Delhi High Court
Sobhag Narain Mathur vs Pragya Agrawal And Ors. on 4 February, 2016
Author: Valmiki J. Mehta
Bench: Valmiki J.Mehta
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CS(OS) No.176/2007
% 4th February, 2016
SOBHAG NARAIN MATHUR ..... Plaintiff
Through: Mr. Aman Lekhi, Senior Advocate
with Mr. Arjun Harkauli, Advocate
and Mr. Satyawan Shekhawat,
Advocate.
versus
PRAGYA AGRAWAL AND ORS. ..... Defendants
Through: Mr. Pradip Diwan, Senior Advocate
with Mr. Vikas Mahajan, Advocate,
Mr. Deshraj, Advocate, Mr. Davender
Kaushik, Advocate, Mr. Rohan
Gupta, Advocate and Mr. S.S. Rai,
Advocate.
CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA
To be referred to the Reporter or not? Yes.
VALMIKI J. MEHTA, J (ORAL)
1. This is a suit for specific performance filed by the plaintiff Sh. Sobhag Narain Mathur who is the proposed purchaser. Defendant no.1 Smt. Pragya Agrawal, the owner of the suit property is the proposed seller. The subject matter of the agreement to sell as propounded by the plaintiff are four contiguous plots admeasuring 82.5 sq metrs each and situated in the CS(OS) No. 176/2007 Page 1 of 34 Local Shopping Center, Madangir, New Delhi. The Agreement to Sell in question is a Receipt dated 7.12.2006 and which document as per the plaintiff is a complete agreement to sell as required by law hence entitling the plaintiff to specific performance on account of the plaintiff being ready and willing to perform his part of the contract and defendants breaching the contract contained in the Receipt-cum-Agreement to Sell dated 7.12.2006.
2. On behalf of the defendants, defendant no.2 being the husband of the owner/defendant no.1, signed the Receipt dated 7.12.2006. The stand of the defendants is that the document being the Receipt dated 7.12.2006 is not a complete contract, of an agreement to sell, in the eyes of law. There are also other issues raised by the defendants with respect to the plaintiff not being ready and willing to perform his part of the contract assuming that the Receipt dated 7.12.2006 is a contract as per law, as to who is guilty of breach of contract i.e whether the plaintiff or the defendants, and as to whether the plaintiff is entitled to the discretionary relief of specific performance, but, in my opinion, decision on these issues are not called for in the facts of the present case in view of Order XX Rule 5 of the Code of Civil Procedure,1908 (CPC) and that the decision with respect to the first issue in the case; whether or not the Receipt dated 7.12.2006 is a complete CS(OS) No. 176/2007 Page 2 of 34 contract as required in law for it to be an agreement to sell capable of being enforced through the subject suit for specific performance; is sufficient for disposal of the suit.
3. The following issues were framed by this Court on 14.11.2007:-
"1. Whether document dated 7th December, 2006 titled as 'Bayana Receipt' does not constitute an Agreement to Sell? If so, its effect? OPD.
2. Whether the defendants are entitled to forfeit the part payment of Rs.20 lacs as alleged in the written statement? OPD
3. If issue No.1 & 2 are decided in the negative, whether plaintiff is entitled to specific performance of the document dated 7 th December, 2006 with all consequential benefits? OPP
4. Relief."
Issue No.1
4. As stated above the first issue is being decided at the outset inasmuch as only if there is a complete contract in the eyes of law would there arise the issue of grant of specific performance.
5. Let me therefore reproduce, at this stage, the document dated 7.12.2006 which is relied upon by the plaintiff as being a complete contract in the eyes of law i.e the same is an agreement to sell as required by law capable of being specifically enforced by this Court. The original document CS(OS) No. 176/2007 Page 3 of 34 dated 7.12.2006, Ex.P6/Ex.DW1/X is in vernacular language and I am reproducing the english translation of the same given by the plaintiff since basically there is no dispute that this is the correct english translation of the document dated 7.12.2006, the same reads as under:-
" BAYANA RECEIPT
DATE: 7.12.2006
I, Pragya Aggrawal w/o Sh. Manoj Agrawal, resigning at R/o 58A/4 Sainik Farms, New Delhi-110062. I have agreed to sell my plots no.A,B, C,D Local Shopping Centre, Madangir, area is 82.5 meters per plot, altogether 330 meter, approximately 400 guz, to S.N. Mathur, s/o Late Sh. Swarup Narainji Mathur r/o 152/10 Swarup Narain Mathur Marg Civil Lines Ajmer for a total consideration of Rs.6,20,00,000/- (Six crores, twenty lacs), I hereby acknowledge the acceptance of Rs.20 lacs in cash as bayana. The remaining payment of Rs.6 crores shall be paid by 15.2.2007. Instalments towards the same as part payment will be decided as per this agreement on the day of payment of 10% bayana day. The tea vendor, tyre puncture repair vendor and scooter repair mechanic, squatting in front of the plots would be removed by me. The detailed agreement will be signed on 14.12.2006 on receiving the 10% of the sale consideration.
SD/-
SELLERS SIGNATURE SD/-
BUYERS SIGNATURE WITNESS
1) SD/-
BHAGMAL JINDAL
2) SD/-
SHRI PAL GUPTA"
I may note that in the second last line of the document dated 7.12.2006, the word used is 'detailed' whereas in the vernacular document CS(OS) No. 176/2007 Page 4 of 34 dated 7.12.2006 the language is 'pucca' and it is this expression 'pucca' which will be taken as the word which is required for interpretation when the same is used by the plaintiff if it means detailed or has any other meaning.
6. For discussing and deciding the issue as to whether this document is a contract in the eyes of law as envisaged under the requisite provisions of the Indian Contract Act, 1872, it will be necessary to refer to those relevant provisions of the Indian Contract Act and these provisions read as under:-
"Section 2. Interpretation -clause.- In this Act the following words and expressions are used in the following senses, unless contrary intention appears from the context: -
(a) When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal;
(b) When a person to whom the proposal is made, signifies his assent thereto, the proposal is said to be accepted. A proposal, when a accepted, becomes a promise;
(c) The person making the proposal is called the "promisor", and the person accepting the proposal is called "promisee";
(d) When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise;
(e) Every promise and every set of promises, forming the consideration for each other, is an agreement;
(f) Promises which form the consideration or part of the consideration for each other, are called reciprocal promises;
(g) An agreement not enforceable by law is said to be void;CS(OS) No. 176/2007 Page 5 of 34
(h) An agreement enforceable by law is a contract;
xxxx xxxx xxxx xxxx Section 10. What agreements are contracts.- All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void.
Nothing herein contained shall affect any law in force in India, and not hereby expressly repealed, by which any contract is required to be made in writing or in the presence of witnesses, or any law relating to the registration of documents." (underlining added) 7(i) Instead of proceeding sequentially from the first Section, let me proceed in a reverse manner because the logic with respect to the existence of contract would be better understood then. Section 10 of the Indian Contract Act states that all agreements are contracts if they are entered into with the free consent of the parties; who are competent to contract; for a lawful consideration, and are not declared by law to be void. The aforesaid aspects which make an agreement a final contract with respect to capacity to contract, lack of coercion etc to enter into the contract, consideration being lawful and otherwise not being declared void are not issues in the present case and one is only concerned that whether at all there exists an agreement to sell ie an agreement as per Section 2(h) of the Indian Contract Act.
(ii) To understand when is an agreement complete, we have to refer to sub-Sections 2(a) to 2(h) of the Indian Contract Act which have been CS(OS) No. 176/2007 Page 6 of 34 reproduced above. These provisions show that an agreement is a set of reciprocal promises. There are two words in the expression 'reciprocal promise'. One is reciprocal and another is promise. Reciprocity is with respect to consideration because one reciprocal promise by one party to the contract is a consideration for other party to give its reciprocal promise under the contract.
(iii) What is then the meaning of the word promise? When an offer is accepted, a promise results. However, before the offer is accepted for resulting into a promise or an agreement, the offer has to be a clear offer and acceptance has to be an unconditional acceptance. Included in this aspect of a complete promise as per law is the aspect of consensus ad idem. Consensus ad idem can only exist if there is clarity in the agreement viz clarity in the reciprocal promise viz clarity in the offer and the acceptance. In case, there is lack of clarity or lack of completeness in either the offer or the acceptance, an agreement as required by law will not result.
(iv) We will therefore examine now what is an agreement in law, being a set of reciprocal promises, so as to make an agreement to sell of an immovable property complete in law, and which is the issue to be decided CS(OS) No. 176/2007 Page 7 of 34 by this Court while deciding issue no.1, and in fact decision on which will be determinative of the suit itself.
8. In a contract for sale of an immovable property i.e an agreement to sell entered into ie the sale deed of an immovable property to be entered into in future, four essential ingredients have to exist and they are: who are the parties to the agreement has to be clear, what is the subject matter of the agreement to sell has to be clear, and what is the total price has to be clear including fourthly as to how the total price is payable i.e whether in lumpsum in advance or partly in advance and partly at the time of execution and registration of the sale deed etc. Besides these aspects, it is also relevant to note that the document in question cannot be said to be an agreement as per the intention of the parties because the parties had intended a formal document to be entered into which only would be the actual contract between the parties. In such circumstances, a court has to examine whether the document which is relied upon was intended by the parties to be a final contract in itself. This is being stated because in some cases an agreement may be complete in itself as required by law and still the parties may state that a formal agreement has to be entered into and in such a case even if a formal agreement is not later on entered into, courts have still held that the CS(OS) No. 176/2007 Page 8 of 34 original agreement which is complete in itself is an agreement to sell which can be enforced in law by filing a suit for specific performance. However, where the facts and circumstances of the case as reflected from the document itself and/or the surrounding circumstances or actions of the parties show that the original agreement which talks of entering later into an agreement is not a complete contract in the eyes of law, then, courts will have to hold that contract between the parties has not been concluded because there is no consensus ad idem including on the aspects as to the minimum requisite terms for completing an agreement to sell. To complete the narration, it may be stated that there are various other terms which are agreed between a prospective purchaser and a prospective seller of an immovable property; in addition to the four main aspects which are stated above; but even if the other terms are not stated, law steps in and presumes that parties have agreed to those terms and which terms are specified in various sub-Sections of Section 55 of the Indian Contract Act.
9. Let us now therefore come to the issue as to whether the document dated 7.12.2006 is a complete contract in the eyes of law. In the document dated 7.12.2006 who is the buyer and who is the seller is clear and what is the property which is the subject matter of the agreement to sell is CS(OS) No. 176/2007 Page 9 of 34 also clear. Also is clear what is the total price at which the property has to be sold. The question is whether merely on account of consensus ad idem with respect to these three aspects is the document dated 7.12.2006 is complete contract in the eyes of law.
10. In my opinion, it is not. The reason for the same is that a price is the most vital aspect for a seller of an immovable property. What I mean by price is not the total price only but in how many instalments/tranches has the price to be paid i.e whether the entire price is in advance ie most of the price is in advance in the sense of being paid prior to the execution and registration of the sale deed or whether the total price is in equated or non- equated instalments and if the price is in equated or non-equated instalments, then, such instalments are payable in which regular period i.e whether of a week or of a fortnight or of a month etc. The document dated 7.12.2006 specifically talks of what instalments ie when payable and for what amounts, not being decided, and which aspect was to achieve consensus ad idem when a formal agreement to sell was to be entered into and which itself was only to be entered into when a further sum of Rs.42 lacs was paid by the plaintiff/buyer to the defendant no.1/seller. Thus the document dated CS(OS) No. 176/2007 Page 10 of 34 7.12.2006 lacks the finality as required in law for it to be binding in law as a final agreement wherein all the minimum requisite terms are decided.
11. Further, this aspect of payment of price in particular tranches is important because price which is received by a purchaser under a contract is used by him from the particular date from which a particular instalment/tranch is received by the seller. After all, the seller may use it in whatever way he wants whether to put it in a bank to earn interest or in the alternative even to buy immovable properties out of the advance amount received prior to the execution and registration of the agreement to sell. In addition to the aspect as to how the price is to be paid and in what instalments, the dates thereof have to be co-related to the date of the agreement to sell and the final execution of the sale deed.
12. It is relevant to note the aspect that whether at all parties as per the facts of this case intended that even assuming instalment payments were not in issue as it is stated that the entire balance price was to be payable by 15.2.2007, still was there at all an agreement to sell inasmuch as the document dated 7.12.2006 talks of receipt of a very nominal amount of Rs.20 lacs out of the total sale consideration of Rs.6.20 crores, yet it can be indubitably held that there is no final and binding contract as per the CS(OS) No. 176/2007 Page 11 of 34 document dated 7.12.2006 because of the most important aspect that the document dated 7.12.2006 categorically and specifically states that it is only on receipt of the 10% of the total price viz Rs.62 lacs that a proper agreement will be entered into. Therefore, in my opinion, in the facts of the present case because of the specific term and specific language used in the document dated 7.12.2006 talking of execution of a proper agreement being entered into only on payment of an amount of Rs.42 lacs, this is hence a very crucial aspect that it was only on receipt of the amount of Rs.42 lacs in addition to the amount of Rs.20 lacs received that a formal, proper and a legal document which will be a contract of sale between the parties would be entered into. No other interpretation can be given to the categorical language used in the document dated 7.12.2006 inasmuch as in so many words language used is of a proper agreement being entered into on receipt of the amount of Rs.42 lacs and on receipt of which 10% of the price would be received as advance earnest money. In view of the fact that I am using the word 'proper' agreement, the meaning of the word 'pucca' as urged on behalf of the defendants and 'detailed' as urged on behalf of the plaintiff, would become immaterial because in effect once the language of the document is seen which requires what is stated there to have a co-relation to entering into the binding agreement only upon receipt of an additional CS(OS) No. 176/2007 Page 12 of 34 amount of Rs.42 lacs, it is therefore clear that the document dated 7.12.2006 was only a receipt which in itself as per the intention of the parties themselves does not make the same to be a complete contract as required by law with respect to an agreement to sell of an immovable property.
13. Let me now turn to the arguments which have been urged on behalf of the plaintiff to urge that in fact the language of the document should be read so that such language should be taken as a complete agreement to sell as required in law.
14(i) Learned senior counsel for the plaintiff has firstly relied upon the judgment of the Supreme Court in the case of Kollipara Sriramulu (dead) by his legal representative Vs. T. Aswatha Narayana (dead) by his legal representatives and Others AIR 1968 SC 1028 to argue that the mode and manner of payment has been held by this judgment not to be an aspect to take away the finality derogating from an agreement to sell being a contract in law once the parties to the contract are known, total price is known and what is the subject matter of the agreement to sell is known. To deal with this argument let me refer to the relevant paras in the judgment in the case of Kollipara Sriramulu (supra) (and one of which paras also pertains to the other later argument of the defendants that the document dated 7.12.2006 did CS(OS) No. 176/2007 Page 13 of 34 not require entering into a further and a formal contract for an agreement to sell as envisaged by law to be complete) and which are as under:-
"2. The first question to be considered in these appeals is whether there was an oral agreement between the 1st respondent and all the partners of the firm except the appellant for sale of their shares on July 6, 1952 and whether respondent No. 1 was entitled to specific performance of that oral agreement. It was the case of respondent No. 1 that on July 6, 1952 there was a meeting of all the male partners at the house of Desu Virabhadrayya and at that meeting there was an agreement reached between all of them (except the appellant) and himself that they should sell to him their shares (and the shares of those whom they represented) at the rate of Rs. 3,375/- for eight shares. A written agreement was to be drawn in 2 or 3 days and the mode of payment of the purchase money was also to be settled later. It was further agreed that the sale deeds were to be executed in three months. In pursuance of the agreement all the co-sharers except defendants 1 to 9 executed sale deeds and the plaintiff therefore became the owner of 98 shares. The first witness in proof of the oral agreement was respondent No. 1 himself. He deposed that P. Ws. 5, 6 and 8, Sri Devata Rama Mohana Rao, Sri Addepalli Nageswara Rao and Sri Thoomu Srimannarayana respectively were present at the meeting of the shareholders. He also said that the first defendant, the son of the 2nd defendant, was there to represent the latter, and that Gopala Krishnaiah, son of the 3rd defendant, and the 7th defendant (who represents the 5th and 6th defendants) and Alavala Subbayya (husband of the 8th defendant and father of the 9th defendant) were present when the agreement was settled. He added that the sale deed was to be executed in three months and that draft agreement, Ex. A-6 was also prepared 2 or 3 days later. On behalf of the appellant reference was made to Ex. B-1, the deposition of the first respondent in the previous suit, where he said that the agreement was on July 1, 1952 and that he did not remember the names of the other persons present at the meeting except P.W. 8, Sri Subba Rao Nayudu, Vice President of Andhra Bank. In our opinion, the discrepancy is immaterial and the High Court was right in accepting the evidence of this witness as true. The evidence of respondent No. 1 is corroborated by P.W. 7 who said that except the women shareholders all other shareholders were present at the meeting of July 6, 1952 and the subject for consideration was the sale of the site of the cinema theatre to respondent No. 1. He added that the price of the whole site was fixed at Rs. 67,500/- and that all the partners except the appellant agreed to sell away their shares. On behalf of the appellant reference was made to the counter-affidavit, B-4 dated January 5, 1953 filed in interlocutory proceedings on behalf of P.W. 7, but there is no serious contradiction between the evidence of that witness in Ex. B-4 and the evidence of P.W. 7 in the present suit. The High Court was highly impressed with the evidence of P.W. 7 and we see no reason for taking a different view in regard to the credibility of this witness. P.W. 8 was also present at the meeting on July CS(OS) No. 176/2007 Page 14 of 34 6, 1952. His evidence corroborates that of respondent No. 1. He said that the son of the appellant was present at the meeting and the women shareholders were represented by some men on their behalf. It is true that P.W. 8 is the cousin brother of respondent No. 1, but this can be no ground in itself for rejecting his testimony. P.Ws. 2 and 3 have also given important corroborative evidence. P.W. 2, Sri D. Subba Rao is the Subordinate Judge of Bapatla. He deposed that the first respondent told him that there was an oral agreement for the purchase of the shares concluded in the first week of July, 1952. Exhibit A- 22 dated July 9, 1952, a letter written by P.W. 2 to respondent No. 1 supports the evidence of P.W. 2 P.W. 3, Sri s. Narayana Rao, a District Judge and a family friend of respondent No. 1 also testified that he was informed of the negotiations by the first respondent for purchasing the shares and he was also told by the first respondent about the conclusion of the agreement. Exhibit A- 26 dated July 14, 1952, a letter written by him to the first respondent, supports this evidence. P.Ws. 2 and 3 are highly respectable witnesses and the High Court was right in taking the view that their evidence strongly corroborates the case of respondent No. 1 with regard to the conclusion of the oral agreement for sale on July 6, 1952. The evidence of respondent No. 1 is also corroborated by the evidence of P.Ws. 5 and 6 Sri Devata Rama Mohana Rao and Sri Addepalli Nageswara Rao which has been believed by the High Court. On behalf of the appellant it was said that respondent No. 1 has not given any reason in the plaint or in the evidence as to why a written agreement was not entered into. There may be some force in this argument. But no such question was put to P.W. 1 in cross-examination, nor was he asked to give any explanation. On the other hand, there are important circumstances indicating that the case of the first respondent with regard to the oral agreement is highly probable. In the first place, respondent No. 1 had built a valuable cinema theatre building on the disputed site and he had very strong reasons to make an outright purchase of the site otherwise he would be placed in a precarious legal position. Negotiations for purchase were going on for several years past and considering this background, the case of the first respondent with regard to the oral agreement appears highly probable. P.W. 2, a Subordinate Judge and P.W. 3, a District Judge have both given evidence which corroborates the case of respondent No. 1 with regard to the conclusion of the oral agreement of July 6, 1952 and there is no reason suggested on behalf of the appellant for discarding their evidence. It is also important to notice that 20 out of 30 shareholders executed sale deeds in favour of the first respondent after the date of the alleged oral agreement on July 6, 1952. The fact that the shareholders sold their shares at the identical price to the first respondent and the others sold at the same price to the appellant is only explicable on the hypothesis that the price was fixed by agreement between all the shareholders willing to sell i.e., all those other than the appellant. The last of the sale deeds executed in favour of the appellant or the first respondent are Exs. A-11 and A-12 dated February 28, 1953. There is evidence that prices were rising meanwhile and therefore the circumstance that the vendors chose to sell at the same price renders it highly CS(OS) No. 176/2007 Page 15 of 34 probable that there was an earlier binding agreement. It is also an important circumstance against the appellant that none of the women shareholders has appeared in the witness box to rebut the evidence tendered on behalf of respondent No. 1. There was evidence given on behalf of respondent No. 1 that the women partners had authorised the men partners to represent them at the meeting but none of the women partners entered the witness box to deny such authorisation. On behalf of the appellant reliance was placed upon the circular letter. Ex. A-15 purported to be written by one Gopi Setti Venkata Sabba Rao, one of the shareholders. The document is not signed by respondent No. 1. It appears to be a notice prepared by one of the shareholders to be circulated inter se among them and refers to the mode of payment of the purchase money agreed to between respondent No. 1 and the persons selling the shares. The High Court has observative. The mere omission to settle the mode of payment does not case of respondent No. 1 and we see no reason to take a different view as regards the effect of Ex. A-15.
3. We proceed to consider the next question raised in these appeals, namely whether the oral agreement was ineffective because the parties contemplated the execution of a formal document or because the mode of payment of the purchase money was not actually agreed upon. It was submitted on behalf of the appellant that there was no contract because the sale was conditional upon a regular agreement being executed and so such agreement was executed. We do not accept this argument as correct. It is well-established that a mere reference to a future formal contract will not prevent a binding bargain between the parties. The fact that the parties refer to the preparation of an agreement by which the terms agreed upon are to be put in a more formal shape does not prevent the existence of a binding contract. There are, however, cases where the reference to a future contract is made in such terms as to show that the parties did not intend to be bound until a formal contract is signed. The question depends upon the intention of the parties and the special circumstances of each particular case. As observed by the Lord Chancellor (Lord Cranworth) in Ridgway v. Wharton 6 H.L.C. 238 the fact of a subsequent agreement being prepared may be evidence that the previous negotiations did not amount to a concluded agreement, but the mere fact that persons wish to have a formal agreement drawn up does not establish the proposition that they cannot be bound by a previous agreement In Von Hatzfeldt-Wildenburg v. Alexander (1912) 1 Ch. 284 at p.288 it was stated by Parker, J. as follows :
"It appears to be well settled by the authorities that if the documents or letters relied on as constituting a contract contemplate the execution of a further contract between the parties, it is a question of construction whether the execution of the further contract is a condition or term of the bargain or whether it is a mere expression of the desire of the parties as to the manner in which the transaction already agreed to will in fact CS(OS) No. 176/2007 Page 16 of 34 go through. In the former case there is no enforceable contract either because the condition is unfulfilled or because the law does not recognize a contract to enter into a contract. In the latter case there is a binding contract and the reference to the more formal document may be ignored." In other words, there may be a case where the signing of a further formal agreement is made a condition or term of the bargain, and if the formal agreement is not approved and signed there is no concluded contract. In Rassier v. Miller 3 A.C. 1124 Lord Cairns said :
"If you find not an unqualified acceptance subject to the condition that an agreement is to be prepared and agreed upon between the parties, and until that condition is fulfilled no contract is to arise then you cannot find a concluded contract."
In Currimbhoy and Company Ltd. v. Creet 60 Ind App 297 = (AIR 1933 PC29) the Judicial Committee expressed the view that the principle of the English law which is summarised in the judgment of Parker, J. in Van Hatzfeldt-Wildenburg v. Alexander (1912) 1 Ch. 284 was be applicable in India. The question in the present appeals is whether the execution if a formal agreement was intended to be a condition of the bargain dated July 6, 1952 or whether it was a mere expression of the desire of the parties for a formal agreement which can be ignored. The evidence adduced on behalf of respondent No. 1 does not show that the drawing up of a written agreement was a pre-requisite to the coming into effect of the oral agreement. It is therefore not possible to accept the contention of the appellant that the oral agreement was ineffective in law because there is no execution of any formal written document. As regards the other point, it is true that there is no specific agreement with regard to the mode of payment but this does not necessarily make the agreement ineffective. The mere omission to settle the mode of payment does not affect the completeness of the contract because the vital terms of the contract like the price and area of the land and time for completion of the sale were all fixed. We accordingly hold that Mr. Gokhale is unable to make good his argument on this aspect of the case." (emphasis is mine)
(ii) Learned senior counsel for the plaintiff has placed considerable emphasis on the observations made in para 2 of the judgment in the case of Kollipara Sriramulu (supra) where it is stated that mode of payment of purchase money was to be settled later and this argument is urged with the aspect that the final price was settled and it was thus argued with the CS(OS) No. 176/2007 Page 17 of 34 observations made in paras 3 and 4 of the judgment that mode of payment ie method of installments payment cannot take away the finality and legal bindingness of the document dated 7.12.2006 as being a complete contract of an agreement to sell as required by law. The observations relied upon in paras 3 and 4 of the judgment are to the effect that intention of the parties and the special circumstances of each particular case decide as to whether or not a contract is complete as required by law for being an agreement to sell of an immovable property enforceable by a suit for specific performance. The observations made in these paras have also been relied upon and which speak of construction of the contract to decide the intention of the parties. Further attention of the Court has been drawn to the fact that the Supreme Court has observed that not only mere non-execution of the formal document is not determinative of the final contract existing but also that the Supreme Court has specifically observed that even if there is no specific agreement with regard to the mode of payment, yet, this does not necessarily make the agreement ineffective and incomplete because mere omission to settle the mode of payment does not affect the completeness of the contract once the vital terms of the contract like price and the area of the land and the time for completion of the sale deed (in this case being 15.2.2007) are found to be fixed.
CS(OS) No. 176/2007 Page 18 of 34
(iii) In my opinion, there cannot be any quibble to the binding observations made by the Supreme Court in the judgment in the case of Kollipara Sriramulu (supra) however, the facts of the present case are different than the facts of the case of Kollipara Sriramulu (supra). Firstly, in the present case the written document dated 7.12.2006 specifically states that it is only on receipt of an amount of Rs.42 lacs (and which action will complete the 10% of the price as advance price earnest money) that a proper agreement to sell would be entered into i.e it is only on receipt by the seller/defendant no.1 of Rs.42 lacs that parties specifically intended that there would be a complete contract of an agreement to sell. No other interpretation in my opinion can be put upon the language of the Bayana Receipt/document dated 7.12.2006 because giving of any other meaning to such categorical language would in fact do violence to the language. Secondly, the ratio of the judgment of the Supreme Court in the case of Kollipara Sriramulu (supra) will not apply in the present case because in the facts of the present case it is seen that the total balance payment which remain due and payable on 7.12.2006 was not payable by a lumpsum payment by a particular date only of 15.2.2007, but as stated above besides an amount of Rs.42 lacs ( i.e one part of the advance price was to be paid so as to make the advance price as a total of 10% of the total price) was payable CS(OS) No. 176/2007 Page 19 of 34 for the agreement to sell to come into existence but also and most importantly the document dated 7.12.2006 specifically required the advance installment payments to be made prior to the execution of the sale deed by 15.2.2007 and which advance price instalments were to be agreed/decided as a specific term of the contract. Therefore, these two crucial factual aspects make considerable difference to the inapplicability of the ratio of the judgment in the case of Kollipara Sriramulu (supra) given in the facts of the said case to the facts which are found in the present case in view of the language used in the document dated 7.12.2006. In Kollipara Sriramulu (supra), the agreement was oral and thus it was interpreted to not require any advance instalment payment as a specific term of the agreement to sell but in the facts of the present case it is factually found to be required to be agreed upon and without which there is lack of consensus ad idem.
(iv) In my opinion, the expression 'mode' of payment used in Kollipara Sriramulu's case (supra) cannot be taken to mean reference to whether price in advance by installments was to be payable before the final date of payment and as is sought to be argued on behalf of the plaintiff. Mode of payment aspect in Kollipara Sriramulu's case (supra) is most probably with respect to the payment to be made whether in cash or gold or CS(OS) No. 176/2007 Page 20 of 34 bank payment or other form of consideration and not as regards payment of price in advance by installments.
15(i) Learned senior counsel for the plaintiff has thereafter placed reliance upon the observations made in Chitty on Contracts Thirty-Second Edition, Volume I, General Principles para 2-120 at pages 265 and 266 with respect to interpretation of contracts and these observations are as under:-
"Agreement complete despite lack of detail. On the other hand, an agreement may be complete although it is not worked out in meticulous detail. Thus an agreement for the sale of goods may be complete as soon as the parties have agreed to buy and sell, where the remaining details can be determined by the standard of reasonableness or by law. Even failure to agree the price is not necessarily fatal in such a case. Section 8(2) of the Sale of Goods Act 1979 provides that, if no price is determined by the contract, a reasonable price must be paid. Under s.15(1) of the Supply of Goods and Services Act 1982, a reasonable sum must similarly be paid where a contract for the supply of services fails to fix the remuneration to be paid for them. These statutory provisions assume that the agreement amounts to a contract for the supply of services fails to fix the remuneration to be paid for them. These statutory provisions assume that the agreement amounts to a contract in spite of its failure to fix the price or remuneration. The very fact that the parties have not reached agreement on this vital point may indicate that there is no contract, e.g. because the price or remuneration is to be fixed by further agreement. In such a case, the statutory provisions for payment of a reasonable sum do not apply."
(ii) Reliance is also placed by the learned senior counsel for the plaintiff on the observations in the book titled as The Interpretation of Contracts Fifth Edition by Sir Kim Lewison published by Sweet & CS(OS) No. 176/2007 Page 21 of 34 Maxwell with Thomson Reuters at pages 434, 437, 438, 441 and 449 and these observations which are relied upon are as under:-
"Similarly, in Star Shipping A.S. v China National Foreign Trade Transportation Corp Steyn L.J. said:
"The spectre of a catalogue of possible alternative constructions may at first glance seem to confront us with a daunting task. The reality is different. The fact that a multiplicity of possible meanings of a contractual provision are put forward, and that there are difficulties of interpretation, does not justify a conclusion that the clause is meaningless. The court must do its best to select, among the contending interpretations, the one that best matches the intention of the parties as expressed in the language they adopted."
xxxx xxxx xxxx xxxx In Whishaw v Stephens (sub nom. Re Gulbenkian's Settlement Trusts) Lord Upjohn said:
"There is no doubt that the first task is to try to ascertain the Settlor's intention, so to speak, without regard to the consequences, and then, having construed the document, apply the test. The Court, whose task it is to discover that intention, starts by applying the usual canons of construction; words must be given their usual meaning, the clause should be read literally and in accordance with the ordinary rules of grammar. But very frequently, whether it be in wills, settlements or commercial agreements, the application of such fundamental canons leads nowhere, the draftsman has used words wrongly, his sentences border on the illiterate and his grammar may be appalling. It is then the duty of the Court by the exercise of its judicial knowledge and experience in the relevant matter, innate commonsense and desire to make sense of the settlor's or parties' expressed intentions, however obscure and ambiguous the language that may have been used, to give a reasonable meaning to that language if it can do so without doing complete violence to it. The fact that the Court has to see whether the clause is " certain " for a particular purpose does not disentitle the Court from doing otherwise than, in the first place, try to make sense of it."
xxxx xxxx xxxx xxxx So in Scammell v Dicker where the parties had compromised a boundary dispute by means of a consent order and a plan, the agreement was sufficiently certain despite difficulties in interpretation. Rix L.J. said:CS(OS) No. 176/2007 Page 22 of 34
"Any of these three conclusions would do justice to the parties' agreement, as working out a detail of it. The applicable legal motto is: that is certain which can be rendered certain (id certum est quod certum reddi potest). What would to my mind be a complete injustice would be, just because of the difficulty about the precise position of the boundary line in immediate juxtaposition with the telegraph pole, to conclude that the parties had completely failed on the grounds of uncertainty to settle their litigation at all, although that is what they plainly intended to do and what they did in fact do with the aid of a detailed consent order and plan".
xxxx xxxx xxxx xxxx
Lord Pearson said:
".....the courts are always to hold a clause bad for uncertainty if a reasonable meaning can be given to it, and it seems to me easy to give a reasonable meaning to this clause."
In Re Lloyd's Trust Instruments, Megarry J. said:
"I think the starting point on any question of uncertainty must be that of the court's reluctance to hold an instrument void for uncertainty. Lord Hardwicke L.C. once said: 'A court never construes a devise void, unless it is so absolutely dark that they cannot find out the testator's meaning: Minshull v Minshull. Lord Brougham said: 'The difficulty must be so great that it amounts to an impossibility, the doubt so grave that there is not even an inclination of the scales one way': Doe d. Winter v Perratt. In a well-known statement, Sir George Jessei M.R. said that the court would not hold a will void for uncertainty 'unless it is impossible to put a fair meaning on it. The duty of the court is to put a fair meaning on the terms used, and not, as was said in one case, to repose upon the easy pillow of uncertainty': In re Roberts. That this is not a doctrine confined to wills but is one which applies to other instruments, such as planning permissions is shown by cases such as Fawcett Properties Ltd v Buckingham County Council, where by a majority, the delphic language of a condition in a planning permission escaped from being held void for uncertainty largely because of its resemblance to a section in a modern Act of Parliament."
xxxx xxxx xxxx xxxx The potential diversity of meaning, and the consequent danger of holding the parties to anyone such meaning was the principal ground upon which Lord Wright based his speech in G Scammell and Nephew v Ouston. He said:CS(OS) No. 176/2007 Page 23 of 34
"The object of the court is to do justice between the parties, and the court will do its best, if satisfied that there is an ascertainable and determinate intention to contract, to give effect to that intention, looking at substance and not mere form. It will not be deterred by mere difficulties of interpretation. Difficulty is not synonymous with ambiguity as long as any definite meaning can be extracted. But the test of intention is to be found in the words used. If these words, considered however broadly and untechnically and with due regard to all just implications, fail to evince any definite meaning on which the court can safely act, the court has no choice but to say that there is no contract. Such a position is not often found. But I think that it is found in this case. My reason for so thinking is not only based on the actual vagueness and unintelligibility of the words used, but is confirmed by the startling diversity of explanation, tendered by those who think there was a bargain, of what the bargain was."
16(i) Learned senior counsel for the plaintiff has very passionately argued by reference to the above observations in the books Chitty on Contracts and The Interpretation of Contracts that courts should unravel the unnecessary technicalities in a case by removing the ambiguities as per the intention of the parties. It is also argued that if there are any undetermined aspects, the same can be determined by standards of reasonableness or by law. It is further argued that if the language of a document is capable of possible alternative constructions which may seem to be a daunting task, that should not preclude the court from doing its best to select out of the different interpretation one that best matches the intention of the parties as expressed in the language the parties have adopted. It is further argued that with reference to the other observations reproduced CS(OS) No. 176/2007 Page 24 of 34 above that obscure and ambiguous language should be given meaning as per the expressed intention of the parties, and which principle applies even for construction of the commercial agreements as per para 8.11 of The Interpretation of Contracts book by Sir Kim Lewison. In sum and substance, it is argued that the object of the court is to do justice and once there is some sort of reasonableness which can be brought in for ascertaining and determining the intention of the parties to the contract, this Court must look at the substance and not the form for removing any ambiguity, once a definite meaning can be extracted. In effect, what is really argued is that once the total price is mentioned, and the last date of payment for the total price as 15.2.2007 is mentioned, if there is any ambiguity or any different interpretation possible of the terms of the document dated 7.12.2006, court must overstep the technicality so as to do justice to the plaintiff by holding that the mode and manner of payment ie in what manner and by what instalment, should be held to be only a technicality for not denying the completeness of the document dated 7.12.2006 for it to be a complete agreement to sell as required in the eyes of law.
(ii) There can be no two opinions with respect to the fact that if various interpretations are possible, court must not shy away from taking an CS(OS) No. 176/2007 Page 25 of 34 interpretation so that justice is done. It is equally not in issue that courts should not get struck in the quagmire of technicalities. Equally it cannot be doubted that if there is an ambiguity but the same is capable of being removed as per the intention of the parties, then, the courts must step in to remove the ambiguity.
(iii) However, in my opinion, none of these principles relied upon on behalf of the plaintiff apply to the present case. This is firstly in view of the specific language of the document which talks of entering into a proper agreement only on an additional sum of Rs.42 lacs being paid by the plaintiff/proposed buyer to the defendant no.1/proposed seller. It is not as if the language used in the document dated 7.12.2006 is capable of various interpretations and therefore this Court must adopt a best interpretation inasmuch as the language of the document admits of only one interpretation that a proper agreement will be entered into on payment of Rs.42 lacs by 14.12.2006. Therefore, in the face of this categorical language, in my opinion, to hold that parties intended the document dated 7.12.2006 to be a complete agreement to sell capable of being enforced in law would be to do violence and injustice to the specific intention of the parties contained in the document itself that the formal agreement was specifically dependent upon CS(OS) No. 176/2007 Page 26 of 34 the plaintiff paying a sum of Rs.42 lacs to the defendant no.1 on 14.12.2006, and on this receiving a total of 10% of the sale consideration of the total price of Rs.6.20 crores, only then would there be a proper agreement to sell i.e a proper agreement which will bind the parties for the parties to be bound legally and contractually. The second reason is that the document dated 7.12.2006 itself requires advance installment payments term to be set out and agreed when payment of Rs.42 lacs was to be made and a proper agreement was to be entered into. There is no ambiguity or technicality or an interpretation issue as is argued by the plaintiff because of the crystal clear language in the document dated 7.12.2006. I therefore hold that in view of the categorical language in the document dated 7.12.2006, stating that a proper agreement will be entered into and which was relatable not only to additional price being received by the defendant no.1, but also arriving at an agreement for advance price instalments to be paid, the document dated 7.12.2006 cannot be said to be a contract in itself and enforceable at law and which contract enforceable in law would have come into existence only on the balance amount of Rs.42 lacs being received by the defendant no.1 to complete the 10% payment of the total sale price of Rs.6.20 crores and the term with respect to advance price installments being agreed upon. CS(OS) No. 176/2007 Page 27 of 34 17(i) Learned senior counsel for the plaintiff has placed reliance upon the Notice dated 26.12.2006 Ex.PW1/G/Ex.P-2 sent by the plaintiff to the defendant no.1 taken with the Legal Notice dated 2.1.2007 Ex.PW1/M sent by the defendant no.1, and on the strength of the notices Ex.PW1/G/Ex.P-2 and Ex.PW1/M and the other evidence led on behalf of the plaintiff showing repeated visits by the plaintiff from Ajmer to Delhi, and it was passionately argued that the plaintiff understood and so did the defendants that there was a complete contract of an agreement to sell of the suit property. This argument was buttressed by referring to para 3 of the Legal Notice dated 2.1.2007 sent by the defendant no.1 to the plaintiff which talked of forfeiture of Rs.20 lacs which was paid by the plaintiff to the defendant no.1 to argue that the forfeiture presumes existence of a final contract. Also, it was argued on behalf of the plaintiff that the Legal Notice of the defendant no.1 dated 2.1.2007 did not talk of the document dated 7.12.2006 to be a complete contract/agreement to sell in law.
(ii) Once again, I cannot agree to the arguments which are urged on behalf of the plaintiff because at best the Notice of the plaintiff dated 26.12.2006 only shows plaintiff's readiness and willingness and the anxiety of the plaintiff to go ahead with the purchase of the suit/immovable property CS(OS) No. 176/2007 Page 28 of 34 and this Notice dated 26.12.2006 cannot in any manner add to or subtract the finality of the language contained in the document dated 7.12.2006 because it is only if the document dated 7.12.2006 is a complete contract, as required by law, would any further notice by the plaintiff be an indication of the intention of going ahead with the contract. If, however, there is no contract then even if howsoever strong the intention of the plaintiff is, that will not bring about an inchoate agreement to be complete agreement as required by law or cause an agreement which was yet to be finally entered into to be an agreement as could have been enforceable in law on the basis of an inchoate document dated 7.12.2006. Also, in my opinion, language of the Legal Notice dated 2.1.2007 sent by the defendants to the plaintiff is such that it specifically again talks of execution of an earnest money agreement on 14.12.2006 by the plaintiff i.e the understanding of the defendants was that it was only on entering into of the agreement on 14.12.2006 and on receipt of the balance earnest money amount of Rs.42 lacs that a proper agreement enforceable at law would be entered into between the parties. Of course there is found talking of forfeiture of Rs.20 lacs in the Legal Notice of the defendants dated 2.1.2007, however, such a forfeiture at best is a misconceived legal claim and that misconceived legal stand cannot result in giving a finality to a contract as required by law to the document dated CS(OS) No. 176/2007 Page 29 of 34 7.12.2006 once the document dated 7.12.2006 is not complete as required by law to make it a complete contract/agreement to sell. In my opinion, therefore, no benefit can be derived by the plaintiff from the documents being the Notice dated 26.12.2006 Ex.PW1/G/Ex.P-2 sent by the plaintiff to the defendant no.1 or the Legal Notice dated 2.1.2007 Ex.PW1/M sent by the defendant no.1 to the plaintiff.
18 Learned senior counsel for the plaintiff next sought to argue that in view of the provisions of law being the sub-Sections of Section 55 of the Transfer of Property Act, 1882 there was no requirement to mention with respect to other terms required of an agreement to sell in the document dated 7.12.2006 so as to make the document dated 7.12.2006 a complete contract in the eyes of law, however, this argument is misconceived inasmuch as the issue is not with respect to the additional terms which are implied by law to exist in a contract for sale but the issue is that whether the terms as agreed upon by the document dated 7.12.2006 did or did not make the document dated 7.12.2006 as a complete contract/agreement as required by law for being enforceable in the court of law because what terms which could only be contractually agreed were not contractually agreed with the fact that a proper and final agreement/contract was not entered into between the parties CS(OS) No. 176/2007 Page 30 of 34 on the parties signing the document dated 7.12.2006 and as envisaged in the document dated 7.12.2006 itself on account of further act of payment to be made by the plaintiff and agreement to be arrived at as regard the term of advance price installment payments.
19(i) Finally, it was argued on behalf of the plaintiff by the learned senior counsel that the aspect of unearned increase amount payable to superior lessor for granting provision to sell the suit property not being mentioned in the document dated 7.12.2006 will not prevent the document dated 7.12.2006 from being a complete contract/agreement as required by law, because it is argued that the amount of unearned increase is only an ascertainable amount on payment of which the Delhi Development Authority (DDA) would give permission as required for completing the sale deed. It is argued that the law presumes as per Section 55(2) of the Transfer of Property Act, 1882 that it is the defendant no.1/seller who will make herself capable of executing the sale deed and hence it is the defendant no.1 only who must bear the unearned increase cost being her obligation as per Section 55(2) of the Transfer of Property Act.
(ii) In my opinion, even this argument urged on behalf of the plaintiff carries no weight firstly for the reason that the issue with respect to CS(OS) No. 176/2007 Page 31 of 34 finality to the document dated 7.12.2006 for being a complete contract/agreement enforceable in law as not being decided by this Court on the aspect of whether or not it was the plaintiff or the defendant no.1 who was to pay the unearned increase. Even if we take that the defendant no.1 was to pay the unearned increase or for that matter the plaintiff should be the one to pay the unearned increase which he theoretically agrees to, would not mean that the document dated 7.12.2006 which is an inchoate document will be a complete agreement as required by law. As already discussed above with respect to not only the tranches of payment, the same is clearly not a choate document for the same to be an agreement enforceable in law and also because the document dated 7.12.2006 specifically and categorically mentions that only on receipt of the total amount of 10% of the sale consideration; on such event happening on 14.12.2006, that a proper agreement would be entered into and thus only then an agreement which would then exist for that agreement to be the one which would have been enforceable in law. No other interpretation to the language of the document dated 7.12.2006 is permissible as already discussed in detail above.
(iii) In my opinion even if the issue of unearned increase payable to the Delhi Development Authority is to be considered with respect to CS(OS) No. 176/2007 Page 32 of 34 consensus ad idem, it has to be held that there is lack of consensus ad idem inasmuch as a total price which will come in the pocket of a buyer has to be a definite term in the contract and if unearned increase of a huge amount, possibly running into lacs of rupees, is to be paid for the purpose of transfer of the property, then in case the proposed seller/defendant no. 1 has to pay the same, it has the effect of reducing the final price which will go into the pocket of the proposed seller/defendant no. 1. Total consideration under a contract therefore is a vital term of the contract and thus lack of certainty as to the total price which will go into the pocket of the proposed settler/defendant no.1 is an aspect to show that once there is no agreement on this aspect of who will pay the unearned increase amount there is lack of consensus ad idem for the agreement between the parties to be an agreement/contract enforceable at law. These observations are being made in the specific facts of this case as although ordinarily if an agreement to sell is silent, then it would be the duty of the seller to pay the unearned increase charges, inasmuch as, a proper agreement which was to be legally binding was to be entered into pursuant to the document dated 7.12.2006 and which final and proper agreement to sell could well have had a clause deciding as to which was the party which will be liable to pay the unearned increase charges.
CS(OS) No. 176/2007 Page 33 of 34
20. Once there is no contract between the parties and which can be enforced at law as an agreement to sell, this Court under Order XX Rule 5 CPC does not have to go into any other aspect of readiness and willingness, alleged dishonest conduct of the defendants or who is guilty of breach of contract inasmuch as the minute this Court takes that course of action, this Court would be presuming a contract/agreement to sell enforceable in law to exist but the same does not exist in view of the aforesaid discussion.
21. In view of the above it is held that since there is no final contract/agreement to sell enforceable in law, the present suit for specific performance is not maintainable, and the same is therefore dismissed, leaving the parties to bear their own costs.
In view of the fact that the suit is dismissed, whatever amounts are deposited by the plaintiff or the defendant no.1 in this Court, these amounts be returned to the respective parties alongwith accrued interest thereon. Needful be done by the Registry within six weeks.
FEBRUARY 04, 2016 VALMIKI J. MEHTA, J.
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CS(OS) No. 176/2007 Page 34 of 34