The bench comprising of Justice Sanjiv Khanna and Justice SVN Bhatti, after referring to Section 182 of the Contract Act, 1872 stated:
1. The essential characteristic of an agent is the legal power vested with the agent in order to alter his principal's legal relationship with a third party and the principal's co-relative liability to have his relations altered.
2. As the agent acts on behalf of the principal, one of the prime elements of the relationship is the exercise of a degree of control by the principal over the conduct of the activities of the agent.
Thus, this degree of control is less than the control which is exercised by the master on the servant, and it being different from the rights and obligations in case of principal-to-principal and independent contractor relationship.
3. The task entrusted by the principal to the agent should result in a fiduciary relationship. Thus, the fiduciary relationship is the manifestation of consent by one person to another to act which being on his or her behalf and subject to his or her control, and the reciprocal consent by the other in order to do so.
4. As the business is done by the agent is on the account of principal's, the agent is liable to render accounts thereof to the principal. Thus, the agent is being entitled to remuneration from the principal for the work he performs for the principal.
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