.C.R.

          Smt. Chandrakantaben and Anr. v. Vadilal Bapalal Modi and
A   Ors., [1989] 2 SCC 630 at 643; Narayani Amma v. Bheskaran Pillai,
    AIR 1969 Kerala 214; Abdul Nabi Sahib v. Bajab Sahib & Anr., AIR
    1944 Mad 221 andlamma v. Reghu, AIR 1977 Orissa 12, referred to.

         CIVIL APPELLATE JURISDICTION: Civil               Appeal     No.
B   4177of1989.

         From the Judgment and Order dated 28.3.1989 of the Madras
    High Court in O.S.A. No. 48 of 1989.

         K.K. Venugopal, K. Chandra Mouli, Ms. Meenakshi Sundaram
    and K.K. Mani for the Appellant.
c
         Dr. Y.S. Chitale, V.G. Pragasam, Satya Mitra Garg, V. Prakash
    and R. Venkataramani for the Respondent.

          The Judgment of the Court was delivered by
D
          K. JAGANNATHA SHETTY, J. Special Leave granted.

         The question raised in this appeal is whether the agent after
    revocation of his authority is entitled to remain in possession of the
    premises of the principal and interfere with the business thereof. The
E   learned single Judge of the Madras High Court in Original Suit C.S.
    No. 1317 of 1988 has granted temporary injunction restraining th.e
    respondent from interfering with the appellant's transport business.
    But the Division Bench by judgment delivered on March 28, 1989,
    vacated that temporary injunction. The present appeal is directed
    against the judgment of tlfe Division Bench.
F
          The facts are substantially undisputed. The appellant-company
    under the name as Southern Roadways Ltd. is engaged in the business
    of transport .of goods and parcels to different places in Southern
    India. It has appointed commission agents at various stations for the
    purpose of carrying on its business. S.M. Krishnan-respondent was
G   one such agent appointed at Madras city. Clause III of the agreement
    by which he was appointed provides that the respondent should
    arrange a suitable godown and engage employees. Clause XI provides
    for his removal from service at any titn~ without notice. It also
    provides that upon removal of the agent the company could occupy
    the godown. The company could also utilise the services of employees
H   en~aged by the respondent. As per the agreement perhaps at the
       SOUTHERN ROADWAYS v. S.M. KRISHNAN [SHETI'Y, J.I           413

suggestion of the respondent, the Company took on lease a godown at      A
No. 10, Srinivasan Raod, T. Nagar, Madras. The godown was put in
possession of the respondent for the purpose of carrying on his agency
business of the company.

      In the course of the company's audit, it was discovered that
the respondent had mismanaged the business and misappropriated B
the income of the company. By letter dated October 13, 1988, the
company terminated his agency with effect from October 14, 1988. He
was informed that the company would be taking possession of the
godown and carrying on the business on its own. By subsequent letter,
he was also intimated that the company has taken possession of the
godown on October 15, 1988 and another agent called R. Sundarajan
was appointed in liis place. The respondent however, prevented R. C
Sundarajan and also the company from carrying on business at the
godown premises. The company, therefore, had to institute a suit
for declaration of its right to carry on business in the said premises.
Permanent injuction restraining the respondent from interfering was
also sought for. The suit was based on two separate grounds. The first D
related to legal right of the company to carry on its business after
termination of agency of the respondent; the second concerned the
fact um of taking actual possession of the premises on October 15,
1988.

      Pending suit, the company moved the High Court for temporary       E
injunction. The temporary injunction restraining the respondent from
interfering with the possession of the premises and the business
th,ereof. The learned single Judge (M. Srinivasan, J.) acceded to that
request. The juoge said:

           "As pointed out already, in this case, there is no denial of F
           the lease arrangement between the owner of the premises
           and the plaintiff. The defendant does not claim to be the
           owner of the premises nor does he put forward any rival
           title as against the plaintiff. The only claim of the
           defendant is that he is in possession and that he has been
           paying the rent to the owner. He does not claim that he G
           took possession as a lessee from the owner. Though there
           is a specific averment in the plaint and the affidavit of the
           plaintiff that there is a lease arrangement between the
           plaintiff and the owner, the\'e is no denial of the same by
           the defendant. In these circumstances, the defendant
           cannot claim that he is in possession pursuant to any right H
            enured in him."
    414        SUPREME COURT REPORTS                [1989] Supp. 1 S.C.R.

          As to the possession of the premises, be said:
A
               "Tbe claim made by the plaintiff that it took possession
               on 15.10.1988 is acceptable in view of the fact that
               the defendant was never the lessee under·the owner of the
               premises. The defendant was only looking after the busi-
B              ness as an agent of the plaintiff and as such he was permit-
               ted to enter the premises and he cannot claim independent
               possession.''

          Finally, he concluded:

               "In the circumstances of the case, there can be no doubt
c              that the plaintiff has been in legal and actual possession of
               the premises on the date of suit. The fact that the business
               has been temporarily shifted to another place in view of the
               threat meted out to the plaintiff's agent will not disentitle
               the plaintiff to get injunction. The plaintiff is certainly
D              entitled to carry on its business at No. 10, Srinivasan Road,
               T. Nagar, Madras-600017, having taken the premises on
               lease. It is ot open to the defendant to prevent the plaintiff
               from carrying on such business."

          The respondent was thus restrained by means of temporary
E   in junction from interfering with the company's transport business in
    goods and parcels at the suit premises.

         The respondent took up the matter in appeal before the Division
    Bench of the fligh Court. The Division Bench consisting of Sathidev
    and Padmini Jesudurai, JJ., accepted the 'appeal and vacated the
F   temporary injuction. The conclusion of learned Judges is largely based
    on the actual possession of the premises claimed by the Company.
    They found it hard to accept that claim and observed:

                "The plaintiff will not be entitled to the relief sought for
                unless it establishes that its claim that possession of the
0               property was handed over to it on 15.10.1984 is true. The
                defendant has consistently been contending that possession
                was not handed over to the plaintiff on 15.10.1984 and that
                he continues to be in actual and physical possession of the
                property everi now. No material has been placed before th'e
                Court to substantiate the claim of the plaintiff that posses-
H               sion was taken over on 15.10.1984."
        SOUTIIERN ROADWAYS v. S.M. KRISHNAN [SHETIY, J.]                415

      They continued:
                                                                               'A
            "In the face of these documents and in the absence of any
            material to show that possession of the suit property was
            taken by the plaintiff on 15.10.1988, it would be impossible
            for this Court to grant the plaintiff, the relief of injuction."
                                                                                B
     As to the company's right to treat the respondent as trespasser,
the Division Bench observed:

            "Before the defendant could be characterised as a tres-
            passer, the validity of the termination of the agency and the
            rights of the parties, following that, have also to be
            determined and this could be done only during trial."               c
      At the outset, we may state that we are not so much concerned
with the rival claims relating to actual possession of the suit premises.
Indeed, that is quite irrelevant for the purpose of determining the
rights of the company to carry on its business. Mr. Venugopal, learned          D
~ounsel for the appellant also discreetly did not advert to that con-
troversy. He, however, rested his case on certain facts which are
proved or agreed. They may be stated as follows:

      The company was and is the tenant of the suit premises and has
been paying rent to the owner. The lease in respect of the premises has E
been renewed up to November 22, 1983. It was the company which has
executed the lease and not the respondent. The respondent as agent
was allowed to remain in possession of the premises. It was only for the
purpose of carrying on company's business. His agency has been
terminated and his authority to act for the company has been put an
end to, These facts a~e indeed not disputed, On these facts the conten- -F
tion of counsel is that when the agency has been terminated, the re-
spondent has no legal right to remain in the premises or to interfere
with the business activities of the company.

      The force of this argument cannot be gainsaid. Counsel, in our
opinion, appears to be on terra firma. The principal has right to carry GI
on business as usual after the removal of his agent. The Courts are
rarely willing to imply a term fettering such freedom of the principal
unless there is some agreement to the contrary. The agreement bet-
ween the parties in this case does not confer right on the respondent to
continue in possession of the suit premises even after termination of
agency. Nor does it l'res_ervt'._ r~ght for him to interfere with the coin- H
    4lb         SUPREME COURT REPORTS                (1989] Supp. 1 S.C.R.

    pany's business. On the contrary, it provides that the respondent could
A   be removed at any time without notice and after removal the company
    could carry on its business as usual. The company under the terms of
    the agreement is, therefore, entitled to assert and exercise its right
    which ca?not be disputed or denied by the respondent.

B         Even otherwise, 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
    envisaged under section 202 of the Indian Contract Act. When agency
    is revoked, the agent could claim compensation if his case falls under
    section 205 or could exercise a lien on the principal's property under
    section 221. The agent's lien on principal's property recognised under
c   section 221 could be exercised only when there is no agreement incon-
    sistent with the lien. In the present case the terms of the agreement by
    which the respondent was appointed as agent, expressly authorises the
    company to occupy the godown upon revocation of agency. Secondly,
    the lien in any event, in our opinion, cannot be utilised or taken
0   advantage of to interfere with principal's business activities.

          There is yet another significant factor to be borne in mind when
    we deal with the rights of an agent. An agent who receives property or
    money from or for his principal obtains to interest for himself in the
    property. When he receives any such property he is bound to keep it
E   separate from his own and that of others. Long ago, Lord Cottenham,
    L.C. (Foley v. Hill, 2 HLC 28-1843-60 All E.R. (Reprint) 16 at 198)
    said:

                " ... So it is with regard to an agent dealing with property;
                he obtains no interest himself in the subject-matter beyond
F               his remuneration; he is dealing throughout for another,
                and though he is not a trustee according to the strict techni-
                cal meaning of the word, he is quasi a trustee for that
                particular transaction for which he is engaged."

          Out uf this practice there has emerged a rule, which is a normal
G   incident of agency, that an agent cannot deny principal's title to pro-
    perty nor he can convert it into other kind or use. Fridman's Law of
    Agency (5th Edition page 150) also supports this view:

          "Respect of Principal's title:

                "The agent cannot deny the title of the principal to goods,
       SOUTIIERN ROADWAYS v. S.M. KRISHNAN (SHETIY, J.I              417

           money, or land possessed by the agent on behalf of the A
           principal. The possession of the agent is the possession of
           the principal for au purposes, including the acquisition of
           title under statutes of limitation, even where in fact the
           agent, though in ignorance of his claim, is entitled to the
           land, unless the agent possesses not as agent but on his own
           behalf, in which event his possession will be personal and B
           not for his principal."

     As to the nature of agent's possession in respect of princip~J's
property, this Court in a recent judgment rendered in Sint.
Chandrakantaben and Anr. v. Vadilal Bapalal Modi and Ors., [1989} 2
sec 630 said at 643:                                                        c
           "It is welJ settled that the possession of the agent is the
           possession of the principal and in view of the fiduci~ry
           relationship defendant 1 cannot be permitted to claim ,his
           own possession. This aspect was well emphasised in David
           Lyell v. John Lawson Kennedy, [1889} 14 HL (E) 437               D
           where the agent who was collecting the rent from the
           tenants on behalf of the owner and depositing it in a oepa-
           rate earmarked account continued to do so even after the
           death of the' owner. After more than 12 years of the
           owner's death his heir's assignee brought the action against
           the agent for possession and the agent defendant pleaded         E
           adverse possession and limitation. The plaintiff succeeded
           in the first court. But the action was dismissed by the Court
           of Appeal. The House of Lords reversed the decision of the
           Court of Appeal and remarked: "For whom, and on whose
           behalf, were those rents received after Ann Duncan's
           death? Not by the respondent for himself, or on his own          F
           behalf,. any more than during her lifetime." Emphasising
           the fiduciary character of the agent his possession was
           likened to that of trustee, a solicitor or an agent recei\\ing
           the rent under a power of attorney. Another English case
           of Williams v. Pott, LR 12 Eq Cas 149, arising out of the
           circumstances similar to the· present case was more interest~    G
           ing. The agent in that case was the real owner of the estate
           but .he collected the rents for a considerably long period as
           the agent of his principal who was his mother. After the
           agent'.s death his heir claimed the estate. The mother (the
           principal) had also by then died after purporting by her.will
           to devise the disputed lands.to.the defendants upon certain      H
    418         SUPREME COURT REPORTS               [1989] Supp. 1 S.C.R.

                trusts. The claim of the plaintiff was dismissed on the plea··
A               of adverse possession. Lord Romilly, M.R., in his judg-
                ment observed that since the possession of the agent was
                the possession of the principal, the agent could not have
                made an entry as long as he was in the position of the agent
                for his mother, and that he could not get into possession
B               without first resigning his position as her agent which he
                could have done by saying: "The property is mine; I claim
                the rents, and I shall apply the rents for my own purposes."
                The agent had thus lost his title by reason of his own pos-
                session as agent of the principal."

          We wish to add that it is not every agent who is in a fiduciary
c   position vis-a-vis his principal. For example is 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. Like wise,
    where the principal authorises an agent to do particular or specified
    acts, the doctrine of fiduciary relation may not arise. What we want to
D   emphasise is, in all cases of general agency, the .relation may be gener-
    ally fiduciary, but in other ·kinds of agencies, the relation may vary
    with t)le confidence which the principal chooses to repose in the agent.
    It may also depend upon the power which the agent exercises over the
    subject matter under the terms of tne contract of agency or by virtue of
    the incident of law and usage of the business which the relationship
E   implies. Thus the fiduciary element in agency, though the key to much
    of the law governing this relation, is not the essential element in the
    relation. (See Modern Law Review, Vol. 17 pp. 31-32).

         The crux of the matter is that an agent holds the principal's
    property only on behalf of the principal. He acquires no interest f()r
F   himself in such property. He cannot deny principal's title to property.
    Nor he can convert it into any other kind or use. His possession is the
    possession of the principal for all purposes. As the Kerala High Court
    in Narayani Amma v. Bhaskaran Pillai, AIR 1969 Kerala 214,
    observed at 217:

G               "The agent has no possession of his own. What is called a
                caretaker's possession is the possession of the agent."

         So much is, we think, established law as regards agent's right to
    property belonging to the principal. Dr. Chitale, learned counsel for
    the respondent, however, cited in this context, two decisions: (i)
H   Abdul Nabi Sahib v. Bajab Sahib and Anr., AIR 1944 Mad 221 and (ii)
         SOUTHERN ROADWAYS v. S.M. KRISHNAN [SHE1TY, J.I           419

lemma v. Raghu, AIR 1977 Orissa 12. In the former case of the A
Madras High Court, the suit was for a permanent injunction restrain-
ing the defendant from interfering with the plaintiff's peaceful posses-
sion and enjoyment of the suit properties and performance of the
religious services. The defendant admitted that he was agent of the
plaintiff but set up title to the property in himself as donee. He has also
set up title by adverse possession. On these claims, Kunhi Raman, J., B
observed:
            "Since the plaintiff had not got possession of the property,
                                                           In
            it would not be sufficient to show that he was construc-
            tive possession and the theory of constructive po,..ession as
            between the principal and agent, cannot be relief_ upon by
            the principal for the purpose of meeting the contention of C
            the description raised on behalf of the defendal'.lt, who is
            the agent."
      If the defendant in the above case, has admitted that he was the
agent of the plaintiff and yet set up title to the property of his princi-
pal, the above observation may not be consistent with the settled D
principle of law. We have already stated that the agent acquires no
interest in -the property of the principal and he cannot, therefore, .
non-suit the principal on the possessory title as agent.
       The second case in J emma v. Raghu, referred to us is the decision
of the Orissa High Court. That case dealt with the general principle
that ·the plaintiff who is not in possession of the suit premises is not E
entitled to relief of injunction. The plaintiff must ask for recovery of
possession. But this principle has no application with regard to dispute
between the principal and agent in respect of principal's property.
      In this case, the respondent's possession of the suit premises was
on behalf of the company and not on his own right. It is, thereofre, F
unnecessary for the company to file a suit for recovery of possession.
The respondent has no right to remain in possession of the suit pre-
mises after termination of his agency. He has also no right to interfere
with the company's business. The case, therefore, deserves the grant
of temporary injunction. The learned single Judge of the High Court in
our judgment, was justified in issuing the injunction. The Division 'G
Bench of the High Court was clearly in error in vacating it.
     In the result, we allow the appeal with costs. In reversal of the
order of the Division Bench, we restore the temporary in junction
granted by learned single Judge of the High Court.
Y. Lal                                                Appeal allowed.    H