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Liladhar Chatrabhuj Vs. Mathuradas Gokuldas - Court Judgment

LegalCrystal Citation
SubjectContract
CourtMumbai
Decided On
Case NumberO.C.J. Suit No.118 of 1927
Judge
Reported inAIR1934Bom158; (1934)36BOMLR119; 150Ind.Cas.871
AppellantLiladhar Chatrabhuj
RespondentMathuradas Gokuldas
DispositionSuit dismissed
Excerpt:
.....and with it his right to claim remuneration.;the test in such cases is whether the work of the broker who claims brokerage is the effective or efficient cause of the completion of the transaction. it is not sufficient to show that the transaction would not have been entered into but for the broker's services, if the transaction resulted therefrom only as a casual and remote consequence. where there are several brokers working for the same party at the same time, the broker who is entitled to his remuneration is not necessarily the one who has first introduced the business, but the broker whose work is the effective cause of the completion of the transaction, not the causa sine qua non, but the causa causans, of the completion of the transaction.burchell v. gowrie and blockhouse..........to pay them brokerage at two per cent. according to his case the brokerage was to be paid to the broker or brokers through whom the transaction was completed, as other persons had also approached him for a sale of the property to the same party. defendant further says that the negotiations for a sale, so far as the plaintiffs were concerned, terminated on or about august 7, 1925. thereafter an agreement for sale was entered into on april 22, 1926, between mr. f.e. dinshaw, solicitor, the mortgagee of the property, and mr. lathe, the then acting dewan of kolhapur, and the sale was completed on or about june 2, 1926. a sum of rs. 12,000 was paid for brokerage to the broker through whom the transaction was completed, and the defendant denies liability to pay to the plaintiffs any.....
Judgment:

B.J. Wadia, J.

1. The plaintiffs have filed this suit to recover the sum of Rs. 12,000 for brokerage alleged to be due to them for bringing about the sale of the defendant's property at Bund Gardens Road, Poona, formerly known as 'Maneck Park', to the Maharaja of Kolhapur for Rs. 6,00,000. Plaintiffs say that they were engaged as brokers in the transaction in or about July 1925, that the transaction of sale which was ultimately completed in or about June 1926, was brought about through their exertions, but that it was completed behind their backs, and that they are entitled to brokerage at two per cent. on the sale price. Defendant says that in or about May-June 1925, plaintiff No. 1 came and told him that the Maharaja of Kolhapur was a likely purchaser of this property, but he denies that he engaged the plaintiffs as his brokers to bring about the transaction, or that he agreed specifically to pay them brokerage at two per cent. According to his case the brokerage was to be paid to the broker or brokers through whom the transaction was completed, as other persons had also approached him for a sale of the property to the same party. Defendant further says that the negotiations for a sale, so far as the plaintiffs were concerned, terminated on or about August 7, 1925. Thereafter an agreement for sale was entered into on April 22, 1926, between Mr. F.E. Dinshaw, solicitor, the mortgagee of the property, and Mr. Lathe, the then acting Dewan of Kolhapur, and the sale was completed on or about June 2, 1926. A sum of Rs. 12,000 was paid for brokerage to the broker through whom the transaction was completed, and the defendant denies liability to pay to the plaintiffs any brokerage at all.

2. The important questions for consideration are whether the plaintiffs were employed as brokers in respect of the transaction of sale of the Poona property ; if so, what were the terms of that employment ; and, thirdly, whether the plaintiffs brought about the contracting mind between the vendor and the purchaser in relation to the transaction that was ultimately completed. I may mention here incidentally that in some cases an estate-broker earns his remuneration without much work or trouble, and his reward is out of all proportion to the work done by him. In other cases he may be regarded as meriting his remuneration for the work which he has actually performed. But these are matters with which the Court is not concerned. The principles governing claims for brokerage have been laid down in numerous decisions, both English and Indian. They were considered by Crump J. in Vasanji v. Karsondas : AIR1928Bom270 in which the learned Judge adopted the dictum of Erle C.J. in Green v. Bartlett (1863) 14 C.B.N.S. 681 which in turn was followed by the Appeal Court in The Municipal Corporation of Bombay v. Cuverji Hirji I.L.R. (1895) Bom. 124 viz., that an agent who finds a purchaser and establishes the relationship of vendor and purchaser between the parties, without actually bringing about the sale, is entitled to his commission. This is subject, as the learned Judge pointed out at p. 494, to any contract or any special term in the contract of employment to the contrary. It is necessary, in every case, therefore, for the Court to consider what the particular terms of the employment of the broker are. In that case the contract, as stated at p. 487, was as follows :

The plaintiff was to find a party willing to advance up to rupees four lacs on equitable mortgage of the defendant's three properties and the defendant was to pay to the plaintiff a commission at the rate of two per cent. on the amount of the loan so to be made.

3. The learned Judge after considering all the evidence held that the plaintiff was entitled to recover his brokerage, though the defendant who had originally engaged him to negotiate the loan actually borrowed the moneys from the same bank through another broker, because it was really the plaintiff who had brought about the contracting mind between the bank and the defendant. It is, however, necessary in order to entitle a broker to earn his commission to show that the transaction is completed, in the absence of any contract to the contrary, or if the transaction is not completed, to show that the non-completion is due to the default of the principal : Mehta V. Cassumbhai. : (1922)24BOMLR847 . But the defendant cannot by employing another broker in the midst of negotiations, however innocently, deprive the broker who brought the parties together of his commission: Wilkinson v. Martin (1837) 8 C. & P. 1 In that case it was held that the broker had introduced the purchaser to the vendor, and as such introduction was the foundation on which the negotiations proceeded, the broker was entitled to his commission if he was up to a certain time the agent or the middleman between the parties, though the transaction was completed with out his instrumentality or interference. It follows, therefore, that if the negotiations carried on by the broker have completely ceased, and have been abandoned at the time his employment as a broker has ceased, the agency of the broker ceases too, and with it his right to claim remuneration. The test in such cases has been laid down in Burchell v. Gowrie and Blockhouse Collieries, Limited [1910] A.C. 614 viz., whether the work of the broker who claims brokerage is the effective or efficient cause of the completion of the transaction. It is not sufficient to show that the transaction would not have been entered into but for the broker's services, if the transaction resulted therefrom only as a casual and remote consequence. There may be cases also in which several brokers are working for the same party at the same time, and in such a case the broker who is entitled to his remuneration is not necessarily the one who has first introduced the business, but the broker whose work is the effective cause of the completion of the transaction, not the causa sine qua non, but the causa causans, of the completion of the transaction: see Halsbury, Vol. I, para. 434. It would, therefore, be immaterial if the transaction in suit was completed through another broker, unless the defendant can show that the negotiations went off completely and were given up by the parties so far as the plaintiffs were concerned, and the transaction was completed as a result of separate negotiations, and through the exertions of another broker. After dealing with the evidence in the case his Lordship proceeded :

4. It appears, therefore, from the evidence that the plaintiffs were not in the strict sense of the word employed to find out a purchaser as the defendant knew that the Maharaja of Kolhapur was a likely purchaser long before July 1925, and though the evidence given by the defendant of Offers made to him in 1922, 1923 and 1924 shows that there was only a casual conversation now and again between him and the members of the Maharaja's staff, in February 1925 at any rate defendant wanted to negotiate with the Maharaja, and that was before the plaintiffs came upon the scene. It cannot also be said that the plaintiffs found the purchaser. 'Finding a purchaser' has been defined by Branwell L.J. in Wilkinson v. Alston (1879) 48 L.J.Q.B. 733 as introducing a purchaser to the vendor, or introducing a purchaser to the premises, or calling the premises to the notice of a purchaser. Strictly speaking, the plaintiffs have not done any of these things, According to the defendant the Maharaja knew the house as he was on visiting terms with him, and I do not believe plaintiff No. 2 when he says that the Maharaja had no idea of what the house or its accommodation was before July 1925, or that the defendant came to know of the Maharaja's intention to buy the house only after the interview of July 23. Defendant did not know plaintiff No. 2 at all, but understood that he represented the Kolhapur party. In fact he was working as a broker for Kolhapur, and his suit for brokerage against the Kolhapur party is pending. It is true that the plaintiffs carried on negotiations after July 23 with the Maharaja, and they would have been entitled to their brokerage of two per cent. if the transaction was completed for Rs. 6,25,000 within a fortnight from July 24, 1925. That fortnight expired on August, 7, and it is the defendant's contention that, as far as the plaintiffs were concerned, all negotiations that they carried on were completely broken off after August 6, or at any rate at the expiry of the period mentioned in the written offer. The written offer gave a limited mandate to the plaintiffs, and Mr. Dinshaw stated that he was not sure whether he might not have mentioned the period of a fortnight, as he was at the same time negotiating for the sale of the house to Sir Victor Sassoon. Plaintiffs on the other hand say that the negotiations did not terminate, but that there was only a lull pending the Maharaja's consideration of the amended offer. There is no evidence that the amended offer, if any, was at all considered by the Maharaja, nor was the result of any consideration ever communicated by Kolhapur to the plaintiffs or by the plaintiffs to the defendant. There is nothing in the evidence before me to show that the plaintiffs carried on their negotiations after the expiry of the fortnight or at any rate after August 8. In fact, plaintiff No. 1 stated that after August 8 he never interested himself about the transaction any more. Plaintiff No. 2 said that he kept on awaiting the final reply from the Maharaja which never came, and the fact that he saw the defendant sitting together with the Maharaja at the Poona Race Course and then wrote to plaintiff No. 1 inquiring as to what this meant does not, in my opinion, amount to carrying on negotiations in respect of the transaction. Plaintiff No. 2 has also stated that he saw Mr. Bawdekar in January or February 1926, and then went to Kolhapur, and from Kolhapur went to Mahableshwar, and from Mahableshwar came to Bombay again, in connection with the transaction, but beyond his bare word, which I do not believe, there is no evidence of what he actually did by way of negotiations in connection with the transaction. I have already stated before that the defendant has in his attorneys' first letter of June 7, 1926, alleged that the negotiations came to an end after the counter-offer was rejected, and there is no denial of that allegation, although it is again repeated in the letter of June 23, 1926. According to the defendant, he was never consulted again in any further negotiations which Mr. Dinshaw carried on with the purchaser and which resulted in the agreement of April 22, 1926, except, as I have stated before, that he had some personal talk with the Maharaja at the Poona Race Course in September 1925.

5. The agreement of April 22, 1926, is contained in a letter addressed by Mr. Lathe, the then Dewan of Kolhapur, to Mr. Dinshaw as the constituted attorney of the defendant. It was contended on defendant's behalf that he was not a party to the agreement, and that the sale was by Mr. Dinshaw himself to Mr. Lathe on behalf of the Maharaja of Kolhapur. Mr. Dinshaw said that he was only formally the agent of the defendant, but not in substance. That Mr. Dinshaw had the dominating voice in settling the transaction is clear, but from the fact that the power-of-attorney was given to him in order that, as he himself stated, he might constitute himself the defendant's agent in respect of this transaction, from the fact that he was accountable to the defendant for the purchase price, from the fact that brokerage was debited to the defendant in the mortgage loan account, and, lastly, from the fact that the conveyance was signed by the defendant himself, it is clear that Mr. Dinshaw was acting as the agent of the defendant. His counsel admitted that for conveying the defendant's equity of redemption in the property Mr. Dinshaw was the agent of the defendant, but it was argued that Mr. Dinshaw was the equitable mortgagee in possession and as such he entered into the agreement for sale. The position of an equitable mortgagee is, according to Order XXXIV, rule 15, of the Civil Procedure Code, and the newly added Section 96 of the Transfer of Property Act, the same as that of a simple mortgagee. One of the essential elements constituting a simple mortgage is the mortgagee's right to cause the property to be sold which implies that he has no power to sell it without the intervention of the Court. He cannot claim possession as of right except by consent of the mortgagor or under an order of the Court. Mr. Dinshaw was in possession with the consent of the mortgagor from July 1925, but that could not give him the right to sell, even though the mortgagor was under his absolute control. He could only sell with the consent of the mortgagor, and though under the circumstances that consent might have been only formal, Mr. Dinshaw could not sell without that formal consent and in his own right. I, therefore, hold that he sold the property as the agent of the defendant, and, as I have stated before, the letter recording the agreement is also addressed by Mr. Lathe to Mr. Dinshaw as the constituted attorney of the defendant.

6. With regard to the negotiations which culminated in the agreement of April 22, 1926, Mr. Dinshaw stated that in February 1926, Mr. Bawdekar saw him, and that thereafter he requested his Poona house agent, viz., the firm of H. 0. Abdul Rehman, to allow Mr. Bawdekar and the Dewan to see the house which they appear to have done some time about the end of February 1926. Thereupon Mr. Lathe had an interview with Mr. Dinshaw in connection with the purchase in March 1926, but the price was not agreed to. In those negotiations with Mr. Bawdekar and Mr. Lathe, one Harilal K. Sheth also took part, as he knew both the defendant and Mr. Dinshaw. Mr. Sheth said that in or about January-February 1926 he approached the defendant on behalf of the Maharaja of Kolhapur about the sale of the Poona property, and defendant referred him to Mr. Dinshaw. He saw Mr. Dinshaw and made an offer of Rs. 5,00,000. At a subsequent stage he made an offer of five and a half lacs. When the offer of five and a half lacs was made, Mr. Lathe, Mr. Tarachand Navalchand, who is Mr. Sheth's partner in certain joint ventures in jewellery, and the pleader Bawdekar were waiting downstairs near Mr. Dinshaw's office. Mr. Sheth took them up to Mr. Dinshaw, and said that he had offered rupees five and a half lacs whereas Mr. Dinshaw wanted rupees six and a quarter lacs, and that between the two figures the price should be settled. The price, however, was not settled, as there was some dispute as to who was to bear the cost of the conveyance.Eventually, Mr. Sheth and the Kolhapur party saw Mr. Dinshaw at his house where the bargain was struck for Rs. 6,00,000 and Mr. Dinshaw agreed that the cost of the conveyance would be borne entirely by the vendor, and a sum of Rs. 50,000 was paid by cheque to him by way of earnest. In the course of these negotiations Mr. Dinshaw had taken a power-of attorney on March 13, 1926, from the defendant as defendant was going out of Bombay. The agreement is dated April 22, and it recites that Rs. 50,000 are now to be paid by way of earnest money to the vendor, and the conveyance also recites that Rs. 50,000 were paid on April 22, 1926. That is not quite consistent with Mr. Sheth's statement. But no question was put to Mr. Dinshaw as to when he received the cheque for Rs. 50,000, nor was Mr. Sheth confronted with the written agreement, for it may well be that earnest money is paid at the time the bargain is struck, though it may be mentioned in the formal agreement as having been paid on the date of its execution. Anyhow the title-deeds were in Mr. Dinshaw's office at the end of March 1926, and according to him they were inspected between that date and April 22, 1926. The agreement mentions that inspection was once taken before, and is to be given again. That inspection cannot, in my opinion, refer to any other inspection except the one which was taken after the title-deeds were returned to the office, for, in fact, as I have held, no inspection was taken in August 1925. Messrs. Payne & Co. have produced their bill with regard to the costs of the conveyance, but that does not help either side, as there is no mention made therein of the cost of inspection of the title-deeds. Mr. Dinshaw stated that inspection was required by the purchaser because of the area. That again cannot refer to the deficiency which is alleged to have been mentioned in August 1925. It refers to the acreage that was comprised in the land acquisition proceedings in Poona. It cannot be said either that the agreement of April 22, 1926, is in substantially the same terms as any brought about by the plaintiffs. The difference in price may not be material, but if the plaintiffs' case is that in the original offer furniture was not included but that it was included because of the deficiency of the area, it is clear from the new agreement that furniture is expressly included, but not in lieu of the area acquired in the land acquisition proceedings, for it was also agreed that any compensation which would be received for the acquired area was to be paid over to the purchaser. In my opinion the old offer of July 1925 had lapsed. In fact plaintiff No. 1 himself says so, and on the evidence the negotiations terminated some time about August 7, 1925, so far as the plaintiffs were concerned. Plaintiffs' efforts in the course of the negotiations which they actually carried on were, therefore, not the causa causans of the sale in April 1926. The negotiations having terminated on or about August 7 so far as the plaintiffs were concerned, their employment as agents terminated also, and the transaction was completed after the termination of their employment and on different terms as a result of fresh negotiations which commenced in or about January-February 1926. In these fresh negotiations plaintiffs took no part, and they cannot, therefore, claim remuneration in respect of a transaction which resulted from those negotiations. In Millar, Son, and Co. v. Radford (1903) 19 T.L.R. 575 Collins M.R. at p. 576 observes as follows :

The claim of house agents to be entitled to commission in circumstances like the present was a claim which was often made, and was likely to continue to be made. It was, therefore, important to point out that the right to commission did not arise out of the mere fact that agents had introduced a tenant or a purchaser. It was not sufficient to show that the introduction was a causa sine qua non. It was necessary to show that the introduction was an efficient cause in bringing about the letting or the sale. Here the plaintiffs failed to establish what was a condition precedent to their right to commission-viz., that they had brought about the sale. It was open to the defendant in an action like this to say either that, though the plaintiffs effected a sale, they were not his agents, or that, though they were his agents, they had not effected the sale. If the defendant proved either the one or the other, the plaintiffs failed to make out their case.

7. In the case before me the plaintiffs were not the defendant's agents at the time of the completion of the transaction, nor did they effect the sale, and their efforts and exertions in July-August 1925 were not the effective or sufficient cause of that completion.

8. I only wish to add in conclusion that I do not believe the plaintiffs' evidence generally. As to Mr. Kamdar, much of his evidence depends upon the accuracy of his memory with regard to the interviews and conversations which took place nearly eight years ago, and his evidence suffers in my estimate by reason of its dependence upon his memory which cannot be implicitly relied on, especially as he had an opportunity to put on record in correspondence what he deposed to in the box, but which opportunity he failed to avail himself of. I prefer the evidence of the defendant and his witnesses, though as far as the defendant is concerned I must say that many of his answers were not quite clear nor satisfactory. I have, however, considered all the evidence led on either side, both oral and documentary, and in the result I hold that the plaintiffs have not made out a case for payment of brokerage to them.

9. Plaintiffs in the alternative claim Rs. 12,000 for damages, or in the further alternative, on the basis of quantum meruit, but their counsel has not chosen to deal with either of these contentions in his closing address. I will, however, deal with them as they form the subject-matter of an issue. There is no question of damages in this case, because though fraud is alleged, none has been proved, and it has not been proved that defendant was guilty of any conduct preventing the plaintiffs from completing their negotiations and earning their remuneration. There is no suggestion that defendant was more anxious to pay brokerage to one broker rather than to another. A suggestion was made that the broker, Mr. Sheth, to whom Rs. 12,000 were paid was merely the nominee of Mr. Bawdekar who conspired with him in order to cheat the plaintiffs of their dues. This suggestion, like many others, rests merely in allegation. As to the question of quantum meruit, it does not arise, because the parties having entered into an express agreement under which the plaintiffs were to get their brokerage if they brought about a transaction on certain terms, there is no scope for the operation of the principle of quantum meruit. Plaintiffs can only be entitled to receive their remuneration in case of success, no matter what amout of labour and trouble they might be put to, and the fact remains that they have not done and completed what they were originally employed to do : see Mason v. Clifton, Bart (1863) 3 F.& F. 899 Howard Houlder and Partners, Ld. v. Manx Isles Steamship Co. [1923] 1 K.B. 110 The claim of quantum meruit can only arise upon a promise to be implied from a request by the defendant to the plaintiffs to perform services for him or from the acceptance of such services as plaintiffs rendered so as to imply a promise to pay for the same. Neither of these alternatives has occurred here, as nothing was done by the plaintiffs outside their agreement under which alone they were entitled to recover: see Barnett v. Isaacson (1888) 4 T.L.R. 645 The suit must be dismissed with costs.


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