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Valapad Co-Operative Stores Vs K.H. Srinevasa Iyer Brothers: Case Analysis

The main objective of this case analysis is to understand the rationale behind the judgment passed in the case of the Valapad Co-Operative Stores Vs K.H. Srinevasa Iyer Brothers[1] and understand the facts and issues of this case. The case of  Valapad Co-Operative Stores Vs K.H. Srinevasa Iyer Brothers is based on the implied authority and apparent authority.

Implied Authority is an authority that isn't communicated or composed into the agreement, yet the agent is accepted to have to execute the matter of protection for the head. Implied authority is coincidental to communicate authority since only one out of every odd single detail of an agent's authority can be illuminated in the composed contract whereas Assume you visit a caf and the server lets you know that you'd need to purchase a starter to get a free refreshment.

Presently, the waiter has made an agreement with you in the interest of the caf. The authority of the waiter is implied on the grounds that they have been chosen as the main representative of the eatery to work with you. Whether different get involved is irrelevant as it is guessed that the server would be the main individual expected to finish your exchange. Experiencing the same thing, assuming the administrator comes to you and illuminates that the server submitted a mix-up and that there is no free refreshment accessible, this would prompt an immediate infringement of an agreement that was made between you and the server.

The eatery could put a punishment on the server; be that as it may, in light of the implied authority, they would need to oblige the arrangement and give you a free drink. Apparent authority is a class of lawful connections between a head and an agent. It checks out at the authority of the agent according to the point of view of the outsider. An agent is supposed to be acting inside the extent of its clear or apparent authority (and hence ready to submit the head) if: The chief somehow or another addresses or holds out the agent as having an authority that is more extensive than the agent's genuine authority.

The individual making the portrayal about the agent's authority must itself have genuine authority to make that portrayal, not simply evident authority. A typical illustration of an issue including clear authority is in the same place as an official of an organization given a title, status and offices that bring about a distortion of the extent of that official's real authority, without shields being set up to forestall such a deception. This study is divided into many sub-section namely background, issues, judgement analysis and lastly conclusion by the author.

The Valappad Co-operative Stores Ltd. is a general society registered under the Madras Co-operative Societies Act (Act VI of 1932)  here called the Society is the respondent in this case. The suit was established for the recuperation of cash by the offended party for the acquisition of products by the Society from them. The bills on which the case of the offended party was based were introduced in the court.

The instance of the offended party was that the Society bought merchandise from him and was Indebted for the sums asserted in the particular plaints. These were initially two cases that were after great deliberation by the court tied together and the evidence for the first case that is O.S. 477 of 1955 was taken. It can be concluded from the case facts that the secretary of the  Valapad co-operative society had bought some goods from Srinivasa Iyer, on credit and when he was not able to pay back the amount of the goods, Srinivasa Iyer sued Valapad cooperative society for money.

The plaintiff argued in this case that the defendant had appointed the secretary to be an agency on the behalf of society and perform the buying and selling of the goods. Hence if the secretary bought goods for me the plaintiff was on credit it was for the society only and hence the case would be against the society and the society will be the defendant.

To this, the defence counsel said that the secretary of the society was entitled to the funds by the society for purchasing the goods and that he had no authority whatsoever to purchase the goods on the basis of credit. According to them by doing so the secretary has not only breached the trust of the society but has also exercised power beyond his jurisdiction. According to them, the secretary has misappropriated the funds granted to him by the society and that he was not authorized to do so and hence the action of the secretary buying goods on credit had no relation whatsoever with the society and hence the society was not liable to pay the price that was claimed.

The preliminary court excused the suits observing that me Society didn't approve the secretary to buy merchandise on credit and that the Society had not held out that the secretary had an expert in the normal course of his work, to buy products using a credit card from the offended parties. In the claim, the lower appellant Court arrived at the resolution that the buys made by the secretary were inside the extent of his power and that the valapad co-operative society was limited by the demonstration of its approved agent and thusly declared the suits. It is against these declarations that the current requests have been recorded by the litigant.

The main issue, in this case, was whether the secretary of the society was authorized to buy goods on credit from a third party and whether the secretary will be considered an agent and will be judged on the basis of rules for the agent or not. The judge, in this case, held that in order to understand whether the secretary had the authority to buy the goods on credit from Shrinivasa the court has to look into and understand the authority given to the secretary in the books of the Constitution of the valappad co-operative society.

To which the rules in the Constitution of the valappad co-operative society is mentioned in the judgement "The Board shall appoint a paid secretary preferably from among the qualified candidates who have undergone training in any one of the co-operative framing institutions and shall fix the condition of his service including the security to be offered by.

He shall not be fined or otherwise punished except by the Board. In addition to such powers and duties as may be entrusted to him by the Board, he shall be responsible for the carrying on of the day-to-aay work of the stores on sound line (B) for checking the stock as often as possible and at least once in a month. For seeing that the accounts are maintained properly and all the books are written tip and posted upto date and for the safe custody of the stock in double lock."[2]

This case had to be decided on the basis of the actual authority of the agent as evidenced fly the bye-laws of the Society. the situation, in this case, was that the agent had the authority to carry on the business. Whether the existence of that authority was known to the person dealing with the agent or not, the agent must be deemed to have made a representation that he has authority under the bye-laws to carry on the business and purchase the goods on credit.

That he had the authority to carry on the business is clear from the bye-laws of the Society, but that he had the authority to purchase goods on credit is not clear. It is not mentioned in the bye-laws. Therefore the question is whether a person authorized to carry on the business of the Stores has got implied authority to purchase goods on credit."

Before this case reached to higher courts the lower appellate court had passed a judgement which was in favour of the plaintiff and said that the secretary bought the goods under his authority only and that the secretary being authority the society was bound by the working of him and hence was liable to pay for the goods purchased by the secretary on credit. The judge while giving the judgement referred to a lot of statements by learned scholars and provided their opinions to explain his stance on the case.

While referring to thought in line of Kredit-bank Cassel G.M.B.H. v. Schenkers Ltd[3]. He quoted "There must be reliance before the doctrine of estoppel can be invoked. The person who professes to set for the company makes an implied representation that he has authority so to do. In such a case the other party to the contract will run the risk of mere being no article."

While referring to Mr. J. H. Watts, the learned editor of Smith's Mercantile Law he successfully explained the difference between implies and ostensible authority of an agent. This was the base of the case and helped explaining in the judgement that the good purchase by the secretary on credit from the plaintiff was actually in accordance to the authority given to him by the society and that the society was bound to provide the defendant with the money as the secretary bought the goods on behalf of the society.

In my interpretation the court held that decision on the view that the secretary is liable for carrying on of the everyday work of the stores on sound lines, it was available to him to buy merchandise on loan assuming he so bought; it was restricted on the litigant. I believe that the conflict is sound. An individual having the obligation to carry on the matter of the Store and its everyday work on a sound line and who is additionally endowed with the chief business of the Society should be considered to have implied authority to buy merchandise using a credit card. The authority of an agent to tie the chief relies on the inquiry of whether the agent was acting in the normal course of his business.

For this situation the Society having endowed the running of the matter of the stores to the secretary, it should be taken that the secretary was depended with so many powers as were vital and common peak the carrying on of that business and it can't be said that the secretary was acting externally the extent of his authority when he bought the merchandise using a credit card.

It is insignificant that the Society had outfitted adequate assets to the secretary for buying merchandise since there is no proof to show that the offended parties knew about this reality. Assuming there is any mysterious limit on the typical and implied authority of an agent an outsider acting with honest intentions won't be found by that mysterious restriction.

For this situation as the bye-regulations approved the secretary to carry on the matter of the Stores and as the offended parties in selling the products using a credit card had not a great explanation to speculate that the general public had progressed assets to the secretary with which to buy merchandise, the Society was limited by the demonstration of the secretary.

Regardless of whether it be accepted that the secretary was submitting extortion off the general public, the general public will he bound given the secretary was acting in the common course of his work and that the offended parties had no information on the misrepresentation and hence on basis of this the court held that the judgement of lower appellant court was confirmed as well as right.

This was a very crucial case and judgement in analysing the importance of agent and his use of power. It is in cases like these only that we understand the importance of interpretation of law. like in this case the condition of purchasing products on credit was not mentioned in the by-laws of the society but the court had to interpret it on the basis of other lines provided in the by-law.

It was mentioned in the by-law that:
"In addition to such powers and duties as may be entrusted to him by the Board he shall be responsible for the carrying on of the day-to-day work of the stores on sound line"

Even though the by-law has not mentioned of secretary purchasing goods on credit basis still it can be interpreted that it was a on sound line and hence the society was bound to pay the amount to the plaintiff. The judge in this case brilliantly explained to us why and how the society was responsible and also set a great example for cases similar to these that will come to the court in future.

  • The Valapad Co-Operative Stores ... vs K.H. Srinevasa Iyer Brothers, ... on 18 February, 1963,, (last visited Mar 20, 2022).
  • The Valapad Co-Operative Stores ... vs K.H. Srinevasa Iyer Brothers, casemine (1963), (last visited Mar 21, 2022).

  1. AIR 1964 Ker 176
  2. AIR 1964 Ker 176
  3. (1927) 1 KB 826

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