dedol-hf/india-case-legal-rag huggingface dataset:
commission contingent upon the consummation of the  transac-
tion. As stated already, the first of these  interpretations
was  rejected by the learned trial Judge as well as  by  the
Appellate Bench, but it was pressed upon us by Mr.  Setalvad
on  behalf of the appellant.  We are unable to  accept  that
view.  The contract specifies only the price required by the
respondent but does not furnish the broker with other  terms
such  as  those relating to the payment of  the  price,  the
investigation  and approval of title, the execution  of  the
conveyance, the parties who are to join in such  conveyance,
the costs incidental thereto and so on. In fact, the- agree-
ment  of  sale dated the 9th June 1943 entered into  by  the
respondent  with the purchasers contains  detailed  stipula-
tions  on  all these and other matters.  Mr.  Setalvad  laid
stress on the statement in the commission note that the sale
was to
36
be  free from encumbrances and that a "good title" would  be
made  out, but this is no more than a general indication  of
the nature of the bargain proposed and is perfectly consist-
ent  with  an  understanding that further  details  will  be
subject  to negotiation between the respondent and the  pur-
chaser when found.
    As pointed out by Kekewich J. in Chadburn v. Moore(1)  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 is to deal which does not pass by
a  short  instrument as stocks and shares do but has  to  be
transferred after investigation of title as to which various
special  stipulations, which might be of particular  concern
to  the owner, may have to be inserted in a  concluded  con-
tract relating to such property.  The parties therefore   do
not  ordinarily contemplate that the agent should  have  the
authority to complete the transaction in such cases. That is
why it has been held, both in England and here, that author-
ity  given to a broker to negotiate a sale and find  a  pur-
chaser, without furnishing him with all the terms, means "to
find a man willing to become a purchaser and not to find him
and  make him a purchaser":  see Rosenbaum v. Belson(2)  and
Durga Charan Mitra v. Rajendra Narayan Sinha(3).
    Mr.  Setalvad next suggested, in the  alternative,  that
the  second  interpretation  referred to  above,  which  was
favoured  by the trial Judge, should be adopted,  and  that,
inasmuchs,  in  that view also, the appellant had  done  all
that  he  was required to do when he introduced to  the  re-
spondent  two prospective buyers who were ready and  willing
to  buy  the premises for Rs. 1,10,000, he was  entitled  to
commission  on that basis.  Learned counsel  criticised  the
view of the Appellate Bench, who adopted the third construc-
tion,  as  illogical and inconsistent, and argued  that,  if
authority to secure a buyer were to be taken to mean author-
ity to find one who is not only ready and willing to buy but
also  becomes  eventually a buyer in order  to  entitle  the
agent to his commission, then such authority must of  neces-
sity
(1) 67 L.T. 257.     (2) [1900] 2 Oh. 267.    (8) 86  C.L.J.
467.
37
extend to the concluding of a contract of sale, as otherwise
the agent could not possibly accomplish the task assigned to
him.  We do not see much force in this criticism. As already
indicated there are cogent reasons why an owner employing an
estate  agent to secure a purchaser 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, and we cannot  see
how  the  lack  of such authority is  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 carried the transaction to completion.
    In  the  present case, however, it is not  necessary  to
decide  whether or not the commission note imports  such  an
understanding,  for  a sale was in fact concluded  with  the
purchasers introduced by the appellant who has thus, in  any
view,  earned his commission, both the trial Judge  and  the
Appellate  Bench having found that the  appellant's  efforts
were the effective cause of that sale.  The only question is
whether  the  commission  is payable on  the  basis  of  Rs.
1,10,000  for which the appellant brought a firm offer  from
the purchasers, or on the basis of Rs. 1,05,000 which is the
price mentioned in the conveyance.
    As  already  stated,  the Appellate  Bench  based  their
decision  on  the  ruling in the Luxor  case.   The  learned
Judges  reasoned thus: "In that case the principal  had  re-
fused to sell in circumstances which afforded no  reasonable
excuse.  Nevertheless,  the House of  Lords,  reversing  the
Court  of  Appeal, held that no commission was  payable.  It
appears to me that the principle is applicable to this case.
Though the agent introduced a purchaser ready and willing to
buy for Rs. 1,10,000 the sale for some reason took place  at
a  lower  figure.   Even if the  defendant  unreasonably  or
without  just  cause  refused to conclude the  sale  at  the
higher  figure, nevertheless the plaintiff has no  right  to
commission based on that higher figure ".  We are unable  to
agree  with  this reasoning and conclusion.  The  ground  of
decision  in the Luxor case was that, where  commission  was
made  payable  on  the completion of  the  transaction,  the
agent's right to commission was "a purely
38
contingent right" and arose only when the purchase  materia-
lised.  As Lord Simon put it "The agent is promised a reward
in  return  for an event and the event has not  happened  ".
But the position is different where the principal,  availing
himself of the efforts of the agent, concludes the sale with
the  purchaser introduced by him, as the respondent  did  in
the  present case.  As observed by Lord Russell of  Killowen
in  the same case, "where a contract is concluded  with  the
purchaser,  the  event has happened upon the  occurrence  of
which  a right to the promised commission has become  vested
in  the agent.  From that moment no act or omission  by  the
principal can deprive the agent of his vested right". Apply-
ing  that  principle, (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,
as it was in the English case) the appellant, having  "nego-
tiated the sale" and, secured buyers" who made a firm  offer
to buy for Rs. 1,10,000 had done everything he was  required
by the respondent to do and acquired a right to the  payment
of  commission on the basis of that price which he had  suc-
cessfully negotiated, subject only to the condition that the
buyers should complete the transaction of purchase and sale.
The  condition  was fulfilled when those  buyers  eventually
purchased  the  property in question,  and  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.'
We  accordingly hold that the appellant is entitled  to  the
full commission of Rs. 6,000.
    The  appeal is allowed, the decree passed on  appeal  in
the  Court  below is set aside and that of the  trial  Judge
restored.  The appellant will have the costs of this  appeal
including  the costs incurred in the lower court as well  as
his costs of the appeal in that court.
     MAHAJAN  J.--This is an appeal by special leave from  a
judgment and decree of the High Court at Calcutta, dated 5th
January 1948. By that judgment the High
39
Court varied the judgment and decree of Gentle J. dated 11th
June  1945  made in exercise of his  original  jurisdiction,
decreeing the plaintiff's suit for recovery of a sum of  Rs.
6,000.
The appellant is a broker by profession residing at  No.
81/1 Phear Lane, Calcutta, and carries on the business of  a
house  agent. The respondent, Animendra Kissen  Mitter,  re-
sides in No. 20B, Nilmony Mitter Street, Calcutta.
    The appellant was employed by the respondent to  negoti-
ate the sale of the respondent's premises, No. 27, Amratolla
Street, Calcutta, on certain terms and conditions on commis-
sion  and the question raised by this appeal is whether  the
appellant  is entitled to his commission under  the  circum-
stances hereinafter mentioned.
    The facts are substantially admitted.  By a letter dated
5th May, 1943, the appellant was employed by the  respondent
for arranging a sale of the premises above mentioned.   This
letter is in the following terms :--
    "I,  Animendra Kissen Mitter of No. 20B, Nilmoni  Mitter
Street,  Calcutta, do hereby authorize you to negotiate  the
sale  of my above property 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 remuner-
ation.   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
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."
    As  recited  in the letter, the authority given  to  the
appellant was to remain in force for one month from 5th  May
1943.  Three days before the termination of the  appellant's
authority, on 2nd June 1943 the plaintiff appellant obtained
an offer from two persons namely,
40
Kishorilal  Mahawar and Ramkumar Mahor, for the purchase  of
the premises regarding which the plaintiff had been  author-
ized to arrange a sale. This letter is in these terms :-
    "We  are willing to purchase the above house,  land  and
premises at and for the price of Rs. 1,10,000 only free from
all encumbrances.
    We hereby authorize you to accept the offer for sale  of
the above premises from Mr. A.K. Mitter for Rs. 1,10,000  on
our behalf and send the confirmation to the vendor Mr.  A.K.
Mitter on our behalf."
On the same date the plaintiff gave a reply which runs  thus
:--
    "I  am in receipt of your letter of date and  under  au-
thority  from  the owner Mr. A.K. Mitter, I  hereby  confirm
your offer for the purchase of the above premises at and for
the price of Rs. 1,10,000 free from all encumbrances."
    Simultaneously  with  the issue of this letter  he  gave
intimation of this contract to the respondent in the follow-
ing terms :--
    "Under the authority given to me by you I made an  offer
for  the  sale of the above premises to  Messrs.  Kishorilal
Mahawar  and  Ram Kumar Mahor of No. 27,  Amratolla  Street,
Calcutta, for rupees one lakh and ten thousand only and they
have accepted the offer and they have authorized me to  send
a  confirmation  to  you of the said  offer.  I  accordingly
confirm  the  offer made by you for the sale  of  the  above
premises  for  rupees one lakh and ten thousand  only.   The
draft  agreement for sale will be sent to you in  the  usual
course.
    A copy of the letter of Messrs. Kishori Lal Mahawar  and
Ram Kumar Mahor accepting your offer is enclosed herewith."
The letter was received by Mitter on 3rd June 1943,  two
days  before the termination of the  plaintiff's  authority.
The  respondent made no reply and kept silent.  He  did  not
question  the agent's authority in effecting a binding  con-
tract of sale with the purchasers. He did not repudiate  the
transaction nor did he
41
expressly  ratify it.  It was the plaintiff's case  that  he
had  accepted  the purchasers' offer after  getting  express
instructions  from the respondent. That case,  however,  was
not accepted in the two courts below.
    On  3rd  June, 1943, the solicitor  for  the  purchasers
wrote  to the solicitor for the agent that as the  offer  of
his  client  for the purchase of 27,  Amratolla  Street  had
already  been accepted and acceptance communicated  to  him,
the  title deeds should be sent so that a conveyance may  be
prepared.   At his request inspection of the letter  of  au-
thority  was  offered  by the plaintiff and a  copy  of  the
letter was sent to him by post.  On receipt of this copy the
purchasers'  solicitor assumed a curious attitude.  He  said
that  the copy of the letter sent contained different  terms
as  to  commission than those contained in  'the  letter  of
authority originally shown to his client.  The plaintiff was
charged  with  making a secret illegal gain.   In  spite  of
these  allegations it was asserted that the contract  was  a
concluded one and that being so, the plaintiff was bound  to
refund  to the purchasers whatever moneys he  would  receive
from  the vendor.  It appears that the purchasers'  attorney
did  not like the idea of the plaintiff pocketing a  sum  of
Rs. 6,000 out of the purchase price, and this dislike on the
part  of the purchasers for the broker's commission has  led
to further complications resulting in this litigation.
    On  9th June, 1943, the purchasers' solicitor  wrote  to
the plaintiff's solicitor that his client had cancelled  the
agreement  of  purchase.   Immediately on  receipt  of  this
communication  the plaintiff's solicitor replied  expressing
surprise  at this attitude and accused the other party of  a
change  of front with an ulterior motive.  It was said  that
further  instructions would be given after getting  instruc-
tions from Mitter to whom these letters were forwarded.   It
seems that the plaintiff was in  the  dark while writing the
letter  of  9th June, 1943, of the  negotiations  that  were
going  on behind the scene directly between  the  purchasers
and the vendor who had kept absolutely silent all this time.
On 9th June the date of the alleged
42
cancellation  of the bargain already made, an agreement  was
executed  between Animendra Kissen Mitter, the  vendor,  and
Makkanlal,  a benamidar of Kishorilal Mahawar  and  Ramkumar
Mahor (the purchasers) for sale of the premises for a sum of
Rs. 1,05,000.  The sale deed in pursuance of this  agreement
was  actually executed on 8th December, 1943, in  favour  of
the original purchasers and not in favour of the  benamidar.
As  pointed out by the learned Chief Justice  who  delivered
the judgment of the appellate Bench, possibly some  arrange-
ment was made whereby both the defendant and the  purchasers
benefited by the insertion of a lower price in. the contract
of sale and the transfer deed.  It seems obvious enough that
the  defendant having received a firm offer of Rs.  1,10,000
for this property could not have parted with it for Rs. 5000
less except on the basis of some arrangement between himself
and  the  purchasers  under which both of  them  shared  the
commission  instead of paying it to the broker.  It  was  to
the advantage of both of them.
    On  14th August, 1943, the appellant filed the suit  out
of  which  this  appeal arises for recovery  of  Rs.  6,000,
brokerage payable under the commission note. He also claimed
relief by way of damages in the alternative.  The  defendant
resisted the suit and denied the appellant's claim.   Gentle
J.  who heard the suit, gave judgment for the plaintiff  and
passed  a decree for a sum of Rs. 6,000, with  interest  and
costs in his favour.  He held that on a true construction of
the commission note the appellant's authority was to find  a
purchaser, namely, a man ready, able and willing to buy at a
price  acceptable to the respondent and that  the  appellant
had  accomplished this when he introduced to the  respondent
the purchasers and that he had done all that was required of
him.   It  was held that the appellant had no  authority  to
conclude a contract of sale and no binding contract of  sale
was  made  on 2nd and 3rd June, 1943, that  the  transaction
effected nominally in the name of Makkanlal and completed on
8th  December,  1943, in favour of  Kishorilal  Mahawar  and
Ramkumar Mahor, was effected solely through the intervention
of the appellant who brought
43
the parties together in the capacity at least of a potential
buyer  and  seller, that the reduction of the price  by  Rs.
5000 from Rs. 1,10,000 was more than peculiar and that  this
reduction  was made for one purpose and that was to  deprive
the plaintiff of his remuneration.
    The respondent preferred an appeal against this  decree.
This was partially allowed by the learned Chief Justice  and
Mukherjea  J. on the following findings:that  the  appellant
procured two persons, viz. Kishorilal Mahawar and Ram  kumar
Mahor,  on  2nd  June, 1943, who were  willing  to  buy  the
property  for Rs. 1,10,000, that on.a true  construction  of
the  contract of agency no commission was payable  until  at
least  a binding contract had been entered into between  the
appellant  and the respondent, that the agent could only  be
said  to have negotiated the sale if he introduced a  person
willing  to  buy who eventually bought, that the  sale  took
place  between the persons introduced by the  appellant  and
the  respondent and it was the direct result of  the  appel-
lant's agency, that the commission note gave no authority to
the appellant to conclude a contract of sale, that Makkanlal
with whom the sale agreement dated 9th June was entered into
was  a benamidar of Kishorilal Mahawar and  Ramkumar  Mahor,
that  the appellant had no right to commission on  a  higher
price  than for which the sale was actually made and as  the
sale  was actually made for Rs. 1,05,000,  his  remuneration
could not exceed a sum larger than Rs. 1,000.  On the  basis
of  these  findings the appeal was allowed  and  the  decree
granted  by Gentle J. was modified and the plaintiff's  suit
was decreed in the sum of Rs. 1000. order for costs was made
in the appeal.
    In  this  appeal Mr. Setalvad for the  plaintiff  raised
three  contentions: (1) That the finding of the court  below
that  on  a  true construction of the  commission  note  the
plaintiff  had no authority to make a binding  contract  re-
garding  the sale of this property with the  purchasers  was
erroneous;  (2) That even if that finding was  correct,  the
plaintiff was entitled to a decree
44
for  the sum of Rs. 6,000, because he had done all  that  he
had promised to do for the respondent, viz., he had  secured
a purchaser for Rs. 1,10,000, who was ready, able and  will-
ing  to  buy the property and that if by reason of  his  own
caprice or in collusion with the purchasers, the  respondent
did  not  sell the property for Rs. 1,10,000  but  chose  to
receive  instead  Rs. 1,05,0O0, the plaintiff could  not  be
made  to  suffer.  (3) That on the evidence it  should  have
been held that the sale was made for a price of Rs. 1,10,000
and that the amount entered in the sale deed was fictitious.
    The  first  thing to see is what the  parties  have  ex-
pressed  in the commission note and what is the true  effect
of the language employed in it, read in the light     of the
material  facts.   As pointed out by  Viscount  Simon,  Lord
Chancellor,  in  Luxor  (Eastbourne), Ltd.  v.  Cooper  (1),
contracts  with  commission agents do not  follow  a  single
pattern  and  the primary necessity in each instance  is  to
ascertain with precision -what are the express terms of  the
particular contract under discussion.  I have very carefully
considered  the terms of this contract in the light  of  the
material circumstances and with great respect to the  Judges
who decided this case in the High Court, I am of the opinion
that  the  authority  given by the principal  to  the  agent
authorized  him to enter into a binding contract to sale  on
his  behalf. It was not a mere authority authorizing him  to
find a purchaser willing, able and ready to buy the premises
for  a price mentioned in the document.  The note, to  begin
with, confers authority on the plaintiff to negotiate a sale
free  from  all encumbrances at a price not  less  than  Rs.
1,00,000.  Then it proceeds to say that the principal under-
takes to make out a good title to the property.  It  further
provides that if the agent succeeds in securing a buyer  for
Rs. 1,00,000, he will be paid a sum of Rs. 1,000 as remuner-
ation.   In the concluding part of the note a scale of  com-
mission proportionate to the price has been promised in case
a  price higher than Rs. 1,00,000 was secured.   In  express
words it is said that if the price exceeds Rs. 1,05,000  and
does not exceed Rs. 1,10,000,
(1) [1941] A .C . 108.
45
"I  shall pay you the whole of the excess over Rs.  1,05,000
in  addition to your  remuneration of Rs. 1,000", that if  a
buyer is secured at a price exceeding Rs. 1,10,000, he  will
be paid 25 per cent of the excess amount over  Rs.  1,10,000
in   addition to Rs. 6,000.  The authority of the agent  was
to remain in force for one month.  In my opinion, the  terms
of  the note as regards the property being free from  encum-
brances and in respect of the guarantee about title indicate
that  the agent was given authority to make a  binding  con-
tract. In a bare authority conferring power on a broker  for
introducing a customer, these stipulations would  ordinarily
find no place.  The words "to negotiate a sale" standing  by
themselves may not authorize an agent to make a contract  of
sale.  But here they do not stand by themselves.   They  are
followed by two important conditions adverted to above.  The
agreement  further lays down that if the broker succeeds  in
securing  a  buyer,  he will get  a  certain   remuneration.
Gentle  J.  observed that the word "securing" here  had  the
meaning  of "obtaining a buyer".  I have consulted the  same
dictionary as the learned Judge did and I find that the true
meaning of the expression "securing a buyer" is "to obtain a
buyer  firmly  ".  It is not possible in business  sense  to
secure a buyer firmly unless he is bound by an offer and  an
acceptance.  Otherwise, he is entitled to withdraw the offer
at  any time before acceptance and it cannot in this  situa-
tion  be  said that a buyer has been  secured  firmly.   The
word" secure" has not the same meaning as the word "find" or
"procure".  It gives an idea of safety and certainty.  If  a
buyer is ensured, he is said to be secured and no buyer  can
be said to be ensured till he is bound by his offer and that
cannot  happen unless it stands accepted.  The  agent  could
only  secure a buyer in the strict sense of the term  if  he
had  authority to enter into a binding contract.   The  word
"buyer" when used in a strict sense also means "a person who
has  actually made the purchase"  The authority given to  an
agent  to  secure a buyer therefore gives him  authority  to
enter  into  a binding contract of sale with  him.   Without
such an authority it
46
was  not possible to secure a buyer. I am further  supported
in  this  view by the language employed in the  document  in
respect  of the payment of the commission.  When  the  price
secured was Rs. 1,10,000, the broker was entitled to 25  per
cent.  of the excess. It is difficult to think of an  excess
in relation to price in a stipulation for commission  unless
the agent has been given an authority to make a contract  of
sale.  If the scope of the authority is only to introduce  a
customer ready, able and willing to buy the property with an
option  to the principal to accept or to refuse  the  offer,
then it would  have been drawn up in a different language.
    The  subsequent  conduct of both the parties  to  the  .
agreement very strongly supports this view. The evidence  of
such  conduct is relevant in this case because,  as  pointed
out  by Viscount Simon, L.C., in the case  already  referred
to,  the phrase "finding a purchaser" is itself not  without
ambiguity.   Here  the phrase is "securing  a  purchaser  ".