Calcutta High Court
National Properties Ltd. vs Bata India Limited on 2 May, 2001
Equivalent citations: AIR2001CAL177, AIR 2001 CALCUTTA 177, (2001) 4 ICC 795
Author: Ashok Kumar Ganguly
Bench: Asok Kumar Ganguly, Pranab Kumar Chattopadhyay
JUDGMENT Pranab Kumar Chattopadhyay, J.
1. This is an appeal against the judgment and decree of a learned single Judge of this Court in a suit for specific performance of a contract. The contract was for the grant of lease in respect of four floors, namely ground, 1st, 2nd, and 3rd of the premises No. 1/1. Lower Circular Road, Calcutta (hereinafter called the said premises) for a period of 25 years at a monthly rent of Rs. 42.50 per 100 sq. ft., M/s. Talbot & Co. carried on negotiations between the parties with regard to the grant of lease and/or letting out of the said premises in respect of the aforesaid four floors, namely ground, 1st. 2nd and 3rd for an area of 12,500 sq. ft. approximately in each floor.
2. The plaintiff claimed that it had entered into a concluded agreement with the owner of the said building National Properties Ltd, the appellant, herein on the basis of correspondences which were exchanged between the parties and/or with M/s. Talbot & Co., the broker, appointed by the appellant who carried on negotiations as an agent of the appellant. The relevant correspondence were exchanged between the parties during the months of July and August, 1958.
3. According to the plaintiff, the terms and conditions of the agreement will appear from the letters dated 31st July, 1958 and 11th August, 1958 written by Talbot and Co. to the plaintiff and a letter dated 20th August. 1958 from the plaintiff to M/s. Talbot and Co. and a letter dated 22nd August, 1958 from Talbot and Co. to the appellant/defendant herein.
4. It is submitted on behalf of the plaintiff/respondent that in the letter dated July 31, 1958 appellant/defendant recorded the terms and conditions under which it was agreeable to lease out approximately 60.000 sq. ft. area in the said premises to the plaintiff. In the said letter it appears that the appellant-herein was agreeable to let out approximately 60,000 sq. ft. of area @ rent at Rs. 42.50 per sq. ft. per mensem. Appellant also agreed to grant a lease for a period of 25 years and the tenancy would commence floor by floor as and when each floor was to be completed even if lifts were not installed.
5. In the said letter appellant mentioned that the offer might be placed before the Board of Directors of M/s. Bata Shoe Company Pvt. Ltd., the plaintiff and the same will remain open for 10 days from the date. It was further mentioned in the said letter that the offer was not intended for any other party. The letter was written by the appellant to its broker/agent, M/s. Talbot and Co. M/s. Talbot and Co. again on the same day i.e. on 31st July, 1958 addressed a letter to the plaintiff Intimating the terms and conditions on which the appellant was agreeable to let out the premises to the plaintiff.
6. M/s. Talbot and Co. addressed a letter to the plaintiff on 31st July, 1958 quoting from the letter of the appellant addressed to the said Talbot and Co. recording the terms and conditions under which the said appellant was agreeable to let out and/or lease out an area to the plaintiff. Thereafter, at the request of the plaintiff through M/s. Talbot and Co. appellant herein extended the time for responding to the offer of the appellant by the plaintiff.
7. Ultimately, by a letter dated 20th August, 1958 plaintiff, Bata Shoe Company Pvt. Ltd. informed M/s. Talbot and Co. In respect of the acceptance of the terms and conditions of the appellant herein which was quoted in the letter dated 31st July, 1958 of the Talbot and Co. with certain modifications. On the same day a director of the appellant endorsed acceptance on behalf of the appellant in respect of the modifications suggested by the plaintiff and mentioned in the said letter dated 20th August, 1958 excepting a minor change regarding expression "garage spaces" which should be read as "parking spaces". By letter dated August 22, 1958 M/s. Talbot and Co. informed the plaintiff about the aforesaid acceptance of the appellant. A copy of the letter received from M/s. National Properties Ltd. In this regard was also forwarded to the plaintiff by M/s. Talbot and Co. for ready reference.
8. By a separate letter dated 22nd August, 1958, M/s. Talbot and Co. informed the appellant herein in respect of the acceptance of the plaintiff regarding minr change about the expression of the word "garage" which was substituted by the word "parking" in compliance with the suggestion of the appellant herein. In the said letter dated 22nd August, 1958 M/s. Talbot and Co. specifically recorded that the terms and conditions of the agreement with modifications as suggested by the plaintiff was accepted by the appellant herein with modifications in respect of the Clause 6 where the word "garage" was required to be eliminated and substituted by the word "parking". M/s. Talbot and Co. also requested the appellant in the said letter to forward the draft lease as soon as possible so that the plaintiff can forward the same to the plaintiff company for approval of the terms by the plaintiff.
9. It has been contended by the plaintiff that appellant herein started repairing works in the said premises in order to make the premises ready as per the agreement and plaintiffs case is that they were assured time to time that possession of the floors would be made over to the plaintiff after the completion of the repairing works in compliance with the agreed terms. According to the plaintiff It was agreed upon by and between the parties that lease would be executed at the time of handing over the first two floors to the plaintiff by the appellant/ defendant herein.
10. However, in spite of the request made on behalf of the plaintiff the appellant/defendant did not send the draft lease for the purpose of approval of the plaintiff. It has also been alleged by the plaintiff that the appellant/defendant herein had been wrongfully refusing to make over the possession of the said premises after finalising and executing a formal lease in terms of the agreement between the parties. Plaintiff thereafter alleged that the defendant in breach of the agreement wrongfully attempted to let out the said premises and/or portion of the said premises to the third parties at an enhanced rate and the plaintiff was informed of this by M/s. Talbot and Co. who had been negotiating in the matter on behalf of the appellant/defendant as its agent.
11. In the meantime, an incident took place at the premises in question on 19th September, 1958 when two European gentlemen and one Indian gentleman visited the premises on behalf of the plaintiff and instructed to stop the work of staircase, lift, urinal of the said building. The aforesaid incident was reported to M/s. Talbot and Co. by the appellant herein by written communication dated 20th September, 1958 and a copy of the said written communication was also forwarded to the plaintiff herein. M/s. Talbot and Co. by letter dated 22nd September, 1958 Informed the aforesaid incident to the plaintiff and requested the plaintiff to communicate immediately to the owner of the building, namely, appellant herein. In view of the said request made by Talbot and Co., M/s, Bata Shoe Company Pvt. Ltd., the plaintiff herein Informed the appellant that their officers while inspecting the premises in question found that the work was not only slow but the alteration and/or modification were being carried out not in accordance with their requirements and as such they felt that the matter should be thrashed out before further progress in the construction as otherwise the alterations and/or modifications which were being undertaken by the appellant may require to be pulled down in view of the eventual requirements of the plaintiff. However, in the said letter plaintiff asserted that the work was not stopped by them as mentioned by the appellant in its letter dated 20th September, 1958.
12. M/s. Talbot and Co. by a letter dated October 7, 1958 Informed the plaintiff that the appellant/defendant herein had started negotiations with the Railway Electrification Department of the Government of India to let out a portion of the said building. Upon receipt of the aforesaid Information, plaintiff immediately took steps by sending necessary Instruction to its Solicitor, M/s. Khaitan and Co. and said Khaitan and Co. by a letter dated 8th October, 1958 asked the appellant/defendant to inform whether the appellant had been negotiating with the Railway Electrification Department in respect of the first and second floor of the premises and in the said letter the appellant was further requested by the Solicitor for the plaintiff to refrain from having any negotiations with any party for letting out any of the floors of the premises in question breach of the agreement between the plaintiff and the appellant/defendant herein.
13. By a letter dated 9th October, 1958 M/s. P.C. Ghosh and Co., Solicitor for the appellant, informed M/s. Khaitan and Co., the Solicitor for the plaintiff that the offer made by the appellant/defendant herein was never accepted and it was also stated on behalf of the appellant/defendant that only negotiations were going on with regard to the offer. In the said letter dated 9th October, 1958 solicitor of the appellant/defendant also informed that the ground and first floor of the said premises in question had already been let out to Railways Electrification, Ministry of Railways, Government of India and a lease had also been executed and registered and possession of the same had also been made over to the railways and railways had already moved into the said premises with their furniture etc. It was also mentioned in the said letter that second and third floor of the premises had been let out to other tenants and the said tenants have also taken possession thereof.
14. Plaintiff thereafter filed the suit against National Properties Ltd., owner of the premises in question for specific performance of the agreement and the said suit was numbered as Suit No. 1614 of 1958. An application was also moved in connection with the said suit before this Hon'ble Court and an ex parte ad interim order of Injunction was passed in terms of Prayer --(a) of the said application. The said prayer is set out herein.
"Injunction restraining the defendant, its servants, agents or assigns from in any way, dealing with disposing of, leasing or letting out the ground, the first, the second and the third floors of the said premises or any portions of the said floors or from, in any way delivering possession thereof to any person or persons save and except the plaintiff, until the final disposal of the action."
15. Ultimately, the said application for injunction was finally disposed of by the order dated January 20, 1959 by G.K. Mitter, J, (as His Lordship then was) whereby and whereunder the defendant (appellant herein) was restrained by an order of injunction from making over possession to any person other than the plaintiff. The said interim order was however modified by the Appeal Court subsequently and reference to that will be made hereinafter.
16. The suit was finally heard by a learned single Judge of this Court and was ultimately decreed in favour of the plaintiff by the Judgment and decree dated 25th February, 1981. The learned single Judge while decreeing the suit against the appellant herein for specific performance appointed receiver on the said premises and the Receiver was directed to take possession of the property and to collect rents therefrom.
17. The present appeal Is arising out of the said judgment and decree passed by the learned Trial Judge on 25th February, 1981.
18. Mr. Mitra, learned counsel, appearing on behalf of the appellant submitted that though various negotiations were carried on between the parties with regard to the leting out of the Ground, 1st. 2nd and 3rd floors of the said premises but ultimately no concluded or binding or valid agreement was ever entered into. Mr. Mitra placed the letters dated 31st July, 1958, 11th August, 1958, 20th August, 1958 and 22nd August, 1958 which were the basis of the agreement according to the plaintiff as mentioned in the plaint.
19. It was submitted on behalf of the appellant that Smt. Asrafi Devi Rajgharia, a director of the appellant company could not in the usual course of business confirm and/ or accept the terms of lease. It was also submitted that the appellant company is not bound by the individual act of its director. In support of the aforesaid contention a decision reported in (1979) 2 Cal LJ 532 (Sayaji Mills Ltd. v. Avadhana Investments Ltd.) was referred to and relied upon by the appellant.
20. According to the appellant, no valid agreement had been entered into by and between the plaintiff and the appellant herein and as such question of arriving at and/or formation of a concluded agreement did not arise as the appellant/defendant company never received any offer from the directors of the plaintiff company nor any such agreement was approved or confirmed by the Board of Directors of the appellant/ defendant herein.
21. It was further submitted that if at all there had been any agreement then the plaintiff had repudiated the same and/or given a total go bye thereof by committing breach of the same. The said repudiation, according to the appellant, has been duly accepted.
22. It has been submitted on behalf of the appellant that the plaintiff had admittedly introduced new terms in the negotiations by its letter dated 25th September. 1958 wherein it was specifically mentioned that constructions in the said premises' should be discussed with and considered by the plaintiff and plaintiff also claimed authority to suggest additions and/or alternations suitable to its requirements. Plaintiff also claimed right to alter and/or modify the constructions already done in the said premises. It has been specifically mentioned in the said letter dated 25th September. 1958 that the constructions in the said premises should continue subject to the approval of the plaintiff.
23. According to the appellant, the aforesaid new terms suggested by the plaintiff were never agreed to by the appellant/defendant herein and as such the defendant was entitled to cancel the agreement if any already entered into. It has been specifically contended by the appellant that by Introducing new terms the plaintiff repudiated and/or rejected and/or cancelled and/or gave a go bye to agreement if any already entered Into and the appellant accepted such repudiation and/or cancellation.
24. It was contended on behalf of the appellant that the plaintiff was not entitled to the relief as were mentioned in the plaint for the reasons that not only there was no concluded contract but also Smt. Asrafi Devi Rajgharia had no authority to endorse consent on behalf of the appellant company and thereby if it is at all contended that the agreement has been entered Into on the basis of the acceptance endorsed by Smt. Asrafi Devi Rajgharia then the same was not binding on the appellant company as Smt. Asrafi Devi Rajgharia had no authority to sign and/ or endorse any acceptance on behalf of the appellant company.
25. Mr. Dutta. learned senior counsel for the appellant submitted that the exhibits -- C & H being the vital documents in support of the contentions for the formation of a concluded and/or binding contract are not at all admissible in law in view of the provisions of Section 49 of Registration Act and no cognizance could be taken in respect of those exhibits -- C & H.
26. One other serious objection raised by the learned Counsel appearing on behalf of the appellant is in respect of non-furnishing the draft lease though in the letter dated 20th August. 1958 plaintiff had requested for sending the draft lease for approval at the earliest. Learned Counsel appearing on behalf of the appellant submitted that in view of the aforesaid demand regarding landlord's confirmation to the letter dated 20th August, 1958 being exhibit -- H and furnishing of the draft lease for approval of the plaintiff were two essential conditions for formation of a concluded Contract and as no draft lease for approval of the terms was furnished there cannot be a valid and concluded contract between the parties.
27. Learned Advocate appearing on behalf of the appellant submitted that there is no agreement before the Court on which a decree for specific performance can be passed. According to the learned Advocate appearing on behalf of the appellant, specific performance of the contract cannot be granted on the grounds that the lease period of 25 years had already expired and furthermore, value of the property which is the subject matter of the suit has considerably enhanced and all the floors of the suit premises had been let out on long terms lease to the third parties who were never brought before this Court by the plaintiff in spite of having specific knowledge. Referring to the lease granted in favour of the third party, learned Advocate of the appellant further submitted that the said leases also conferred rights on the lessees for inducting sub-tenants and there are numerous subtenants today who are in possession of the said premises.
28. Referring to the Sections 20 and 22 of the Specific Relief Act it was specifically submitted on behalf of the appellant that the Jurisdiction of Court to grant decree for specific performance is discretionary and the Court is not bound to grant such relief merely because it is lawful to do so.
29. Mr. Mitra further submitted that no date was also mentioned in respect of commencement of the lease and also no specific date was mentioned during which the lease would remain operative. Mr. Mitra also submitted that in the instant case actually an offer was made to receive an offer and nothing else and the same cannot be said to have let to a formation of binding and/or concluded contract between the parties.
30. According to the appellant herein, only proposals were communicated but no lease and/or contract had been arrived at between the parties. Mr. Mitra specifically submitted that the negotiation was at a fluid stage and at no point of time a firm and binding contract was arrived at between the parties. It was also submitted by Mr. Mitra that the plaint though was filed on 9th October, 1958 but the same was amended after a period of long 20 years on 20th November, 1978. The learned Counsel for the appellant contended that this shows that the plaintiff was not diligent and this latches on his part disentitles him to any relief of specific performance.
31. It was further mentioned on behalf of the appellant that the document was not registered. The valuation of the property being sufficiently high and considering the valuation, agreement was required to be registered which has not been done in the Instant case. Mr. Mitra. referring to the minutes of the meeting of the Receiver of 31st July, 1996, submitted that Mr. P.L. Khaitan of M/s. Khaitan and Co., Advocate on Record of the plaintiff, agreed and consented to the surrender of the tenancy of a tenant and granting of a new tenancy to a tenant. According to the appellant, this shows that the plaintiff does not require any further accommodation since he has agreed to the Induction of new tenants in the said premises,
32. It has also been submitted on behalf of the appellant that after a long lapse of 23 years suit was finally decided in the year 1981 and as such on the ground of delay alone the prayer for specific performance made on behalf of the plaintiff should have been refused by this Court.
33. Mr. Hiranmoy Dutta, learned Senior Counsel, also appearing on behalf of the appellant submitted that there is difference between the agreement of lease and agreement to lease. According to Mr. Dutta, in the Instant case no agreement of lease has been executed. Mr. Dutta referring to pages lib to 117 of the paper book, containing judgment of the learned trial Court, submitted that the plaintiff in the letter dated 20th August, 1958 addressed to M/s. Talbot and Co. admittedly suggested certain modifications and/or also asked for confirmation from the appellant and as such according to the appellant, everything was at the negotiation stage and there was no scope for concluded contract under any circumstances on the basis of the said letter.
34. Mr. Dutta, learned senior Counsel, appearing on behalf of the appellant submitted that negotiation was going on as would be evident from the documents disclosed by the appellant/defendant being letter dated 30th October, 1979 issued by Solicitor of the appellant/defendant to M/s. Khaitan and Co., Solicitors of the plaintiff and also from the other documents being minutes of the meeting of the Board of Directors of the appellant herein. It would also appear from those documents that the appellant company took steps to lease out the property before filing of the suit by the plaintiff.
35. Mr. Dutta further submitted that the third party right had already intervened and there had been no scope for allowing the prayer of specific performance of the plaintiff under any circumstances in the Instant case. Mr. Dutta referred to and relied upon the judgment (H.V. Rajan v. C. N. Gopal) and submitted referring to paragraph 6 of the said judgment that third party right since had already Intervened, there was no scope for allowing the prayer of the plaintiff for specific performance.
36. Mr. Dutta further submitted that under no circumstances agreement of lease could be equated with an agreement to lease and in the instant case at best it could be said that an agreement to lease has been made but no agreement of lease has been either made or executed.
37. It has been submitted on behalf of the appellant that before filing of the suit by the plaintiff an agreement of lease had been executed and registered with the Railways Electrification, Ministry of Railways, Government of India and possession of the ground floor and first floor of the said premises had also been made over to the railways on 1st October, 1958. The railways also moved into the said premises with their furniture etc. It was also submitted that the second and third floors of the said premises had also been made over to other tenants who had also taken possession thereof before filing of the suit.
38. Accordingly, Mr. Dutta, on behalf of the appellant, submitted that in view of preexisting registered lease, no decree could be passed for specific performance of agreement and/or contract, Mr. Dutta submitted that in view of the Impediment due to the Intervention of the third party Interest no relief could be granted directing specific performance of the agreement and according to Mr. Dutta, learned Trial Judge committed an error by decreeing the suit in order to grant relief of specific performance which in the facts and circumstances of the case should not have been granted.
39. Mr. Dutta further submitted that no hardship has been pleaded in the plaint and further submitted that exhibit-C and exhibit-H are nothing but offer and counter offer and as such there cannot be any concluded contract. Mr. Dutta also submitted that learned Trial Judge while decreeing the suit did not mention since when the lease is to be executed, as specific date has not been mentioned in the prayer of the plaint in this regard on the basis whereof the decree has been passed. Mr. Dutta further submitted that how can vacant possession be delivered in view of accrual of third party right in the property and particularly when the third parties are in possession of the substantial portions of the property. On behalf of the appellant Mr. Dutta also raised a question on the ground that since no draft lease has been executed who will settle the terms of the lease and how the formal lease could be registered. According to Mr. Dutta, decree cannot be implemented,
40. Learned Counsel for the appellant also contended that the alleged agreement is void for uncertainty. It has been contended on behalf of the appellant that the alleged agreement is not only silent with regard to the date from which the lease is to commence but the same also does not specify the time when the lease will be executed and/or the actual area that would be let out as the exhibit-H provides approximately 12,500 sq. ft. area on each floor without specifying the exact area which is essential for the purpose of ascertaining the rent and/ or consideration. According to the appellant no specific date has also been mentioned in respect of handling over the possession of the premises in question.
41. It has also been submitted on behalf of the appellant that agreement without consideration and without registration cannot be treated as valid document and in the Instant case it cannot be said that any commercial contract had been arrived at. According to Mr. Dutta, an agreement for lease under the Transfer of Property Act, can under no circumstances be termed as a commercial contract as the learned Trial Judge erroneously held. It has been specifically submitted on behalf of the appellant herein that no direct correspondences had been exchanged between the parties, namely, the plaintiff and defendant/appellant herein and as such according to learned Advocate of the appellant, question of arriving at a concluded contract and/or execution of a valid lease between the parties under such circumstances cannot arise.
42. Mr. Dutta submitted that trial Court should have taken into consideration the subsequent events after filing of the suit in respect of accrual of third party right in the property and the Impediment due to creation of third party right should have been taken into consideration while considering the claims of the plaintiff herein. Mr. Dutta specifically submitted that Court should take into consideration all subsequent events after the filing of the suit before granting a decree of specific performance. The following judgments were referred to and relied upon by the learned Advocate appearing on behalf of the appellant.
1. (1986) 1 Cal LJ 360 (Krishna Kanta Bhowmick v. Gobinda Chandra Dutta)
2. , (Raj Kumar Gupta v. Barbara Gupta)
3. (Ramesh Kumar v. Kesho Ram) (para 4)
4. (H. V. Rajan v. C. N. Gopal) On behalf of the appellant it was contended that due to supervening Impossibility agreement, if any has become incapable of specific performance. Following judgments were cited in support of the aforesaid contention by the learned counsel of the appellant:
1. , (Sailendra Nath Bose v. Charu Chandra Banerjee)
2. , (Kanshi Ram v. Om Prakash Jawal)
3. , (Pasupuleti Venkateswaralu v. The Motor General Traders).
43. Mr. Dutta further submitted that agreement without consideration is void and referred to Section 2(d) and Section 25 of the Contract Act. Mr. Dutta also submitted that documents were required to be registered under the registration Act if the documents created a present demise, they are compulsorily registerable. Mr. Dutta referred to following Judgments :
1. Head Note and Paragraphs 4 and 5, (Col. D. I. Mac Pherson v. M. N. Appanna)
2. AIR 1970 SC 706 Paragraph 12 and Head Note b (Badri Prasad v. The State of M.P.)
3. , (Yohannan v. Harikrishnan Nair).
44. It has been contended on behalf of the appellant that suit for specific performance filed by the plaintiff herein should have been dismissed on the ground of willful and deliberate laches of the plaintiff if not in the matter of institution but in the prosecution of the suit. Learned Counsel of the appellant accordingly submitted that the claims of the plaintiff, if any, in the suit was liable to be rejected on the ground of delay alone.
45. Reliance was placed on a passage at page 317 from the book of Law of Specific Performance by Dr. S. C. Banerjee which is reproduced hereunder.
The doctrine of laches is as applicable to the promissory as to the promise who is directed to sell an estate as one who is concerned to buy It. Performance of acts to be performed by either must be executed promptly. The institution of a suit when necessary should not be delayed and when instituted must be vigorously prosecuted."
46. Mr. Tibrewal, learned Advocate, appearing on behalf of the plaintiff opposed the contentions of the appellant herein. Mr. Tibrewal submitted that there had been no delay on the part of the plaintiff to approach this Hon'ble Court by filing the suit against the defendant/appellant herein. According to the plaintiff, intimation was received from M/s. Talbot and Co. only on 7th October, 1958 wherefrom the plaintiff came to know that the appellant/defendant herein was negotiating for letting out the first and second floors of the premises with Railway Electrification Department and the said broker, M/s. Talbot and Co., also suggested for taking immediate restrain action against the owners, namely, appellant herein. The plaintiff immediately took steps and under the instruction of the said plaintiff, its solicitors, M/s. Khaitan and Co., Advocates, wrote to the appellant herein enquiring whether the appellant/defendant herein negotiated the first and second floors of the said premises in breach of the agreement and the said M/s. Khaitan and Co. by the written notice dated 8th October, 1958 asked the appellant herein to refrain from having any negotiations with any party for letting out any part of the said premises in breach and/ or violation of the already concluded agreement between the plaintiff and the appellant herein. The suit was filed on 10th October, 1958 and as such according to Mr. Tibrewal, the plaintiff had approached this Court promptly by filing this suit without any further delay. Mr. Tibrewal further submitted that in spite of all the efforts the said suit could not be heard before the lapse of almost a period of 20 years and as such under no circumstances it can be said that the plaintiff herein was responsible for any delay as has been alleged by the appellant herein.
47. Mr. Tibrewal referred to exhibits --C & H and submitted that there was a concluded agreement between the parties. Mr. Tibrewal submitted that the negotiation was initiated with the exhibit-C and was finally concluded by the letter dated 20th August, 1958 being exhibit-H. All the terms agreed to by and between the parties were Incorporated in the letter dated 31st July. 1958 being exhibit-C. The plaintiff by the letter dated 20th August, 1958 specifically endorsed and/or acknowledged the acceptance of all the terms and conditions stated in the letter dated 31st July, 1958 being exhibit-C subject to certain modifications and the said modifications were also accepted on behalf of the appellant excepting a minor change regarding substitution of the word "garage" by the word "parking" in Clause 6 of the said modifications suggested on behalf of the plaintiff. The acceptance of the modified terms as suggested on behalf of the plaintiff was endorsed on behalf of the owners on the letter dated 20th August, 1958 by Smt. Asrafi Devi Rajgharia, Director of the appellant company.
48. According to Mr. Tibrewal terms and conditions of the parties were not only finalized but the parties entered into a concluded agreement pursuant to the letter dated 20th August, 1958 being exhibit-H wherein it has been specifically mentioned by the plaintiff that the terms and conditions mentioned in exhibit-C have been accepted by the plaintiff with certain modifications and the same was endorsed by Smt. Asrafi Devi Rajgharia, Director of the appellant company. She also endorsed her acceptance of the modifications as were suggested by the plaintiff.
49. Learned Counsel of the plaintiff submitted that all the essential terms in respect of the contract had been agreed upon and the agreement to lease being completed in every respect should be held to be concluded agreement. According to Mr. Tibrewal essential terms in a concluded agreement are as follows :
a. Names and addresses of the parties to the agreement, b. subject matter of the lease, c. rent payable to the landlord and d. period of lease.
50. Mr. Tibrewal submitted that all the aforesaid essential terms have been fulfilled in the instant case and as such it can be said that the parties have entered Into a concluded contract.
51. In support of the aforesaid contention Mr. Tibrewal placed his reliance on a passage from Hill and Redman's Law of Landlord and Tenant 16th Edition page 105 para 52(b). The passage cited from Hill and Redman's Law of Landlord and Tenant is also reproduced hereinbelow :
"Concluded contract may be resolved by examination of its language, into an offer of the lessor to let, and an unconditional assent by the lease to take, the property on certain terms. The essential terms of an agreement for a lease are (1) the identification of the lessor and the lessee; (2) the premises to be leased; (3) the commencement and duration of the term; and (4) the rent and other considerations to be paid. If the matters just mentioned are ascertained to be thus offered and accepted, and pro viding the agreement is supported by consideration, this is sufficient. Any other matters Incident to the relation of landlord and tenant, if not defined by the parties, arc sufficiently defined by law. If any other terms are mentioned by one party, these also must be unconditionally accepted by the other party in order that there may be a concluded contract. As long as the above necessary terms have not been agreed to or any additional terms has been mentioned on one side and not unconditionally accepted on the other, the matter rests in negotiation and there is no concluded contract."
52. Mr. Tibrewal further contended that on or about 22nd August, 1958, the appellant permitted the plaintiff to put up a signboard containing its name in the premises in question which was nothing but performance of the said agreement.
53. According to Mr. Tibrewal, terms of the agreement had been finally accepted and thereby contract has been completed and only performance of the same was to be done by the parties. According to Mr. Tibrewal, appellant herein breached the contract by refusing to perform the contract and the said appellant company was alone responsible for non-performance of the said concluded contract, Mr. Tibrewal referred to the letter of the appellant company dated 31st July, 1958 being exhibit-C and submitted that in the said letter it was mentioned that the offer of the appellant company may be placed before the Board of Directors of the plaintiff company which under no circumstances means that such offer must be placed before the Board of Directors of the plaintiff company. According to Mr. Tibrewal, option was left with the plaintiff whether or not such offer should be placed before the Board of Directors.
54. Mr. Tibrewal further submitted that from the terms and conditions as mentioned in the said letter dated 31st July, 1958 it would appear that there was no specific clause for acceptance of the offers only by the Board of Directors of the plaintiff company. However, the offer of the appellant company herein was placed before the Board of Directors and the same was duly approved by the Board of the plaintiff company as would appear from the minutes of the meeting of the Board of Directors of the plaintiff company held on 23rd August 1958.
55. Learned Counsel on behalf of the plaintiff submitted that essential terms of lease agreed to by and between the parties would appear from exhibits- C & H. According to the plaintiff, essential terms for a lease agreement are identification of the parties i.e. lessor and lessee, the premises in question, actual area to be leased out, the rent and the duration of the lease. It has specifically been submitted on behalf of the plaintiff that all the essential terms would appear from exhibits-C & H.
56. It was further contended on behalf of the plaintiff that once a contract is concluded, subsequent negotiations or suggestion of terms and conditions do not in any way affect the contract. According to the plaintiff, whatever has been done in the present case after acceptance of the modifications suggested by the plaintiff and mentioned in exhibit-H was nothing but work-Ing out of the contract. The request of the plaintiff for sending the draft lease was also in course of working out of the contract. It has been also submitted by the plaintiff that aforesaid request made by the plaintiff for sending the draft lease would suggest that the parties were proceeding on the basis of a concluded agreement. It has been specifically contended on behalf of the plaintiff that the draft lease was asked in course of performance of the agreement to lease.
57. Therefore, the plaintiffs assertion is that decree of specific performance is in nature of a preliminary decree and the Court retains the control of proceedings. In the event, any difficulty arises in course of the performance the aggrieved party can always approach the Court for necessary relief.
58. Learned Counsel on behalf of the plaintiff submitted that there is no uncertainty in the present case. From exhibits-C and H it would clear that the area to be let out was specifically mentioned which is 50,000 sq. ft. approximately in four floors. The duration of the lease has also been mentioned in exhibit-C which was for a period of 25 years. As regards the date of commencement of the lease, according to the plaintiff, it would appear from exhibits-C & H. It has been specifically mentioned in those exhibits-C & H that the rate of rent will be Rs. 42,50 per 100 sq. ft. per mensem and the lease will be for a period of 25 years. Tenancy will commence floor by floor as and when each floor is completed and furthermore, the landlord undertook to complete all works within approximately six months.
59. Furthermore, plaintiff by the letter dated 25th September, 1958, which was the only direct communication to the appellant, categorically mentioned that the construction work, which was being carried out by the appellant/defendant at the premises in question was not only slow but the alterations and modifications that were being carried out therein were not in conformity with the requirements of the plaintiff. In the letter it was further mentioned that the engineer-in-charge of the construction should see the plaintiff and also discuss about the plan so that the plaintiff could suggest additions and/or modifications which would be suitable to the said plaintiff for future requirements. It was specifically mentioned in the said letter that though the work was not stopped by the plaintiff but it was suggested on its behalf that before any further progress in the construction matter should be thrashed out so that the modifications that were being carried out in the premises might not have to be pulled down in view of eventual requirements of the plaintiff. According to the appellant, the very words "the matter might be thrashed out" and "In view of our eventual requirements" would also suggest that no finality had been arrived in respect of the transaction in question.
60. Learned counsel of the appellant referred to and relied on a decision reported in (1965) 2 All ER 786 (Harvey v. Pratt) wherein Lord Denning, M. R. observed as hereunder :
"It has been settled law for all time that, in order to have a valid agreement for a lease, it is essential that it should appear, either in express terms or by reference to some writing which would make it certain or by reasonable reference from the language used, on what day the term is to commence."
61. Learned Counsel of the appellant also referred to the observation of Lush, LJ in Marshall v. Berridge reported in (1881) 19 Ch. D. 233 at page 245 which is reproduced hereinbelow:
".(.........There must be a certain beginning and a certain ending, otherwise it is not a perfect lease..,....;........."
62. Mr. Tibrewal further submitted that all the terms mentioned in exhibits-C & H were specific, clear and the same lead to a definite conclusion that there was a concluded contract. The essential terms of the lease were thus specifically mentioned in those exhibits-C & H and nothing had been violated which can disentitle the plaintiff to specific performance. Mr. Tibrewal also submitted that the terms and conditions offered by the defendant herein and subsequently accepted by the plaintiff in respect of the suit property was unambiguous, specific and certain and after referring to Section 2(a) of the Contract Act it was further submitted that in spite of uncertainty of the commencement of lease the agreement in question between the parties was capable of being made certain particularly when the appellant/defendant undertook to complete all works as expeditiously as possible and within approximately six months from the date as was specifically mentioned in Clause 30 of the terms and conditions offered to the plaintiff as mentioned in exhibit-C.
63. According to the plaintiff, so far as date of commencement of lease is concerned, the same could be gathered from the agreement being exhibits-C & H. It was contended on behalf of the plaintiff that the commencement of lease as was mentioned in the said exhibits C and H was to be approximately within six months from 20th August, 1958 and only upon the possession of first two floors being given the tenancy would commence. As a matter of fact, in the letter dated 31st July, 1958 being exhibit-C the appellant herein in Clause 4 of the terms and conditions mentioned that the tenancy will commence floor by floor and undertook to complete all works as expeditiously as possible and approximately within six months from the date. Accordingly, under no circumstances it can be said that in the aforeL said exhibits-C and H parties have not specified any firm date regarding commencement of the lease which is one of the essential terms of the agreement.
64. The plaintiffs case is that in any event tenancy would commence from the date of execution of the lease in view of the provision of Section 110 of the Transfer of Property Act. It has been contended on behalf of the plaintiff that lease is to be executed at the time of handing over of the possession of the first two floors and so there was no uncertainty at all. Learned counsel on behalf of the plaintiff submitted that the alleged uncertainty in the facts of the present case could always be made certain.
65. Mr. Tibrewal also referred to Williams on Title 4th Edition, pages 25-26. Relevant extracts whereof are reproduced hereinbelow :
"CONTRACTS BY CORRESPONDENCE When enforceable contract formed. It is not uncommon for negotiations to be carried on by the Interchange of a number of letters passing between the vendor and the purchaser or their agents. At some time during such correspondence it may be that one can collect from the negotiations up to that point that an offer by one party has been completely accepted by the other. In arriving at the conclusion that a concluded contract has been formed in that way by the acceptance of an offer, not only must the whole correspondence be looked at, but also any oral negotiations which may have taken place If, when the whole of the negotiations both written and oral show that at a certain date an offer including all the necessary terms has been accepted without qualification, then a binding contract has been entered into and no communication or negotiation subsequent to that date can affect it, unless both parties agree that the subsequent communications of negotiations shall have that effect."
66. Mr. Tibrewal also referred to and relied on the following judgments :
1. (Krishnan Kesavan v. Kochukunju Karunakaran).
2. (1964) 68 Cal WN 611 at pages 625, 629, 634 and 635 (Smt. Labanya Ray v. Rai Saheb Panindra Mohan Mukherjee),
3. AIR 1919 Cal 837 at page 838 (Kailash Chandra v. Bejoy Kanta Lahiri).
4. (Kolllpara Sriramulu (dead) by his legal representative v. T. Aswatha Narayan (dead) by his legal representative).
5. relevant-portions at page 12 Para 18, (Mayawanti v. Kaushalya Devi}.
6. (1923) 50 Ind App 25 : (AIR 1923 PC 47), (Harichand Mancharam v. Govind Luxman Gokhale).
7. relevant-portions at page 24 para 25 to 26 '(S.V.R. Mudallar (dead) by LRs. v. Rajabu F. Buhari (Mrs.) (Dead) by LRs.)
67. The conduct of the appellant/defendant herein was strongly criticized on behalf of the plaintiff herein. Mr. Tibrewal submitted that the appellant herein did not pay any respect to the solemn order of the Hon'ble Court and acted in gross violation of the specific direction of this Hon'ble Court. Plaintiff herein filed the suit on 10th October, 1958 for specific performance of the agreement and also filed an application in connection with the said suit for an ad Interim order of injunction. The said application for ad interim order of Injunction was moved before the Hon'ble Vacation Judge on 10th October, 1958 of this Court when an ad Interim order of injunction was passed in terms of prayer -- (a) of the said petition which has been set out above. Subsequently, the said application for interim order was finally pending hearing of the suit and the Interim order made earlier was also confirmed to that extent.
68. The Appeal Court, however, by an order dated 23rd August, 1959 varied the said order passed by G.K. Mitter, J. on 20th January, 1959 to the extent that the said order will not operate to the prejudice of the lessees, if any, who acquired their interest in the disputed property prior to 10th October, 1958. In view of the aforesaid order of the Appeal Court, order passed by G.K. Mitter, J. would not affect the rights of the lessees who had acquired interest in the property in question prior to 10th October, 1958.
69. Admittedly, the Railway Electrification Board, Ministry of Railways surrendered their possession in respect of the portion of the premises under its occupation under the lease. Such surrender took place on 31st December, 1969. But after such surrender by the Railway Electrification Board appellant let out to a new parry the said portion which was under occupation of the Railway Electrification Board. The aforesaid conduct of the appellant herein was severely criticized by the learned counsel of the plaintiff and it was submitted that the parties who are in possession of the ground floor and first floor of the premises in question in violation of the Court's order cannot constitute a legal embargo on the right of the plaintiff to a claim of specific performance. Mr. Tibrewal further submitted that in view of the aforesaid conduct of the defendant herein this Court should not hesitate to grant discretionary relief directing specific performance as has been prayed for in the Instant case by the plaintiff.
70. On the point of hardship, learned Advocate of the plaintiff submitted that the question of hardship in the instant case cannot and does not arise and in any event if any hardship at all arises then the same is a self-induced hardship for which the plaintiff cannot be made to suffer.
71. Mr. Tibrewal referred to and relied on the following judgments :
1. AIR 1949 Cal 571 Head Note --(E) and para 24 (Kanto M. Mullick v. Jyotish Ch. Mukherjee).
2. ILR 1941 Cal 852: AIR 1914 Cal 137, (Haradhan Deb Nath v. Bhagabati Dasi).
3. Head Note -- (A) & paras 10 & 11 (S.V. Sankaralinga Nadar v. P.T.S. Ratnaswami Nadar)
4. (Prakash Chandra v. Angadlal).
5. (Abdul Kayum Ahmed v. Damodhar Paikaji Klnhekar).
72. The consequences of entering into possession in violation of the Court's order has been discussed in the judgment . Satyabrata Blswas v. V. Kalyan Kumar Kisku) at page 1843. This was relied on by Mr. Tibrewal, Mr. Tibrewal also referred to and relied upon following Judgments on the said point.
1. (Pirthi alias Sansi v. Jati Ram).
2. relevant portions at paras 12 & 13 at pages 678 and 679 (of SCC) : (at pp. 905 and 906 of AIR) (Krishna Kumar Khemka v. Grindlays Bank P.L.C.).
3. relevant portions at para 15 & 16 at page 112 (Anandilal Poddar v. Gunendra Kumar Roy).
73. Mr. Tibrewal finally submitted that in the event this Court is of the opinion that specific performance cannot be granted then a suitable relief by way of granting damages at the present market rate should be awarded in favour of the plaintiff. Following judgments were relied upon by the learned Advocate in support of the aforesaid submissions relating payment of damages in place of specific performance.
1. , (Damacherla Anjaneyulu v. Damacherla Venkata Seshaiah).
2. (1962) 1 All ER 442 to 446 (Jones v. Lipman).
3. , (Pasumarti Ramulu v. Nuthi Anantha Ramulu).
4. (1985) 1 All ER 211, (Clarke v. Chadburn).
5. (1973) 1 All ER 897 at 919 (Wroth v. Tyler).
74. The learned Counsel for the plaintiff further submitted that consideration could be made in terms of payment of rent only after delivery of possession. Section 2(d) of the Contract Act was referred to in this regard. Learned Advocate of the plaintiff also submitted that promise to pay is to be considered as consideration in terms of Section 2(e) and (f) of the Contract Act.
75. After hearing the learned Counsel representing the contesting parties and upon considering the relevant documents, pleadings and the judgment of the Trial Court we are of the view that the principal question to be decided at first in the instant appeal is whether the parties herein entered into a concluded or binding or valid agreement in respect of the premises in question. In other words whether the parties herein arrived at a concluded and/or binding contract for grant of lease in respect of the said premises.
The foundation of the claim of specific performance rests on a concluded contract between the parties. In the present case it is to be ascertained whether the plaintiff and the defendant are parties to a finally concluded contract. .
76. No proceeding in specific performance can succeed unless a contract has actually been concluded. The burden of proving the conclusion of the contract rests on the plaintiff. In a case where the contract is embodied in a formal document simultaneously entered by both the parties there is hardly any difficulty to find out whether the contract is concluded. But in a case like the present one, where there is no such formal contract, there the question of construction will be most Important. The most common question in such a situation is whether negotiations between the parties have resulted in an actual contract. If it is doubtful after looking at the intention of the parties and considering the materials and evidence that matters rest at a stage where negotiations have not been closed, the Court normally refuses the equitable remedy of specific performance.
77. Keeping those principles in mind, let us examine the facts of the case.
Admittedly, the parties herein, namely, plaintiff and defendant negotiated through the broker M/s. Talbot & Co. and the parties never dealt with the matter directly and always acted through the negotiator, namely, M/s. Talbot & Co.
78. According to the plaintiff, the agreement was entered into by and between the parties on the basis of the written communication of the parties being exhibits-C & H.
79. Learned Trial Judge considering the contents of the aforesaid written communications being exhibits-C & H held as under
"I do not find any of the terms contained in these Exhibits to be ambiguous, nor do I find any terms wanting therefrom so as to hold that there was no concluded contract."
80. The learned Trial Judge held that a concluded contract had been arrived at and the parties also construed it to be so as would emerge from the events which occurred as a natural and consequential outcome of a finally concluded transaction. The events which were considered by the learned Trial Judge as the natural and consequential outcome of a finally concluded transaction transformed into a concluded contract are quoted hereinbelow :
"These events are (a) pursuant to the execution of Ext.H and the confirmation thereof on behalf of the defendant by its director Ashrafi Devi, the plaintiffs signboard admittedly was permitted to be put up at the suit premises in August or September, 1958 indicating thereby the suit premises as the site for the plaintiffs central office (b) Representative of the plaintiff including its engineer Mr. Banock were permitted to visit the suit premises to view the progress of works even as late as September 1958 and admittedly works stopped on their instructions; (c) Construction works were being carried on at the suit premises even on September 19, 1958 admittedly on the basis of the correspondence, although the defendants urge that the transaction was in a state of negotiation; (d) No objection being taken to the visit of the plaintiffs representative to the suit premises for inspecting such works is of significance. That such overt steps would have been permitted if the matter was merely in the stage of negotiations. Is highly improbable."
81. It was contended on behalf of the appellant that in exhibit -- H it was specifically mentioned by the plaintiff company that M/s. Talbot & Co. being the negotiator in the deal should not only send landlord's confirmation in respect of the said modifications as suggested by the plaintiff in the said written communication dated 20th August. 1958 being exhibit-H but should also send the draft lease for approval. Accordingly, from the said exhibit-H it becomes clear that the plaintiff company not only suggested certain modifications but also desired a draft lease for the purpose of approval of the same. The mentioning of the aforesaid conditions regarding approval of the draft lease by the plaintiff company is an important factor which can under no circumstances be ignored while deciding the issue as to whether the parties entered into a concluded agreement and/or the existence of* a concluded contract between the parties.
82. According to the appellant, terms between the parties could not be finally settled in view of the condition which was specifically mentioned in exhibit-H in respect of sending a draft lease for approval of the plaintiff company. It was further submitted on behalf of the appellant that the terms and conditions suggested by the parties and mentioned in exhibits-C & H could be altered at the time of approving the said draft lease. Learned Counsel for the appellant accordingly submitted that in view of the aforesaid condition mentioned in exhibit-H regarding the draft lease, it could not be said that the transactions in question were concluded. It was further contended on behalf of the appellant that the term in respect of the forwarding of a draft lease specifically suggested that the parties were negotiating the deal and the entire matter was at a fluid stage. Learned Counsel of the appellant, therefore, submitted that in view of the non-finalisation of the transaction in question, the formation of a concluded contract could not arise.
83. Learned Counsel for appellant submitted that exhibit-H should be treated as a conditional counter offer of the plaintiff in view of the last paragraph of the said exhibit-H which is quoted hereunder.
"You will send us the landlord's confirmation to this letter and also send us the draft lease for approval at the earliest convenience."
84. Here the plaint case is that there is a concluded contract between the parties about an agreement of lease from correspondence. Four letters have been disclosed in the plaint as concluding the contract. They have all been referred to above. Of all those four letters, exhibit-C and exhibit-H are treated by the plaintiff as the two most vital documents. Exhibit-C is a letter dated 31st July, 1958 and exhibit-H is a letter dated 28th August, 1958. These letters have been marked with the letters 'A' and 'C' to the plaint. The terms contained in those letters are set out hereinbelow :
"Exhibit-'C'
1. That the rate of rent will be Rs. 42.50np. per 100 sft. per mensem inclusive of the owner's and occupier's shares of Municipal taxes, calculated on the total floor area in the tenants' occupation excluding lift and surrounding staircase wells; it is understood that any increase in taxes in the future after the assessment has been made which Includes the agreed rent, will be borne by the tenants;
2. That the lease will be for a period of twenty five years;
3. The tenants will pay us six months' rent in advance at the time of signing the lease;
4. That the tenancy will commence floor by floor as and when each floor is completed even if the lifts are not Installed;
5. That we will finish the building in a first-class workmanlike manner and each floor will consist of absolutely vacant halls with adequate number of bathrooms consisting of W.C. seats, urinals and wash-hand basins which we will have fitted at -- positions suitable to the original building plan and we will erect 5 in brick partitions making not more than six private rooms per floor at positions to be chosen by the tenants. Any further partitioning or private rooms required will have to be carried out by the tenants;
6. The floor will be laid in mosaic tiles;
7. The walls will be lime-punned and whitewashed;
8. Proper windows will be fitted and the outside elevation of the building will be as per the elevation already supplied to you with slight modifications if we consider it necessary;
9. We will provide light and fan points on all the floors at positions to be pointed out by the tenants but any heavy cable lines for air conditioning will have to be done by them at their own expense. We will arrange with Messrs. The Calcutta Electric Supply Corporation Ltd. that the supply of current in the building will be A.C.;
10. We will provide three good staircases in first-class finish in keeping with the dignity of the building and provide three new lifts, each with 6 passanger capacities. The staircases and lifts will be for common use of the building;
11. The back courtyard will be cleared and will be available for parking of cars for the entire building;
12. We will provide only ten servants' quarters measuring about 10' x 12' each either on the roof or at the north end of the courtyard being near the northern boundary of the premises. These, of course, will be finished last but meanwhile there will be no reduction of rent;
13. We undertake to complete all works as expeditiously as possible and to complete all floors and install lifts etc. as mentioned above within approximately six months from date;
14. The tenants will pay their own Solicitors' cost for the drawing up of the lease and also the stamp and registration charges in connection therewith.
This offer may be placed before the Board of Directors of Messrs. Bata Shoe Co. Ltd.. and will remain open for ten days from date. This offer is not intended for any other party."
"Exhibit-'H' Calcutta 20th August, 1958 We thank you very much for your letter No.G. 4235 dated the 31st July, 1958.
We hereby accept the terms and conditions stated in your said letter with the following modifications :
The tenancy will be for 4 floors - ground, 1st, 2nd and 3rd floor -- each floor approximately 12.500 sq.ft.
1. Instead of the tenancy commencing floor by floor as stated in your letter, the tenancy will commence two floors at a time when ready i.e. the ground floor and the first floor will be handed over simultaneously when ready and the second and third floors will similarly be handed over simultaneously when ready.
2. We will have the right to sublet during the currency of the lease if we so desire; nevertheless we will be responsible to the owners for the fulfillment of the terms and conditions of the tenancy.
3. The lease will be executed at the time of handing over the first two floors The advance rent paid at the time of execution will be adjusted against the first six months rent.
4. The lifts will be provided within a reasonable time,
5. 2 w.c. and 2 bath rooms will be provided with the servants quarters and the same will be built reasonably soon enough,
6. Parking spaces should be reseived proportionate to the space of tenancy.
You will send us the landlord's confirmation to this letter and also send us the draft lease for approval at the earliest convenience.
Yours faithfully, BATA SHOE COMPANY PRIVATE LIMITED, Sd/- illegible.
IAW SUPERINTENDENT.
We accept these modifications as set out herein except that in Clause "6" Garage spaces should read as Parking Spaces:
THE NATIONAL PROPERTIES LTD., Sd/- Illegible.
DIRECTOR"
85. Relying on those two letters being exhibit-C and exhibit-H it has been contended by the plaintiff that final agreement has been arrived at between the parties. But it is difficult for this Court to accept the said contention for the following reasons :
86. In exhibit-H, viz. the letter dated 20th August, 1958 though modification as prayed for in Clause 6, viz., that instead of parking spaces, garage space should be reserved proportionate to spaces of tenancy has been accepted, the other condition in the said letter dated 20th August, 1958 being exhibit-H has not been complied with. The said requirement is sending of a draft lease for approval of the plaintiff at the earliest convenience.
87. The learned counsel appearing for the plaintiff has submitted that this requirement of sending the draft lease is merely ancillary and is not essential to the formation of a contract between the parties. In other words, the submission of the plaintiff is that the requirement of sending a draft lease is not a part of the terms and conditions of the parties but the same is merely a draft for incorporation of the already existing terms which have been finalized between the parties.
88. It is difficult for this Court to accept the said contention having regard to the correspondence between the parties and the case made out by the plaintiff in the plaint.
89. Requirement of a formal draft lease for approval has not only been mentioned in exhibit-H alone, but the same has been repeated in the letter written just on the following date that is on21st August, 1958. In that letter marked exhibit-I, it has been stated as below :
"We should be glad to have your formal confirmation of this letter as requested by Messrs. Data Shoe Co. Private Ltd. and advise us when we may get the draft lease for submission to them for their approval."
90. The demand for a draft lease was repeated on the following i.e. 22nd August, 1958 in a letter marked 'K'. The relevant portion is set out below :
"Kindly forward us the draft lease as soon as possible so that we may forward same to Messrs. Bata Shoe Co. Private Ltd."
91. in Paragraph 3 of the plaint it has been stated as follows :
"By the aforesaid letter dated the 20th August, 1958 the plaintiff called upon Messrs. Talbot & Co., to cause a draft lease to be prepared and sent to the plaintiff for approval in accordance with the terms and conditions of the agreement between the parties for the preparation of a formal lease. By the aforesaid letter dated the 22nd August, 1958 Messrs. Talbot & Co. called upon the defendant to forward the draft lease as soon as possible so that the same may be sent to the plaintiff."
92. Again in Paragraph 6 of the plaint, it has been averred as follows :
"By and under the said agreement it was further inter alia agreed that the said lease will be executed at the time of handing over the first two floors to the plaintiff by the defendant. In spite of requests made in that behalf by the plaintiff as aforesaid, the defendant had not yet sent the draft lease for the approval of the plaintiff."
93. The evidence adduced by the plaintiff s witnesses on the importance of the draft lease for approval of the terms by the plaintiff will appear from the following answers given by Sukumar Dey of Talbot & Co. who negotiated the terms between the parties The answers given by Mr. Dey to questions Nos. 255 to 268 are relevant and extracted below :
"Q. 255. There were some questions and answers about draft lease; you have said that draft lease was to be given by the owners?
Ans. Yes.
Q. 256. Where did you get that; it is not in writing?
Ans. Not in writing but we have written a letter.
Q. 257. Did the owners agree either in writing or verbally to give you draft lease?
Ans. They verbally told that they would submit a draft lease. Then we wrote letters and in one of our letters addressed to National Properties we enquired when he was going to send the draft.
Q. 258. In that letter did you refer to any verbal assurance given by any body on behalf of the defendant?
Ans. 1 have to see that letter. (Brings out from the file letter dated 6th September).
Q. 259. Before that didn't you mention about a draft lease in the letter dated 22nd August, 1958?
Ans. On 22nd August we wrote a letter and thereafter we sent a reminder.
Q. 260. If there had been any reference of any verbal assurance if would be in the letter of 22-8-58 inasmuch as in the other letter; do you find any such reference?
Ans. No. Q, 261. Therefore, from the correspondence it does not appear that anybody on behalf of the defendant said anything about draft lease or gave you any assurance and no such assurance was ever recorded by you in any letter?
Ans. From the correspondence it appears so.
Q. 262. Please look at Ex. 1, letter dated 21-8-58 -- this letter is even earlier than the last one you saw. Here also there is a reference of a draft lease right at the end of the letter?
Ans. Yes.
Q. 263. In the first paragraph of this letter discussion and correspondence have been referred to?
Ans. Yes.
Q. 264. But there is no reference to any discussion or assurance about any draft lease?
Ans, Not in writing, but we demanded.
Q. 265. Did you ever get any formal confirmation as requested here in this letter?
Ans. From National Properties Ltd.? Q. 266. I do not know - as referred to in this letter?
Ans. No. Q. 267. But as understood by yourself and also as requested by Bata Shoe Co. Pvt. Ltd. such a confirmation was thought to be necessary. You did not write an unnecessary letter?
Ans. No. Q. 268. It was thought to be necessary?
Ans. Yes."
94. From the aforesaid evidence, exchange of correspondences and pleadings in the plaint, it is clear that the preparation of the draft lease was not merely incidental to the formation of the contract but the preparation of the draft lease was necessary for obtaining the approval of the plaintiff and such sending of the draft lease was insisted on time and again as it was in accordance with the terms and conditions of the agreement between the parties for the preparation of a formal lease. So it is an essential part of the contract between the parties.
95. It is common ground that the draft lease was never sent by the appellant for approval of the terms by the plaintiff. There is no existence of draft lease.
96. The crucial question is whether under these circumstances, a concluded contract can be said to have come into existence between the parties.
97. Reliance in this connection may be placed on a Full Bench Judgment of the Calcutta High Court in the case of J.I.J. Hyam v. M.E. Gubbay reported in AIR 1916 Cal 1. In this case a somewhat similar question arose whether there was a concluded contract between the parties in the case of sale of immovable property. In that case the learned Judges considered the averment in the plaint to the following effect.
"It was agreed that the plaintiffs said Solicitors should prepare a formal agreement in writing embodying the usual terms and conditions of purchase was an integral part of the negotiation of that date and was actually a matter of agreement between the parties. That it was an essential term of the bargain between the parties. That then should be a written contract is, I think, clear even apart from the definite allegation in the plaint." (See page 7)
98. The learned Judge further held at page 7 as follows :
"It is expressly pleaded in the plaint that it was a matter of actual agreement not merely the expression of a desire that the term should be embodied in a written agreement."
99. The learned Judge after considering the ratio in Ridgway v. Wharton reported in (1957) 6 HLC 238 held that--
"in the absence of a written agreement, therefore, I hold that there was no enforceable contract, and in the view I take this is sufficient to dispose of the appeal."
100. Justice Ashutosh Mookerji (as His Lordship then was) held at page 20 of the report :
"It is well settled that the fact that the parties Intended to embody the terms of their contract in a formal written agreement. Is strong evidence that the negotiation prior to drawing up of such writing are merely preliminary and not understood and intended to be binding."
101. His Lordship after discussing the case law on the subject further crystallised the principle as follows at page 22 of the report:
"If the written draft is viewed by the parties merely as a convenient memorial or record of their previous contract, its absence does not affect the binding force of the contract; If, however. It is viewed as the consummation of the negotiation, there is no contract until the written draft is finally signed."
102. His Lordship further clarified at page 23 of the report as follows :
"If a written draft is proposed, suggested or referred to during the negotiation it is some evidence that the parties intended it to be final closing of the contract."
103. In Winn v. Bull, reported in (1877) 7 Ch D 29, Lord Jessel Master of Rolls expressed the same view. In dealing specifically with the question of the concluding terms of a lease, the learned Judge observed at page 30 of the report as follows :
"When we come to a contract for a lease the case is still stronger. When you bargain for a lease simply, it is for an ordinary lease and nothing more: that is, a lease containing the usual covenants and nothing more; but when the bargain is for a lease which is to be formally prepared, in general no solicitor would, unless actually bound by the contract, prepare a lease not containing other covenants besides, that is, covenants which are not comprised in or understood by the term "usual covenants". It is then only rational to suppose that when a man says there shall be a formal contract approved for a lease, he means that more shall put into the lease than the law generally allows. Now. In the present case, the Plaintiff says in effect, "I agree to grant you a lease on certain terms, but subjectto something else being approved/ He does not say, "Nothing more shall be required beyond what I have already mentioned, but "something else is required" which is not expressed. That being so, the agreement is uncertain in its terms and consequently cannot be sustained."
104. Principles in Winn v. Bull, (1877-7) Ch D 29) (supra) have been approved by Lord Parker in Von Hatzfeldt Wilden Burg v. Alexander, reported in (1912) 1 Ch D 284. The principles on this point have been succinctly put by Lord Parker at pages 288-289 of the report in the following words :
"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 mere expression of the desire of the parties as to the manner in which the transaction already agreed to will in fact 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. The fact that the reference to the more formal document is in words which according to their natural construction import a condition is generally if not invariably conclusive against the reference being treated as the expression of a mere desire."
105. In the instant case from paragraph 3 of the plaint it is clear that the requirement of sending the draft lease for approval of the plaintiff is not merely a desire of the parties as to the manner in which the transaction already agreed to will be recorded. On the other hand, (his condition of sending the draft lease for approval of the plaintiff is a condition of the bargain.
106. The aforesaid dictum of Lord Parker has been quoted with approval in the Calcutta High Court Full Bench decision in the case of Hyam v. Gubbay, (AIR 1916Call) (supra).
107. Reference in this connection may also be made to an old decision in enquity case between Crossley v. Maycock reported in (1874) LR 18, Enquity 180. Lord Jessel Master of the Rolls, explained the principles as follows :
"If there is a simple acceptance of an offer of purchase accompanied by a statement that the acceptor desires that an arrangement should be put into some more formal terms, mere reference to such a proposal will not prevent the Court from encoding the final agreement so arrived at. But if the agreement is made subject to certain conditions, then specified or to be specified by a party making it or, by his Solicitor, then until those conditions are accepted, there is no final agreement such as the Court will enforce."
108. Here the plaintiff was keen for and insisted on the draft lease and to examine the terms for their approval. Admittedly no draft lease was ever prepared and the plaintiff could not approve the terms. This is a part of the bargain. Therefore, in the absence of the terms mentioned in the draft lease which require the plaintiffs approval, the contract has not reached finality.
109. In Rossdale v. Denny reported in (1921) 1 Ch 57 there was an alleged contract on correspondence. There was a conditional offer by one of the parties with the endorsement "subject to a formal contract". The question arose whether without a formal contract there is a concluded agreement between the parties. Justice Russel after considering various authorities on the point formulated the proposition in paragraph 59 of the report as follows :
"If upon the true construction of the documents the reference to a formal contract amounts to an expression of a desire on the part of one or other of the parties, or both, that their already complete contract should be reduced Into a more formal shape, then the fact that no such contract has been executed is no defence to the action, but the original and complete contract survives and may be enforced. If, on the other hand, the true construction of the documents is this, that cither the offer or the acceptance was conditional only, then the non-execution of a formal contract affords a defence to the action upon the ground that the parties really did not intend to be bound until a formal document had in fact been executed."
110. In this case from the facts discussed above, it is clear that a formal draft lease was an essential part of the bargain inasmuch such draft lease was required for the purpose of approving its terms by the plaintiff. It is not a case of mere expression of desire to record the already arrived at bargain between the parties.
111. The next decision on this point is reported in the case of Raingold v. Bromley reported in (1931) 2 Ch. 307. The facts of the case will clarify the point Involved. So the facts are set out below ;
"The defendant employed house agents to let shop premises at 155 High Street, Bromley. Kent, and on December 9, 1930, the plaintiff, after inspecting the premises, offered to take a lease. In reply the house agents wrote to him on the same day : "Corner shop, 155 High Street, Bromley. Referring to out conversation this morning on the telephone, we confirm that, subject to the terms of a lease, our client is prepared to accept your offer to take the above premises on a 7, 14 or 21 years' lease at a rent of 350L. per annum for the first 14 years."
112. The draft lease was forwarded to the same day and after negotiations the defendant's solicitors wrote on 29th December, 1930 to the plaintiffs' solicitors :
"We have now received our client's instruction in the draft lease and he is prepared to accept your client's alterations. We are, therefore, having the lease engrossed, and will forward you a counterpart for execution by your client in due course."
113. This was also done. But then the defendant refused to execute the lease and granted lease of the premises to someone else. Thereafter, the plaintiff commenced the proceedings for specific performance and alternatively claimed damages. In those facts it was held that there was no binding contract to grant a lease. The expression "subject to the terms of lease" meant according to the learned Judges "subject to the terms to be contained in a lease executed by the lessor". Therefore, there was no concluded contract until the lease has been executed. This was the judgment of Lord Justice Lawrence. The facts in Raingold (1931 (2) Ch 307) (supra) have a very close similarity with the facts of the Instant appeal.
114. In order to combat this legal position. Mr. Tlbrewal, the learned Counsel for the plaintiff relied on two decisions of the Division Bench of Calcutta High Court. The first decision was in the case of Gostho Behari Sadhukhan v. Omiyo Prosad Mullick .
115. In Gostho Behari (supra) the question which fell for the consideration of the Court is whether a term for payment by the lessee of lessor's solicitor's cost for the preparation of lease is a vital term or is ancillary to the main transaction. The further question is whether a violation of this term disentitles the plaintiff to a decree for specific performance. The obvious answer is that such a term is not an integral part of the main transaction and a breach or default in the performance of such an unimportant term does not go to the root of the matter nor does it debar the plaintiff from seeking a specific performance of the contract.
116. The question in the present appeal is totally different so the principles decided in Gostho Behari (supra) do not have any remote application to the facts of the present appeal.
117. The other decision is in the case of Gostho Behari Sirkar v. Sur's Estates, . In that case a question relating to the conclusion of contract on the basis of correspondence between the parties came up for consideration. Justice P. B. Mukharji considering the pleading in the plaint held that formal contract in question was merely to "evidence" the agreement and nothing more. In this case the pleading in the plaint does not show that. The learned Judge formulated the test as follows : "Whether it was merely commemorative of the evidence on the point" or "whether the formal document is of such a nature that it was the very condition of that contract".
118. In this case, the terms relating to sending of the draft lease for approval of the terms was a very vital condition of the contract. As such without preparation of the draft lease the terms of the lease were not approved and there is no concluded contract. The principles decided in Gosto Behari (supra) by Justice P. B. Mukharji (as His Lordship then was) may not be disputed but they are not attracted to the present case. However, Justice H. K. Bose while delivering a concurring Judgment held in paragraph 79 that "the matter is not all free from doubt".
119. From the facts and circumstances and the evidence adduced in this case, it is clear that here draft lease is not required for incorporation of the terms already agreed upon. But it is required for approval of the terms of the bargain. The terms of the bargain, in the absence of the draft lease, have not been approved by the plaintiff company and remain at the stage of negotiation. Obviously there is lack of finality. So the draft lease in this case is not commemorative of the bargain. At least that is not the case in the plaint nor does the same appear from the evidence of the witnesses.
120. There is another aspect of the negotiation between the parties which is vital. In a contract for the grant of a lease, the date of the commencement of the lease is a material term, and if it does not appear in the contract, 'by expression or reference, it is incomplete (Fry : Specific Performance, 6th Edition, 177).
121. In the instant case even though the duration of the lease is certain, its commencement is uncertain in the sense it says that it will commence floor by floor as and when each floor is completed even if lifts are not installed. It is also stated "we undertake to complete all works as expeditiously as possible and to complete all floors and install lifts etc. as mentioned above within approximately six months from date.
122. To this Court such vague and inconclusive stipulations like 'as expeditiously as possible' and 'approximately' do not indicate with a degree of precision the date of commencement of the lease.
123. Learned Counsel for the plaintiff relied on Section 110 of the Transfer of Property Act which is set out below :
"Section 110. Where the time limited by a lease of immovable property is expressed as commencing from a particular day, in computing that time such day shall be excluded. Where no day of commencement is named, the time so limited begins from making of the lease.
Where the time so limited is a year or a number of years, in the absence of an express agreement to the contrary, the lease shall last during the whole anniversary of the day from which such time commences.
Where the time so limited is expressed to be terminable before its expiration, and the lease omits to mention at whose option it is so terminable, the lessee, and not the lessor, shall have such option."
124. In this case the so called agreement to lease does not specify any date of commencement. So according to Section 110 date of commencement will begin from 'the making of the lease'. In the case at hand there is no question of the making of the lease even the draft lease is not in existence. So Section 110 of the Transfer of Property Act cannot be pressed into service in the facts of this case. For a strong support for this view, we can look to the Division Bench judgment of this Court in the case of Gostho Behari (supra). At pages 365-66, para 13 of the report. Chief Justice Dasgupta expressed this view very strongly after quoting Section 110 of the Transfer of Property Act. The Hon'ble the Chief Justice held :
There can be no doubt that this provision that "where no day of commencement is named, the time so limited begins from the making of the lease" applies only when a lease has been made in the way required by law as provided in Section 107 of the Transfer of Property Act. It has been strenuously argued by the learned Advocate General, who appeared for two of the Bose defendants --and the argument was adopted by the counsel appearing for the other defendants --that this provision as regards the time beginning from the making of the lease should not be taken into consideration at all in a case where the lease has not yet been executed, I have no hesitation in agreeing with the learned counsel that the provision cannot possibly have the same effect when only an agreement to execute a lease in future is being considered."
125. The evidence on this aspect adduced by the plaintiffs witness also shows that no date of commencement of the lease was fixed. The relevant portion of the evidence of Sailendra Nath Bose, Law Officer of the plaintiff company is reproduced below :
"Q. 218. According to your evidence and your opinion a lease commences usually on the date of the document?
Ans. This is a draft and not the final thing. These are proposals.
Q. 219. Where did you get that the lease will start from the date of the execution of the document?
Ans. That is mentioned in the original lease generally.
Q. 220. But it is not mentioned here? Ans. That is so.
Q. 221. And the original lease was never executed?
Ans. No."
126. Again the answers to questions 241, 242. 243 and 244 are set out below :
"Q. 241. There was no agreement as to the time within which the lowest two floors would have to be completed and given over to you -- there was no such agreement?
Ans. No, there was no agreement but there was a time for six months.
Q. 242. Was there any other agreement governing the two first floors?
Ans. No. Q. 243. So, there was no time when the lease would be executed because the lease was to be executed at the time of delivery of the lowest two floors?
Ans. Yes, after handing over of the possession of the first two floors the lease would be executed.
Q. 244. Therefore, there was no specific time fixed for that -- is that right?
Ans. Yes."
127. The summary of legal principles on this aspect appears from the celebrated treatise of Hill and Redman. on Landlord and Tenant, 16th Edition, 106. The relevant portion is quoted below :
"(d) The commencement and duration of the term.-- Where no date for the commencement of the term is stipulated there is no valid agreement : Harvey v. Pratt, (1965) 2 All ER 786; Lowenthal v. Riordan Heating Co. (1966) Estate Gazette Digest 387; Fitzmaurice v. Bayley (1860) 9 HL Cas 78, Nor will the Court cure the Invalidity by implying a term that the lease is to commence at a reasonable time or at the date of the agreement: Marshall v. Berridge (1881) 19 Ch D 233; Edwards v. Jones (1921) 124 LT 740; Harvey v. Pratt (supra)."
The law in this country is the same. So this Court is of the view that there is no binding contract between the parties.
128. In the context of such fluid state of things, the letter dated 25th September, 1958 written by the plaintiff for the first time to the appellant assumed importance. Actually, this is the first letter directly addressed between the parties to the contract.
129. From a perusal of the said letter, it is clear that the officers of the plaintiff company visited the site with a view to find out the nature of the work being carried out. On such visit, it appeared to them that the work was slow and at the same time the alternations and modifications were going on in a manner, which did not conform to their requirements. Therefore, there was a demand for a plan by them and on perusal of the plan, which was produced by the head mistry, their views were confirmed that the work was not being carried on according to their requirements. Therefore, it was suggested on behalf of the plaintiff company that the engineer-in-charge of the construction should discuss with them or the plan may be officially sent to them so that they could suggest additions and alterations to suit their requirements.
130. It is therefore, clear that the nature of construction, which was going on, was not according to the requirements. Therefore, the nature of the construction which was suggested in the letter of the appellant and accepted by them, have not been followed. Thus it is clear that the parties are not ad idem on the nature of the construction.
131. So it was suggested in the second paragraph of the letter that the matter is required to be 'thrashed out' before further progress in the construction may be made. This clearly suggests that the terms between the parties have not reached a final stage. So there is clear indication that terms between the parties require further discussion and the matter should be 'thrashed out'. The construction required new modification and unless the matter is further discussed and thrashed out the construction may have to be 'pulled down' in case of their 'eventual requirement'. It is, therefore, clear that the entire bargain rested at a stage of negotiation only and nothing was finalized.
132. This letter can be looked at from another point of view also. By this letter, it is clear that the plaintiff company was trying to introduce a new terms which also unsettled the tentative bargain if any arrived at between the parties. It is nobody's case that the appellant agreed to the proposal of the plaintiff company contained in the letter dated 25th September. 1958. Since there is no agreement on this newly introduced term, it cannot be said that there is concluded contract between the parties.
133. It is an admitted legal position that In order to find out whether there is a concluded contract between the parties, it is permissible to look into the facts and circumstances in its entirety. So looking at the facts and circumstances in its totality, the conclusion is inescapable that there is no concluded contract between the parties.
134. Since this Court holds that there is no concluded contract between the parties, the suit for specific performance cannot succeed. The suit therefore, stands dismissed. The judgment and decree passed by the learned trial Judge are also set aside. The learned trial Judge did not grant the prayer for damages made in prayer (c) of this plaint. No cross-objection has been filed against that.
135. Before this Court also the learned Counsel for the plaintiff did not put forward any claim for damages. The entire argument was confined to sustain the judgment and decree for specific performance granted by the learned trial Judge.
136. Apart from that since this Court has held that there is no concluded contract, the question of damages cannot normally! arise. The plaintiff company has not also| proved any financial loss in order to make out any claim for damages. It is not the case of plaintiff company that after not being able to get the accommodation at the said premises they have gone in for accommodation at any other premises at or about the time of the alleged contract at any higher rate. The plaintiff company has not paid any consideration to the appellant. There is no question of the plaintiff company proving any breach in the absence of any concluded contract. No case has been made out by the plaintiff company for grant of damages in lieu of specific performance.
137. Since by this judgment, the judgment and decree of the learned trial Court has been set aside, the Receiver appointed under the judgment and decree of the learned trial Judge is forthwith discharged. The receiver is directed to make over the accounts including the rent collected to the appellant company within a period of two weeks from date.
138. There will be, however, no order as to costs.
Ashok Kumar Ganguly, J.
139. I agree.