D.S. Sahni vs Faqir Singh

K.V. Gopalakrishnan Nair, J.—This is a Defendant's second appeal and arises out of a suit instituted by the Respondent against him for

rendition of accounts and for a decree in respect of the amount found due on taking of accounts.

The Appellant appointed the Respondent his agent for sale of tractors, diesel engines etc. on a commission of 2½ per cent on the price of the

goods sold in the State of Jammu and Kashmir. The trial court passed a preliminary decree which was duly followed by a final decree directing the

Appellant to pay a sum of Rs. 2618/14/9 to the Respondent. On appeal, the Addl. District Judge at Jammu held that the Appellant was liable to

pay only Rs. 2343/14/9.

This amount constituted the commission payable to the Respondent in respect of two sales: one of a tractor to the Director of Rural Development,

Jammu for a price of Rs. 25846/88/ -; the commission payable on this sale being Rs. 896/2/9 and the other of a diesel engine to the Chief Engineer

Government Joinery Mills Pampore for Rs. 58150, the commission. due to the Respondent in respect of this sale being Rs. 1457/12/ -.

The Appellant in this second appeal has attacked the judgment and decree of the Addl. District Judge on the ground that he is not in law liable

to pay the Respondent any commission in respect of either of the aforesaid sales. We shall first deal with the sale of the tractor to the Director,

Rural Development. It is common ground that the contract for this sale was obtained by the Respondent as the agent of the Appellant on 20-3-

1954.

In pursuance of this contract the tractor was actually supplied to the Director Rural Development on 25-3-1954, but the period of agency of the

Respondent had terminated on 24-3-1954. It is, therefore, strenuously urged on behalf of the Appellant that the actual delivery of the tractor

having taken place after the period of the Respondent's agency terminated, the Respondent cannot claim any commission in respect of this sale.

The Respondent's learned Counsel has, on the other hand, argued that neither under the provisions of the Sale of Goods Act nor under the Law of

Contract can the Respondent be deprived of his commission in respect of the sale.

This makes it necessary to refer briefly to the provisions of law bearing on the subject. Section 4 of the Sale of Goods Act defines a sale and an

agreement to sell in the following terms:

(1) A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price....

(2) Where under a contract of sale the property in the goods is transferred from the seller to the buyer the contract is called a sale, but where the

transfer of the property in the goods is to take place at a future time or subject to some conditions thereafter to be fulfilled, the contract is called an

agreement to sell.

(3) An agreement to sell becomes a sale when the time elapses or conditions are fulfilled subject to which the property in goods is to be

transferred.

This section makes it clear that where under a contract of sale the property in the goods is transferred from the seller to the buyer, the contract

effectuates a sale. It cannot be doubted that a contract entered into by a duly authorized agent within the scope of his authority is as good as a

contract entered into by the principal himself and has the same legal effect,

In the instant, case, the Respondent was duly authorized to enter into contracts of sale and it is not gainsaid that he acted duly within the scope

of his authority in entering into the contract in question. The transaction, therefore, has the same effect as if the contract of sale was entered into by

the Appellant himself. Reference may be made in this connexion to Section 226 of the Contract Act. The only question that has to be considered is

whether the property in the goods was transferred to the buyer under the contract of sale entered into by the Respondent as the agent of the

Appellant. Section 19(1) of the Sale of Goods Act enacts that

where there is a contract for the sale of specific or ascertained goods the property in them is transferred to the buyer at such time as the parties to

the contract intend it to be transferred."" Sub-section (2) lays down that

for the purpose of ascertaining the intention of the parties regard shall be had to the terms of the contract, the conduct of the parties and the

circumstances of the case.

But the parties are apt to express their intention obscurely; it is also possible that a particular point of importance such as the passing of the

property in the goods was not present to their minds so that they really did not have an occasion to express their intention in respect of it. The

legislature has, therefore, formulated certain rules for ascertaining the intention of the parties as to when the property in the goods is to pass to the

buyer. Sub-section (3) of Section 19 of the Sale of Goods Act accordingly enacts that

unless a different intention appears, the rules contained in Sections 20 to 24 are rules for ascertaining the intention of the parties as to the time at

which the property in the goods is to pass to the buyer

In the case in hand, no express provision was made in the contract regarding the time at which the property in the goods was to pass; nor does the

conduct of the parties or the circumstances of the case afford a decisive answer to the question. We have, therefore to be guided in this case by

the provisions of Section 20 of the Sale of Goods Act for the purpose of ascertaining the intention as to the passing of the property in the goods.

Section 20 reads as under:

Where there is an unconditional contract for the sale of specific goods in a deliverable state, the property in the goods passes to the buyer when

the contract is made and it is immaterial whether the time of payment of the price or the time of delivery of the goods, or both is postponed.

According to Section 2(3) of the Act.

goods are said to be in a ""deliverable state"" when they are in such state that the buyer would under the contract be bound to take delivery of them.

Specific goods"" are defined in Section 2(14) of the Act as

goods identified and agreed upon at the time a contract of sale is made.

The tractor in question undoubtedly fell within the definition of ""specific goods"" and was in a ""deliverable stale; the contract of sale was

unconditional in character. It is, therefore, beyond doubt that the property in the tractor passed to the buyer when the contract of sale was made

on 20-3-1954 by the Respondent as the agent of the Appellant. The mere circumstance that the tractor was physically delivered to the buyer only

on 25-3-1954 could not have the effect of postponing the passing of the property in it to the buyer.

It follows that under the contract of sale dated 20-3-1954 the property in the goods was transferred from the seller to the buyer, and consequently

there was a sale in the eye of law on that date. Admittedly the period of agency of the Respondent terminated only on 24-3-1954. The

Respondent is, therefore, clearly entitled to the stipulated commission on the sale of the tractor which took place on 20-3-1954.

The matter can be viewed from another angle. Let us assume that the actual sale took place only after the period of agency of the Respondent

terminated. Even so, on the facts of this case one has per force to come to the conclusion that the contract concluded by the Respondent with the

buyer was the basis for the sale. The Respondent established the relation of vendor and purchaser between the parties, and it was in pursuance of

this relation that the sale took place.

It is also significant to note that even according to the Appellant's case the actual sale took place well within a week of the conclusion of the

contract of sale by the agent. It is plain that it was the agent who not only negotiated the sale and induced a contracting mind in the buyer, but also

actually concluded a binding and enforceable contract for the benefit of his principal. In the circumstances, it is not a valid answer for the principal

to turn round and say that at the time of the actual sale of goods the agency had terminated.

That the contract made by the agent directly and effectively led to the sale of the goods cannot be over-looked. The principal had to do nothing

more than abide by that contract which was obviously to his advantage. We are therefore of opinion that even if it is held that the actual sale took

place after the agency had terminated by efflux of time, the agent will be entitled to his commission.

In Green v. Bartlett (1863) 11 WR 834 : 14 CBNS 681, Erle C.J. observed:

The question whether or not an agent is entitled to commission, has repeatedly been 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.

This statement of the law was adopted by the Bombay High Court in the Municipal Corporation of Bombay v. Cuverji Hirji ILR 20 Bom 124, at

p. 127. This decision held that

a broker is entitled to his commission where he has induced in the vendor the contracting mind, the willingness to open negotiations upon a

reasonable basis even though a change or modification of the terms of the contract is made by the buyer and seller without his intervention.

The principle of law was re-iterated in Firm Fazal Ilahi Abdul Qayium v. Md Amin Bros. AIR 1935 Pesh 56, in the following terms:

The broker's duty is simply 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 conditions is not the sine qua non for the earning of the commission.

He need not look to the fulfilment of the conditions.

It will be noticed that the case on hand is stronger than the cases cited above and therefore the principle enunciated in those cases will apply

with even greater force to the present case. It is thus seen that whether we consider the case on the basis of the express provisions of the Sale of

Goods Act or under the general law of contract relating to commission agents, the conclusion is the same, namely, that the Respondent is entitled

to commission in respect of the sale in question.

The other item in dispute in this case relates to the sale of a diesel engine to the Chief Engineer, Government Joinery Mills, Pampore, for a sum

of Rs. 58150/ -. Much of what we have already said regarding the sale of the tractor applies to this item also. The only point urged on behalf of the

Appellant in respect of this item is that the diesel engine was delivered at Pathankot which is admittedly outside the State of Jammu and Kashmir.

The contract of agency provided for payment of commission to the Respondent only in respect of sales within the State.

It is argued that as the delivery of the diesel engine was made outside the State, the sale of it also must be held to have taken place outside the

State. This argument is patently fallacious. It equates delivery of the goods sold with the sale itself. Section 20 of the Sale of Goods Act is a

complete answer to the Appellant. As in the case of the tractor dealt with in the foregoing paragraphs, so in the case of the diesel engine now under

consideration the property in the goods passed to the buyer on the conclusion of the contract of sale which admittedly took place within the State.

It is unnecessary to read over again the provisions of the Sale of Goods Act to which we have adverted earlier in this judgment.

It is a matter of convenience for the parties to arrange when or where to take delivery of the goods in respect of which the property has already

passed to the buyer. In such a case it is erroneous to assume that delivery alone brings about the sale. We do not find any ground whatsoever to

accede to the contention of the Appellant that the sale of the diesel engine in question took place at Pathankot and not within the State of Jammu

and Kashmir. We have, therefore, no hesitation in negativing the contention put forward by the Appellant's learned Counsel.

In view of the foregoing, the appeal fails and is dismissed with costs.

Murtaza Fazl Ali, J.

I agree.