1950 (3) TMI 25 - SC - Indian Laws

Summary

Issues Involved:
1. Authority of the appellant to conclude a binding contract.
2. Entitlement of the appellant to commission based on the price negotiated.
3. Interpretation and implications of the commission letter.
4. Effect of the respondent's actions on the appellant's right to commission.

Detailed Analysis:

1. Authority of the Appellant to Conclude a Binding Contract:
The primary issue was whether the appellant, acting as an estate broker, had the authority to conclude a binding contract for the sale of the property. The trial judge and the appellate bench both found that the appellant did not have such authority. The commission letter authorized the appellant to "negotiate the sale" but did not furnish all the necessary terms for a binding contract. The Supreme Court agreed, stating, "The 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 incidental thereto and so on."

2. Entitlement of the Appellant to Commission Based on the Price Negotiated:
The appellant claimed entitlement to a commission based on the price of Rs. 1,10,000, which he had negotiated with the purchasers. The trial judge found that the appellant had performed his part of the contract by finding buyers ready and willing to purchase at Rs. 1,10,000. However, the appellate bench held that the appellant was entitled to commission only on the actual sale price of Rs. 1,05,000, as the sale was the direct result of the appellant's negotiations. The Supreme Court disagreed with the appellate bench, holding that the appellant was entitled to the full commission of Rs. 6,000 based on the negotiated price of Rs. 1,10,000. The Court stated, "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 payment of commission on the basis of that price."

3. Interpretation and Implications of the Commission Letter:
The commission letter was subject to multiple interpretations. The trial judge and the appellate bench interpreted it as requiring the appellant to find a purchaser but not to conclude a binding contract. The Supreme Court considered three possible interpretations:
1) Authorization to conclude a binding contract.
2) Reward for merely introducing a potential buyer.
3) Commission contingent upon the consummation of the transaction.
The Court rejected the first interpretation and found that the appellant had fulfilled his obligations under the second and third interpretations. The Court emphasized that "The commission note may be understood as requiring the appellant to find such a purchaser without authorizing him to conclude a binding contract of sale but making commission contingent upon the consummation of the transaction."

4. Effect of the Respondent's Actions on the Appellant's Right to Commission:
The respondent entered into a sale agreement for Rs. 1,05,000, allegedly to deprive the appellant of his commission. The trial judge found that the reduction in price was made to deprive the appellant of his legitimate remuneration. The appellate bench suspected but did not find it as a fact. The Supreme Court held that the appellant's right to commission became absolute when the sale was concluded with the purchasers introduced by him. The Court stated, "The appellant's right to commission on that basis became absolute and could not be affected by the circumstance that the respondent 'for some reason' of his own sold the property at a lower price."

Conclusion:
The Supreme Court allowed the appeal, setting aside the appellate court's decree and restoring the trial judge's decree. The appellant was entitled to the full commission of Rs. 6,000, with costs throughout. The judgment emphasized that the appellant had fulfilled his contractual obligations by introducing purchasers who made a firm offer, thereby earning his commission irrespective of the final sale price agreed upon by the respondent.