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Smt. Saraswati Devi Vs. Moti Lal - Court Judgment

LegalCrystal Citation
SubjectProperty;Contract
CourtRajasthan High Court
Decided On
Case NumberCivil Regular Second Appeal No. 454 of 1970
Judge
Reported inAIR1982Raj108; 1981()WLN629
ActsContract Act, 1872 - Sections 219
AppellantSmt. Saraswati Devi
RespondentMoti Lal
Appellant Advocate J.K. Singhi, Adv.
Respondent Advocate J.K. Dhingara, Adv.
DispositionAppeal dismissed
Cases ReferredIn Jaques v. Llyod D. George
Excerpt:
.....defendants employed the respondent (plaintiff) as their broker to find purchaser for selling their property at ajmer, for a sum of rs. 1,27,500/- and promised to pay a commission of rs. 2,500/- the respondent found the purchaser who were ready and willing to purchase the property and gave a cheque of rs. 30, 000/- to defendant no. 1 but it were defendants no. 1 and 2 who resiled from it and, therefore, the bargain could not be carried through. thus, the terms of the agency were that in the event of introducing the defendant no. 1 and her husband to the purchaser who is ready and willing to pay rs. j, 27,000/-, the respondent was to get his commission of rs. 2,500/-. the terms were not that the remuneration was only payable in case of actual sale. the event on which the commission was..........event he wishes in his agency contract, but it is 'the common understanding of man that the agent's commission is payable out of the purchase price', and it requires clear and unequivocal words to entitle the agent to commission if no sale is made. but in all cases the question is whether the event upon which it is stipulated that commission is due has taken place.' the same author in para 2107 has stated that 'however, if the agent does introduce a person who is shown to fulfil the required description, he becomes entitled to commission although no contract of sale has been made. thus, it has been said, an unqualified offer to purchase by the person introduced will normally entitle the agent to his commission under a 'ready, willing and able' contract because the potential.....
Judgment:

M.B. Sharma, J.

1. This is a defendant's appeal in a suit for recovery of a sum of Rs. 2500/- as brokerage.

2. The respondent (plaintiff) is a broker (estate agent) by profession and carries on his business at Ajmer. He claimed to recover a sum of Rs. 2500/-from Smt. Saraswaati R. Mehta (defendant No. 1) and her husband Shri Rang-raj Mehta (defendant No. 2 since dead and now represented by his legal representatives) as brokerage on the ground that he was employed by the deiendants to find a purchaser for a property of defendant No. 1 bearing A. M. C. XX/221 and XX/224 situated at Beawar Raod, Ajmer and to introduce her and said properties to a purchaser. According to the plaintiff through his efforts he introduced Prahlad Kumar Jindal of M/s. Jindal and Co., Arms dealer, Ajmer to the defendants and they gave the highest offer of Rs. 1,25,000/- to him for the aforesaid properties. When the name of the purchaser was disclosed to the defendants by the plaintiff and when they were told that their offer was for Rs. 1,25,000/- the defendants gave out at Bombay that they were prepared to accept Rs. 1,25,000/- as the net sale price for the properties and the same should be increased by Rs. 2,500/- which the defendants agreed to pay to the plaintiff by way of brokerage or remuneration for the work done by him on their behalf. He contacted the prospective purchaser Shri Prahlad Kumar Jindal and told him that transaction can be settled for a sum of Rs. 1,27,000/- and that he should give his consent to the transaction. Shri Prahlad Kumar Jindal gave his consent and also instructed the plaintiff to deliver the two cheques of Rs. 20,000/- and Rs. 10,000/- respectively, which the plaintiff had brought with him from Ajmer to the defendants towards the sale price. According to the plaintiff the contract was concluded and later on instead of aforesaid two cheques, a cheque for Rs. 30,000/- in the name of defendant No. 1 was given by Shri Prahlad Kumar Jinal and a draft agreement was also prepared, but later on the defendants refused to sign the agreement. The case of the plaintiff was that he had completed the job entrusted to him in finding a purchaser and introducing the defendants and their properties to him and as such even if because of the default of the defendants the transaction could not be through, he is entitled from his remuneration for the job done by him for the defendants. The plaintiff also claimed a sum of Rs. 320.95 as expenses incurred in going to Bombay at the instance of the defendants.

3. The suit was contested by the defendants. Defendant No. 1 in her separate written statement pleaded that she never asked the plaintiff to Arrange for the sale of her property. She traversed all the averments in the plaint except that she came to Ajmer on 3-1-1963. The defendant No. 2 set up a case that the property did not belong to him and the plaintiff was only authorised to enter into negotiations for the sale of the property and negotiations never ripened and were never finalised. He also raised other objections including an objection that the court had no jurisdiction to try the suit because the agreement for payment of commission, if any, took place at Bombay and not at Ajmer.

4. The trial court framed five issues and held that the transaction of the sale of the property was complete and the Vendor and Vendee were brought together by the plaintiff and plaintiff is entitled to recover the amount of Rupees 2,500/- as brokerage. It also held that, the plaintiff is not entitled to Rs. 320.95 allegedly incurred by him in going to Bombay. The court further held that the property was situated at Ajmer, the agreement for sale was to be executed at Ajmer, some talks also took place at Ajmer. The payment of the brokerage amount was to be at Ajmer, and therefore, it had jurisdiction to try the suit. Consequently the suit was decreed for Rs. 2,500/-. The appeal was dismissed as already stated.

5. In the instant case there is no written agreement under which the defendants or any of them appointed the plaintiff as their broker for sale of their property situated at Ajmer and agreed to pay brokerage. The case of the plaintiff is that the contract for the payment of brokerage amounting to Rs. 2,500/-was that he should bring the vendors, the defendants, and the vendee together and should introduce them and their properties to the purchaser. The defendants agreed to pay the above sum in case the purchaser was agreeable to pay a sum of Rs. 1,27,000/- as defendants wanted a net price of Rs. 1,25,000/- for defendant No. 1. Under Section 219 of the Contract Act, which deals with as to when agent's remuneration becomes due, in the absence of any special contract, payment for the performance of any act is not due to the agent until the completion of such act. A broker is also an agent and relations between broker and the person for whom he acts is that of an agent and principal. As pointed outby Kekewich J in Chadburn v. Moore, (1892) 67 LT 257 : 61 LJ Ch 674, a house or estate agent is in a different position from a broker at the stock exchange owing to the peculiarities of the property with which he is to deal which does not pass by a short instrument as stock and shares do but has to be transferred after investigation of title as to which various special stipulations, which might be of particular concern to the owner may have to be inserted in a concluded contract relating to such property.'

6. The above observation of Kekewich J., in the aforesaid case were quoted with approval in Abdulla Ahmed v. Animendra Kissen, AIR 1950 SC 15. It all depends on the terms of a particular contract as to when an estate agent is entitled to his remuneration. Whether he is only entitled to his remuneration after sale or he is entitled to his remuneration upon introduction of a person ready, willing and able to purchase. In the instant case an agreement to pay remuneration can be implied from the circumstances in which the agent was employed. The circumstances and the letters can also be spelt out from the I correspondence, if any, exchanged between the parties. On the evidence on record, the lower appellate court has concluded that the transaction of sale of the property was complete and the vendor and vendee were brought together by plaintiff and it was the Vendor who resiled from the agreement to sale. The lower court, therefore, held that the plaintiff was entitled for his remuneration amounting to Rs. 2,500/-. The aforesaid finding of the learned lower court is based on documentary evidence. There are various letters addressed not only by defendant No. 1 but also by her husband defendant No. 2 on the authority of defendant No. 1, from which it appears that the plaintiff was employed by them for finding a purchaser and for introducing the defendant No. 1 and her properties to the purchaser. There is sufficient material on record that the bargain was settled for Rs. 1,27,500/-and Prahlad Kumar Jindal, the purchaser was not only introduced by the plaintiff to the defendants but also gave a cheque for a sum of Rs. 30,000/- in the name of defendant No. 1 and the draft agreement Exs. 9 and 10 were also prepared. But later on defendant No. 1resiled and did not sign the agreement. I have already referred to Section 219 of the Contract Act. The plaintiff as per the contract was only required to find a purchaser for Rs. 1,27,500/- for the properties of defendant No. 1. He did find a purchaser who not only gave a cheque of Rs, 30,000/- but was sincerely ready and willing to purchase the property, and thus, the plaintiff cannot be held responsible if the sale deed was not executed and transaction fell through because it were the defendants who resiled from the contract. Chitty on Contracts 24th Edition Vol. II para 2105 dealing with 'Estate agent' has observed 'The agent is engaged to bring about a sale, but he generally wants his commission before sale, i.e. at the 'subject to contract' stage. He is free to stipulate whatever event he wishes in his agency contract, but it is 'the common understanding of man that the agent's commission is payable out of the purchase price', and it requires clear and unequivocal words to entitle the agent to commission if no sale is made. But in all cases the question is whether the event upon which it is stipulated that commission is due has taken place.' The same author in para 2107 has stated that 'However, if the agent does introduce a person who is shown to fulfil the required description, he becomes entitled to commission although no contract of sale has been made. Thus, it has been said, an unqualified offer to purchase by the person introduced will normally entitle the agent to his commission under a 'ready, willing and able' contract because the potential purchaser has thereby been shown to be 'ready, willing and able'. The terms upon which he was willing and able to purchase must however have been terms upon which at the material time the vendor had expressed a willingness to sell. The question whether the person introduced fulfils the contractual description is a question of fact.'

7. The matter of remuneration to estate agent came up for consideration before the Hon'ble Supreme Court in Abdulla Ahmed's case (AIR 1950 SC 15) (supra). Mahajan J. as his Lordship then was, referred to the observations of Viscount Stanford Chancellor in Luxor (East Bourne) Ltd. v. Cooper, 1941 AC 108 'Contracts with commission agents do not follow a single pattern and theprimary necessity in each instance is to ascertain with precision what are the express terms oi the particular contract under discussion.' Their Lordships were considering the case of an estate agent, who introduced the seller and his property to the purchaser, but later on the transaction was entered into with the nominees of purchaser. The question arose as to whether the estate agent would be entitled to his remuneration. Their Lordships referred to the observation of Viscount Simon L. C. in Luxor (Eastbourne) Ltd. v. Cooper, 1941 AC 108 in the following terms:--

'There is a class in which the agent is promised a commission by his principal if he succeeds in introducing 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 regard, 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.'

Construing the contract it was observed: 'In my opinion, the present case falls within this class of case and commission becomes payable on the introduction of a willing buyer by the agent to the Principal.'

8. In Jaques v. Llyod D. George & Partners Ltd., (1968) 1 WLR 625 construing the contract of commission agency in that case Lord Denning M. R. and Caires J., observed that as Clause (3) was totally uncertain and so of no effect the defendant agents would only have been entitled to commission on the usual basis if the sale had gone through. Lord Denning M. R. further observed, when an estate agent is employed to find a purchaser, the ordinary understanding of mankind is that the commission is payable out of the purchase price when the matter is concluded. If the agent seeks to depart from that term, he must make it perfectly plain to his client.

9. In my opinion in case of estate agent, who is employed to find a purchaser ordinarily the commission is payable out of the purchase price when the sale takes place. If in a given case the agent seeks to depart from that term, he must make it perfectly plain to hisclient and for that a strong case is required to show that the event on the happening of which commission was payable was to find a purchaser ready and willing.

10. As I have already stated earlier in the instant case the defendants employed the respondent (plaintiff) as their broker to find purchaser for selling their property at Ajmer, for a sum of Rupees 1,27,500/- and promised to pay a commission of Rs. 2,500/-. The respondent found the purchaser who was ready and willing to purchase the property and gave a cheque of Rs. 30,000/- to defendant No. 1 but it were defendants Nos. 1 and 2 who resiled from it and, therefore, the bargain could not be carried through. Thus, the terms of the agency were that in the event of introducing the defendant No. 1 and her husband to the purchaser who is ready and willing to pay Rs. 1,27,000/-, the respondent was to get his commission of Rs. 2,500/-. The terms were not that the remuneration was only payable in case of actual sale. The event on which the commission was payable to the plaintiff, having taken place and the plaintiff having done all that was agreed to be done by him, he was entitled to his remuneration. Thus, the courts below rightly decreed the suit of the plaintiff against the appellants.

11. There is no force in this second appeal and same is dismissed with costs.


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