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PETITIONER: GORDON WOODROFFE & CO.

       Vs.

RESPONDENT: SHEIKH M. A. MAJID & CO.

DATE OF JUDGMENT: 22/03/1966

BENCH: RAMASWAMI, V. BENCH: RAMASWAMI, V. SUBBARAO, K. SHELAT, J.M.

CITATION:  1967 AIR  181            1966 SCR    1  CITATOR INFO :  RF         1977 SC1275  (13)  C          1989 SC1555  (8)

ACT: Contract-Difference between sale and agency to  sell-Account stated, what is-When can be re-opened.

HEADNOTE: The  respondent  was a trader in hider. and  skins  and  the appellant  was  an exporter.  During the period  January  to August 1949, there were several contracts between them.  The contracts mentioned that the appellant was buying the  goods for resale in U.K. The price quoted was C.I.F. less 2 1/2 %. The contracts also provided that time should be the  essence of the contract, that the sales tax was on respondent’s  ac- count, that the respondent was answerable for weight as well as  quality,  that there should be a lien on the  goods  for moneys  advanced  by  the appellant, and  that  any  dispute regarding quality should be settled by arbitration according to the custom of the trade in the U.K. The course of dealing between them showed that before the goods were shipped  they were subjected to a process of trimming and reassortment  in the  godowns  of  the appellant with a  view  to  make  them conform to London standards, that the goods were marked with the  respondent’s  mark and that premiums were paid  to  the respondent  in  case  the goods  supplied  were  of  special quality.   The respondent filed a suit on the original  side of the High Court praying that an account should be taken of the dealings between himself and the appellant on the ground that the appellant was his agent.  The appellant’s case was, that  there  was an outright purchase  of  the  respondent’s goods and that the appellant was not an agent of the respon- dent.   The trial Judge dismissed the suit.  On  appeal  the High  Court held that the appellant acted as a  del  credere agent of the respondent and directed the taking of accounts. In  appeal to this Court, it was contended by the  appellant that:  (i)  the terms of the contracts and  the  course,  of dealing  between the parties showed that the  appellant  was not  the  agent  of  the  respondent  but  was  an  outright purchaser  of the goods, and (ii) that there was  a  settled account  between the parties which the respondent could  not

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reopen. HELD:(i) The appellant was the purchaser of the respondent’s goods  under  the several contracts and not  his  agent  for sale,  and therefore, the view taken by the High  Court  was not correct. The  essence of sale is the transfer of title to  the  goods for  price paid, or to be paid, whereas the essence  of  the agency to sell is the delivery of the goods to a person  who is to sell them, not as his own property but as the property of the principal who continues to be the owner of the goods, and the agent is liable to account for the proceeds.  On the terms of the contract and the course of dealing between  the parties, the contract was not one of agency for sale but was an  agreement  of sale.  The appellant purchased  the  goods from the respondent 2 1/2% less and sold them to the  London purchasers  at  the full price so that the 2 1/2 %  was  its margin  of profit and not its agency commission.   The  fact that the goods were sent with the respondents 2 mark,  that  the premium was paid outside the terms  of  the contract, that the appellant considered it fair and just  to pay  the whole of the premium to the respondent or to  share it  with  him, and that additional burden  with  respect  to weight  and  quality was thrown on the respondent,  have  no significance,  in deciding the nature of the contract.   The clause  with regard to lien is consistent with the  transac- tion  being  an  outright sale, because  the  appellant  was acting as creditor of the respondent and charged interest on advances only till the date of shipment of the goods when it became  the purchaser of the goods from the respondent.   An agent  can become a purchaser when the agent pays the  price to  the  principal on his own  responsibility.   The  clause regarding  arbitration in the U.K., though unusual,  is  not also  inconsistent with there being a sale of goods  between the parties in India. [3H-4B; 5G-H.] (ii) The  accounts were settled between the parties and  the respondent  could  not  be allowed  to  reopen  the  settled account as there was no proof of fraud, mistake or any other sufficient ground. Accounts are "settled or started" if they are submitted  and accepted as correct by the other side to whom they have been rendered.  For almost every shipment the appellant  prepared a full and detailed statement of account and sent it to  the respondent.  The account contained items both of credit  and debit  and the figures on both sides were  adjusted  between the parties and a balance struck and the respondent accepted their accuracy and never raised any objection to them. [11H; 14 E-F]. Bishnu  Chand v. Girdhari Lal, (1934) L. R. 61 I.A. 273  and Laycock v. Pickles, 4 B and S 497, applied.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 164 of 1964. Appeal from the judgment and decree dated December 15,  1959 of the Madras High Court in O.S. Appeal No. 22 of 1955. P.   Ram Reddy and A. V. Velayudhan Nair, for the appellant. K.  R.  Chaudhuri,  and  K.  Rajendra  Choudhury,  for   the respondent. The Judgment of the Court was delivered by Ramaswami, J. This appeal is brought against the judgment of the  High  Court of Madras dated December 15, 1959  in  O.S. Appeal No. 22 of 1955. The  respondent was a trader at Madras in hides  and  skins.

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The  appellant  was  a firm, Gordon  Woodroffe  and  Company (Madras),  Limited,  doing business among  other  things  as exporters  of hides and skins.  For the period of  8  months commencing  from  January, 1949, there were as many  as  101 contracts  entered  into  between  the  appellant  and   the respondent.  The case of the respondent was that he  entered into  an agreement with the appellant to act as  agents  for shipping  the goods (hides and skins) to United Kingdom  and for  finding  purchasers  there.  It  is  alleged  that  the appellant used to make payment to the respondent in  respect of  the  goods  sent to it for shipment  in  the  nature  of advances and he 3 used to set off these advances when payment was made to  the respondent  after  the goods were shipped.   The  respondent will  hereinafter  be referred to as the plaintiff  and  the appellant  as  the defendants.   The  plaintiff  tentatively claimed a sum of Rs. 56,564/and odd as due to him as balance of the price of the goods and a further sum of Rs.  40,275/- as  representing the loss sustained by him by reason of  the defendants’  conduct  in not shipping his  goods  under  the "Shaik  mark".   The plaintiff accordingly  prayed  that  an account should be taken of the dealings between the  parties for  the period in question.  The defendants  contested  the suit on the ground that it was not an agent of the plaintiff but it purchased hides from the plaintiff for export and for resale  in the United Kingdom.  The case of  the  defendants was  that there was an outright purchase of the  goods  from the  plaintiff  for  the purpose of  resale  in  the  United Kingdom.   The defendants also contended that a sum  of  Rs. 4,351  /-  and odd was due to it from the plaintiff  and  it prayed for a decree against the plaintiff for that amount by way of counter-claim.  The trial Judge held, by his judgment dated  May 6, 1954 that the defendants were only  purchasers of  the goods from the plaintiff and the idea of agency  was quite  inconsistent  with  the nature  of  the  transactions between the parties.  The trial Judge came to the conclusion that  the plaintiff was bound by the statements  of  account rendered by the defendants from time to time.  After  giving an  opportunity to the parties to produce further  evidence, the  trial  Judge  held that since there was  no  fraud  the accounts  could  not  be  reopened  and  the  claim  of  the plaintiff with regard to Rs. 157/- in respect of the  marine insurance   alone   was  sustainable.    The   trial   Judge accordingly  dismissed  the suit and decreed  that  counter- claim of the defendants after deducting the said sum of  Rs. 157/-.  The plaintiff preferred an appeal to the High  Court of  Madras under the Letters Patent.  By its judgment  dated December  15, 1959 the High Court reversed the  decision  of the  trial Judge and held that the defendants acted  as  del credere  agents of the plaintiff for effecting the  sale  of the plaintiff’s goods in the United Kingdom.  On this  basis the High Court decreed the plaintiff’s suit and directed the taking  of  accounts, as prayed for,  from  the  defendants, though  in  respect of some of the items the  claim  of  the plaintiff was negatived.  The High Court also held that  the plaintiff  was  liable to pay to the defendants  the  amount claimed by them by way of counter-claim. The first question presented for determination in this  case is whether the defendants were acting as del credere  agents of  the  plaintiff or whether the defendants  were  outright purchasers  of the goods supplied to them by the  plaintiff. In  the approach to this question it is necessary to  notice the distinction between a contract of sale and a contract of agency.  The essence of sale is the transfer of the title to

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the  goods for price paid or to be paid.  The transferee  in such case becomes liable to the transferor of the goods 4 as  a debtor for the price to be paid and not as  agent  for the proceeds of the sale.  On the other hand, 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 the property of the principal who continues to be the owner of the  goods and  who  is therefore liable to account for  the  proceeds. The  true  legal  relationship between the  parties  in  the present case has, therefore, to be inferred from the  nature of the contract, its terms and conditions and the nature  of respective obligations undertaken by the parties. It  is  necessary,  at this stage, to set  out  briefly  the course  of the dealings between the parties which  has  been summarised by the High Court as follows:               "The  plaintiff used to purchase tanned  hides               of all sorts in Periamet (Madras), and in  his               godown assort them according to quality,  pack               them  into bales and mark them with his  mark,               viz., Shaik or S. M. A. Mark.  Then the  bales               would be delivered into the defendants’ godown               where  the  bales  would  be  opened  and  re-               assorted   so   as  to   conform   to   London               specification and standard.  In the process of               putting the goods into that shape, there  used               to be necessity for the defendants to cut  and               trim  the  pieces and sometimes  call  on  the               plaintiff for replacement of the pieces  which               fell  below  the  standard.   Thereafter,  the               defendants  used  to re-pack them  into  bales               each  weighing  600 pounds and then  ship  the               goods  themselves as shippers and  obtain  the               necessary  shipping documents on the basis  of               c.i.f. contracts.  The goods would be  shipped               to  the defendants’ London Office  where  they               were  sold  to  London  purchasers.   All  the               expenses incurred in connection with the goods               prior to shipment, such as carriage,  trimming               and assortment in the defendants’ godown  were               all  to be borne by the plaintiffs.   So  also               expense in connection with the shipment,  such               as  freight,  insurance, short  weight,  etc.,               were  all to be home by the plaintiff.   After               the  goods  were shipped and as  soon  as  the               shipping  documents were got ready. the  price               of the goods was calculated at the price fixed               in the contract notes and after deducting  the               expenses   and  the  advances  with   interest               thereon, the balance, if any, was paid to  the               plaintiff either by cheque or by credit  being               given  in his accounts.  For every shipment  a               contract note was being sent by the defendants               to  the  plaintiff.  So also, a  statement  of               account  with a covering letter as well  as  a               cheque  for  the  balance  found  due  to  the               plaintiff  were  being sent to  the  plaintiff               from  time  to time.  In all, there  were  101               contract  forms  and  several  statements   of               accounts sent to the plaintiff               5               in respect of the shippers.  To none of  those               contracts  or  statements of account  did  the               plaintiff raise any objection               at any time.  "

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The  question  whether the defendants took delivery  of  the plaintiff’s  goods  as  agents  for  sale  or  whether  they purchased  the goods outright must largely depend  upon  the terms  of the contract of which a sample is Ex.   P-1.   All the  101 contracts were prepared in the same  printed  form. Exhibit  P-1 is the contract dated January 21, 1949.  It  is in  the  form  of a letter sent by  the  defendants  to  the plaintiff.   It opens with the sentence "We  confirm  buying from  you  for resale the following subject to  U.K.  Import Licence".   Then follows a description of the  goods  giving the  number  of  bales, the average weight  and  range,  the assortment  and  the price per lb. in  pennies.   The  price quoted  is  said to be c.i.f. less 21 per cent.   The  goods were  already shipped by the s.s. ’City of  Florence’.   The seller is said to be liable to pay brokerage at the rate  of one pie per lb.  Then follow the terms of the contract which are to the following effect:               "  Landed  weight to be accepted,  payment  on               presentation  of  documents in order.   It  is               understood  that the above goods are  for  re-               sale  in United Kingdom.  You are  responsible               irrespective of any inspection by us in Madras               for  selection  and quality of  the  goods  at               destination  where inspection  and  acceptance               thereof  will  be made by our  agents  or  the               ultimate buyers.  In the event of any  dispute               or  claim in respect of goods covered by  this               contract,  failing  amicable  settlement  with               buyers,  such  claim  is to  be  submitted  to               arbitration  according  to the custom  of  the               trade in the United Kingdom and the result  of               such  settlement or arbitration is binding  on               you.   We have a charge or lien on  all  goods               covered  by  this  contract  for  all   moneys               advanced by us including expenses incurred and               interest  thereon.  Insurance  through  Gordon               Woodroffe  Company, Madras, Limited.  Time  is               an essence of the contract." In  the  first  place, it is important to  notice  that  the contract in the opening portion specifically makes a mention of  the fact that the defendants were buying the  goods  for resale,  and  in the paragraph containing the terms  of  the contract  it is reiterated that the goods were intended  for resale in the United Kingdom.  On the face of it, therefore, the  contract is clearly not one of agency for sale  but  it reads  as  an  agreement of sale.  If  the  defendants  were intended to be constituted as the agents for sale the  terms of the contract would have been entirely different.  Another important  feature in this case is that there is a  definite price  fixed  in  the contract for  the  plaintiff’s  goods. According  to the plaintiff the rates fixed in the  contract were the ones at which the goods were sold to London 6 purchaser  and not a different rate and the defendants  were agents  who were obtaining for him only the price  at  which the  goods  were  sold  at London.   It  is  true  that  the defendants  admit  that before fixing the price  as  between themselves  and  the plaintiff they used  to  ascertain  the London  price by cable.  It is also true that the  plaintiff was debited in the statement of account with the expenses of the cable.  Even so, if the defendants were simply acting as agents  for  the sale there was no need at all  to  fix  the price in the contract as between them and the plaintiff.  It was  contended  for  the plaintiff  that  according  to  the contracts  the prices fixed are c.i.f. less 2 1/2  per  cent

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and  discount  of  21 per cent was the  commission  for  the defendants  as  agents.   There  is no use  of  the  word  " commission"  in the contracts and we see no reason  to  hold that 2 1/2 per cent should be taken as commission and not as a  margin  of profit.  The important point is  that  if  the contract was one of agency there was no need to mention  the price  at all as between the plaintiff and  the  defendants. It may be that in most cases the prices which the defendants obtained  from  the London purchasers were the same  as  the prices  stipulated in the contracts with the  plaintiff  but the fact remains that they obtained 21 per cent discount  on the  sale  price, that is to say, they purchased  the  goods from  the  plaintiff 2 1/2% per cent less and sold  them  to their London purchasers at the full price, so that 2 1/2 per cent  was  their  margin of profit.   It  is  possible  that sometimes they sold the goods to the London purchasers at  a higher  price  in which case they would be entitled  to  the difference  in prices as a profit in addition to the  2  1/2 per cent which they got from the plaintiff. In  all there are 101 contract forms and in accordance  with these contract forms statements of account were furnished by the  defendants  to  the plaintiff.   Exhibit  P-1A  is  the statement  of account dated January 25, 1949 based upon  the contract  note Ex.  P-1.  It is true that the plaintiff  did not sign any one of the contract forms, but all of them were received by the plaintiff without any objection.  Statements of account were Prepared in terms of these contracts and the plaintiff  was receiving moneys from the defendants  on  the basis  of these contracts and according to the  price  fixed therein.   He  did  not, at any time,  raise  the  slightest protest  against  the terms of the contract or  against  the price fixed therein.  On the other hand, he received all the contract  forms  and statements of account as  well  as  the moneys  sent  to  him  by  cheque.   The  plaintiff  cannot, therefore,  be  heard to say that he was  not  a  consenting party to the contracts. There  is also the circumstance that before the  goods  were shipped  to  London  they were subjected  to  a  process  of trimming  and reassortment in the godowns of the  defendants with  a  view to make them conform to  London  standard  and selection.  In that process the defendants often called upon the plaintiff to replace the 7 pieces  found  defective.   If the  defendants  were  merely acting as agents the process of trimming and reassorting  in the  godowns to make the goods conform to  London  standards and specifications will be unnecessary, for in that case the defendants were merely bound to ship the goods as they  were delivered  to  them.   Another  important  feature  of   the transaction is that in several contracts time was fixed  for delivery of the goods.  In some cases like the contracts  in forms like P-1 to P-3 the shipment has been effected  before the contract forms were issued but there are some  contracts which  contained the stipulation that the bales were  to  be sent  to  the godowns of the defendants for shipment  to  be effected "promptly" which according to D.W. 1, Ayyalu Chetti meant  two weeks.  There were also some contracts  like  Ex. D-2(a)  which required the goods to be sent for shipment  to be  effected  within  one month, and  some  other  contracts within  two  months.  All the contracts provided  that  time should  be the essence of the contract.  If  the  defendants were  acting only as agents for the sale there is no  reason why there should be a stipulation in the contract as to  the time  fixed for the delivery and the stipulation  that  time should  be  the essence of the contract.  There  is  also  a

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further condition in the contracts that the sales-tax was on seller’s  account,  the seller being  the  plaintiff.   This circumstance  also  indicates that  the  legal  relationship between the parties was that of a seller and a purchases and not of a principal and agent. On  behalf of the plaintiff it was argued that according  to the   contract  the  goods  were  to  be  marked  with   the plaintiff’s   mark.   It  is  true  that  in  some  of   the defendants’ letters such as Ex.  P-10 it was mentioned  that the  bales  were  sent with the  plaintiff’s  mark  in  some shipments  but this circumstance has not  significance.   It only  means  that the buyer resold the goods to  the  London purchaser  with  the  mark of the plaintiff.   It  was  also contended on behalf of the plaintiff that "premium" was paid to the plaintiff in case the goods supplied were of  special quality.   It is in evidence, that the "premium"  was  extra price  obtained  in  London  if the  Board  of  Control  was satisfied  about the special quality of the goods  (vide  D- 1O).   It  was  pointed  out that  if  the  defendants  were purchasers  the premium should go to them but in some  cases the premium was paid to the plaintiff.  Exhibits P-7, P-  10 and  P-  1 8, show that for some shipments the  premium  was paid  to  the plaintiff.’The explanation of D.W.  1,  Ayyalu Chetti  is  that in some cases the premium was paid  to  the plaintiff ex gratia.  If in London the quality of the  goods was  found particularly good the premium was  obtained  from the  London  purchaser,  that is to  say,  the  premium  was obtained  not as in terms of the contract but as  a  special payment if the goods happened to be of good quality.  It  is a payment therefore, L/S5SCI-3 8 made outside the terms of the contract and there is  nothing significant if the defendants considered it fair and just to pay the whole of the premium to the plaintiff or to share it with  him  in  some cases.  It was  also  contended  by  the plaintiff  that According to the terms of the  contract  the landed weight was to be accepted and the plaintiff was to be responsible  for the selection and quality of goods  at  the destination   where   inspection  would  be  made   by   the defendants’  agents or the ultimate London buyers.  In  some statements of account sent by the ’defendants the  plaintiff has  been debited various amounts for shortage in weight  at London.   The plaintiff was also informed about  the  claims made by the London purchasers on the ground of low  standard and  selection,  that  is to say,  the  plaintiff  was  made answerable  for weight as well as quality.  It is true  that the  liability  of the, plaintiff is  an  additional  burden thrown upon him under the terms of the contract but it is of ’no  significance in considering the question as to  whether the  as  transfer  of  title to the goods  at  the  time  of shipment from the plaintiff to the defendants.  On behalf of ’the  plantiff reference was also made to the fact that  the contracts  provided for a Hen on all the, goods  covered  by the  contracts  for all moneys advanced by  the  defendants, including expenses incurred and interest thereon. it is  the admitted  position that for purchasing skins and hides,  the plaintiff  was taking large sums of money as  advances  from the  defendants.   We find from the  several  statements  of account that reference is made to all such advances.   These advances  together with interest thereon are  deducted  from the sale-price payable to the plaintiff and for the  balance alone cheques were sent: to him.  It appears that on a later date,  i.e.,  in June, 1949 the defendants  took  a  regular hypothecation deed, Ex.  P-19 from the plaintiff in  respect

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of  all the advances to be made by the defendants.   But  it should  be  noticed  that  in  making  such  advances,   the defendants  were only acting as creditors of  the  plaintiff and  were,  therefore, entitled to charge interest  on  such advances  till  they actually purchased the goods  from  the plaintiff.   After  the purchase of the goods they  did  not charge any interest on the moneys paid by them.  It  appears from the statements of account that interest, was charged on advances  upto  the date of shipment.  In  other  words  the title in the goods passed to the defendants at the moment of shipment  of  the goods and the fact was that  interest  was charged on all advances only upto the date of shipment.  The charge or lien on the, goods, therefore, subsisted till  the time of shipment i.e., till the title in the goods passed to the  defendants  under  the con. tract  of  sale.   We  are, therefore,  unable  to  agree  with  the  Counsel  for   the plaintiff  that the clause with regard to the. lien  is  not consistent  with  the theory of the  transactions  being  an outright  sale,.  There was also a suggestion on  behalf  of the  plaintiff  that  there cannot be  a  contract  of  sale subject  to c.i.f. terms if there was an out right  sale  at Madras between the parties.  We do not think 9 there is any substance in this argument.  The primary object of  the  contract  was  that there,was  a  purchase  by  the defendants from the plaintiff of the goods for resale in the United  Kingdom  and in keeping with this object  the  buyer stipulated with the seller for delivery of the goods  abroad and  for that purpose adopted a c.i.f. form of &de.   It  is also contended on behalf of the plaintiff that the term with regard to arbitration "according to the custom obtaining  in United Kingdom" was not compatible with the theory of a sale between  the  parties.  It is not possible  to  accept  this argument  as correct.  It is open to the plaintiff to  agree that  even after the sale had taken place any  dispute  with regard  to  the quality of the goods and  selection  may  be submitted to arbitration in the United Kingdom.  It is  true that  a clause of this description is unusual but it is  not inconsistent with the theory that there was a sale of  goods between  the  parties at Madras.  We have  already  observed that  the contracts in this case were not  c.i.f.  contracts but the price alone was fixed on a c.i.f. basis. It is well-established that even an agent can become a  pur- chaser when an agent pays the price to the principal on  his own  responsibility.  In Ex parts White, In re Nevil(1) T  & Co. were in the habit of sending goods for sale to N who was a partner in the, firm of N & Co., but received these, goods on  his private account.  The course of dealing between T  & Co.  and  N was that the goods were accompanied by  a  price list.   N sold the goods on what terms he pleased, and  each month  sent  to T & Co., an ac. count of the  goods  he  had sold,  debiting himself with the prices named for,  them  in the  price list, and at the expiration of another  month  he paid the amount in cash without any regard to the prices  at which he had sold the goods, or the length of credit he  had given.  On these facts it was held by the Court of Appeal in Chancery  that though both the parties might look  upon  the business as an agency, N did not, in fact, sell the goods as agent of T & Co., but on his own account, upon the terms  of his paying T & Co. for them at a fixed rate if he sold them, and  the moneys he received for them were therefore his  own moneys, which T & Co., had no right to follow. A  similar  principle has been expressed in W. T.  Lamb  and Sons v. Goring Brick Company, Ltd.(1) In that case,  certain manufacturers  of ,bricks and other building materials, by

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an  agreement  in  writing, appointed a  firm  of  builders’ merchants  as  sole selling agents of all bricks  and  other materials  manufactured at their works".  The agreement  was expressed  to be for three years and  afterwards  continuous subject to twelve months’ notice by either party.  While the ;agreement  was  in  force the  manufacturers  informed  the merchants  that  they intended in the future to  sell  their goods themselves without the intervention of any agent, (1)  (1871) 6 Ch. 397                         (2)  [1932]  1 K.B. 710. L/S5SCI-3(a) 10 and  thereafter they effected sales to  customers  directly. An  action was then brought by the merchants for  breach  of the agreement.  It was hold by the Court of Appeal that  the effect of the agreement was to confer on the plaintiffs  the sole  right  of  selling  the  goods  manufactured  by   the defendants  at their works, so that neither  the  defendants themselves  nor any agent appointed by them, other than  the plaintiffs, should have the right of selling such goods.  It was  also  held  that the agreement was one  of  vendor  and purchaser  and not one of principal and agent.   Though  the term ’agent’ was used in the agreement, the Court of  Appeal considered  that the substance of the transaction  was  that the  manufacturers sold their bricks to the so-called  agent who  in  turn  sold  them on  their  own  responsibility  to customers.   The price charged by the manufacturers  to  the sole selling agents was the ruling market price and the sole selling  agents were allowed a deduction of 10 per  cent  by way  of commission on that price.  The manufacturers had  no concern at what rate the sole selling agents sold the  goods to  customers.  It was clear from these facts that the  sale by  the  selling agents to customers was  a  transaction  in which the manufacturers were not interested and there was no privity  of  contract  between  the  manufacturers  and  the ultimate  purchasers.   Reference  may  be  made,  in   this connection  to the following passage from Blackwood  Wright, ’Principal and Agent’.  Second Edn. page 5:               "In   commercial  matters,  where   the   real               relationship is that of vendor and  purchaser.               persons are sometimes called agents when, as a               matter of fact, their relations are not  those               of  principal and agent at all, but  those  of               vendor and purchaser.  If the person called an               ’agent’  is  entitled  to  alter  the   goods,               manipulate  them,  to sell them at  any  price               that  he  thinks fit after they have  been  so               manipulated,  and is still only liable to  pay               for them at a price fixed beforehand,  without               any  reference to the price at which  he  sold               them, it is impossible to say that the produce               of  the  goods so sold was the  money  of  the               consignors, or that the relation of  principal               and agent exists-Ex parte White, In re  Nevill               (1871).  6  Ch.  397A  purchaser  has  not  to               account  to his vendor-, his only duty  is  to               pay  him; and all the other rights and  duties               which  exist between principal, and  agent  do               not  exist  between  vendor  and  purchaser-Ex               parte Bright, In re Smith (1879), 10 Ch.  Div.               566; Ex parte White, In re Nevill-(1871) 6 Ch.               397-." For the reasons already given we are of the opinion that the defendants were purchasers of the plaintiffs goods under the several  contracts and not his agents for sale and the  view

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taken  by the High Court on this aspect of the case  is  not correct and must be overruled. 11 We pass on to consider the second question involved in  this viz.,  whether  there  was a  settled  account  between  the parties  and whether it is open to the plaintiff  to  reopen it. It  is admitted in this case that for almost every  shipment the  defendants prepared a statement of account and sent  it to  the plaintiff giving full particulars of the amount  due to  him  together  with the deduction and  showing  the  net balance  payable  to  him and enclosing a  cheque  for  such balance or giving a credit for the sum  the accounts. Copies of such accounts are Ex.  P-1A,P-2A     and             P-3A corresponding to the contracts Exs. P-1, P-2 and  P-3.Copies of  other accounts have been filed by the defendants in  the Court  and  marked Ex.  D-18 series.  The plaintiff  in  his evidence  did not deny the receipt of these  accounts.   On the  contrary,  he admitted in  cross-examination  that  for every  shipment he was getting accounts and cheques for  the balance  due.   It  is  an  admitted  fact  that  to   these statements  of  account  no  objection  was  raised  by  the plaintiff  at  any  time.  Nor a single  document  has  been produced  on  his  side to show that he ever  wrote  to  the defendants  raising  an  objection  to  the  statements   of account.   Not only the plaintiff failed to raise  objection to the several statements of account but at one stage  sent a memorandum to the defendants accepting the accuracy of the accounts.  On June 20, 1949, the defendants wrote a  letter, Ex.  P-16, to the plaintiff stating that there was a balance of  Rs.  1,26,379/7/2 payable by him, and that  against  the balance  they  were holding certain goods belonging  to  the plaintiff and asking him to confirm the statements.  On June 22,  1949 the defendants again wrote a letter-Ex.  D-5,  en- closing  a statement of account Ex.  P-17 showing  the  said balance  of  Rs. 1,26,379/7/2 and asking the  plaintiff  for confirmation.   On receipt of this statement  the  plaintiff signed the memorandum, Ex. D-4 on June 22, 1949 and sent  it to the defendants confirming the correctness of the  balance as  due  by him and also confirming the stock of  his  goods remaining  with the defendants.  The plaintiff  conceded  in his evidence having signed Ex.  D-4 after the receipt of the statement  of account, Ex.  P-17.  The  plaintiff  explained that he did not look into the correctness of the figures but believed  Ex.   P-1 7 to be correct ’&as it was sent  by  an English firm".  The plaintiff also said that he was told  by the defendants’ broker that if he did not sign it, it  would be  harmful to him.  The trial Judge refused to  accept  the explanation of the plaintiff and held that the plaintiff had accepted   all  statements  of  account  as   correct   and, therefore,  it  must be held in law that the  accounts  were settled and the plaintiff could be allowed to reopen it only by  proof  of  fraud  or mistake  or  any  other  sufficient equitable ground. The  legal  position  is that the accounts  are  settled  or stated if they are submitted and accepted as correct by  the other side to whom the accounts have been rendered.  Such  a statement of 12 accounts  need not be in writing, nor is it  necessary  that before the accounts are settled, they should be gone into by the  parties and scrutinised and supported by vouchers.   It is  sufficient  if  the  accounts  are  accepted  and   such acceptance  may  be  inferred by  conduct  of  parties.   As observed  in  Diniell’s Chancery Practice,  eighth  edition,

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Vol. 1, p. 419:               "The  mere  delivery of an  account  will  not               constitute  a  stated  account  without   some               evidence  of  acquiescence  which  may  afford               sufficient legal presumption of a settlement."               There is also the following passage in  Bullen               and  Leake’s Prece. dents of Pleadings,  ninth               edition, p. 584:               "It  is  not enough for the  accounting  party               merely  to deliver his account; there must  be               some  evidence  that  the  other,  party   has               accepted’  it as correct But  such  acceptance               need   not  be  express;  contemporaneous   or               subsequent conduct may amount to a  sufficient               acquiescence. Again,  in  Willis v. Jernegan(1) the Lord  Chancellor  was dealing  with the two objections raised by’  the  plaintiffs counsel to the defendant’s plea of a stated account.  It was observed  by the Lord Chancellor that there was no  absolute necessity  that the account should be signed by the  parties who  had  mutual dealings to make it a stated  account,  for even  where  there  were transactions,  suppose,  between  a merchant  in  England  and a merchant  beyond  sea,  and  an account  was transmitted to England from the person who  was abroad, it was not the signing which would make it a  stated account,  but the person to whom it was sent, keeping it  by him  any length of time, without making any objection  which should  bind  him  and prevent his  entering  into  an  open account  afterwards.  In another case, Tickel v. Short,  (2) the  Lord  Chancellor expressed the opinion that it  is  the rule  of  the Court that where a merchant  kept  an  account current  by him for about two years without  objection,  the Court will consider that the accounts are stated or settled. The  same  principle has been expressed by the  Bombay  High Court  in Seth Maneklal Mansukhbhai v.  Jwaladutt  Rameshwar Pillani(3)  in  which  it  was  pointed  out  that  it   was sufficient if the accounts were accepted and such acceptance might be inferred by conduct of parties. The contention on behalf of the defendants is that there has been a "stated" or "settled" account in this case and in the ab.  sence  of  fraud,  mistake  or  any  other   sufficient equitable  ground  it is not liable to be  reopened  at  the instance of the plaintiff.  In connection it is necessary to state that the expression "account (1)  (1741)  2 Atk. 251.                     (2)[1750-51)  2 Ves. (Son.) 239. (3)  I.L.R. [1947] Bom. 878.                              13 stated"  has  more than one meaning.  It sometimes  means  a claim to payment made by one party and admitted by the other to  be  correct An account stated in this sense is  no  more than  an  admission of a debt out of court, while it  is  no doubt  cogent  evidence  against the  admitting  party,  and throws  upon him the burden of proving that the debt is  not due, it may, like any other admission, be shown to have been made in error.  Where the transaction is of this  character, it  makes no difference whether the account is- said  lo  be "’stated"  or  to  be "stated and  agreed";,  the  so-called agreements  is,without consideration and amounts to no  more than  an  admission.   There is however a  second.  kind  of account  stated  where-the, account contains items  both  of credit and debit, and the figures on both sides are adjusted between the parties and a balance struck.  This is called by Mr.  Justice  Blackburn, in Laycock v.  Pickkes(1)  a  "real account stated " and he describes it as follows:

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              "There  is a real account stated,  called  in               old  law an insimul computassent, that  is  to               say,  when several items of claim are  brought               into  account on either side, and,  being  set               against one another, a balance is struck,  and               the  consideration  for  the  payment  of  the               balance is the discharge of the items on  each               side.  It is then the same as if each item was               paid  and a discharge given for each,  and  in               consideration  of that discharge  the  balance               was agreed. to be due.  It is not  necessary,.               in  order to make out a real  account  stated,               that the debts should be debts in praesenti or               that  they  should be regal  debts.   I  think               equitable claims might might be, brought  into               account,  and  I am not certain that  a  moral               obligation  is  not sufficient.  It is  to  be               taken as if the sums had been really paid down               on  each side; and the balance is  recoverable               as   if  money  had  been  really   taken   in               satisfaction; subject to this, that where some               of  the items are such that, if they had  been               actually  paid,  the party paying  them  would               have  been able to recover them back as  on  a               failure  of consideration, the account  stated               would be invalidated." In  the  present  case, the "settled  account"  between  the parties falls within the second kind of "account stated" and it  is to an account of this description that the  equitable doctrine of "settled account" has to be considered. This  statement of the law has been affirmed by Lord  Wright in  delivering  the  opinion of the  Judicial  Committee  in Bishnu Chan v. Birdhari Lal(2) as the follows:               "Indeed,  the essence of an account stated  is               not the’ character of the items on one side or               the other, but the               (1)      4      B.      and      B.,      497.               (2) A.I.R. 1934 P.C. 147,               14                fact that are cross items of account and that               the   parties  mutually  agree   the   several               accounts of each. and by treating the items so               agreed  on  the one side  as  discharging  the               items  on the other side pro tanto, go  on  to               agree that the balance only is payable.   Such               a  transaction  is  in  truth  bilateral   and               creates a new debt and a new cause of  action.               There  are  mutual  promises,  the  one   side               agreeing  to accept the amount of the  balance               of  the  debt as true (because there  must  in               such cases be. at least in the end, a creditor               to whom the balance is due) and to pay it, the               other  side agreeing the entire debt as  at  a               certain  figure and then agreeing that it  has               been discharged to such and such an extent, so               that  there  win be complete  satisfaction  on               payment  of the agreed balance.  Hence,  there               is  mutual consideration to support  the  pro-               mises on either side and to constitute the new               cause  of  action.   The  account  stated   is               accordingly  binding. save that it may be  re-               opened  on any ground for instance.  fraud  or               mistake which would justify setting aside  any               other agreement.  " In  the present case, the ’correctness of the statements  of

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account  furnished by the defendants has been challenged  by the  plaintiff under 13 heads.  In view of our finding  that the  transactions between the parties were not on the  basis of  an  agency  but on the basis of  an  outright  sale  the accounts  cannot  be reopened under any of  these  heads  of challenges.   The  trial  court has already  gone  into  the evidence  and  has  reached the finding that  there  was  no fraud, mistake or any other sufficient equitable ground  for reopening  the  finality of the accounts.   As  regards  one item, viz., rebate in marine insurance, the trial court  has ordered  that  the plaintiff should be given  credit  for  a small sum of Rs. 157/- though there was no evidence of fraud on the part of the defendants.  The trial court has rejected the claim of the plaintiff for reopening the accounts on any other  ground  and  in view of our finding  that  the  legal relationship  between the parties was not one of agency,  we see no reason for interfering with the decision of the trial court on this aspect of the case also. For  the  reasons expressed, we allow this  appeal  and  set aside  the  judgment and decree of the High  Court  in  O.S. Appeal  No.  22 of 1955 dated the 15th  December,  1959  and restore the judgment and decree of the trial Judge dated May 6, 1954 dismissing the suit of the plaintiff and granting  a decree  for  the  counter-claim  of  the  defendants.    The defendants are entitled to the costs of this appeal in  this Court and in the High Court. Appeal allowed. 15