Case Analysis

Abdulla Ahmed vs. Animendra Kissen Mitter, 1950 AIR 15

Abdulla Ahmed vs. Animendra Kissen Mitter 1950 is a case involving a real estate agent,
the appellant/plaintiff in this case and a person who wants to sell one of his property, the
respondent. The case involves a dispute between the two parties with regard to the discharge
of commission to the estate agent by the respondent. The case law is based on the on the
contract of agency from the broad topic of contract law. This case is one of the many
prominent cases falling under the purview of contract of agency and the remuneration of
agents.

The appellant is a real estate broker in Calcutta. The respondent willing to sell one of his
property hired the appellant to secure a suitable buyer. The respondent reduced this contract
into writing in the form of a commission letter. He mentioned the commission scale of the
broker in the same letter. The appellant was to sell the property for a price not less than Rs.
1,00,000 for which he would have received a commission of Rs. 1,000. If he sells the
property for more than Rs. 1,05,000 and less than Rs. 1,10,000 he would be entitled for the
whole of excess over Rs. 1,05,000. With accordance to this contract the appellant found two
purchasers who were willing and able to buy the said property. The appellant got a deal of
Rs. 1,10,000 for the respondent from these purchasers and intended to conclude the contract
of sale with them on behalf of the respondent. He communicated the same to the respondent
through letter. The respondent however, never replied to that letter. Moreover, the respondent
went behind the back of the appellant and entered into an agreement with the nominee of the
purchasers mentioned above for the sale of the said property for an amount of Rs. 1,05,000.
The appellant, therefore, brings forth this appeal to recover his commission of Rs. 6,000
which was due to him if the sale was made for Rs. 1,10,000 instead of Rs. 1,05,000. In
addition to this commission he also claims damages of the same amount for breach of
contract.

There are two key issues involved in this case. Firstly, whether the appellant is entitled to a
commission of Rs. 5,000 on the basis of sale that took place eventually for Rs. 1,05,000 or is
he entitled to Rs. 6,000 which would have been due to him had the sale took place for Rs.
1,10,000. Secondly, whether the appellant had the authority to conclude the contract of sale
on the behalf of the respondent. This is an issue of greater significance. The issue of authority
of agent has been thoroughly discussed by Mahajan J. in the judgment of this case. The
respondent claims that the appellant had no authority for concluding a contract of sale and
therefore the contract he entered into with the purchasers is void ab initio.

The case before reaching the Honourable Supreme Court was heard by a single Judge in the
High Court of Judicature at Calcutta and also by the Division Bench of the same Court. The
Division Bench passed a contrasting judgment with the one passed by the single Judge. The
single Judge held that the appellant had no authority in selling the property. However, the
subsequent sale that took place for Rs. 1,05,000 between the respondent and the purchasers
was a direct result of the appellant’s efforts. He was entitled to a full commission of Rs.
6,000. The Division Bench on the other hand agreed with the single Judge on the question of
authority but varied on the magnitude of commission discharged to the appellant. The
Division Bench held that the task of agent was complete only when the buyers introduced by
him to the respondent concluded the sale of contract. However, a sale of contract was
concluded between the respondent and buyers introduced by appellant. Although the
circumstances under which it took place were different, but the contract was a direct result of
appellant’s negotiations. Therefore, the appellant is entitled to commission but on the basis of
price mentioned in the subsequent sale deed which in this case was Rs. 1,05,000. The
Division Bench held that appellant was entitled to a commission of Rs. 5,000. Patanjali Sastri
J. interpreted the commission contract between the appellant and respondent in three different
ways. Firstly, it might be interpreted as the appellant finding an appropriate purchaser and
concluding the sale of contract on behalf of the respondent. Secondly, rewarding the
appellant just for introducing competent purchasers to the respondent. Thirdly, the appellant
finding competent purchasers and introducing them to the respondent without the authority of
concluding a binding contract of sale. The trial Judge adopted the second interpretation, and
the Division Bench adopted the third interpretation. Patanjali Sastri J. conflicted the view
adopted by the Division Bench while referring to the case of House of Lords in Luxor
(Eastbourne) Ltd. v. Cooper saying that the grounds of both the cases were different and that
the principles laid down in that case were not applicable here. He, therefore, held that the
appellant had done everything he was required to when he introduced the purchasers who
made a firm offer of Rs. 1,10,000 to the respondent and the fact that the sale took place at a
lower price did not affect the appellant’s right to commission of Rs. 6,000. Mahajan J. passed
a similar judgment and allowed the appeal, however, he laid special emphasis on the question
of authority of the appellant in concluding the sale of contract. He observed that the
construction of the commission note conferred authority on the appellant to conclude a sale of
contract. The commission letter has a phrase ‘secure a buyer’ which is different than finding
or procuring a buyer. One can only secure a buyer if he has the authority to enter into a
contract. Also, he lays weight on the conduct of parties with respect to the authority in this
case. The silence of respondent that followed after the appellant shared the letter of buyers to
him seems as eloquent as speech. He noted that the testimony of respondent did not seem
reliable and that his conduct was questionable. He referred to case of Durga Charan Mitra v.
Rajendra Narain Sinha for the purpose of interpretation of commission letter. He refers to the
case of Burcheil v. Cowrie & Blockhouse Collieries Ltd. in which it was held that even if the
principal goes behind the back of the agent and concludes a contract with the purchaser
brought in touch with him through the agent, the agent is fully entitled to the commission
guaranteed to him. Therefore Mahajan J. held that the appellant had an authority to sell the
said property and was entitled to a commission of Rs. 6,000 due to him for a sale that was
supposed to take place for Rs. 1,10,000.

The judgment passed by Patanjali Sastri J. and Mahajan J. was in many instances different
than that of the High Court. The Division Bench mainly relied on the Luxor case for the
judgment of this case. Whereas the grounds of both the cases were different. It is clearly
stated in the Luxor case that every contract with commission agent do not follow a single
pattern and one has to ascertain the express terms of the contract in question. Also, in this
case the conduct of the respondent directs that there was an arrangement made between the
purchasers and the respondent so as to bypass the agent and deprive him of his commission.
This can be established by the conduct of the purchasers when they pressed charges of
fraudulent misrepresentation against the appellant. The court found that these allegations do
not hold water. The subsequent sale deed made for Rs. 1,05,000 was made in the favour of a
benamidar of the purchasers and was later forwarded to the purchasers subsequently. Further
the court was not satisfied by the respondent’s version of events. They were evasive and the
ultimate resort was in lapses of memory. Mahajan J. compared and contrasted various cases
to establish the authority of the appellant to conclude the sale of contract.

It is clear in this case that the intention of both the purchaser and the respondent was to
deprive the appellant of his commission by going behind his back and entering into a contract
for a lesser amount. It is clear that the appellant introduced the respondent a purchaser willing
and able to buy the property for Rs. 1,10,000 and was ready to enter into a contract on the
behalf of the respondent. Also, in Inchbald v. Western Neilgherry Coffee etc. Co. it was held
that if the principal does anything that prevents or makes it less probable for the agent to earn
his commission the agent should receive it.