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Section 233: Right of person dealing with agent personally liable

Indian Contract Act • Official Statutory Text & Practice Guide

Statutory Regulation
Legal Standard
Competent Court / Tribunal
Act 1872
Section 232 All 266 Sections of Indian Contract Act Section 234

Legal Commentary & Landmark Judgments: Section 233

Section 233 confers upon the third party a right of dual recourse where an agent is personally liable, entitling the third party to hold either the agent, or the principal, or both of them liable, creating joint and several liability.

  • Dual Recourse of Third Party: Where the agent has incurred personal liability under contract or under Section 230, the third party is not forced to make a pre-suit election between them.
  • Joint and Several Liability: The creditor may file a single suit joining both principal and agent as co-defendants, seeking a decree against either or both under Order I Rule 3 CPC.
  • Satisfaction Rule: While both may be held liable, the creditor cannot obtain double satisfaction; recovery from one discharges the obligation pro tanto against the other.
Key Landmark Precedents:
  • Firm of K.V.V. v. Firm of P.L.A. AIR 1941 Mad 737: The Madras High Court held that under Section 233, a third party is entitled to sue both principal and agent together and obtain a decree against both, where the agent has made himself personally liable on the contract.
  • Morel Brothers & Co. Ltd. v. Westmorland [1904] AC 11: The House of Lords clarified that entering final judgment against an agent operates as a conclusive election barring subsequent enforcement against the principal where liabilities are purely alternative.
  • Narandas v. Papammal AIR 1967 SC 333: The Supreme Court recognized the joint and concurrent liabilities of commercial agents and principals in commission agency and export dealings.
Courtroom Practice & Strategic Litigation Guidance:

In drafting commercial recovery suits where the agency status or authority might be contested at trial, always implead both the principal and the agent as co-defendants under Section 233 read with Order I Rule 7 CPC to prevent a total non-suit if authority is successfully disclaimed.

Section 232 All 266 Sections of Indian Contract Act Section 234