(1950) 1 S.C.R. 30
(1950) 1 S.C.R. 30
(1950) 1 S.C.R. 30
1950 however, a sale did take place between the persons in-
troduced by the plaintiff and the defendant, and as
Abdulla Ahm<d
that sale, in the view1also of the learned Judges, was
v.
Ani1nendra
the "direct result of the plaintiff's negotiations", they
Ki1s~n MitU,.. held that the appellant was entitled to commission but
only on the price mentioned in the sale deed, namely,
Ptdanjali
Sastrl /,
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.
S.C.R. SUPRE!ME COURT REPORTS 35
exceed Rs. 1,10,000 I shall pay you the whole of the 1960
excess over Rs. 1,05,000 in addition to your remuner-
Abdulla Ahmed
ation of Rs. 1,000 as stated above. In case you can v.
secure a buyer at a price exceeding Rs. 1,10,000 I shall Animendra
pay you twenty-five per cent.. of the excess amount Ki ssen Mitter.
over Rs. 1,10,000 in addition to Rs. 6,000 as stated
f. above. This authority will remain in force for one Patanjali
month from date". Sa•tri J•
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
-, 'L
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
36 SUPREME COURT REPORTS [1950]
19150 be free from encumbrances and that a "good title"
Abdulla Ah1ned
would be made out, but this is no more than a general
v. indication of the nature of the bargain proposed and is
Aui11iendra perfectly consistent with an understanding that further
Kissen Mitter, details will be subject to negotiation between the res-
pondent and the purchaser when found.
Patanjali
Sastt'i J. 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 pur-
chaser": 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.
S.C.R. SUPREME COU"RT REPORTS 37
extend to the concluding of a contract of sale, as other- 19'50
wise the agent could not possibly accomplish the task
assigned to him. We.do not see much force in this Abdulla Aluned
v.
criticism. As already indicated there are cogent reasons Anifllendrn
why an owner employing an estate agent to secure a K issen Mitter.
purchaser should not, in the absence of clear words to
that effect, be taken to have authorised him to conclude Patattjali
a contract of sale, and we cp.nnot see how the lack of SastriJ,
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
i I
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
38 SUPREME COURT REPORTS [1950]
1950 contingent right" and arose only when the purchase
materialised. As Lord Simon put it " The agent is
1lbdulla Ahnzcd
v.
promised a reward in return for an event and the
Aniutendra event has not happened". But the position is differ-
/( isst:n l'if itter. ent where the principal, availing himself of the
efforts of the agent, concludes the sale with the pur-
F>atanjali chaser introduced by him, as the respondent did in
Sastri J.
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}. 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
S.C.R. SUPREME COURT REPOR'fS 39
"I think you were, as you usually are, a little pre- 1950
mature in actually entering into what might be a bind-
Ahdulla Ahmed
ing contract. It is always best to have an offer and v.
acceptance subject to a formal contract being entered A11i1ncndra
into .... ". Ii issen Mitter.
I To this Newman replied:--
Mahajan J.
'"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.
52 SUPREME COURT REPORTS [1950]
1960
go so far as to· say an estate agent cannot enter into
Abdtllla Al1111ed any contract, and does not decide the question of
v. authority, but only states his opinion. I must per•
Aninrendra force refer to Prior v. Moore('), where I indicated my
Kisscn 1'.litter. -0wn opinion distinctly; that instruction to a house
Mahaja.iJ.
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:- 1980
"I hereby authorize you to negotiate the sale of the Al>d11/lt1 Al11n,·d
lands at Tolligunge I have recently purchased from v.
Messrs. Martin and Co. If you can secure a purchaser Aui111eudra
to purchase the same at the gross value of Rs. 16,000, f{issen Mitto·.
I shall pay you Rs. 200 as your remuneration. If you Mt1ht1jt1t1 J.
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 ),