Can a person dealing with the agent, sue the principal in a case where the agent is personally liable?

The question is primarily related to section 233 of the Indian contract Act, 1872. The section states that “in case where the agent is personally liable, a person dealing with him may hold either him or his principal, or both of them liable.”
The interpretation of this section clearly shows that the person may sue the principal to claim his right. The person going in contract with the agent have the right to sue any of them whether agent or principal. He may also sue both of them at the same time. This motive behind liability of principal is the agent work under the authority of his principal and so if he entered into any deal, the liability of principal will also arise.
Illustration: – A enters in contract with B, to sell him 100 bags of wheat, and later he discovers that B was acting as an agent for C. A, may sue either B or C, or both, for the price of wheat bags.
The Hon’ble Court in Calder v, Dobell, (1871), L.R.6 C.P.486, enumerated that “A person who has made a contract with an agent may, if and when he please, look directly to the principal, unless by the terms of the contract he has agreed not to do so, and that whether he was or was not aware when he made the contract that the person with whom he was dealing was an agent only, and not the less so in the case where the agent is personally liable, for the law which superadds the liability of the agent does not distract from the liability of the principal.
Similarly, the Hon’ble Court in Purmanudass v. Cormach (1881), 6 Bombay 326, said that a loan made to the secretary, treasurer and agent of a company authorized to raise money for the company may be recovered from the company.
Thus, a person dealing with an agent may sue the principal or agent, or both, in case where the agent is personally liable.
~ ASHISH RANJAN

Vicarious liability is that legal concept in torts which allows one party to be held liable, for the actions of another despite having no active involvement in that incident. The law of tort attaches a liability to a principal for the wrongful act of the agent on the ground that it’s the principal who has selected the agent. Agency is defined as the consensual relationship in which the principal appoints the agent to act in his behalf, primarily to make contracts between the principal and the third party. Example of principal-agent relationships include that of an attorney and his client, a contractor hired for repairs or an investment advisor for a businessman.

The liability between a principal and agent is joint as well as several. The injured party can sue only the principal or only the agent or both. For an agent to make the principal legally responsible for a wrongful act, it is necessary to show that:
• The act was committed by the agent in the course of his employment, even if the principal did not participate directly in the act or authorise it,
• That the act was beyond the scope of the agency, and was expressly ratified or authorised by the principal.
For example, X is a contractor who hires Y, a sub-contractor. Y is found performing the job inadequately. The contractor is held liable for the subcontractors actions, since he employed him.

The Bombay Court held that the test of agency is not physical control but the right to control. When a person does an act with the approval of the principal and that act specifically concerns the principal, he will be held liable for the agents actions. Even if the principal has the right to control, and not actual control of that particular act, he would be held responsible.
~ Vinisha Bhavnani

What is the Personal Liability of Principal and Agent – under the law of Torts.
The concept that is related to the liability between principal and agent is called vicarious liability. Vicarious liability is a concept where a person is liable for the actions of the others. This concept is quite controversial to the actual principle of the law of tort because it says that a person is liable only for the acts performed by him. Examples of various master-servant relationships can be partners of a partnership firm, company, and its directors, etc. In this case, the plaintiff can sue either the principal or the agent or both of them. So, the liability of the principal and agent is joint as well as individual. The principal becomes liable for the acts of the agent only if the act is performed under the scope of employment. For example, A works as a driver under QPR Travels. He was asked to drop ten passengers in a bus from Delhi to Ahmedabad but in the middle of the journey, the bus was looted by 3 robbers, and the passengers were ensured and guaranteed against the happening of such an event. In this case, the passengers can either sue the principal i.e., QPR travels, or the agent who is A or both of them. The other example can be, B is a partner in ABC Ltd. And he has the duty of updating the accounts from time to time about the petty expenses of the firm. In this, B added the amount he spent on buying a hand blender on credit for his own purposes, and upon the due of credit period, he refused to pay the amount saying everybody in the firm was entitled to pay the amount in their respective shares. But, since this is an act out of the scope of employment or the work allotted, the claim of B is wrong, and hence nobody but only he is liable to pay the full amount to the creditor.

– PREYANSI ANAND DESAI

The principal is generally liable for acts done by the agent within the principal’s authority. Under section 233 of the Indian contract act, 1872, even when the agent is personally liable, the third party can still go on to sue the principal, it is right of dealing with an agent personally liable, in case the agent is personally liable, and the persons deals with an agent, either the agent or principal becomes liable or both agent and principal can be held liable. If an agent enters a contract on his own, then the third party can hold him personally liable and the agent can also sue the third party, if the third party discovers the principal, under section 234 of the Indian contract act then the third party can sue both agent and principal or the liability can be sued individually. The liability of principal to the third parties comes when misrepresentation or fraud done by the agent at the time of contract, and the principal is liable at the time of existence of the contract and liable for the contracts made by his agent and neither principal existence nor undisclosed principal, then the agent can be sued personally. KUTTI KRISHNAN NAIR VS APPA NAIR in this case the plaintiff on a contract to supply timber and he sued two defendants principal and his agent but the liability of both principal and agent are not equal which has been taken from the case Morel brothers vs. the earl of Westmoreland. SK SIKKA VS HINDUSTAN PAPER CORPORATION LMTD, in this case, the supreme court stated that the plaintiff who has acted as an agent and has been founded that the agent has been playing fraud on the respondents and the court held the judgment under the provision of section 233 of Indian contract act, the defendants were held liable, and the repayment has to be done by principal or agent .so when an agent is personally liable, then the third party can still sue the principal.