1960

l[areh li.

30 SUPREME COURT REPORTS

ABDULLA AHMED

v.

ANIMENDRA KISSEN MITTER.

[SHRI HARILAL KANIA c . .1., SAIYID F AZL ALI,

PATANJALI SASTRI, MEHR CHAND MAHAJAN and

S. R. DAS JJ.)

Oontmct-.{gencu-Estate b1"0ker-Authorit11 to ' 11tgotiate a

sale' and '3ecure purcha.se1· '-Whether empower& broker to conclw11

contrnct-Constr"-Otion of contract~Broker finding out purchaur

ready

awl

willing to buy for pries fixed by principal-Principal

concl,,.ding contract with same purchaser for lower price-Broker'1

right to commission-Powers of e&late agents.

The appellant, •u estate broker, was employed by the

respondent by a letter .dated 5th May, 1943, to negotiate a· sale

of a certain property on the terms mentioned_ in a commission

note which ran as follows: "J ...... do hereby authorise yon 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 secur­

ing a huyer for Rs. 1,00,000, I shall pay you Rs. 1,000 as your

remuneration. If the price exceeds Rs. 1,05,000 e.nd 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 remunemtion of Rs. 1,000 as

~tated above. In ce.se you can secure a buyer at a price exceed·

ing Rs. 1,10,000 I shall pay you twenty·five · pet cent. of the

excess amount over Rs. 1,10,000 in addition to Rs. 6,000 as stated

1tbove. This authority will remain in force for one month

from !late." In pursuance of this contract the appellant found

two persons rearly and willing to purchase the property for

Rs. 1,10,000 on the 2nd June and by letters exchanged with

them he purportecl to conclude the contract for the sale of the

property, and on the 3rd June communicated the same to the

responrlent. The respondent, however, cancelled the authority

or the appellant on the 9th June and on the same date entered into

an agreement \Vith a nominee of the said persons for a

•ale of the property for Rs. 1,05,000 and eventually executerl

a conveyance in their favour for Rs. 1,05,000. The appel­

lant institutecl a suit against the respondent for Rs. 6,000.

Held, per KANIA C.J., FAZL ALI, PATANJALI SASTRI and

DAS .J.T.-(i) that a house or estate agent is in a different position

from a hroker at the Stock Exchange owing to the peculiarities or

the p1·operty with which he has to deal, and an owner employing

an estate agent should not, in the absence of clear words to that

effect, be taken to have authorised him to conclude a contract or

sale; but the lack of such authority is not inconsistent with an

understanding that the agent is . .not to be entitled to his commis­

•ion unles• the owner and the purchase1· introduced by the agent

4

•

)

S.C.R. SUPREME COURT REPORTS 31

carried the transaction to completion; (ii) that even j.f the 191JO

commission note in the present case were to be construed as

making payment of commission conditional on the completion of Abdulla Alimed

the tre.nsaotion, the appellant having "negotiated the sale" and v.

"secured buyers" who made a firm offe1· to buy for Rs. 1,10,000, Animendra

acquired. the right to the payment of commission on the basis of Kis#n Mitter.

that price subject only to the condition 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

fo1· 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 i. into such a contract he was entitled to the commission of Rs. 6,000

according· to the terms of the co~mission 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 in·

troduced a buyer ready and willing to purchase for the price fixed

by the o'wner, whether the owner completed the transaction or not.

Luxor (Eastbourne) Ltd. v. Cooper ([1941) A.O. 108) distin·

guisbed.

• Chadburn v. 1'rloore (67 L.T. 257), Rosenbaum v. Belson ((1900)

2 Cb. 267), Durga Charan Mitra v. Rniendra Narain Sinha (36

C.L.J. 467), Wragg v. Lovett ([1948) 2 All E.R. 969) referred to.

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

(Harries C.J. and Mukherjea J.) dated 5th January

1948 which varied a judgment passed by a single Judge

l sftting_~m 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. 0. Setalvad (A. K. Sen with him), for the

appellant.

B. Sen, for the respondent.

--<t. 1950. March 14. The judgment of Kania C. J.,

and Fazl Ali, Patanjali Sastri and Das JJ., was

delivered by Patanja.li Sastri J.: Mahajan J. delivered

a

separate judgment. 6

19t:O

Al1f/ulla Ahmed

v.

A11i111e1Jdra

Jlisset? Mitter.

Patanjali

Sastri J,

32 SUPREME COURT REPORTS [1950]

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.

Th<> appellant who is carrying on business as an es­

tate broker in Calcutta was employed by the respond­

ent on the terms mentioned in a commission letter

dated the 5th May, 194-3, 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 pur­

chase the property for Rs. l,10,000, and by letters

ex<lhanged with them on 2nd June, 1943, he purported

to eoncl ude a con tract 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 !lth .Tune, 1943, with a nominee of

the said persons for the sale of the property for

Rs. l,05,000 and eventually executed a conveyance in

their favour on 8th December, 1943.

Thereupon the appellant brought the suit alleging

that the contract concluded by him with the purcha­

se1·s for Rs. I ,I0,000 on the 2nd .June, 1943, was bind-

ing on the respondent and claimed that he was

entitled to the payment of Rs. 6,000 as remuneration

in accordance with the terms <if 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 de­

fence to the snit the respondent pleaded, intei· alia,

that the appellant had no authority to conclude a

binding contract for sale with any one, that the pur­

chasers refused to complete the transaction alleging

that they had been induced by the fraudulent mis­

representation 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 appel­

lant was not therefore entitled to any remuneration or

damages.

....

S.C.R. SUPREME COURT REPORTS 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 misrepre­

sentation by the appellant and that the negotiations

were

later resumed afresh directly between the

respond­

ent 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

bring­

ing 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.

l,l0,000 as

not being supported by any evidence but found that

the reduction of the price by Hs. 5,000 from

Rs. l,l0,000 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 re­

muneration of Rs. 6,000. He accordingly held that

the appellant, who had performed his part of the con­

tract by finding two persons who were ready, able and

willing to buy at Rs. 1,10,000 was entitled to the com­

mission claimed.

The Division Bench (HarriesC.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 commis­

sion whether or not the property was sold at that price

or at all. They held, following certain observations

of Lord Russell of Killowen and Lord Romer in the

case next mentioned, that the appellant, having under­

taken 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,

1960

Al1d11lla

Ahmed

v.

Anioientlfa

[{ i ssen M ittc r,

Patanjali

Sa>tri J.

1950

Abdulla Ahm<d

v.

Ani1nendra

Ki1s~n MitU,..

Ptdanjali

Sastrl /,

34 SUPREME COURT REPORTS [1950]

however, a sale did take place between the persons in­

troduced by the plaintiff and the defendant, and as

that sale, in the view1also 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 respond­

ent accepted a reduced P,rice, Harries C.J., who

delivered

the judgment of the

Court, observlld: "All

that is known is that persons who undoubtedly ma.de

a firm offer of Rs. 1,10,000 for this property even­

tually 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 aom­

mission 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('),

where it was held

tl!.at, in a contract to pay

commission upon the completion of the transaction

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 commission, and that it was op!m 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 deci­

sion, the Appellate Bench varied the decree of the trial

Judge by reducing the a mount 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 remuner--

a.tion. If the price exceeds Rs. 1,05,000 and does not

(1) (1941] A.C, lOS.

..

•

•

•

f.

..

-, 'L

S.C.R. SUPRE!ME COURT REPORTS 35

exceed Rs. 1,10,000 I shall pay you the whole of the

excess over Rs. 1,05,000 in addition to your remuner­

ation 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 inten­

tion 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

appel­

lant 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 poten­

tial 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 requiring the appellant to find such a

purchaser

without authorising him to conclude a

bind­

ing contract of sale but making commission contingent

upon

the consummation of the transaction. 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 appel~ant. We are unable to accept that

view. '£he 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 incident&! thereto

and so on. In fact, the agreement of sale dated the 9th

June, 1943, entered into by the respondent with the

purchasers contains detailed stipulations on all these

and other matters. Mr. Setalvad laid stress on the

statement in the commission note that the sale was to

1960

Abdulla Ahmed

v.

Animendra

Ki ssen Mitter.

Patanjali

Sa•tri J•

19150

Abdulla Ah1ned

v.

Aui11iendra

Kissen Mitter,

Patanjali

Sastt'i J.

36 SUPREME COURT REPORTS [1950]

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 consistent with an understanding that further

details will be subject to negotiation between the res­

pondent and the purchaser when found.

As

pointed out by Kekewich J. in

Chadburn v.

Moore(') a house or estate agent is in a differeu t 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 investi­

gation 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 contract 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 authority given to a broker to negotiate a

sale

and find a pnrchaser, 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(') and Ditrya

Charan 11!/itra v. Rajendra Narayan Sinha(').

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, inasmuch as, in that view also, the appellant had

done all that he was required to do when he introduced

to the respondent two prospective buyers who were

ready and willing to bny the premises for Rs.

I,I0,000,

he was entitled to commission on that basis. Learned

counsel criticised the view of the Appellate Bench, who

adopted the third cons~ruction, as illogical and incon­

sistent, and argued that, if authority to secure a buyer

were to be taken to mean authority 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 necessity

(1) 67 L.T. 257.

12) [1900] 2 Ch. 267. IS) 86 O.L.J. '67.

•

•

•

i I

S.C.R. SUPREME COU"RT REPORTS 37

extend to the concluding of a contract of sale, as other­

wise 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 absence of clear words to

that effect, be taken to have authorised him to conclude a contract of sale, and we cp.nnot see how the lack of

such authority is iiiconsistent 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

a;ny view, earned his commission, both

the

trial J·udge and the Appellate Bench having found

that the appellant's efforts were the effective cause of

that sale. The

only question is whether the commis­

sion 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 men­

tioned 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

refused to sell in cirQumsta nceswhich afforded no reason­

able excuse. Nevertheless, the House of Lords, revers-

. ing the Court of Appeal, held that no commission was

payable.

It appears to me that the principle is applicable

to

thi~case. Though the.agent introduced a purchaser

ready and willing to buy for Rs. 1,10,000 the sale

for !JOme reason took place at a lower figure. Even if

the defendant unreasonably or without just cause re­

fused to conclude the sale at the higher figure, never­

theless the plaintiff has no right to commission based

·on that higher figure." We are unable to agree with

thia reasoning. a.nd conclusion. The ground of deci­

sion in -the Luxor case was that, where commission

was made payable on the completion of the transac­

tion, the agent's right to. commission was " a purely

19'50

Abdulla Aluned

v.

Anifllendrn

K issen Mitter.

Patattjali

SastriJ,

1950

1lbdulla Ahnzcd

v.

Aniutendra

/( isst:n l'if itter.

F>atanjali

Sastri J.

Mahajan}.

38 SUPREME COURT REPORTS [1950]

contingent right" and arose only when the purchase

materialised. 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 differ­

ent where the principal, availing himself of the

efforts of the agent, concludes the sale with the pur­

chaser 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 con­

cluded 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". Applying that

principle, (even if the commission note in the present

case were to be construed as making payment of com­

mission conditional on the completion of the transac­

tion, as it was in the English case) the appellant,

having "negotiated 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 paymel)<t of commis­

sion on the basis of that price which he had success­

fully negotiated, subject only to the condition that the

buyers should complete the transaction of purchas~ 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 be­

came absolute and could not be affected by the cir­

cumstance 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

•

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•

. f

..

I I

S.C.R. SUPREME COURT REPOR'fS 39

Court va.ried 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

Nq. 81/l Phear Lane, Calcutta, and carries on the

busihess of a house agent. The respondent, Animendra

Kissen

Mitter, resides in No.

20B, Nilmony Mitter

Street, Calcutta.

The appellant was employed by the respondent to

negotiate the sale of the respondent's premises, No. 27,

Amratolla Street, Calcutta, on certain terms and condi­

tions on commission and the questio~ raised by this

appeal is whether the appellant is entitled to his com­

mission under the circumstances Jli.ereinafter men­

tioned.

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 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. l,OOOas 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,

6

1950

Abd,.lla Ahmed

v.

Animendra

Kissen Mitter.

Mahajan J.

1960

Abdtdla A11med

v.

Animendra

Kissen Mitter.

Mahajan j.

40 SUPREME COURT REPORTS [1950J

Kishorilal Mahawar and Ramkumar Mahor, for the

purchase of the premises regarding which the plaintiff

had been authorized to arrange a sale. This letter is in

these terms:-

"We are willin:g 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 permises from Mr. A. K. Mitter for

Rs.

1,10,000 on our behalf and send the confirma.tion

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

authority

from the owner Mr. A. K. Mitter, I hereby

confirm your offer for the purchase of the above permises

at and for the price of Rs.

1,10,000 free from all encum­

brances."

Simultaneously with the issue of this letter he gave

intimation of this contract to the respondent in the

following terms :-

" Under the authority given to me by you I made an

offer for the sale of the above premises to Messrs.

Kishorilal Maha war and Ram KumarMahorof No.27,

Amratolla Street, Calcutta, for rupees on 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

orrly. The draft

agreement for sale will be sent to you in the usual

course.

A copy

of the letter of Messrs. Kishori Lal Maha war

and Ram Kumar

l\Iahor accepting your offer is enclosed

herewith."

The lettel',Was received by Mitter on 3rd June 1943,

two days bo'fore 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 contract of sale with the purchasers.

He did not repudiate the transaction nor did he

.. '

.,

;

' .

S.C.R. SUPREME COURT REPORTS 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 accapted and acceptance · communicated

to him, the title deeds should be sent so thata convey­

ance

may be prepared. At his request inspection of

the letter of authority 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 allega­

tions

it was asserted that the contract was a concluded

one

and that being so, the plaintiff was bound to refund

to the

purd10'sers whatever moneys he would receive

from

the vendor.

It appearr:; that the purchasers'

attorney did Qot like the ideaoftheplaintiffpocketing

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 inthis 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

wtmld

be given after getting instructions 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

pur­

chasers and the vendor who had kept absolutely silent

all

this time.

On 9th June the date of the alleged

19li0

Abdulla Alimed

v.

Animendra

Kissen Milter.

Mahajan J.

1950

Abdulla Ahmed

v.

Animendra

K issen Mitter.

Mahajan/.

42 SUPREME COURT REPORTS [1950]

cancellation of the bargain already made, an agree­

ment 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 ori­

ginal purchasers and not in favour of the benamidar.

As pointed out by the learned Chief Justice who de­

livered the judgment of the appellate Bench, possibly

some arrangement was made whereby both the defend­

ant 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. 5,000

Jess except on the basis of some arrangement between

himself and th.e 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 will­

ing to buy at a price acceptable to the respondent and

that the appellant had accomplished this when he in­

troduced to the re~;·ondent the purchasers and thathe

had done all that "':1s required of him. It was held

that the appellant I.ad no authorit.y to conclude a con­

tract 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 com­

pleted on 8th December, 1943, in favour of Kishorilal

Mahawar and Rarnkumar Mahor, was effected solely

through the intervention of the appellant who brought

..

•

•

•

S.C.R. SUPREME COURT REPORTS 43

the parties together in the capacity at least of a

potential buyer and seller, that the reduction of the

price by Rs. 5,000 from Rs. 1,10,000 wal.' 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 find­

ings: that the appellant procured two persons, vi~.,

Kishorilal Mahawar and Ramkumar Mahor, on 2nd

June, 1943, who were willing to buy the property for

Rs. 1,10,000, that on a true construction of the con­

tract of agency no commission was payable until at

least a binding contract had been entered into bet­

ween 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 appellant's agency, that

the commission note gave no authority to the appel­

lant to conclude a contract of sale, that Makkanlal

with whom the sale a.greement 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 act­

ually 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. 1,000.

No 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 regarding the sale of this property with the

purchasers was erroneous; (2) That even if that find­

ing was correct, the plaintiff was entitled to a decree

19ll0

Abdulla Ahmed

v.

Animendra

K issen Mitter-.

Mahajan J,

19ll0

Abdulla Ahmett

T,

Animendra

K is sen M itler.

Mahaj"" J.

44 SUPREME COURT REPORTS [1950]

· 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 willing to buy the property and that if by_

reason of his own caprice or in collusion with the pur­

chasers, the respondent did not sell the property for

Rs. 1,10,000 but chose to receive instead Rs. 1,05,000,

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('), 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 contraut ·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 cont­

ract of 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 encum­

brances at a price not less than Rs. 1,00,000. Then it

proceeds to say that the principal undertakes to make

out a good title to the property. It further provides

that if the agent succeeds in securing a bnyer for

Rs. 1,00,000, he will be paid a sum of Rs. 1,000 as

remuneration. In the concluding part of the note a

scale

of commission proportionate to the price bas 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) [19U] A.O. 108,

•

•

f

S.C.R. SUPREME COURT REPORTS- 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 exceed­

ing 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

rrote as regards the property being free from

encumbrances

and in respect of the guarantee about

title

:indicate that the agent was given authority to

make a binding contract. In a bare authority confer­

ring 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 17hemselves. They are

followed by two illl.llortant 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 with­

draw the offer at any time before acceptance and it

cannot in this situation 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

id-ea. of safety and certainty. If a buyer fa 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 l: 11os actually made the purchase". The

authority given to an agent to secure a buyer there­

fore gives him authority to enter into a ~inding con­

h·act of sale with him. Without such an authority it

1960

Abdulla Ahmed

v.

Anime•dra

Kissen Mitter.

Mahajan/.

19150

AIN"'11aAhmed

••

A.#U..mdra

Hiuen Mitter.

Maloaja" J,

46 SUPREME COURT REPORTS (l950J

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 paym•mt of the commis­

sion. 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

str~ngly supports this view The evid­

ence 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

"securh~g a purchaser". This phrase similarly is not

without ambiguity. The evidence of conduct of the

parties in this situ .. tion as to how they understood the

words to mean can be considered in determining the

true effect of the contract made betw~en the parties.

Extrinsic evidence

to determine the

effect of an instru­

ment is permissibie where there remains a' doubt as to

its true meaning. Evidence of the acts done under it

is a guide to the intention of the parties in such a case

and particularly when

acts are done shortly after the

date of the instrument.

(Vide p.ara 343 of Haiis·ham

Edn. of Halsbury, Vol. 10, p. 274).

So far as the conduct of the agent is concerned, he

accepted

the offer and under his own signature Rent.

the letter of acceptance to the purchasers. In the letter

written by him to his principal he specifically refers to

his authority. The correspondence above mentioned

clearly shows

that both the purchasers and the

agent thought that a concluded contract had been

made.

Information of this was given to the vendor and

though he did not speak, his silence in the

circumstan­

ces of the case seems as eloquent as speech would have

,.,

I ,;

S.C.R SUPREME COURT REPORTS 47

been. He never repudiated the contract made by the

agent but behind his back entered in.to a fresh contract

with the same persons who had been secured by the

agent in a surreptitious manner. In the witness box

he assumed a dishonest and untruthful attitude. The

learned trial Judge pronounced him a liar and rightly

too. He asserted complete igngrance about the subse­

quent contract of sale and fixed all blame on to his son .

. When asked about the sale price on the contract of 9th

June, 1943, his answer was that be knew nothing about

this and said that because his son asked him to sign

the deed he did sign it and that W&,S all that he knew.

When faced with the sale deed, he said that he did not

know what his son had told him astowhatwaswritten

in the deed. He added that be did not know what

consideration was paid to him for the sale. He further

professed not to know whether the sale price went into

his banking account or was even entered in the account

books. After a great deal of prevarication he was made

to accept the document of 5th May, 1943, and its terms.

He admitted that on 3rd June he had a conversation

with the purchasers and was informed by them that

they had entered into a bargain with the broker and

that the broker had deceived them about the commis­

sion

and therefore they would not buy the house. He

admitted that he got the letter sent by the plaintiff,

but gave no explanation as to why he sent no reply to

that letter. With great difficulty he was made to accept

his signature on the postal acknowledgment about the

receipt of the letter sent by the broker to him informing

him

of the concluded bargain made with the purchasers,

and he had to admit that he got that letter from the

broker. He also admitted that he took no objection to

the letter

written by the broker before Kishoribabu had

told him the story about the commission of two per

cent. In further cross-examination he admitted that

what was stated by the broker in the letter of the 2nd

June was correct. The whole evidence given by the

defendant consists of evasive statements and his ulti­

mate resort was in lapses of memory. It is quite clear

from

his deposition that the respondent accepted the

contract made by the a.gent and was clearly under the

7

19!50

Abdulla Al1mcd

v.

Animendra

K issen Mitter,

Maha jail j.

\,

1950

.Ablulla Ahmtid

v.

.AnimenJ,.a

Kissen Milter.

~Iahajan l.

48 SUPREME COURT REPORTS: (1950)

belief that the agent had nof exceeded his authority in

entering into a binding contract with the purchasers .

I

am therefore of the opinion that the authority given

to

the agent in this case was an authority to enter into

a binding contract of sale

and this he did and he was

therefore entitled to his commission of Rs.

6,000.

The learned single Judge and the learned Judges of

the Court of Appeal found otherwise on this part of the

case in view ot certain decisions

of English

Courts and

a decision of a Division Bench of the Calcutta High

Court. In my opinion, none of those cases touch the

present case. Unless the language of two documents is

identical,

an interpretation placed on one document is

no authority for

the proposition that a document differ­

ently drafted, though using

partially similar language,

should

be similarly interpreted.

.. · . -· ·· ·

In Hamer v. Sharp(

1

)

Sir

Charles Hall, V. C., ·con­

sidered the case of an authority of an agent for sale

appointed

by the owner of an estate. The document in

that case was in these terms

:-

" I request you to procure a purchaser for the fol­

lowing freehold property,

and to insert particulars of

the same

in your Monthly Estate

Circular till further

notice,

viz., my beer house and shop No. 4 and No. 6,

Manchester Road, Tenant No. 4,

\Villiam Galloway,

gilder,

and No. 6, Albert

Vaults, Henry Holmes, beer

retailer,

and work rooms above. Present net rent, £150, price £2800, when I will pay you a commission

and expenses of fifty pounds. About six years' lease

unexpired."

The Vice-Chancellor observed as follows :-

"The question is whether, when an owner of an

estate puts it into the hands of an estate agent for sale,

stating a price for and giving particulars of the pro­

perty to enable him to inform intending purchasers,

but giving no instructions as to the absolute disposal,

and none as to the title of the property, and mentioning

none of those special stipulations which

it might be

proper to insert in conditions in reference to the title, (11 L. R. 19 Eq. 100

0

•,

,.

>-.

I

S.C.R. SUPREME COURT RE.PORTS 49

-

that is sufficient authority to the agent to sign a con- 1950

tract for the sale of the property fort.he price stated in

the instructions, without making any provision wha_ tso-Atididla Alimed

v.

ever as to title. In considering whether the instructions -Animendra

of October, 1872, were a sufficient authority to the agent Kissen Mitter.

for that purpose, I cannot help expressing an opinion

that such an authority to an agent on the part of a Maliajan J.

vendor would be highly imprudent, as the purchaser

would then be entitled to require, on completion, attest-

ed copies of all documents of title, and the expense of

them would swallow up, to a great extent, the purchase

money. This estate agent must have known that if

this property had been offered for sale by public auction

there would have been conditions to guard the vendor

against being subject to c('lrtain expenses, and to pre-

vent the contract becoming abortive by reason of a

purchaser requiring a strictly marketable title. Could

he suppose that he was invested with authority to sign

a contract without considering what it should contain

as regards title? As an intelligent and well informed

person, he could not suppose that he was properly dis-

charging his duty to his principal when he signed the

contract which he signed; such a contract was not one

within the scope of his authority to sign."

The case therefore stood decided on the construction

of the document. It was remarked that in those cir­

cumstances it was not necessary to decide what words

would confer such an authority. Having said so, the

learned Vice-Chancellor proceeded to observe as

follows:-

"but I nevertheless state my opinion to be, that

when instructions are given to an agent to find a pur­

chaser of landed property, he, not being instructed as to

the conditions to be inserted in the contract as to title,

is not authorized to sign a contract on the part of the

vendor."

This case can hardly be said to be an authority for

the construction of the agreement that we are called up­

on to construe in the present case. Considerable empha­

sis was laid in that case on the point that no instruc­

tions had been given as to the conditions that had to he

1915()

.

Abdulla Ahmed

v.

Animt!ndra

Kiss~n Mitter.

Mahajan J.

50 SUPREME COURT REPORTS [1950]

inserted in the agreement as to title. In the present

case the agent was told that the principal guaranteed

marketable title. He was further told that the sale

should be free

of encumbrances. All the material

conditions of sale were thus contained in the present

agreement.

The next case on which considerable reliance was

placed

in the courts below is the case of

Chadburn v.

Moore('). In this case an advertisement appeared in

the Daily Telegraph in these· words:-

" Forced sale by order of the niortgagees-thirty­

four well built houses, situated at Grays, closa to the

station on the London, Tilbury, and '<ISouthend Rail­

way, within easy reach of the docks, all let to respect­

able tenants at rents amounting to £ 620 per annum.

Held for about ninety-five ·years at ground rents

amounting to£ 146; price£ 3500, of which £3000 can

remain on mortgage. For further particulars apply to

Messrs. Pinder, Simpson and Newman, 33 and 34,

Savilerow, London, W."

In response to this advertisement the plaintiff in

that case, James Chadburn, called on Messrs. Pinder,

Simpson and Newman, a firm of surveyors and estate

agents, for further information. He then went to see

the houses and came back and made an offer to pur­

chase them, which was reduced to writing. It appear­

ed from the evidence that the offer was to be submitted

by Mr. Newman to his client the defendant; and the

plaintiff was to return the next day for an answer.

Newman saw the defendant, who gave him instruc­

tions to withdraw five <3f the houses, and fixed the

price, but did not, according to the evidence given in

court, give instructions to Newman to enter into a

binding contract. Later on the plaintiff called on

Messrs. Pinder, Simpson and Newman and two letters

were exchanged between them, which were letters of

offer a:Qd acceptance for the twenty-nine houses at

Grays. The offer and acceptance were forwarded by

the defendant to the estate agents. The defendant on

receiving this offer wrote a letter saying inter alia :-

(!) 67 L.T, ~61.

I

'

S.C.R. SUPREME COURT REPORTS 51

"I think you were, as you usually are, a little pre­

mature in actually entering into what might be a bind­

ing contract. It is always best to have an offer and

acceptance subject to a formal contract being entered

into .... ".

To this Newman replied:--

'"The offer for the above was accepted under your

definite instructions anrl is a very good get out for

you."

Kekewich J., who decided this case, gave the fol­

lowing judgment:-

"Having heard Mr. Newman, who was called with­

out the plaintiff knowing what he was going to say,

and having read the correspondence, I have little

doubt that I have the real transaction-which is a

mere transaction between principal and agent-before

me. It might be that a different colour would be

put upon the matter by the cross-examination of

Mr. Moore, but this was not done, and he is entitJed to

have judgment upon the point of law. Moore undoubt­

edly authorized Newman to find a purchaser for the

houses. It is true the expression does not come out on

the correspondence. On the second occasion Newman

appears to have been instructed to negoti:ate a sale.

Whatever else he did do, Moore did not il). express

terms authorize Newman to enter into a contract.

Newman wus to .find a purchflser, and to negotiate a

sale. Is that sirftfoien t ? No evidence was given as to

custom; no evidence was brought to show that the

position of a house or estate agent resembles that of a

broker on the Stock Exchange or any other exchange.

A house or estate agent is in a different position,

owing to the peculiarity of the property with which he

has to deal, which does not pass by a short instru­

ment as stocks and shares do, but has to be transfer­

red after investigation of title and in accordance with

strict laws.

An agent for sale of real estate must be

more formally constituted than a seller of stocks and

securities of a similar nature. There is no definite

authority; in Hamer v.

Sharp('), Hall V.C., does not

(1) 19 Eq. 108.

1950

Ahdulla Ahmed

v.

A11i1ncndra

Ii issen Mitter.

Mahajan J.

1960

Abdtllla Al1111ed

v.

Aninrendra

Kisscn 1'.litter.

Mahaja.iJ.

52 SUPREME COURT REPORTS [1950]

go so far as to· say an estate agent cannot enter into

any contract, and does not decide the question of

authority, but only states his opinion. I must per•

force refer to Prior v. Moore('), where I indicated my

-0wn opinion distinctly; that instruction to a house

agent to procure a purchjl.ser and to negotiate a sale

does not amount to authority to the agent to bind his

principal by contract. Here the circumstance must

not be forgotten that Moore on the J!eccind occasion

told Newman what he was prepared to take for the

twenty-nine houses. Newman then jumped at the

conclusion that he had power at that price to enter In­

to a contraot. That is in my opinion not sufficient, and

unless express authority is given to the agent to -aell,

and for that purpose to enter into a binding contract,

the principal reserves his final right to accept or re­

fuse."

In this case there was no written document between

the principal and the agent. From th'e correspondence

it was inferred that the principal had asked the agent

to find a purchaser or to negotiate a sale and it was

held that within these words an authority to sell could

not be spelt out. Not only is the language of the

document with which we are concerned different, but

the evidence in the case particularly about the conduct

of the parties is materially different. The observations

made by the learned ,Judge must be taken to be

limited to the facts found by him. The expressions

"find a purchaser'', "procure a purchaser'', "nego­

tiate a sale" standing by themselves may not be suffi­

cient to confer authority on the agent to enter into a

binding contract on behalf of the principal; but as I

have in di ca

ted a hove, the words in the present case

are such as by necessary implication conferred

author­

ity on the agent for making a binding contract.

The next case ia D?trga Oharan Mitra v. Rajendra

Narain Sinha(•), a Bench decision of the Calcutta

High Court. The document considered in that case

bears considerable resemblance with the document in

the present case.

(1) 8 T.L.B. 69'. (ii) 86 C.L.J. 467.

'

-

S.C.R. SUPREME COUR.T REPORTS 53

It was in these terms:-

"I hereby authorize you to negotiate the sale of the

lands at Tolligunge I have recently purchased from

Messrs. Martin

and

Co. If you can secure a purchaser

to purchase the same at the gross value of Rs. 16,000,

I shall pay you Rs. 200 as your remuneration. If you

be able to raise the price to any amount above

Rs. 16,000, you will be entitled to the excess amount

-folly and I shall be bound to mention the whole

amount in the conveyance.

Please

note that this letter of authority will remain

in force for a

fortnight only to complete the

tran..c;­

action; after that this letter will stand cancelled."

The agent acting on this authority sold the property.

On receipt of this letter the vendor informed the agent

that he would not sell the land. On the acceptance of

the agent a suit was brought for specific performance.

Sir Asutosh Mookerjee who delivered the judgment

of the Bench referred to the cases of Hamer v.

Sharp (1), Prior v. Moore (

2

), Chadburn v. Moore (

3

),

and also Rosenbaum v. Bel8on ('), and observed that

it was well settled that an estate or house-agent,

authorized

to procure a purchaser, has no implied

authority to enter into an open contract of sale, because

the transaction mentioned is as specified in

·the letter,

viz., to negotiate a sale after securing a purchaser.

There is

similarity in the language employed in the

letter dealt with in this case and the letter of authority

with which we are concerned; but read as a whole, the ·two documents are drafted with different intents and the

true effect of both is not the same. There was no men­

tion of the title being guaranteed by the vendor or of

the sale being made free of encumbrances in that case.

Therl! was no evidence of surrounding circumstances or

of the conduct of the parttes. On the other hand, the

plaintiff who was himself a solicitor realized the diffi­

culties

of the situation and endeavoured to alter the

foundation of his claim. He conceded that as a broker

he had no authority to sell the property and that he

(1) 19 Eq. 108. (2) S T.T •. R. 62~.

(S) 67 L.T. 257.

(41 (1900) 2 Oh. 267.

1980

Al>d11/lt1 Al11n,·d

v.

Aui111eudra

f{issen Mitto·.

Mt1ht1jt1t1 J.

19ll0

Abdulla Altmed

Animendra

l\"issen Mitter.

Mahajau }.

54 SUPREME COURT REPORTS [1950)

could not have taken a conveyance of sale of the plot.

In the present case the attitude adopted by the parties,

as already pointed out, was entirely different. Sir

Asutosh Mookerjee also cited the case of Rosenbaum v.

Belson ('). In this case the learned Judge made the

following observations:-

"To my mind there is a substantial difference bet­

ween those expressions .. Authorizing a man to sell

means

an authority to conclude a sale; authorizing him

to find a purchaser means less than that-it means to

find a man willing to become a purchaser, not to find

him

and also make him a

purchaser."

In Saunders v. Dence('), Field J. distinguished

Hamer v. Sharp('), saying that 'all th&t Hall, V.C., in

that case decided, as I understand it, was that if you

go to an estate agent, and tell him you have a property

to sell, and that you want a purchaser, and you tell

him what you have made up your mind shall be the

price, and to a certain extent what shall be the condi­

tions, and you instruct him to try and find a purchaser,

that is not sufficient, under those circumstances, to

authorize the agent to make a contract without any

conditions whatever with regard to the title'.

I have been unable to find any case in which it has

been held 'that.Jnstructions given by A.B. to sell for

him his house, and an agreement to pay so much on

the purchase price accepted, are not an authority to

make a binding contract, including an au.thority to

sign an agreement.

In my opinion, on the terms of the instrument in

this case and in view of the relevant evidence the cor­

rect conclusion to draw is that the agent had authority

to enter into a binding contract with the purchaser and

that he did and is therefore entitled to succeed in ·the

case. Reference in this connection may be made to

Wragg v. Lovett('), where Lord Greene, M.R., put the

proposition in these words:-

" Whether or not the . agents were authorized (or,

what in law is the same thing, reasonably understood

(ll 11900) 2 Ch. 267.

(2) 62 L.T. G4'1.

(8) 19 E:i· 108.

!') [19•SJ 2 A.E.R. 969.

'

·-

-

-

S.C.R. SUPREME COURT REPOR.TS 55

themselves to be authorized) to make this particular

contract",

and it was held that the proper inference from all the

facts of the case was that the defendant was satisfied to

allow his agents to make whatever contract they

thought best and relied on them to protect his interests

provided, and provided only, that they obtained the

desired statement from the plaintiff as to his intention

to remain in the house. The answer to the question

depends

on the facts of each individual case and though

authority to make a binding contract has not to be

lightly inferred from vague

or ambiguous

l~nguage but

from substantial grounds, that however does not mean

that in express words it should be stated that the

agent is authorized to sell the property.

The learned Chief Justice in the judgment under

appeal observed that "the agent had undertaken to

negotiate a sale and secure a buyer. He could not be

said to have either secured a buyer or negotiated a sale

unless a sale

actually took place or at least a contract

of sale had been entered

into". If that is the correct

construction of the note, then in my judgment, the true

implication of the note is that the agent was authorized

to enter into a bin'ding contract, because othewise he

could

not have secured a buyer. Later on, the learned Chief Justice while referring to the case.of Rosenbaum

v. Belson(1), took the view that authorizing a man to

sell meant an authority to conclude a sale and

authorizing a man to find· a puchaser meant less

than that. It meant finding a man willing to become

a purchaser,

not to find him and also make him a

pur­

chaser. If that was the duty entrusted to the agent,

then he had clearly performed his duty and was entitl­

ed to his commission.

For the reasons gi\;en above I am o"fthe opinion that

the plaintiff had authority to enter into a binding con­

tract on behalf of the defendant and he entered into

such a contract and thereby earned the C61,!;lmission

which he has claimed in the suit and he is entitled to a

(1) [1900] 2 Ch. 267.

8

1960

Abdulla Ahmed

v.

Aui111£ n,/ru

/(i,')se.i Mitter.

Mahaja11 J.

1911()

Abdulla Aluned

••

Animendf'a

I( i.-rsen Mitt~r.

Mahajan}.

56 SUPREME COURT REPORTS [1950]

decree in the sum of Rs. 6,000 which the trial Judge

hadgiven to him, with all costs throughout.

Conceding for the sake of argument that the construc­

tion that I have placed on the agreement entered into

between the principal and the agent is not the correct

one, the question arises whether in that event the deci­

sion under appeal can be maintained. I am inclined

to the opinion that even on the construction placed by

the trial Judge on the commission note the view taken

by him was the correct one and the court of appeal

arrived at a wrong conclusion by giving too much im­

portance to certain obiter observations of Lord Russ(lll

of Killowen and Lord Romer in Luxor (Eastbourne)

Ltd. v. Gooper(1). In this very case it was pointed out

by Viscount Simon L. C. that there were at least three

different classes of cases in which the question of a

right to commission could arise. He states the first of

them in these terms:-

"There is the class in which the agent is promised a

commission

by his principal if he succeeds in

introduc·

ing to his principal a person who makes an adequate

' .

offer, usually an offer of not less than the stipulated -

amount. If that is all that is needed in order to earn

his reward, it is obvious that he is entitled to be paid

when this has been done, whether this principal accepts

the offer and carries through the bargain or not. No

implied

term is needed to secure this

result."

In my opinion, the present case falls within this

class of case· and commission became payable on the

introduction of a willing buyer by the agent to the

principal.

In Burchell v. Gowrie & Blockhouse Collieries Ltd. (

1

)

it was observed by their Lordships of the Privy Coun·

cil that if an agent brings a person into relation with

his principal as an intending purchaser, the agent has

done the most effective, and possibly, the most labo·

rious and expensive, part of his work, and that if the

principal takes advantage of that work, and, behind

the back of the agent and unknown to him, sells to the

purchaser thus brought into touch with him on terms

(1) [19'1] A.C. 108. l~) (1910] A.C. 614.

f·

-

S.C.R. SUPREME COURT REPORTS 57

which the a.gent theretofore advised the principal not to

accept, the agent's act may still well be the effective

cause of the sale and that there can be no real difference

between such a case

and those cases where the principal

sells

to the purchaser

intr@duced by the agent at a

price below

the limit given

-to the agent.

In ln¢h/Jald v. Western Neilgherry Coffee etc.' Oo.(

1

)

Willes J,. thus lays down the rule of law applicable to

SUGh cases : -

. --· u I apprehend that wherever money is to be paid by

oue man to another upon a. given event, the party upon

whom is

cast the obligation to pay, is liable to the

party who is to receive the money if he does any act

which prevents or makes it less probable that he should

receive

it."

The rule has been stated by Story on Agency at page

404 in the following terms :-

"The general rule of law, ·as to commissions, un­

doubtedly is, that the whole service or duty must be

performed, before

the right to any commissions

at­

taches, either ordinary or extraordinary ; for an agent

must complete the thing required of him, before he is

entitled

to charge for it. In the case of brokers

em­

ployed to sell real estate, it is well settled that they ·are

entitled

to their commission when they have found

a.

purchaser, even though the negotiations are conducted

and concluded by the principal himself; and also

where there is a failure

to complete the sale in

conse­

quence of a defect in title and no fault on the part

of the brokers."

In my judgment therefore, Gentle J. was right when

he held on

the interpretation placed by him on the

document that the plaintiff had earned his

commis­

sion in full iµasmuch as be had secured a buyer

who was ready, able

and willing to buy the property fol'. Rs. 1,10,000.

As l have indicated above, if the word "buyer" is to

be construed in a strict sense, then it must be .held

that the broker had authority to secure a buyer of that

type an~ he could only do so by making a binding

(1) 17 O.B. (N.B.) 788.

1915()

Abdulla Ahmul

v.

A.nime•ldra

K isseu Jlfittcr.

Mahajati J.

1911()

Ab:lulla AJ11ned

v.

Afiintendra

Ki.ssen ,itter.

58 SUPREME COURT REPORTS [1950)

contract with him. On the other hand, if the word is

taken to mean a potential buyer, such a buyer having

been secured, the agent was entitled to the commission

that had been promised to him.

It is now convenient to consider the case of Luxor

(Eastbourne) Ltd.

v.

Cooper(') in some detail because

certain observations made by Lord Russell of Killowen

and Lord Romer are the basis of the decision of the learn­

ed Chief Justice. In this case no commission note was

addressed to the broker and the contract was not contain­

ed in any document. Evidence in support of the commis­

sion agreement was oral and its terms had to be deduced

from

that evidence. Viscount Simon L.

C., out of the

materials from which express contract had to be pieced

together, reached the result that the bargain was this:

"If a party introduced by the respondent should

buy the cinemas for at least £1,85,000, each of the two

appellants would pay to the respondent £5,000 on the

completion

of the

sale."

No such sale took place, and in those circumstances

it was hel~ that there could be nothing due to the res­

pondent on the terms of the express bargain. It was

then argued that since the proposed purchasers intro­

duced by the respondent were and remained willing

and able to buy the properties for the minimum price,

while

the appellants did not close with the offer, the

appellants were

. liable in damages to the res­

pondent for breach of an implied term of the commis­

sion contract. In the statement of claim the implied

term was said to be that the appellants would "do

nothing to prevent the satisfactory completion of the

transaction so as to deprive the respondent of the agreed

commission." The breach pleaded was the failure to

complete the contract of sale with th) respondent's

client and the disposal of the subject-matter in another

quarter. The Lord Chancellor was of the opinion that

the suggested implied term was not necessary in this

contract and it was observed that in contracts made

with commission agents there was no justification for

introducing a.11 implied term unless it was necessary to

(1) [19U] A.C .. 108,

•.

(

-

_,

-

S.C.R. SUPREME COURT REPORTS 59

do so for the purpose of giving to the contract th'.e

business effect which both parties to it intended

it should have.

Lord Russell

of Killowen in his opinion said that the

only right of the plaintiff was to receive his commissi_on

out of the purchase moneys if and when received. His

right was a purely contingent right. He stood to earn

a very large sum at comparatively small pains, taking

the risk of either side withdrawing from the negotia­

tions before

any binding contract of sale and purchase

was concluded, or

of the contract for any reason not

being carried to completion. In this view of the case

the action was bound to fail and no occasion arose for

pronouncing on

the correctness or otherwise of the view

expressed

by the

Court of Appeal in Trollope & Sonav.

Martyn Brothera(1). Then it was said that as the

question of these commission contracts was discussed

at great length, that furnished an excuse for stating

briefly conclusions which his Lordship's mind, free as it

was from the fetter of previous decisions, reached. In

dealing with the subject the following observations

were

made:-"I can find no safe ground on which to base the

introduction of any such implied term. Implied terms,

as we all know, can only be justified under the compul­

sion

of some necessity. No such compulsion or

necessity exists in

the case under consideration.

The agent is promised a commission if he introduces

a

purchaser at a specified or minimum price. The owner

is desirous

of selling. The chances are largely in favour

of the deal going through, if a purchaser is introduced.

The agent takes the risk in the hope of a substantial

remuneration for comparatively small exertion. In the

case of the plaintiff his contract was made on

Septem­

ber 23, 1935; his client's offer was made on October 2,

1935. A sum of £10,000 (the equivalent of the remu­

neration of a year's work by a Lord Chancellor) for

work done within a period

of eight or nine days is no

mean reward, and is one well worth a risk. There is

no lack of business efficacy in such a contract, even

(1)

[1984] 2 K.B. 486.

1911tl

Abdulla Ahmed

v.

Animendra

Kiss~n Mitter.

Mahajan J.

Ab4uUo Ah-tl

..,,

Atlimnsdra

Kis&m Jl;Uer.

M aloaj"" J.

60 SUPREME COURT REPORTS [1950)

though the principal is free to refuse to sell to the

agent's client.

The position will no doubt be different if the matter

has proceeded to the stage of a binding contract having

been made between the principal and the agent's

client. In that case it can be said with truth that a

'purchaser' has been introduced by the agent; in

other words, the event has happened upon the occur­

rence 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

that vested right."

It is the observations last quoted which are the basis

of the decision of the learned Chief Justice in the pre-

-sent case. It seems to me that these observations had

reference to cases visua.Jized by Lord Russell ofKillowen

in the earlier part of this quotation with specific refer­

ence to the facts found in that case and cannot apply to

all cases where the word ' purchaser' or 'buyer' has

been loosely used in a different context.

Lord Romer in his opinion made the following obser·

vations :-

"But supposing that a contract by one person to

pay another a sum of money in the event of the latter

performing an unsolicited service. t6 the former is as

much subject to an implied condition as if the latter

had been employed to perform the s~rvice, the condi­

tion is in general one that merely imposes on the

former a negative and not a positive obligation. If

I employ a man for reward to build a house on my land

I subject myself to an implied condition ·that I will do

nothing to prevent him carrying out the work. But I

am under no implied obligation to help him earn the

reward whether by the supply of building materi11ols or

otherwise. But there are exceptional cases where in

a contract of employment the employer is under a

positive obligation.

If, for instance, I employ an artist

to paint my portrait I subject myself to the positive

obligation

of giving him the requisite sittings. The

question,

then, to be dermined upon the hypothesis

that I mentioned just now is .this : Where an

owner of

S.C.R. SUPREME COURT REPORTS 61

property employs an agent to find a purchaser, which

must mean at least a person who enters into a binding

contract to purchase, is it an implied term of the con­

tract of agency that, after the agent has introduced a

person who is ready, willing and able to purchase at a

price assented

to by the principal, the principal shall

enter into a contract with that person to sell at the agreed price subject only to the qualification that he

may refuse to do so

if he has just cause or reasonable

excuse for his refusal

? This qualification must plainly

be added, for

the respondent does not contend, and

no·

one could successfully contend, that the obligation of

the principal to enter into a contract is an uncondi­

tional one."

The learned Chief Justice relying on the last part of the

above quotation reached the conclusion that in the pre­

sent case as the duty of the agent was to secure a pur­

chaser, it could not be held that the purchaser had been

secured till

the contract of sale was concluded by the

vendor with him and that the actual sale having been

concluded for a sum

of Rs.

1,05,000, the plaintiff ~9uld

only get his remuneration on the basis of the price for

which

the

sale was made and not on the basis of the

offer the plaintiff had secured. It seems to me that

when Lord Romer was laying down that a purchaser

in such contracts means at least a person who enters

into a binding contr~ct to purchase, he had in mind

the contract with which he was dealing in that case ..

I am free to think that Lord Romer had not in mind

commission notes ~herein the word "buyer" or

"purchaser" had been employed in a loose sense.

In Jones v. Lowe(1), wherein the instrument was in

these terms-

"In the event of my introducing a purchaser,

I shall look to you for the payment of the usual com­

mission in accordance with the scale fixed by the

Auctioneers and Estate Agents Institute'',

Hilbery J. said that hadhebeenfreeofauthority,he

should have thought that there were strong grounds for

saying that what every owner of a house who desired to

11) [19,ll] 1 K.B. 78.

19&0

Abdulla Ahmeil

v.

Animenilra

l(issen MUler.

Mahajan J.

1960

Abdulla Ahmed

v.

Anlntendra

Kiuen Mitter.

Mahajan].

62 SUPREME COURT REPORTS. (1950]

sell it expected a house agent to do, was to bring the pro­

perty fairly to the notice of persons who resorted to

him for houses and endeavour to persuade one of them

to buy it. The learned Judge further observed as

follows:-

"If the agent introduces someone who is perfectly

willing to go through with the purchase at a price

which will satisfy the vendor, it would seem that the

agent has done everything that the parties contemplate

that he should do, for they do not contemplate that

'the agent should have anything to do with the actual

completion of the transaction. He is to find a person

who will pay the price which is asked for the property,

and the contract is entered into on the basis that the

person so found will be the person to whom the owner

of the property will sell.

It seems to me hard, if an agent has done to the full

extent what the parties contemplated that he should

do, that he should not be entitled to say 'I have done

what I contracted to do because I have introduced

someone willing to purchase although he never, in fact.

became the actual purchaser'. I do not feel, however,

that it is open to.me to put thp.t construction on the

words of the contract in the present case because I

think that the observations made in the House of Lords,

and particularly those of Lord Russell ofKillowen and

Lord Romer in Luxor (Eastbourne) Ltd. v. Cooper('),

ahow that they were clearly of opinion that if an agent is

employed to introduce a purchaser for a house and before

the purchaser has entered into a binding and legal

contract, the house is withdrawn from the market, the

agent cannot say that he has earned his commission."

In a later case, E. H. Bennett v. Millet('), the same

learned Judge had to deal with a case where the cont­

ract was in these terms :-

"We confirm that in the event of our introducing

a purchaser who is able and willing to complete the

transaction, our commission will be in accordance with

the recognized scale .... ".

The plaintiffs introduced a prospective purchaser,

whom the court found to have been at all times able

(l) [19U] A.C. 108, 12) (19<8) 2 All E.R. 929,

S.C.R. SUPREME COURT REPORTS 63

and willing to purchase, but the defendant refused to

complete. It was argued by the defendant that the

qualification of the word "purchaser" in the plaintiffs'

letter was otiose and therefore should be struck out and

the plaintiffs had not performed the contract until they

had introduced a person who actually completed the

purchase, It was held that the expression "a purcha­

~er who is able and willing to complete the transaction"

meant not a person who did, in fact, ultimately pur­

chase

the property, but one who was prepared to pur­

chase

it at the seller's price, and, as the estate agents

had found

suQh a person, they were entitled to their

commission. The learned Judge further stated that

in ordinary parlance we do not use the word "purcha­

ser" as necessarily restricted to a person who actually

completes a transaction of purchase and sale. In my

judgment, therefore, on the alternative interpretation

which has been placed by the two courts below on the

commission note the word "purchaser" cannot be read

in the strict sense in which it was read in Luxor's

case (1), but should be read in the sense in which it is

loosely used

in common parlance, and that being so,

the decision under appeal cannot be sustained. l\Ir. Setalvad cited a number of Indian authorities

where the words "buyer" and "purchaser" had not

been given the strict meaning that had been given in

Luxor' s case (1). Similarly, the words "lender" and

"borrower" had been given the meaning of "potential

lender" and "potential borrower". It is, however,

unnecessary

to enter into a discussion of all those cases

as it does not in any way advance the matter beyond

what I have already said. It is unnecessary to go

into the third contention of Mr.

Setalvad in view of

the above decision.

For the reasons given above I agree with the conclu­

sion

reached by my brother,

Patanjali Sastri, in the

judgment just delivered by him, that the appeal be

allowed

with costs throughout.

Agent for the appellant:

Agent for the respondent:

(1)

[1941] A.O. 108.

9

Appeal allowed.

S. P. Varma.

Sukurnar Gho8e.

19!50

AbduJla Ahtned

v.

Ani11iettclra

Kissen Mitter.

Mahaja11 J.