The main legal point established in the judgment is the entitlement of the plaintiff to agency commission due to the failure of the defendants to make the site ready for commissioning the machines, despite the terms of the contract.

( 1 ) THIS is a suit for recovery of Rs. 5,89,434/- towards agency commission. Plaintiff is agent of defendant no. 3, an Italian company, in India. Defendant no. 1 is a Public Sector Undertaking and is a unit of defendant no. 2. Brief resume of facts pleaded by the plaintiff in respect of its claim is like this:-

( 2 ) DEFENDANT no. 1 floated a global tender for purchase of two Hydraulic Crankshaft Grinding Machines on 24. 9. 1986. Plaintiff gave an offer dated 22. 9. 1986 for two machines. Earlier plaintiff had supplied four similar machines to defendant no. 1 vide their order dated 5. 2. 1985. Later defendant no. 1 sought some clarifications and also the amendment in terms if four machines were purchased instead of two.

( 3 ) IN original offer the plaintiff had offered that agency commission would be 15% of FOB value of order. By letter dated 7. 3. 1987, plaintiff offered discount of 5% on commission if entire order was placed on plaintiff and 100% commission was paid on receipt of shipping documents. By letter dated 10. 8. 1987, defendant no. 1 wrote to plaintiff that requirement was raised to four Grinder Machines, and the plaintiff should submit reduced price bid accordingly. By letter dated 14. 8. 1987 plaintiff did the needful and informed defendant no. 1 that price of machine will be same and be multiplied by four in place of two and discount of 5% on agency commission of 15% would be valid if (i) entire order is placed on plaintiff and (ii) 100% agency commission released on presentation of shipping documents. By letter dated 9. 11. 1987, defendant no. 3 informed defendant no. 1 that plaintiff would not accept any amount less than already offered by them, as their work involved lot of expenditure. Defendant no. 1 thereupon placed order dated 25. 4. 1988 addressed to defendant no. 3 on plaintiff at Delhi who in turn forwarded it to defendant no. 3 at Italy only for two machines. An amendment dated 6. 5. 1988 was issued by defendant no. 1 to this order. Clause 2 of amendment was as follows:-

"b. Installation:- Indian Agent of the supplier will install and demonstrate the equipment at site free of cost after foundation are laid, equipment placed on foundation electricals and air liners brought to the site by the consignee. The consignee however will ensure readiness of the infrastructure well in advance so that the machine can be commissioned within 60 days from the date of the arrival at project site.

( 4 ) IN the order placed, defendant no. 1 unilaterally reduced the commission payable to plaintiff from 15% to 10% of FOB value, even though discount of 5% was offered only as quantity discount on four machines and was not applicable to two machines only. Plaintiff protested against this unilateral action of defendant no. 1. Plaintiff never consented to 5% discount for only two machines. By letter dated 17. 5. 1988 plaintiff accepted the order at Delhi with the exception of the discount clause.

( 5 ) THE defendant did not issue any amendment but acted on the plaintiff s letter allowing 5% discount and established Letter of Credit in favour of defendant no. 3. Two machines were shipped on 9. 1. 1989 by the foreign seller. The complete machinery was received by defendant nos. 1 and 2 at site on or before 30. 8. 1989 and in this respect they issued acknowledgments. Thereafter plaintiff repeatedly wrote to defendant nos. 1 and 2 asking for readiness of site to enable plaintiff to commission the machines. Since there was no response, plaintiff served legal notice dated 8. 4. 1989 on defendant nos. 1 and 2 demanding 15% commission. It was also pointed out in the notice that the site was not made ready even though two years had passed since the receipt of the machines. No reply was sent by the defendants but telegram was received from them to defer the legal action as matter was being looked into. Plaintiff deferred legal action and again sent letter dated 3. 8. 1991 to defendant nos. 1 and 2 pointing out that site was