Bobby Prasad (“Buyer”), a Mumbai resident, contacted Greater Noida real estate salesperson Virendra Kumar (“Salesperson”) about her interest in a 2 bhk flat. The Buyer told the Salesperson that she was interested in buying investment property in Greater Noida and planned to use the rent payments as an income stream.
The Salesperson was associated with RGSB Infratech Pvt Ltd (“Brokerage”). The agreement with the Brokerage stated that the Salesperson was an independent contractor, and the Salesperson was responsible for paying her own costs and recruiting clients. The agreement also specified how commissions would be divided between the parties.
In November 2015, the Salesperson took the Buyer to the property, as well as several other properties. The Buyer saw part of one interior of the properties, but otherwise didn’t go inside the other properties. The Salesperson told the Buyer that extensive work had been done to the interiors of the properties.
The Buyer purchased one unit through the Salesperson in Migsun Ultimo flat, based on alleged representations that the properties will be ready for possession soon and its development is going on very fast speed. The Brokerage received commissions from each of the sales.
Salesperson assured that the underconstruction flat will be ready by 2017 November and buyer can take possession in 2017 November. Salesperson also issued a CREDIT NOTE to Buyer mentioning after paying 40% of the cost of building Buyer will get INR 1,80,000/- as discount from RSGB Infratech Pvt Ltd and also AC, Fridge, Microweb.
After paying 40% when Buyer tried to contact the Salesperson - it was hard to find the changed contact details of the Salesperson, when Buyer tried contacting and find the office of RSGB Infratech Pvt Ltd - it was not there at the given address in the CREDIT NOTE. When Buyer called the number given on the mentioned mobile number in the CREDIT NOTE then she reply that Buyer has to be in the RSGB Office to discuss.
Buyer then took a flight from Mumbai to New Delhi and visited the RSGB office and found Salesperson is abscounding and the person who had issued the CREDIT NOTE and the manager of the RSGB Infratech firm said that the CREDIT NOTE issued is FALSE AND NULL AND VOID and Buyer will not get anything from the Salesperson or from the firm which issued the CREDIT NOTE!
A salesperson is required to work under the supervision of a licensed broker in all of his/her real estate transactions, including the requirement that the broker collect all commissions earned from the transactions. While a licensed salesperson can be an independent contractor in its relationship with a brokerage firm and can be treated as such in disputes between the firm and the licensee, the court found that there is a principal/agent relationship in place when the licensee is working with third parties. Because of this duty to supervise its licensees and also because the licensees are acting in the broker’s name during their transactions, the trial court ruled that brokers are vicariously liable for intentional torts such as fraud committed by its licensees while they are performing their duties as a salesperson.
In this case, the Brokerage’s name was listed on the Buyer’s purchase contracts and the agency disclosure forms, and the Brokerage received the commissions from the Salesperson’s transactions.