dedol-hf/india-case-legal-rag huggingface dataset:
"I/we  have this day sold/bought for you in Bombay  sub-
ject to the following conditions and to the Bye-laws of  the
East  India Cotton Association Ltd., in force from  time  to
time  and subject also to my/our usual charges and terms  of
business as Commission Agents."
    Then  are   inserted  particulars  of  the  description,
quantity, price etc., of the cotton which is the subjectmat-
ter of the contract.  Then follows the clause for payment of
margin,  the last sentence of which provides for payment  of
deposit payable under bye law 51-A as amended, namely, at  a
rate  not less than Rs. 121/2 per bale.  At the end  of  the
form  are  to be found the two new clauses  required  to  be
incorporated in every Contract Note by the Government  Noti-
fication already referred to.
    The  Contract Notes actually rendered by the  Appellants
to the Respondent, however,. were in forms, a specimen  copy
whereof  is  set out at pages 12--15 of the Paper  Book.   A
comparison  of  the  two forms of the  contract  notes  will
reveal the following differences :-
    (1)  In the contract note rendered by the Appellants  to
the  Respondent the last sentence providing for  deposit  at
the end of the margin clause is missing. There is,  however,
a  rubber  stamp impression on the top of the  back  of  the
contract to the following effect :--
    "In  addition  to the above, the deposit  (not  carrying
interest) payable under bye-law 51-A, namely, at a rate  not
less  than Rs. 25 per bale shall, when demanded, be made  by
you to me/us in Bombay."
    Evidently, this rubber stamp provision is a reproduction
of  the  sentence that used to be found at the  end  of  the
margin clause before bye-law 51-A was amended and the clause
itself was amended by the Government Notification of 1944.
71
(2) The two new clauses required to be inserted in the  con-
tract referred to above have also been omitted.
The  contention of the respondent was that  the  contract
notes  actually issued were not in accordance with the  bye-
laws  of  the Association and were  accordingly  void  under
Section  8  of the Bombay Cotton Contracts  Act,  1932,  and
that, that being so, the arbitration agreement  incorporated
in  the  contract note was also void and there could  be  no
reference  to  arbitration and there could be  no  award  as
purported  to have been made by the arbitrators on a  refer-
ence under the void contracts.
    The  matter  was dealt with by Mr.  Justice  Chagla  who
overruled  the contentions of the Respondent  and  dismissed
the application on 2nd  July 1946.  The learned Judge point-
ed  out that whereas bye-law 80 required that delivery  con-
tracts must be made on the official form and that the  hedge
contracts,  when made in writing, must be made in  the  form
given  in the Appendix, clause 82 did not require  that  the
contracts between members acting as commission agents on the
one  hand  and their constituents on the other  must  be  in
writing  or  in particular form.  According to  the  learned
Judge bye-law 82  required  two things, namely :-
(i)  that  the contracts referred to therein  should  be
made subject to the bye-laws, and
    (ii) that a contract note in the prescribed form  should
be rendered in respect of every such contract.
    The  learned Judge was of the opinion that section 8  of
the  Bombay  Cotton Contracts Act, 1932,  only  avoided  the
contracts  i.n case of contravention of the  first  require-
ment, namely, if the contracts were not made subject to  the
bye-laws,  but had no concern with the contravention of  the
second  requirement, namely, if the contract notes were  not
in  the prescribed form. The learned Judge appears  to  have
made  a distinction between a contract and a  contract  note
which was a mere evidence of the contract. According to him,
even  if the contract note was not in the  prescribed  form,
that fact did not affect the pre-existing contract which had
only to be made subject to the bye-laws but need not have
10
72
been made in writing at all. Accordingly, the learned  Judge
dismissed the application.
    Being aggrieved by that decision, the Respondent went up
on  appeal which was heard by Stone C.J. and Coyajee J.  who
accepted the appeal, set aside the dismissal of the Respond-
ent's petition and  gave  the declaration prayed for and set
aside the award.  The Appellants have now come up on  appeal
before  us after having  obtained the necessary  certificate
from the Bombay High Court.
    We find ourselves in agreement with the decision of  the
appellate  Court.  Ordinarily, when a contract  between  the
parties  is  reduced  to writing, the  writing  becomes  the
repository  of  the contract and that writing  only  can  be
looked at to ascertain what the contract between the parties
is,  and if that writing is not in accordance with the  bye-
laws, the contract itself must be void.  We do not, however,
feel  pressed to emphasize this aspect of the  matter,  for,
assuming that there was a pre-existing oral contract between
the  parties  dehors the written contract note, as  held  by
Chagla  J.  we have yet to see whether  the  so-called  pre-
existing oral contract was in accordance with the  bye-laws,
for if it were not, then it would be hit by section 8 of the
Bombay  Cotton Contracts Act, 1932.  There is no  suggestion
that 'the terms of the so called pre-existing oral  contract
were  in any way different from the terms  subsequently  re-
corded in the contract notes actually issued.
In the first place we find that the last sentence in the
margin  clause, in order to be in accordance with  the  bye-
laws, should have been as follows :-
    "In  addition  to the above, the deposit  (not  carrying
interest) payable under bye-law 51-A, namely, at a rate  not
less  than Rs. 121/2 per bale shall, when demanded, be  made
by you to me/us in Bombay."
    Instead  of  that  sentence, we have  the  rubber  stamp
impression reading as follows :-
    "In  addition  to the above, the deposit  (not  carrying
interest) payable under bye-law 51-A, namely, at a
73
rate not less than Rs. 25 per bale shall, when demanded,  be
made by you to us in Bombay."
    The respondent contends that this term is not in accord-
ance  with the bye-laws of the Association.  The  Appellants
on  the  other hand contend that there  is  no  discrepancy,
because a provision for a rate not less than Rs. 25 per bale
does  not contravene or is not inconsistent with the  provi-
sion for a rate not less than Rs. 121/2 per bale.  In  other
words, any rate above the rate of Rs. 121/2 may be stipulat-
ed  in  accordance with the terms of business to  which  the
contract was subject, for it did not contravene the require-
ment that the rate should not be less than Rs. 121/2. It  is
true that the opening clause of the contract note makes  the
contract subject to the Appellants' usual charges and  terms
of business, but the contract is at the same time subject to
the bye-laws of the Association.  In order to reconcile  the
two, such terms of business as are not inconsistent with the
bye-laws can only be permitted to prevail.  The rubber stamp
provision clearly imposes on the respondent as the constitu-
ent the liability to deposit a higher amount as the  minimum
amount to be deposited and is to that extent not in  accord-
ance with bye-law 51-A.  Apart from this consideration there
is another serious objection to the rubber stamp  provision.
The  language of that rubber stamp provision  clearly  indi-
cates  that  it purports to summarise and set  out  what  is
payable   under   bye-law   51-A.  In   fact,   as   already
stated,above,  bye-law  51-A had been amended  and  what  is
payable under the amended' bye-law is not at a rate not less
than  Rs. 25 but at a rate not less than Rs.  121/2.  There-
fore, the rubber stamp provision wrongly summarises and sets
out  the provisions of bye-law 51-A and consequently is  not
in accordance with that bye-law.
    The contention of the Respondent has been and is that by
reason of the omission of the two clauses at the end of  the
contract  note actually issued by the Appellants it was  not
in accordance with the bye-laws. The learned Attorney-Gener-
al  appearing for the Appellants contends that the  contract
was expressly made subject
74
to  the bye-laws and, therefore, the provisions of  the  new
bye-law 65-A were by reference incorporated in the contract.
This  contention, we are satisfied,  is   unsound.   Bye-law
65-A in terms regulates the relationship between members and
incorporation thereof in   a contract between a member agent
and  an outsider   constituent will make no sense and  on  a
plain reading   will be meaningless.  Further, under bye-law
65-A   the last buyer has certain options.  The  outstanding
contract  being one for purchase of 900 bales, the    Appel-
lants,  if they became the last buyers, could,   under  that
bye-law,  exercise any of those options at   their own  dis-
cretion.  In the second of the two clauses   which have been
omitted  from the contract note this   option has been  made
subject to express instructions of   the constituent to  the
contrary,  for it provides that   the Appellants  as  agents
would be free to exercise their option--
   "unless  I/We  shall have received  express  instructions
from you in writing to the contrary, before the    commence-
ment  of  the delivery period if the contract  is    entered
into  before  the commencement of the delivery    period  or
with the order if the contract is entered into   during  the
permitted days of trading in the delivery   period."
   By reason of the omission of the two clauses, this  right
of the Respondent as constituent is not made a term of   the
contract between the parties.  It follows, therefore,   that
the so-called pre-existing oral contract is not in   accord-
ance with the bye-laws on this ground also.
For  reasons stated above, this appeal fails and must    be
dismissed with costs.
   PATANJALI SASTRIJ.---I agree that this  appeal  should be
dismissed with costs, but I would prefer to   rest my  deci-
sion  solely on the ground of the omission   to  include  in
the  contract in question the two clauses   newly  added  in
the  prescribed  form in order to give   effect  to  bye-law
65-A.        Appeal dismissed.
Agent for the appellants, Rajinder Narain.
Agent for the respondent: M.S.K. Sastri.
75
PETITIONER:
ABDULLA AHMED
        Vs.
RESPONDENT:
ANIMENDRA KISSEN MITTER.
DATE OF JUDGMENT:
14/03/1950
BENCH:
SASTRI, M. PATANJALI
BENCH:
SASTRI, M. PATANJALI
DAS, SUDHI RANJAN
KANIA, HIRALAL J. (CJ)
FAZAL ALI, SAIYID
MAHAJAN, MEHR CHAND
CITATION:
 1950 AIR   15            1950 SCR   30
 CITATOR INFO :
 F          1975 SC  32  (19)
 E          1980 SC  17  (36)
 E          1990 SC1833  (17)
ACT:
Contract Agency Estate  broker--Authority to negotiate a
sale'  and'secure  purchaser '--Whether empowers  broker  to
conclude contract--Construction of contract--Broker  finding
ready  and willing to buy for price fixed by principal  con-
cluding  contract with same purchase for lower  price  -Bro-
ker's right to commission -power of agents.
                principal--Principal
HEADNOTE:
      The  appellant, an estate broker, was employed by  the
respondent  by a letter dated 5th May, 1943, to negotiate  a
sale  of  certain  property on the ,,terms  mentioned  in  a
commission  note  which ran as follows:  I   .....do  hereby
authorise  you  to  negotiate the sale of  my  property  27,
Amratolla Street, free from all encumbrances at a price  not
less  than Rs. 1,00,000.  I shall make out a good  title  to
the  property.  If you succeed in securing a buyer  for  Rs.
1,00,000,  I shall pay you Rs. 1,000 as  your  remuneration.
If  the price exceeds Rs. 1,05,000 and does not  exceed  Rs.
1,10,000,  I  shall  pay you the whole of  the  excess  over
Rs.1,05,000 in addition to your remuneration of Rs. 1,000 as
stated  above.   In case you can secure a buyer at  a  price
exceeding Rs. 1,10,000, I shall pay you twenty-five percent.
of  the excess amount over Rs. 1,10,000 in addition to  Its.
6,000 as stated above.  This authority will remain  in force
for  one  month from date."  In pursuance of  this  contract
the  appellant found two persons ready and willing  to  pur-
chase  the property for Rs. 1,10,000 on the 2nd June and  by
letters  exchanged  with them he purported to  conclude  the
contract  for the sale of the propertY, and on the 3rd  June
communicated  the same to the respondent.   The  respondent,
however, cancelled the authority of the appellant on the 9th
June and on the same date entered into an  agreement with  a
nominee  of  the said persons for a sale of the property Rs.
1,05,000  and eventually executed    a conveyance  in  their
favour  for Rs. 1,05,000.  The appellant instituted  a  suit
against the respondent for Rs. 6,000.
    Held, per KANIA C.J., FAZL ALl, PATANJALI SASTRI and DAS
JJ.--(i)  that  a house or estate agent is  in  a  different
position  from a broker at the Stock Exchange owing  to  the
peculiarities of the property with which he has to deal, and
an  owner employing an estate agent should not, in  the  ab-
sence of clear words to that effect, be taken to have autho-
rised  him to conclude a contract of sale; but the  lack  of
such  authority  is not inconsistent with  an  understanding
that  the  agent  is not to be entitled  to  his  commission
unless the owner and the purchaser introduced by the agent
31
carried the transaction to completion; (ii) that even if the
commission note in the present case were to be construed  as
making  payment of commission conditional on the  completion
of  the  transaction, the appellant having  "negotiated  the
sale "and "secured buyers" who made a firm offer to buy  for
Rs.  1,10,000, acquired the right to the payment of  commis-
sion  on the basis of that price subject only to the  condi-
tion  that  the buyers should complete  the  transaction  of
purchase and sale;  and as this condition was fulfilled when
the  buyers eventually purchased the property  in  question,
the  appellant's  right to commission on that  basis  became
absolute, and could not be affected by the circumstance that
the respondent for some reason of his own sold the  property
at a lower price.
   MAHAJAN J.--Under the terms of the commission note in the
present  case  the appellant had authority to enter  into  a
binding contract on behalf of the defendant, and, as he  had
entered into such a contract he was entitled to the  commis-
sion  of Rs. 6,000 according to the terms of the  commission
note.   Even conceding that he had no such authority,  under
the  terms of the commission note the agent was entitled  to
his remuneration as soon as he introduced a buyer ready  and
willing to purchase for the price fixed by the owner, wheth-
er the owner completed the transaction or not.
   Luxor  (Eastbourne)  Ltd. v. Cooper (  [1941]  A.C.  108)
distinguished.
  Chadburn  v.  Moore (67 L.T. 257), Rosenbaum v.  Belson  (
[1900]  2 Ch. 267), Durga Charan Mitra v. Rajendra  Nararain
Sinha  (36 C.L.J. 467), Wragg v. Lovett ([1948] 2. All  E.R.
969) referred to.
JUDGMENT:
   APPEAL  from the High Court of Judicature at  Cal  cutta:
Civil Appeal No. XLIV of 1949.
   This  was an appeal by special leave from a judgment  and
decree of the High Court of Judicature at Calcutta  (Hatties
C.J. and Mukherjea J.) dated 5th January 1948 which varied a
judgment  passed by a single Judge sitting on  the  Original
Side  of  the same High Court (Gentle J.) dated  11th  June,
1945. The facts of the case and the arguments of the Counsel
appear fully in the judgment.
M.C. Setalvad (A. K. Sen with him),    for the
appellant.
B. Sen, for the respondent.
    1950.  March 14.  The judgment  of Kania C. J, and  Fazl
Ali, Patanjali  Sastri and Das JJ., was delivered by  Patan-
jali Sastri J.: Mahajan J. delivered a separate judgment.
32
PATANJALI SASTRI J.--This is an appeal by special leave from
a judgment and decree of the High Court    of Judicature  at
Fort William in West Bengal dated 5th January, 1948,   which
varied  a  judgment and decree passed by a single  Judge  on
11th June, 1945, on the Original Side of the same Court.
    The  appellant who is carrying on business as an  estate
broker  in  Calcutta was employed by the respondent  on  the
terms  mentioned in a commission letter dated the  5th  May,
1943, to "negotiate the sale" of premises No. 27,  Amratolla
Street,  Calcutta, belonging to him.  In pursuance  of  this
contract the appellant found two persons who were ready  and
willing  to purchase the property for Rs. 1,10,000,  and  by
letters exchanged with them on 2nd June, 1943, he  purported
to  conclude  a contract for the sale of  the  property  and
communicated the same to the respondent by a letter of  even
date.  The respondent, however, entered into an agreement on
9th  June, 1943, with a nominee of the said persons for  the
sale of the property for Rs. 1,05,000 and eventually execut-
ed a conveyance in their favour on 8th December, 1943.
    Thereupon  the appellant brought the suit alleging  that
the  contract concluded by him with the purchasers  for  Rs.
1,10,000 on the 2nd June, 1943, was binding on the  respond-
ent  and claimed that he was entitled to the payment of  Rs.
6,000  as remuneration in accordance with the terms  of  his
employment as he had done all that he was required to do  on
behalf of the respondent.  In the alternative he claimed the
same  sum as damages for breach of contract.  In defence  to
the suit the respondent pleaded, inter alia, that the appel-
lant  had  no authority to conclude a binding  contract  for
sale  with any one, that the purchasers refused to  complete
the  transaction alleging that they had been induced by  the
fraudulent misrepresentation of the appellant to agree to  a
price of Rs. 1,10,000, that the subsequent sale was effected
independently  of the appellant, and that the appellant  was
not therefore entitled to any remuneration or damages,
33
     Gentle  J. who tried the suit found that the  terms  of
the appellant's employment did not authorise him to conclude
a  contract of sale and that the letters of 2nd June,  1943,
did not effect a contract of sale binding on the respondent.
The  learned Judge, however, rejected the respondent's  case
that the purchasers refused to purchase on the ground of any
fraudulent  misrepresentation by the appellant and that  the
negotiations were later resumed afresh directly between  the
respondent  and the purchasers, and came to  the  conclusion
that  the agreement to sell of the 9th June, 1943,  and  the
subsequent conveyance of 8th December, 1943, were due solely
to  the  efforts of the appellant in  bringing  the  parties
together  as potential buyers and seller. The learned  Judge
refused  to accept the suggestion that the sale was in  fact
effected  for  Rs. 1,10,000 as not being  supported  by  any
evidence but found that the  reduction  of  the price by Rs.
5,000 from Rs. 1,10,000 for which the purchasers were  ready
and  willing  to  buy the property, was made  only  for  the
purpose  of depriving the appellant of his legitimate  remu-
neration of Rs. 6,000.  He accordingly held that the  appel-
lant, who had performed his part of the contract by  finding
two  persons who were ready, able and willing to buy at  Rs.
1,10,000 was entitled to the commission claimed.
The  Division  Bench (Harries C.J. and Mukherjea  J.)  which
heard  the appeal of the respondent, agreed with  the  trial
Judge  that the appellant's authority did not extend to  the
concluding  of a binding contract for sale of the  property,
but  differed from his view that all that the appellant  was
required  to do was to introduce a purchaser who  was  ready
and willing to buy for Rs. 1,10,000 and that he was entitled
to  his commission whether or not the property was  sold  at
that price or at all.  They held, following certain observa-
tions of Lord Russell of Killowen and Lord Romer in the case
next  mentioned,  that the appellant, having  undertaken  to
"negotiate  the sale" and to "secure a buyer", could not  be
said  to have either secured a buyer or negotiated the  sale
"unless the sale actually took place or at least a  contract
had been entered into ".  As,
34
however,  a sale did take place between the persons in  pro-
duced by the plaintiff and the defendant, and as that  sale,
in  the  view also of the learned Judges,  was  the  "direct
result of the plaintiff's negotiations", they held that  the
appellant  was entitled to commission but only on the  price
mentioned in the sale deed, namely,Rs. 1,05,000 which,  they
found was the price actually received by the respondent.  As
to  why  the respondent accepted a  reduced  price,  Harries
C.J.,  who  delivered the judgment of the  Court,  observed:
"All  that is known is that persons who undoubtedly  made  a
firm  offer  of Rs. 1,10,000 for  this  property  eventually
bought  it for Rs. 5,000 less.  I strongly suspect that  the
price  was reduced at the defendant's instance but I  cannot
find  it  as a fact ".  In support of their  view  that  the
appellant  was  not  entitled to any  commision  above  that
payable  on  a purchase price of Rs.  1,05,000  the  learned
Judges relied on the decision of the House of Lords in Luxor
(Eastbourne) Ltd. v.Cooper (1), where it was held that, in a
contract to pay commission upon the completion of the trans-
action  which the agent was asked to bring about, there  was
no  room  for implying a term that the principal  shall  not
without  just cause prevent the agent from earning his  com-
mission, and that it was open to the principal to break  off
negotiations  and  refuse to sell even after the  agent  had
produced a customer who was ready and willing to purchase on
the  principal's terms. Applying what they conceived  to  be
the  principle of that decision, the Appellate Bench  varied
the decree of the trial Judge by reducing the amount payable
to the appellant to a sum of Rs. 1,000.
The commission letter runs as follows:
   "I,  Animendra Kissen Mitter of No. 20-B, Nilmoni  Mitter
Street,  Calcutta, do hereby authorise you to negotiate  the
sale  of my property,  27, Amratolla Street, free  from  all
encumbrances at a price not less than Rs. 1,00,000.  I shall
make  out a good title' to the property.  If you succeed  in
securing a buyer for Rs. 1,00,000 I shall pay you Rs.  1,000
as your remuneration.  If the price exceeds Rs. 1,05,000 and
does not
(1) [1941] A.C. 108.
35
exceed Rs. 1,10,000 I shall pay you the whole of the  excess
over  Rs. 1,05,000 in addition to your remuneration  of  Rs.
1,000 as stated above.  In case you can secure a buyer at  a
price exceeding Rs. 1,10,000 I shall pay you twenty-five per
cent. of the excess amount over Rs. 1,10,000 in addition  to
Rs.  6,000 as stated above.  This authority will  remain  in
force for one month from date".
    In  the absence of clear words expressing the  intention
of  the  parties it is possible to construe these  terms  in
three  different  ways corresponding to the  three  patterns
into which commission contracts with real estate brokers may
broadly be said to fall. In the first place, the letter  may
be  read  as authorising the appellant not only  to  find  a
purchaser ready and willing to purchase the property at  the
price required but also to conclude a binding contract  with
him  for the purchase and sale of the property on behalf  of
the  respondent. Secondly, the contract may be construed  as
promising  to reward the appellant for merely introducing  a
potential buyer who is ready, able and willing to buy at  or
above the price named, whether or not the deal goes through.
And lastly, the commission note may be understood as requir-
ing the appellant to find such a purchaser without authoris-
ing  him to conclude a binding contract of sale  but  making