' MUHAMMAD BASHIR KHAN JEHANGIRI, J.---This appeal, with the leave of the Court, has arisen out of the judgment of Lahore High Court dated 24-5-1992 whereby Regular Second Appeal No, 687 of 1971 filed by the petitioner-School through the Government of Punjab was dismissed.
2. Admitted facts of the case are that Isiah High School, Chiniot', was established by the Anjuman-i- Islah School, Chiniot' (hereinafter called as the appellant-Society). It was registered as a Society under the Registration of the Societies Act (XXI of 1860) on 5-3-1952. By virtue of a registered sale- deed dated 24-5-1967 one Nazir Hussain sold for an ostensible amount of Rs,10,000 his land measuring 42 Kanals and 5 Marlas situate in the Revenue Estate of Chiniot to Isiah High School, Chiniot, through Moulvi Muhammad Aslam Hayat who was perhaps then serving as a teacher in the School. Jawad Hussain, respondent, pre-empted the sale of the land aforesaid, The suit of the respondent-pre-emptor was decreed on merits by the judgment dated 14-3-1970 of the learned trial Judge. On appeal field by the appellant-School through Moulvi Muhammad Aslam Hayat the suit was remanded on 11-6-1970 by the learned Additional District Judge, to the learned Civil Judge on the ground that the learned Trial Court who had decreed the suit on 14-3-1970 lacked pecuniary jurisdiction. During the pendency of the suit after remand, the parties entered into a compromise and in support thereof statements of the plaintiff and Moulvi Muhammad Aslam Hayat on behalf of the appellant-School were recorded whereby it was agreed that the suit should be dismissed in respect of land measuring 11 Canals and 13 Marla's described in the order of the learned Civil Judge and should be decreed as regards the remaining land on payment of Rs,1,200. Styling himself as the Secretary of the appellant-School, one Feroz Khan Dard, filed an appeal substantially challenging the authority of Moulvi Muhammad Aslam Hayat for compromising the suit. The learned District Judge dismissed the appeal holding that" the suit had throughout been defended by Moulvi Muhammad Aslam Hayat and that it was not pleaded in the written statement that the suit had been instituted through an improper person." The learned District Judge also noticed that in the memorandum of appeal, it was nowhere asserted that Feroz Khan Dard had an authority to file an appeal. The learned District Judge was further of the view that the decree impugned before him was a consent decree and, therefore, no appeal was competent under section 96 (3) of the Civil Procedure Code. The contention raised before the District Judge that position of the Society being akin to that of a minor and, therefore, it was for the Collin to safeguard its interest was repelled saying that the act and conduct of Moulvi Muhammad Aslam Hayat was binding on the appellant" as he had no reason to believe that he had acted mala fide or with gross negligence.
3. In the Regular Second Appeal, the learned Judge in Chember of the' High Court, apart from adopting the reasoning that weighed with the learned District Judge, further held that neither any proof of the School being a registered Society was brought on the file of the learned District Judge nor was there anything to show that Feroz Khan Dard was the Secretary of the Society nor on the file of the High Court any such document was placed. It was, however, conceded that a copy of the resolution dated 12-8-1971 authorising Feroz Khan Dard Secretary of the School to file appeal has been brought on the record of the regular second appeal. Resultantly, the learned Judge concluded that--- "In these facts, the appellant-school is, in my view, not entitled to succeed on the ground that Moulvi Muhammad Aslam Hayat had no authority to act on behalf of the school. In the absence of anything to show that the school is a registered society, the inference may well be that the school was being run by Moulvi Muhammad Aslam Hayat; and in view of the admitted facts that the land was purchased for the school by Moulvi Muhammad Aslam Hayat, that it was he who had paid the sale consideration and that it was he who had defended the suit on all possible grounds till the decree dated 2-3-1971, it is, in my opinion, too late in the day to countenance the plea that he had no authority to act on behalf of the school."
4. In consequence, the Regular Second Appeal was dismissed.
5. Mr. Muhammad Yawar All Khan, Additional Advocate-General, Punjab, for he appellant, contended that the learned Courts below while determining the status of a School had failed to realize that Islah High School as described in the plaint was not shown to be "a juristic person, therefore, it was not possible to hold that Moulvi Muhammad Aslam. Hayat was competent as its next friend." According to him, it was incumbent upon the learned lower Courts to notice that the Secretary of such body could competently act for the School allowing Moulvi Muhammad Aslam Hayat to defend the suit and having omitted to do so it was tantamount to perpetuating an illegality. The learned Additional Advocate-General further maintained that even in cases where next friends were appointed after satisfying that they had no interest adverse to that of the party defended by them and the compromise cases were scrutinized under Order XXXII, C.P.C. To the cases of ,minor and that on that analogy no such scrutiny was made in the instant case thus allowing Moulvi Muhammad Aslam Hayat "to play treacherous to the School."
6. As against this, Mr. Azam Rasool, learned counsel for the respondent, invoked the provision of section 188 of the Contract Act (IX of 1872) and urged that where a person contracts to do something on behalf of another person although acting beyond the scope of his authority, the principal, viz., the person on whose behalf he is acting is liable for the acts of his authorized agent.
In support of this proposition reliance was placed on, Nabagopal v. D. Coop. T. Bank Ltd. (1 D.R.).
7. Section 188 of the Contract Act reads as under:-- "188. Extent of agent's authority.---An agent, having an authority to do an act, has authority to do every lawful thing which is necessary in order do such act.
' An agent, having an authority to carry on a business, has authority to do every lawful thing necessary for the purpose, or usually done in the course of conducting such business."
' In this section the extent of agent's authority has been circumscribed. The agent with authority to do an act---
(i) has authority to do every lawful thing,
(ii) which is necessary to do such act. (Underlining is ours).
' When the agency is for carrying on a business the same principles apply under this section i,e,, the agent has all authority to do every lawful thing which is necessary or isusufal for the purpose of conducting the business. (Again underlining is for emphasis).
8. To our mind, the provision of Section 187 ibid could be read in conjunction with Section 188 of the Contract Act, 1872 which is to the following effect:- "187. Definitions of express and implied authority.---An authority is said to be express when it is given by words spoken or written. An authority is said to be implied when it is to be inferred from the circumstances of the case, and things spoken or written, or the ordinary course of dealing, may be accounted in circumstances of the case."
' Under Section 187 supra an agent's authority may be--
(i) express, that is, when it is given by words spoken or written;
(ii) implied, that is, when it is left to be inferred from circumstances of the case or the course of dealing's. Between the parties."
' When he was confronted with this provision, the learned counsel for the respondent argued that the appellant-Society having acquiesced in the conduct of Moulvi Muhammad Aslam Hayat to act as an agent by raising no objection to the purchase of land, therefore, he acted on behalf of the School by engaging a counsel to defend the pre-emption suit and filing an appeal against the pre-emptor-appellant and, therefore, it was estopped from denying its conduct as an agent. The learned counsel has perhaps invoked what in legal parlance is called 'agency by estoppel'. . This arises when one person puts another in such a position as .To lead other persons to think that they are entitled to treat the second person as authorized to act as agent for the first person in respect of a certain class of business. Here the first person is estopped from denying to those who have acted on behalf of the second person on whose belief he has by his conduct thus induced that second person was in fact his agent. .
9. It would be worthwhile to determine at the outset the status of the appellant-School. It is not denied that the appellant-School was being run by Anjuman-i-Islah High School. The Registration Certificate placed on the file of this Court manifests that the Anjuman was duly registered under section 1 of the Societies Registration Act (XXI of 1860) to be hereinafter called as the Act). Under section 5 of the Act the property, movable and immovable, belonging to a society, if not vested in the trustees, shall be deemed to be vested for the time being in the governing body of such society, and in all proceedings civil and criminal, may be described as the property of the governing body of such society by their proper title.
1,0. One significant consequence flowing from the registration of the society is that under section 6 of the Act it may sue or be sued in the name of the president, chairman or principal secretary or trustees, as shall determine by the rules, regulations or bye-laws of the Society and in default of such determination, in the name of such person as shall be appointed by the governing body for the occasion. The governing body has been defined under section 16 of the Act as under:-- "The governing body of the society shall be the governors, council, committee, trustees, or other body to whom by the rules and regulations of the society management of its affairs is entrusted?
' It would thus be seen that the land in dispute purchased for the Islah School through Moulvi Muhammad Aslam Hayat vested under section 5 ibid in the Anjuman-e-Islah High School, Chiniot.
Similarly the suit for pre-emption giving rise to this appeal should also have been brought against the said Anjuman. Initially the maintainability of the suit, in the circumstances, was not above board:
11. Be that as it may and ignoring the technicality of maintainability of the suit, let us appreciate the respective contentions of the parties.
12. The appellant-Society had styled itself to be juridical person having authorized Moulvi Muhammad Aslam Hayat to be its agent by necessary implication perhaps to purchase the land for its user by its School and further to defend the suit for pre-emption and file the appeal. This implied authority of the agent was so far so good but beyond that i,e, to enter into a compromise in the suit to the extent of surrendering a big of chunk of land for a nominal consideration was unwarranted. . He had no right of his own in the land and whatever he had done prior to the court 'promise could not justify his act of surrendering the rights of his principal in the land without due recourse of its bye-laws which have been placed on the record of this Court. Under the bye-laws it was the Managing Committee of the Society to have resolved to compromise the suit. There is nothing on the record to suggest that any such resolution was adopted by the appellant in favor of Moulvi Muhammad Aslam Hayat. .
13. It has clearly been pointed out that the Society in consequence of registration under the Act would be deemed to be a club or corporation. In such a situation the following passage from Halsbury's Laws of England, Volume I (1952) Third Edition, para. 386 at pages 164-165 may be referred to:-- "386. Necessary and incidental acts. The implied authority of an agent extends to all subordinate acts which are necessary or ordinarily incidental to the exercise of his express authority. It does not, however, extend to acts which are outside the ordinary course of his business, or which are neither necessary nor incidental to his express authority.
' The manager of a business has authority to do all acts necessary to the regular conduct of the business, but he has no implied authority to borrow money; nor has a servant, merely from the fact of service, authority to pledge his master's credit. In certain cases, however, an agent has implied authority to pledge his principal's credit, e.g., the general manager of a railway company for medical attendance to a of the company, of the matron of a hospital, as agent of the managing committee, for meat supplied to the hospital."
' Halsbury quotes the following cases in support of the principle enunciated by him. See Re: (i)
Woodin v. Burford (1834), 2 Cr. & M. 391), (ii) Said v. Butt (1920) 3 K.B. 497), (iii) Keen v. Mear (1920 2 Ch. 574) and (iv) Keen v. Mear (1920) 2 Ch. 574; of. p. 167, post).
' Again Bowstead's enunciation on Agency (1959 Edition) under Article 38 at page-56 is as under:-- "Every agent who is authorised to conduct a particular trade or business, or generally to act for his principal in matters of a particular nature, or to do a particular class of acts, has implied authority to do whatever is incidental to the ordinary conduct of such a trade or business, or of matters of that nature, or is within the scope of that class of acts, and whatever is necessary for the proper and effective performance of his duties; but not to do anything that is outside the ordinary scope of his employment and duties."and in support thereof he relied on the following case-law: (58) Re Williams, ex p. Howell (1865); Peers v. Sneyd (1853) 17 Beay. 151; Jones v. Phipps (1868) L.R. 3 Q.B. 567; Wabber v. Granville (1860) 30 L.J.C.P. 92, (59) Langan v. G.W. Ry. (1874) 30 L.T. 173, Exh. Ch. And (60)
Linford v. Provincial etc., Ins. Co. (1864) 34 Beay. 291; Cox v. Midland Ry. (1849) 3 Exh. 268; Kreditbank Cassel v. Schenkers (1927) 1 K.B. 826, CA. Illustrations 2 and 11 to 18.
14. .The case of Nabagopal supra which had construed the provisions of section 188 ibid, is, therefore, distinguishable from the facts of the instant case. It should be understood that merely because an agent is entrusted with a certain work, the principal is not in any way prevented from asserting that the agent had acted in excess of authority and in a manner prejudicial to the principal. A third party has a remedy against the principal for the acts of his agent provided he proved that the agent had acted wholly within the scope of his authority or ostensible authority held or exercised by the agent. (Again underlining is for emphasis). Undoubtedly in the absence of a written authority, law gives an inference of implied authority from the situation of the respective parties, the circumstances of the case, the conduct of the principal and the usage obtaining in the course of dealing etc. When these tests are made applicable to the instant case, we are constrained to hold that Moulvi Muhammad Aslam Hayat was not clothed with any such authority to compromise the dispute with the respondent to the extent of surrendering a big chunk of land for a nominal price. It ostensibly operated against the interest of the appellant-School.
15. In the light of what has been discussed above, we are of the considered view that the learned First Appellate Court as also the learned Judge in Chamber of the High Court had erred to hold that Moulvi Muhammad Aslam Hayat had not exceeded his limited implied authority to compromise the case to the extent of surrendering a substantial parcel of land in dispute for a very negligible price. We would accordingly accept this the judgment of the learned High Court and remand the case to the learned Senior Civil Judge concerned to try the suit himself or entrust it to another experienced Civil Judge having jurisdiction in the matter. Since the matter is very old, the learned trial Judge shall dispose of the case within three months. In the peculiar circumstances of the case, the parties are left to bear their own costs. .