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Section 229: Consequences of notice given to agent

Indian Contract Act • Official Statutory Text & Practice Guide

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Act 1872
Section 228 All 266 Sections of Indian Contract Act Section 230

Legal Commentary & Landmark Judgments: Section 229

Section 229 enacts the doctrine of imputed notice, dictating that notice given to, or information obtained by, an agent in the course of transacting the principal's business has the identical legal effect between the principal and third parties as if given to or obtained by the principal in person.

  • Doctrine of Imputed Knowledge: Information, caveats, warnings, and statutory notices received by an agent are conclusively imputed to the principal under the legal fiction of unity of principal and agent.
  • Requirement of 'Course of Agency Business': Notice binds the principal only if acquired during the actual course of handling the specific business to which the notice relates; casual knowledge obtained outside employment or prior to the agency does not bind.
  • Fraud Exception (Kennedy v. Green Rule): Imputed notice does not apply where the agent acts in deliberate fraud of the principal and deliberately conceals information to perpetrate his own crime or fraud.
Key Landmark Precedents:
  • Mohori Bibee v. Dharmodas Ghose (1903) 30 IA 114: The Privy Council held that where an attorney acting for a money-lender had notice of the borrower's minority, that knowledge was legally imputed to the lender under Section 229, defeating the claim of bona fide lender without notice.
  • State Bank of India v. Smt. Shyama Devi (1978) 3 SCC 399: The Supreme Court recognized that an employee's private fraud and unauthorized receipt of cash outside banking hours cannot be imputed to the bank under Section 229 principles.
  • Bhavani Amma v. Narayana Pillai AIR 1957 Ker 147: The Kerala High Court held that notice of an existing prior agreement to sell given to an authorized purchasing agent constitutes notice to the purchaser principal under Section 229.
Courtroom Practice & Strategic Litigation Guidance:

When seeking to fix constructive notice of title defects, encumbrances, or lease terminations on a corporate principal, establish service on its authorized manager, attorney, or procurement agent. In defense, invoke the fraud exception by proving collusion between the third party and the agent.

Section 228 All 266 Sections of Indian Contract Act Section 230