Section 192 of ICA : Section 192: Representation Of Principal By Sub-Agent Properly Appointed

Explanation using Example

Imagine Mr. Sharma, who owns a large textile business, hires Mr. Gupta as his agent to manage certain transactions. Mr. Gupta, with Mr. Sharma's consent, appoints Ms. Iyer as a sub-agent to purchase cotton from farmers. Ms. Iyer, acting within the scope of her authority, enters into contracts with the farmers and purchases cotton on behalf of Mr. Sharma.

In this scenario, Mr. Sharma is bound by the actions of Ms. Iyer as if he had appointed her himself, because Mr. Gupta properly appointed her as a sub-agent. If Ms. Iyer makes any decisions that are detrimental to Mr. Sharma's business, Mr. Gupta is responsible to Mr. Sharma for those actions. However, Ms. Iyer is responsible to Mr. Gupta for her actions and not directly to Mr. Sharma, unless she commits fraud or a wilful wrong.