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1978 DIGILAW 163 (MAD)

Banwarilal and Company v. Sundaram Spinning Mills

1978-02-25

NAINAR SUNDARAM

body1978
Judgment :- 1. The plaintiff who lost his cause in Small Cause Suit No. 120 of 1973 on the file of the Third Additional Subordinate Judge, Coimbatore, is the petitioner in this revision. The defendant in the said suit is the respondent herein. The plaintiff laid the suit for the recovery of a sum of Rs. 875/-said to be due to it towards brokerage for transactions brought about by it to the defendant from third parties. According to the plaintiff, such brokerage is payable as per the agreement and trade custom prevailing. The defendant contested the suit mainly on the ground that the transactions brought about by the plaintiff did not fructify, in that sales were not completed and prices were not paid and the plaintiff could earn commission only when the transaction ended in fruition, thereby benefiting the defendant and the plaintiff as well. The learned Subordinate Judge, who tried the matter negatived the claims of the plaintiff mainly on the ground that the plaintiff is not a broker simpliciter, but in respect of the transactions concerned it was more than a broker simpliciter, in that it had the responsibility to see to the completion of the transactions to the end by sales being effected and the prices being paid and then only it could earn commission, and in the present case admittedly the transactions did not fructify, and hence, the plaintiff is not entitled to the brokerage claimed. In this view, the learned Subordinate Judge dismissed the suit of the plaintiff. The present revision is directed against the judgment and decree of the learned Subordinate Judge. 2. Mr. N. Varadarajan, learned counsel for the petitioner, contends that the responsibility of the plaintiff came to an end when it established the privity of contract in respect of each of the transactions concerned between the defendant and third parties and the plaintiff had no further responsibility to see to the completion of the contract, in that sales took place and prices were paid and this could not be made the condition precedent for the payments of brokerage to the plaintiff. Learned counsel submits that as per the agreement and trade custom, the plaintiff is entitled to the brokerage even though the transactions did not come to fruition. 3. Learned counsel submits that as per the agreement and trade custom, the plaintiff is entitled to the brokerage even though the transactions did not come to fruition. 3. When there is an express contract providing for the remuneration of the agent, the amount of the remuneration and the conditions under which it becomes payable must primarily be ascertained from the terms of the contract. In the absence of an express contract, the right of remuneration and the conditions under which it is payable will depend on the custom or usage or the particular business in which the agent is employed. In the present case, there is no contract of agency reduced to writing specifying the terms with regard to the payment of remuneration to the agent. Hence, we are left with the surrounding circumstances and factors from which we have to spell out the terms of the contract of agency with reference to the payment of remuneration. The principle has been laid in Ayyanna Chetty v. Subramania Iyer 45 M.L.J. 400 = 18 L.W. 560 as follows:— “The question whether, under a contract of commission agency, the commission agent has earned his commission or not depends upon the intention of the parities to be deduced from the terms of the contract and the surrounding circumstances; very clear words are necessary to induce the Court to hold that the intention of the parties to the contract was that the commission should be payable by an intending purchaser whether he actually became the purchaser or not.” That there could be two types of agency has been considered by judicial precedents. The question whether or not an agent is entitled to commission has been repeatedly litigated, and it has usually been decided that if the relation of buyer and seller is really brought about by the act of the Agent, he is entitled to commission although the actual sale has not been effected by him. In other words, the commission becomes due if the broker has induced in the party for whom he acts the contracting mind or t he willingness to open negotiations upon a reasonable basis. This would be a case of broker simpliciter. In other words, the commission becomes due if the broker has induced in the party for whom he acts the contracting mind or t he willingness to open negotiations upon a reasonable basis. This would be a case of broker simpliciter. The second type of agency is one usually characterised as “commission agency” in which the agent has a more active part not only with reference to bringing about the privity of contract between his principal and third party purchaser, but also his responsibility continues till the completion of the contract by delivery of the goods and by payment of the sale price and the completion in the above sens e alone gives him the basis to demand and earn his commission. 4. The distinction between the two types of agency has been brought about in Radha krishnan v. Province of Madras I.L.R. 1952 Mad. 571 = 65 L.W. 250 (F.B.) by a Full Bench of this Court in the following terms:— “A ‘broker’ is an agent employed to make a bargain for another and receives a commission on the transaction which is usually called brokerage. He has usually neither the custody nor the possession of the goods. It is the brokers duty to establish privity of contract between the principal and the third party. The broker cannot sell in his own name nor can he sue on the contract. A ‘commission agent’ (to which class the plaintiffs in these cases belong) on the other hand, is not like a broker. He has, almost invariably, custody or possession of the goods, actually or constructively. He often sells in his own name and, in certain circumstances, can sue the buyer himself.” 5. In Fisher v. Drewitt 48 L.J. Ex. 32 Dramwell, L.J., says that the current of modern opinion is to the effect that those who bargain to receive commission for introduction have a right to heir commission as soon as they have completed their portion of the bargain, irrespective of what takes place subsequently between the parties introduced. This dictum has been adopted by Chandhuri, J., in Raghu Nandan Lal v. Madanmohan Dass 76 I.C. 333. 6. This dictum has been adopted by Chandhuri, J., in Raghu Nandan Lal v. Madanmohan Dass 76 I.C. 333. 6. In the case of a broker simpliciter, his duty is only to bring the parties together to arrange a transaction and to get the contract completed; the performance of the contract is a matter between the promisor and promisee; the due fulfilment of the conditions is not a sine qua non for the earning of the commission and he need not look forward to the fulfilment of the conditions. This is what has been stated by a Division Bench in Firm Fazal Ilahi v. Md. Amin Bros A.I R. 1935 Peshawar 56. 7. That a broker is a mere intervener; he is a negotiator; he is interested in establishing privity of contract between the parties, and he is not concerned with the actual fulfilment of the contract has also been recognised by a Division Bench of the Andra Pradesh High Court in G. Krishnamurthy & Co. v. Ramunujam 1960 A.I.R. (A.P.) 882. 8. However, where an agent introduced a customer to his principal and the latter undertakes to pay him a fixed commission “after the satisfactory expiry and conclusion of the business”, the payment is to be made on completion of the contract, which takes place after the goods have been delivered and the buyer has paid the price. This principle has been recognized in Chimaswami v. C. Doctor & Co. 1044 2 M.L.J. 122. 9. The categories of brokers came to be considered by the Supreme Court in Abdulla Ahmed v. Animendra Kissen Mitter 1950 S.C.R. 30 where the Court was concerned with a commission letter which ran as follows: “I, Animendra Kissen Mitter of No. 20-B Nilmeni 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 remuneration. If the price exceeds Rs. 1,05,000/- and does not exceed Rs. 1,10,001/-. I shall pay you the whole of the excess over Rs. 1,05,000/- in addition to your remuneration of Rs. 1,000/- as stated above. In case you can secure a buyer at a price exceeding 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. 1,10,001/-. I shall pay you the whole of the excess over Rs. 1,05,000/- in addition to your remuneration 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 percent of the excess amount over Rs. 1,10,000/- in addition to Rs. 6000/- as stated above. This authority will remain in force for one month from date.” In the said context, the Supreme Court observed as follows: “In the absence of clear words expressing the intention of the parties it is possible to construe these terms in three different ways corresponding to the three patterns into which commission contract with real estate brokers may broadly be said to fall. In the first place, the letter may be read as authorising the appellant 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 purchaser and sale of the prop erty on behalf of the respondent. Secondly, the contract may be construed as promising to reward the appellant for merely introducing a potential buyer who it 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 binding contract of sale but making commission contingent upon the consummation of the transaction. From the above, it is clear that there could be a case where the agent could earn the commission only upon the consummation of the transaction. Keeping the said principles in mind, we have to find out as to whether in the instant case, the contract of agency constituted the plaintiff only as a broker simpliciter, or a broker with the responsibility and a duty attached to him to see to the fruition of the transaction or the contact. In the present case, the plaintiff examined a clerk of it as P.W.1 and marked the documents, Ex. A1 to A3, the brokerage bills, Ex. A4, the notice issued by its counsel and Exs. A6 to A8 to show that brokerage was earlier paid to it. In the present case, the plaintiff examined a clerk of it as P.W.1 and marked the documents, Ex. A1 to A3, the brokerage bills, Ex. A4, the notice issued by its counsel and Exs. A6 to A8 to show that brokerage was earlier paid to it. These documents do not by themselves throw any light on the question involved and do not support the case of the plaintiff that by merely bringing about the contract between the defendant and the third parties and by establishing a privily of contract between them, the plaintiff would be entitled to the brokerage without reference to the fruition of the contract, in that the sale takes place, goods delivered and price paid. 10. On the side of the defendant, correspondence that has passed between the parties has been marked as Ex. B1 to B18 and they, to a very great extent, enlighten us on the question involved. Ex. B1 is a letter from the plaintiff dated 28th August 1970, addressed to the defendant. It is with reference to a transaction with one M/s. Dalchand Somani. It would be useful to extract the contents of this letter. “You must be remembering very well that we had a talk in this connection and it was agreed by your goodselves that let the party retire the bills and take delivery and your goodselves was kind enough to agree to pay the difference in freight and octroi and handling charges paid by the party in excess to the usual charges when despatched direct to Malegaon. These cases were despatched to Bombay by the mills in spite of our clear instructions to send these to Malegaon.” “But we regret very much to find that till now the amount has not been paid to the party.” “We request your goodselves to remit this amount immediately to the party without any further delay.” “We hope you will take necessary action immediately and oblige us.” Ex. B-2 is another letter from the plaintiff, addressed to the defendant, and it is dated 3rd March 1971, and there, the plaintiff speaks about “sales effected by us”. Ex. B-3 is also a letter from the plaintiff, addressed to the defendant dated 10th May 1971 and the following statement is interesting: “The amount will be paid on delivery of L/r. either to the party or to us Please make necessary arrangements and oblige.” Ex. Ex. B-3 is also a letter from the plaintiff, addressed to the defendant dated 10th May 1971 and the following statement is interesting: “The amount will be paid on delivery of L/r. either to the party or to us Please make necessary arrangements and oblige.” Ex. B-4 is again a letter from the plaintiff, addressed to the defendant dated 11th May 1971 and in that with reference to a transaction with M/s. Deendayal Hiralal of Bhiwandi the plaintiff states “.. the amount of Rs. 600/- is to be paid only after delivery of 25 cases.” In Ex. B-5 dated 14 May 1971, which is also a letter from the plaintiff, addressed to the defendant, the plaintiff states as follows: “We have received the draft today in your favour. Please arrange to send the L/r. to us through your man and collect the draft from us against the same.” In Ex. B. 6 dated 22nd May 1971, the plaintiff informs the defendant with reference to the account of one M/s. Abdul Samad Abclulla Latiff of Bombay that the draft is lying with the plaintiff. Exs. B7 to B10 and B16 to B-18 seem to be the usual printed forms filled up with concerned particulars adopted by the defendant arid they say with reference to the concerned transactions that the yarn was sold through the plaintiff. In Ex. B-11 dated 8th June 1971, the plaintiff states. “The amounts are lying with us and you are hereby requested to send your representative with the relative L/rs and necessary documents against which we can pay the amounts as agreed.” Ex. B-12 is an office copy of the letter dated 24th March 1971 addressed by the defendant to the plaintiff and there, they write as follows: “In this matter we would like to inform you that unless you arrange to clear all the pending bills of your clients we will not decide over this. Only if you arrange to clear the pending bills we will decide over the matter.” In Ex. B-13, the defendant writes to the plaintiff on 12th May 1971 with reference to the transaction with M/s. Deendayal Hiralal of Bombay as follows: “We refer to your letter dated 10th May 1971 and 11th May 1971. Regarding the Rs. 600/- which you have agreed to pay, you have written to adjust in your brokerage account. B-13, the defendant writes to the plaintiff on 12th May 1971 with reference to the transaction with M/s. Deendayal Hiralal of Bombay as follows: “We refer to your letter dated 10th May 1971 and 11th May 1971. Regarding the Rs. 600/- which you have agreed to pay, you have written to adjust in your brokerage account. We have already explained over phone that this account is different and brokerage account is different. So this Rs. 600/- is to be remitted by you by a cheque immediately.” The sale confirmation slips have been exhibited as Ex. B14 and B15. The expression used runs as follows: “We confirm having sold this day for and on your behalf and account to.” 11. The implications of these documents are overwhelming and they point out that the agency in the present case is not an agency simpliciter, but something more, in that the plaintiff had taken over the responsibility of seeing to the fruition of the contracts and it had the responsibility of not only bringing about the privity of contract but also the responsibility of not only bringing about the privity of contract but also the responsibility to see to the fruition of the contract. It could earn its commission only if the transactions were put through, goods were delivered and the prices were paid. It could not earn its commission on the simple basis that it had brought about a privity of contract between the parties and its responsibility ended there. In this view, I find the learned Subordinate Judge has come to the right conclusion that the job of the plaintiff is not that of a broker simpliciter so as to warrant and sustain its claim for brokerage on the mere basis that it has brought about the contract between the parties and the fulfilment of the obligations between its principal and third parties was no concern of it. I do not find that the judgment and decree of the learned Subordinate Judge suffer from any infirmity in law and they cannot be said to be not in accordance with law. I was inclined to discuss the materials on record only with the intention to find out whether they fit in with the principles set out by the judicial precedents in this behalf. I do not find any warrant to interfere in revision and in this view, this revision is dismissed. I was inclined to discuss the materials on record only with the intention to find out whether they fit in with the principles set out by the judicial precedents in this behalf. I do not find any warrant to interfere in revision and in this view, this revision is dismissed. There will be no order as to costs.