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K.C. Mehta Vs. Cassumbhai Keshavji - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtMumbai
Decided On
Case NumberO.C.J. Suit No. 582 of 1922
Judge
Reported in(1922)24BOMLR847; 75Ind.Cas.193
AppellantK.C. Mehta
RespondentCassumbhai Keshavji
Excerpt:
.....of transaction in which the broker is engaged-broker entitled to his commission-title-deeds, production of-mortgagee not bound to produce title-deeds.;a broker, in order to be entitled to his commission, must prove either that the transaction has been completed, or that, if it is not, the noncompletion was due to default on the part of the principal.;lott v. cuthwaite (1893) 10 t.l.r. 76, 77, followed.;a mortgagee in bombay is not bound to deliver possession of the title deeds, or to produce them for the inspection of the mortgagor, until actual tender or payment of the principal, interest and costs. beattie v. jetha dungarsi (1868) 5 bom. h.c.r.o.c.j. 152, 155, 157, referred to. - - 11. in this letter it is clearly stated that the defendant had agreed to take a loan..........one j.m. mehta, who was the first mortgagee of the said property for rupees one lac, to send the title-deeds to him for investigation of title. mr. lam, thereupon, wrote the letter ex. b. the defendant's son also requested mr. lam to prepare a formal agreement of mortgage. mr. lam said that there was no necessity of a formal agreement, as he had made a full note of all the terms agreed upon between the parties. the defendant's son, however, told mr. lam that he wanted a formal agreement to show it to the first mortgagee, so that he might send the title-deeds to mr. lam. mr. lam undertook to prepare a formal agreement and he eventually drafted one. the defendant's son stated in his evidence that the plaintiff asked mr. lam to prepare the agreement, but i do not believe his evidence on.....
Judgment:

Mulla, J.

1. This is a suit to recover Rs. 4,000 being brokerage alleged to be due from the defendant to the plaintiff.

2. The plaintiff's case is that in December 1921 he was employed by the defendant as a broker to raise a loan of Rs. 2,00,000 on a mortgage of the defendant's property at Ripon Road. The terms of employment-as to which there is no dispute between the parties -were that the defendant should pay brokerage to the plaintiff at the rate of two per cent. on completion of the mortgage.

3. The plaintiff says that he went and saw two or three persons about the loan and that eventually he saw Mr. Cama, who expressed his willingness to make a loan if the property was a substantial one. Mr. Cama, accompanied by the plaintiff, the defendant and the defendant's son, went and saw the property, and he eventually agreed to advance Rs. 2,00,000 on a first mortgage of the said property at interest at the rate of nine per cent. per annum free from income tax. Thereafter, on the 11th January 1921, the plaintiff, the defendant and his son saw Mr. Cama at his office pursuant to an appointment made with him, and from there they proceeded to the office of Messrs. Shroff & Lam, Mr. Cama's attorneys. There the remaining terms of the loan were discussed and settled, and Mr. Lam made a note (Ex. A) of the terms agreed upon between the defendant and Mr. Cama. There is no dispute between the parties as to these terms; in fact the notes made by Mr. Lam were put in by counsel for the plaintiff in his opening with the consent of counsel for the defendant.

4. After the terms were recorded by Mr. Lam, the defendant's son requested Mr. Lam to write a letter to one J.M. Mehta, who was the first mortgagee of the said property for Rupees one lac, to send the title-deeds to him for investigation of title. Mr. Lam, thereupon, wrote the letter Ex. B. The defendant's son also requested Mr. Lam to prepare a formal agreement of mortgage. Mr. Lam said that there was no necessity of a formal agreement, as he had made a full note of all the terms agreed upon between the parties. The defendant's son, however, told Mr. Lam that he wanted a formal agreement to show it to the first mortgagee, so that he might send the title-deeds to Mr. Lam. Mr. Lam undertook to prepare a formal agreement and he eventually drafted one. The defendant's son stated in his evidence that the plaintiff asked Mr. Lam to prepare the agreement, but I do not believe his evidence on this point.

5. After a few days the plaintiff went and saw the defendant's son at his shop. The defendant's son told him that the first mortgagee did not want to part with the title-deeds and that the first mortgagee having come to know of the agreement between the defendant and Mr. Cama, he himself was willing to make a further advance to the defendant and to extend the time for redemption. The defendant's son also told the plaintiff that he was prevailing upon the first mortgagee to part with the title-deeds. The defendant's son also went and saw Mr. Lam and informed him to the same effect.

6. On or about the 19th January 1922 the plaintiff again went and saw the defendant's son at his shop when the defendant's son told him that the first mortgagee had agreed to make a further loan to him and that that would save him costs and brokerage. Thereupon the plaintiff demanded brokerage from the defendant's son. The latter told him that he would give him some other job to enable him to make up for the loss.

7. On the same day the plaintiff sent a solicitor's notice (Ex. C) to the defendant. To the said notice the defendant replied on the 24th January 1922 (Ex. C), stating that there was no concluded agreement for a mortgage between the defendant and Mr. Cama, and that the plaintiff's claim was false.

8. Mr. Cama also sent a solicitor's notice to the defendant on the 20th January 1922 (Ex. D) to which the defendant sent a similar reply on the 24th January 1922 (Ex. D).

9. The defendant has filed his written statement. The first defence is that there was no concluded agreement between him and Mr. Cama for the loan and that matters had rested in negotiations only. The defendant stated in his evidence that he did not agree to any of the terms taken down by Mr. Lam and that there was nothing but a talk about the terms of the loan in Mr. Lam's office. I think this is absolutely untrue. After the terms were arranged, he instructed Mr. Lam to write a letter (Ex. B) to the first mortgagee which runs as follows:-

We are instructed by Mr. Cassum Keshvaji the above named mortgagor to address you as under:-

That he has entered into an agreement with our clients Messrs. J.H. Cama and others to take a loan from them on a first legal mortgage of the above property which is at present under mortgage to you.

We are instructed that due intimation has already been given to you by the said Mr. Cassum Keshavji of his intention to redeem your mortgage.

10. At the end of the letter there is a request to the first mortgagee to send the title-deeds to the attorneys for the investigation of title.

11. In this letter it is clearly stated that the defendant had agreed to take a loan from Mr. Cama. The defendant's son admits that this letter was read out and interpreted to him by Mr. Lam before it was despatched.

12. I hold on the evidence of the plaintiffi and Mr. Cama, corroborated by the independent testimony of Mr. Lam, that there was a concluded agreement between the defendant and Mr. Cama whereby Mr. Cama agreed to lend and the defendant agreed to borrow rupees two lacs from Mr. Cama on a first mortgage of the defendant's property upon the terms contained in Ex. A.

13. The second defence is that the brokerage was payable on completion of the mortgage, but as the mortgage was not completed, the defendant was not bound to pay brokerage. It is true that the mortgage was not completed as stated by the defendant. The plaintiff is not therefore entitled to the brokerage claimed unless he proves that the mortgage was not completed owing to default on the part of the defendant. It is well established that in order to entitle a broker to his commission, he must prove either that the transaction has been completed, or that, if it is not, the non-completion was due to default on the part of the principal: see per Lindley L.J. in Lott v. Outhwaite (1893) 10 T.I.R. 76.

14. Such being the law, it remains to consider whether the noncompletion of the mortgage was due to default on the part of the defendant. The defendant's case on this point is thus stated in his written statement (paragraph 2):-

The defendant saya that as the former mortgagees declined to part with the title-deeds unless and until the amount of their moneys was paid to them the negotiations fell through.

15. In his evidence the defendant's son stated that on the 15th or 16th January 1922 he went and saw Mr. Lam and told him that the first mortgagee refused to part with the title-deeds and that Mr. Lam thereupon told him that unless he had full and free inspection of the title-deeds ho would not advise Mr. Cama to advance a single pie to the defendant. This case is no where set out in the correspondence before suit, nor was a single question put to Mr. Lam about it in his cross-examination, and when with the leave of the Court Mr. Jayakar interrogated Mr. Lam about it at the fag end of the case, Mr. Lam stated emphatically that he did not say anything of the kind to the defendant's son. On the other hand, the version given by Mr. Lam is that the defendant's son told him that the first mortgagee would not part with the title-deeds, but that he was prevailing upon him to do so. Mr. Lam says that the defendant's son left him under that impression, and this is corroborated by the two letters Exh. D. The first of them was a letter addressed by Messrs. Shroff & Lam on behalf of Mr. Cama to the defendant on 20th January 1922. The letter says:-

Under your instructions a draft agreement for mortgage was prepared by us setting forth in detail all the terms and conditions of the said intended mortgage.

Thereafter your son attended our office and informed us that the present mortgagee was giving trouble and stated that you would call again and inform us as to how you wished to proceed in the matter.

We regret since then neither yourself nor your son has called at your office to give as the necessary instructions to proceed further.

Under the above circumstances we have to write this to you asking you to see us in the matter immediately.

16. To the said letter the defendant replied, on the 24th January 1922, stating that the negotiations for the loan were never completed and that the defendant therefore did not think it necessary to attend the office of Messrs. Shroff & Lam. At the end of the letter it is stated that under the circumstances it was not necessary that the defendant should see Messrs, Shroff & Lam as required in their letter. It is nowhere stated in this reply that the defendant's son did not see Mr. Lam because Mr. Lam had finally told the defendant's son that he would not advise his client to make the loan unless the title-deeds were produced to him, Had the defendant's son told Mr. Lam that the first mortgagee was firm in his refusal to produce the deeds, Mr. Lam would have investigated the defendant's title to the property by taking search of the records of the Sub-Registrar of Bombay. A mortgagee in Bombay is not bound to deliver possession of the title-deeds, or to produce them for the inspection of the mortgagor, until actual tender or payment of the principal, interest and costs. It was so held by Westropp C.J. in Beattie v. Jetha. (1868) 5 B.H.C.R. 152 Where a mortgagee refuses to produce the title-deeds, and such cases are not uncommon, the mortgagor's title may be investigated by taking search of the records of the SubRegistrar of Bombay. It was contended by Mr. Jayakar on behalf of the defendant that no such suggestion was made by Mr. Lam to the defendant or his son. The answer to that is that that stage was never reached so far as Mr. Lam was concerned, for when the defendant's son last saw Mr. Lam he left Mr. Lam under the impression that he was prevailing upon the first mortgagee to part with the title-deeds. The truth of the matter seems to be that the first mortgagee must have at first refused to part with the title-deeds, but that when he learned that the defendant had arranged for a loan elsewhere he himself offered to advance a further loan; farther the due date of payment of the first mortgage was drawing nigh, and there was a possibility, if the loan was taken from Mr. Cama, that the defendant's title might not be accepted by his attorneys. On the other hand, if the defendant borrowed further money from the first mortgagee, there would be no fresh investigation of title, and the additional loan could be made on a further charge. A fresh mortgage for rupees two lacs would not be necessary and that would save stamp and registration charges on rupees two lacs. As it happened, the defendant's son finally arranged for a further loan with the first mortgagee on the 15th or 16th January 1922 and the only fresh document executed was a deed of further charge for Rs. 70,000.

17. The defendant's son in the course of his evidence meant to convey that the refusal of the first mortgagee to part with the title-deeds, coupled with Mr. Lam's final reply, left him no alternative but to accept the offer of a further loan from the first mortgagee. I do not think that was so. I do not believe the defendant's son when he says that he saw Mr. Lam, that he told Mr. Lam that the first mortgagee refused to part with the title-deeds, and thereupon Mr. Lam told him that he would not advise his client to advance money unless the title-deeds were produced.

18. Had the first mortgagee persisted in the refusal-as to which there is no satisfactory proof, he being not called as he was not in Bombay-the defendant's son ought to have gone and seen Mr. Lam about it. He did not do so, and when he was requested by Mr. Lam's letter of the 20th January 1922 to see him, he sent a blunt reply, saying that there was no agreement for a mortgage and it was therefore not necessary to see Mr. Lam.

19. Upon these facts, I hold that the non-completion of the mortgage was due to default on the part of the defendant, and pass judgment for the plaintiff for Rs. 4,000 and costs and interest on judgment at six per cent. per annum.


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