Gujarat High Court
Maheshbhai Jivrajbhai Gujarati vs Krishna Pravinbhai Gujarati on 1 September, 2021
Author: J. B. Pardiwala
Bench: J.B.Pardiwala, Vaibhavi D. Nanavati
C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 1951 of 2021
With
CIVIL APPLICATION (FOR STAY) NO. 1 of 2021
In R/FIRST APPEAL NO. 1951 of 2021
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE J.B.PARDIWALA Sd/-
and
HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI Sd/-
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1 Whether Reporters of Local Papers may be allowed YES
to see the judgment ?
2 To be referred to the Reporter or not ? YES
3 Whether their Lordships wish to see the fair copy NO
of the judgment ?
4 Whether this case involves a substantial question NO
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
CIRCULATE THIS JUDGMENT IN THE SUBORDINATE JUDICIARY
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MAHESHBHAI JIVRAJBHAI GUJARATI
Versus
KRISHNA PRAVINBHAI GUJARATI
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Appearance:
MR PATHIK M ACHARYA, ADVOCATE for the Appellant.
MR R.S.SANJANWALA, SR.ADVOCATE with MR TARAK DAMANI,
ADVOCATE for the Respondent.
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CORAM:HONOURABLE MR. JUSTICE J.B.PARDIWALA
and
HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI
Date : 01/09/2021
CAV JUDGMENT
(PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA)
1. This First Appeal under Section 96 of the Code of Civil Procedure, 1908 (for short, 'the CPC') is at the instance of an Page 1 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 unsuccessful plaintiff of a civil suit and is directed against the judgment and decree passed by the 2 nd Additional Senior Civil Judge, Surat, dated 19th June 2021, in the Special Civil Suit No.208 of 2017, by which the suit filed by the plaintiff for specific performance, declaration and injunction came to be dismissed.
2. The facts giving rise to this Appeal may be summarised as under :
3. For the sake of convenience, the appellant herein shall be referred to as the plaintiff-vendee and the respondent herein shall be referred to as the defendant-vendor.
4. The plaintiff-vendee and the defendant-vendor entered into a registered deed of agreement for sale dated 7th October 2016 with respect to the Final Plot No.90/2 of the Town Planning Scheme No.7 (Vesu-Magdalla).
5. The true English translation of the deed of agreement for sale reads as under :
"This Deed of Agreement for Sale (Sata Khat) without Possession is executed in favor of the Purchaser of the said Land i.e. Party of the First Part:
Maheshbhai Jivrajbhai Gujarati, Aged 47, Occupation Agriculture and Business, Hindu by Religion, Residing at: 902, Dream House, Near L.P. Savani School, Canal Road, Vesu, Surat PAN No. ADOPG 3271 G Page 2 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 (Which shall hereinafter be referred to as Purchaser or the Party of the First Part in the present Deed of Agreement for Sale without Possession, which expression shall, unless repugnant to the context or meaning thereof, be deemed include the Party of the First Part Company and all the present and from time to time Directors, Assignees, Executors, Administrators, etc. of the Company) This Deed of Agreement for Sale (Sata Khat) without Possession is executed by the Vendor of the Land i.e. Party of the Second Part :
Krishna Pravinbhai Gujarati, Aged 28, Occupation Agriculture and Business, Hindu by Religion, Residing at: 29, Tapinagar Society, Beside Kubernagar-2, Ved Road, Surat PAN No. AJVPG 5987 G (Which shall hereinafter be referred to as Vendor or the Party of the Second Part in the present Deed of Agreement for Sale without Possession, which expression shall, unless repugnant to the context or meaning thereof, be deemed include the Party of the Second Part himself and his Heirs, Guardians, Successors, Assignees, Executors, Administrators, etc.) WHEREAS, the Party of the Second Part, by executing the present Deed of Agreement for Sale without Possession in favour of the Party of the First Part, states as follows: The Page 3 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 old tenure agricultural land, which admeasures about Hectare 0-11 Are 00 Sq. Meters, bearing Old Survey No.41/1 paiki, New Revenue Survey No.30-2-1, is situated at Mouje Village Magdalla, District Surat, Sub-District Surat City (Presently Majura Taluka) and upon it being amalgamated into the T.P. Scheme No.7 (Vesu-Magdalla) the same has culminated in the Final Plot No.90/2 admeasuring 781 Sq. Meters and the Town Planning Committee vide its Resolution no. 4/2015 dated 09.02.2015 had approved the same and thereafter the said Resolution was placed before the In-Charge Municipal Secretary, Town Planning, Surat Municipal Corporation, who by Resolution No.: 25/2015, dated 07.09.2015, suggested to allocate the land and as per 7/12, the Party of the Second Part is in the ownership, occupation and possession out of the land admeasuring 1026.67 Sq. Meters (733.34 Sq. Meters + 293.33 Sq. Meters) and the Party of the Second Part out of the land admeasuring 728 Sq. Meters, the land admeasuring 618.729 Sq. Meters i.e. 740 Sq. Yards together with the right, title, share and interest of the Party of the Second Part as per Final Plot and together with all the inside and outside rights appurtenant thereto and from the center of the earth to the infinite in the sky, has been described in detail in the Schedule hereunder written and which shall hereinafter be referred to as the said land in the present Agreement for Sale. The Party of the Second Part, by stating that the said land has continued to have vest in the ownership, occupation, possession, and management of the Party of the Second Part, has decided to sell the said land to the Party of the First Part as against the sale consideration amount of Page 4 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 Rs.1,39,21,500/- (Rupees One Crore Thirty Nine Lakh Twenty One Thousand Five Hundred Only) and as against the said amount of sale consideration, the Party of the First Part has agreed to purchase the said land from the Party of the Second Part and an Agreement for Sale in respect of the same has been entered into between the parties hereto on the following terms and conditions.
-: Terms and Conditions :-
1. The amount of sale consideration has been fixed at Rs.1,39,21,500/- (Rupees One Crore Thirty Nine Lakh Twenty One Thousand Five Hundred Only) between the parties, which is acceptable and admissible to both the parties.
2. For the amount of sale consideration fixed in the paragraph 1 above, the Party of the First Part has paid Rs.1,30,00,000/- (Rupees One Crore Thirty Lakh Only) to the Party of the Second Part in the following manner: Details of Payment Sr. Name of the Cheque No. Date Amount (Rs.) No. Bank
1. Axis Bank 608101 07.10.16 8,70,000/-
2. Axis Bank 608102 20.11.16 20,00,000/-
3. Axis Bank 608103 25.11.16 20,00,000/-
4. Axis Bank 608104 30.11.16 20,00,000/-
5. Axis Bank 608105 05.12.16 20,00,000/-
6. Axis Bank 608106 10.12.16 20,00,000/-Page 5 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021
C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021
7. Axis Bank 608107 15.12.16 20,00,000/-
TOTAL Rs. 1,30,00,000/-
Party of the Second Part hereby acknowledges the receipt of the amount received as per the above details and issues a receipt thereof to the Party of the First Part. The Party of the Second Part or the heirs, guardians, successors, etc. of the Party of the Second Part will not have to raise any objection or dispute in future over non-receipt or the less receipt of the amount. The possession of the said land is presently with the Party of the Second Part only, which will have to be handed over to the Party of the First Part at the time of execution of the Sale Deed.
4. As agreed between the parties, when the payment of Rs.9,21,500/- (Rupees Nine Lakh Twenty One Thousand Five Hundred Only) is made towards the balance amount of sale consideration and when the title to the said land becomes clear and marketable and when the land of Final Plot which is decided to be sold is allocated under T.P. Scheme in favor of Party to the Second Part, the Party of the Second Part shall execute a registered sale deed of the said land in favour of the Party of the First Part and shall handover the possession of the said land. Therefore , the time of this Agreement for Sale shall remain valid until the sale deed of the said land is executed in favour of the Party of the First Part and the possession of the said land is handed over to the Party of the First Part.
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5. It has been found from the revenue record of this land that certain civil as well as other cases are pending in respect of the land admeasuring 1026 Sq. Meters, over which the Party of the Second Part has the right, title, share and interest and it is and will be the responsibility and liability of the Party of the Second Part to make disposal all these claims as well as to make the title of the said land clear and marketable. Therefore, be fore the Party of the Second Part executes the sale deed in respect of the said land, which is decided to be sold, he will have to get the title to the said land clear and marketable.
6. Except as shown in Para No.5 above, the Party of the Second Part has not created any lien on the said land nor is it under seizure, attachment or injunction of any Court. The Party of the Second Part has not made or caused to be made any Trust or Settlement or Will i.e . Testament in respect of the said land. The Party of the Second Part has not assigned the said land as security by becoming guarantor for anyone nor assigned the same into any equitable mortgage nor is the same under any reservation nor any such proceeding is initiated. There is no charge of anyone of maintenance, alimony or residence or charge of Government dues on the said land. In the said Land which you have decided to sale, there is no tenant in the land nor there is any Occupier nor any such right is created nor has the Party of the Second Part has given in writing / orally to assign any part thereof to anyone nor executed any writing in the form of diary or otherwise and the Party of the Second Part, having given such promise, assurance and trust to the Party of the First Page 7 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 Part, the Party of the First Part has decided to purchase the said land from the Party of the Second Part. However, if the Party of the Second Part is found to have done the same, it will be the responsibility of the Party of the Second Part to settle all the accounts, make disposal of the same and get the title to the land clear and marketable.
7. The Party of the Second Part has decided to sell the said land to the Party of the First Part and, therefore, from now onwards, the Party of the Second Part shall not make or cause to be made any transaction or arrangement or disposal in respect of the said land with any person or institution, as well as shall not create or cause to be created any writing, agreements, deeds with anyone by deciding to sell the said land to anyone. The Party of the Second Part shall not commit or cause to be commit any such act which may cause injury to the rights and entitlements granted to the Party of the First Party by virtue of execution of the Agreement for Sale in respect of the said land. Despite, however, if any such act is committed, the same will be considered null and void and the Party of the Second Part shall remain responsible for all the responsibilities arising out of the same.
8. Until the sale deed is executed after execution of the present Agreement for Sale, the Party of the Second Part shall maintain the condition of the said land as it is and shall not commit any act which may alter its identity and shall not create or cause to be created any charge or lien Page 8 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 over the same or shall not handover its possession to any third party either on lease or otherwise or shall not commit or cause to be committed any act which may reduce the value of the land or put in jeopardy the interest of the Party of the First Part. Despite, however, if the Party of the Second Part commits any such act, the Party of the First Part can prevent him from doing the same.
9. It will be the responsibility of the Party of the Second Part to pay all the taxes levied on the property sold to the Party of the First Part, including Government, Semi- Government, Village Panchayat, Surat Municipality taxes and other charges, till the date of handing over of the possession and the Party of the First Part will be responsible for paying all taxes and dues related to the said property after the date of handing over possession and on the day of the execution of the Sale Deed, the Party of the Second Part will have to hand over all the original deeds, orders, papers qua title related to the said land to the Party of the First Part.
10. The Party of the Second Part has decided to sell to the Party of the First Part, the old tenure agricultural land, which admeasures about Hectare 0-11 Are 00 Sq. Meters, bearing Old Survey No.41/1 paiki, New Revenue Survey No.30-2-1, is situated at Mouje Village Magdalla, District Surat, Sub-District Surat City (Presently Majura Taluka) and upon it being amalgamated into T.P. Scheme No.7 (Vesu- Magdalla) the same was becoming Final Plot no. 90/2 admeasuring 781 Sq. Meters and the Town Planning Page 9 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 Committee vide its Resolution no. 4/2015 dated 09.02.2015 had approved the same and thereafter the said Resolution was placed before the In-Charge Municipal Secretary, Town Planning, Surat Municipal Corporation, who by Resolution No.: 25/2015, dated 07.09.2015, suggested to allocate the land and as per 7/12, the Party of the Second Part is in the ownership, occupation and possession out of the land admeasuring 1026.67 Sq. Meters (733.34 Sq. Meters + 293.33 Sq. Meters) and the Party of the Second Part out of the land admeasuring 728 Sq. Meters, the land admeasuring 618.729 Sq. Meters i.e. 740 Sq. Yards together with the right, title, share and interest of the Party of the Second Part as per Final Plot. Therefore, after finalization of T.P. Scheme applicable to this land in future, the Party of the First Part will be entitled to get the same amount of the area of land which will be allotted in the said land, which is decided to be sold.
11. The Party of the First Part has decided to purchase the said land after con firming the revenue record of the land and after making necessary confirmation in respect of the allocation of Final Plot. Further, the parties together have not set any time limit either in respect the said Agreement for Sale or registered Sale Deed, which is agreeable and binding on both the parties and their heirs, guardians, successors, etc.
12. Since the Party of the Second Part has executed the present Deed of Agreement for Sale without Possession in Page 10 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 favour of the Party of the First Part today, after the outstanding amount of sale consideration has been paid, the registered Sale Deed in respect of the said land will have to be executed in the name of the Party of the First Part by remaining present before the Sub-Registrar, Surat and the direct and indirect possession of the said land will have to be handed over and necessary signature, consent, undertakings, statement, etc. on the Sale Deed, 135-D Notice and affidavits and will have to be given without causing any delay. But the expenditure for the same, such as stamp charges, typing charges, registration fee, advocate fee, etc. will have to be borne by the Party of the First Part, who is getting the sale deed executed.
13. Both parties will have to faithfully abide by the terms and conditions mentioned in the present Agreement for Sale . If either party fails to comply with the terms of this Agreement for Sale, the errant party shall be entitled for specific performance of this Agreement for Sale against the other party.
-: SCHEDULE :-
DETAILS OF THE LAND, WHICH IS DECIDED TO BE SOLD The old tenure agricultural land, which admeasures about Hectare 0-11 Are 00 Sq. Meters, bearing Old Survey No.41/1 paiki, New Revenue Survey No.30-2-1, is situated at Mouje Village Magdalla, District Surat, Sub-District Surat Page 11 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 City (Presently Majura Taluka) and upon it being amalgamated into T.P. Scheme No.7 (Vesu-Magdalla) the same was becoming Final Plot no. 90/2 admeasuring 781 Sq. Meters and the Town Planning Committee vide its Resolution no. 4/2015 dated 09.02.2015 had approved the same and thereafter the said Resolution was placed before the In-Charge Municipal Secretary, Town Planning, Surat Municipal Corporation, who by Resolution No.: 25/2015, dated 07.09.2015, suggested to allocate the land and as per 7/12, the Party of the Second Part is in the ownership, occupation and possession out of the land admeasuring 1026.67 Sq. Meters (733.34 Sq. Meters + 293.33 Sq. Meters) and the Party of the Second Part out of the land admeasuring 728 Sq. Meters, the land admeasuring 618.729 Sq. Meters i.e. 740 Sq. Yards together with the right, title, share and interest of the Party of the Second Part as per Final Plot and together with all the inside and outside rights appurtenant thereto and from the center of the earth to the infinite in the sky.
Both the parties hereto have executed this Agreement for Sale without Possession, as described above, with their readiness and willingness and a fter thorough consideration and without there being any coercion from anyone and in the sound state of mind and wisdom and the same is and shall remain binding on the parties hereto and their heirs, guardians, successors, etc."
6. Thus, from the aforesaid it appears that the old tenure agricultural land owned by the defendant-vendor bearing old Page 12 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 Survey No.41/1/p (new Survey No.30-2-1) situated at Mouje village Magdalla, District Surat, Sub-District Surat city, came to be amalgamated into the Town Planning Scheme No.7 (Vesu- Magdalla). The amalgamation culminated in the Final Plot No.90/2 admeasuring 781 sq.meters. The Town Planning Committee, vide its Resolution No.4 of 2015 dated 9 th February 2015, approved the same. The said resolution thereafter was placed before the Surat Municipal Corporation who, in turn, by Resolution No.25 of 2015 dated 7 th September 2015, decided to allocate the land in favour of the defendant-vendor. It is with respect to this final plot that the parties entered into the registered deed of agreement for sale.
7. It appears that the total sale consideration fixed, as reflected from the agreement for sale, is Rs.1,39,21,500=00 (Rupees One Crore Thirty Nine Lakh Twenty One Thousand Five Hundred Only). On the date of the execution of the agreement for sale, the plaintiff-vendee issued in all seven post-dated cheques in favour of the defendant-vendor, drawn on the Axis Bank aggregating to the tune of Rs.1,30,00,000=00 (Rupees One Crore Thirty Lakh Only) inclusive of Rs.1,30,000=00 (Rupees One Lakh Thirty Thousand Only) towards the TDS. The understanding between the parties in accordance with the terms of the agreement for sale was that once the title to the land in question, i.e. the final plot, is made clear and marketable and the final plot is actually allocated to the defendant-vendor, then the plaintiff- vendee, on payment of the balance amount of Rs.9,21,500=00 (Rupees Nine Lakh Twenty One Thousand Five Hundred Only), the defendant-vendor shall execute the sale deed in favour of the plaintiff-vendee.
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8. It appears that while the aforesaid agreement for sale was in existence, the plaintiff-vendee came to learn that the defendant-vendor was trying to defeat the rights accrued in favour of the plaintiff-vendee on the strength of the agreement for sale and was trying to dispose of the suit land contrary to the terms of the agreement for sale. In such circumstances, the plaintiff-vendee thought fit to file the Special Civil Suit No.208 of 2017 in the court of the Principal Senior Civil Judge, Surat.
9. The plaintiff-vendee prayed for the following reliefs :
"(1) Be pleased to pass a decree against the Defendant directing them to execute a Sale Deed in respect of the Suit Land in favour of the Plaintiff or in favour anybody as may be suggested by the Plaintiff by making specific performance of the Agreement for Sale dated 07.10.2016 executed in respect of the old tenure agricultural land, which admeasures about Hectare 0-11 Are 00 Sq. Meters, bearing Old Survey No.41/1 paiki, New Revenue Survey No.30-2-1, is situated at Mouje Village Magdalla, District Surat, Sub-District Surat City (Presently Majura Taluka) and upon it being amalgamated into T.P. Scheme No.7 (Vesu-Magdalla) the same was becoming Final Plot no. 90/2 admeasuring 781 Sq. Meters and the Town Planning Committee vide its Resolution no. 4/2015 dated 09.02.2015 had approved the same and thereafter Page 14 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 the said Resolution was placed before the In-Charge Municipal Secretary, Town Planning, Surat Municipal Corporation, who by Resolution No.:
25/2015, dated 07.09.2015, suggested to allocate the land and as per 7/12, the Party of the Second Part is in the ownership, occupation and possession out of the land admeasuring 1026.67 Sq. Meters (733.34 Sq. Meters + 293.33 Sq. Meters) and the Party of the Second Part out of the land admeasuring 728 Sq. Meters, the land admeasuring 618.729 Sq. Meters i.e. 740 Sq. Yards as per Final Plot; and if the Defendant fails to do so, be pleased to appoint a Court Commissioner with appropriate authority and thereby be pleased to passed a decree in favour of the Plaintiff directing the Court Commissioner to fulfil the requirements as per the above Agreement for Sale and execute a legal sale deed in the name of the Plaintiff or in the name as may be suggested by the Plaintiff.
OR IN THE ALTERNATIVE If the Hon'ble Court does not consider it appropriate to grant the above relief, then be pleased to pass a decree in favour of the Plaintiff to recover a sum of Rs.15,00,00,000/- (Rupees Fifteen Crore Only) together with compounding interest at the rate of 18% from all types of land, goods, property of the Defendant.
Page 15 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 (2) Be pleased to pass an order of permanent injunction against the Defendant restraining the Defendant himself or through anyone from creating any type of transaction of mortgage, gift or sale or otherwise in respect or whole or any part of the property being the old tenure agricultural land, which admeasures about Hectare 0-11 Are 00 Sq. Meters, bearing Old Survey No.41/1 paiki, New Revenue Survey No.30-2-1, is situated at Mouje Village Magdalla, District Surat, Sub-District Surat City (Presently Majura Taluka) and upon it being amalgamated into T.P. Scheme No.7 (Vesu-Magdalla) the same was becoming Final Plot no. 90/2 admeasuring 781 Sq. Meters and the Town Planning Committee vide its Resolution no. 4/2015 dated 09.02.2015 had approved the same and thereafter the said Resolution was placed before the In-Charge Municipal Secretary, Town Planning, Surat Municipal Corporation, who by Resolution No.:
25/2015, dated 07.09.2015, suggested to allocate the land and as per 7/12, the Party of the Second Part is in the ownership, occupation and possession out of the land admeasuring 1026.67 Sq. Meters (733.34 Sq. Meters + 293.33 Sq. Meters) and the Party of the Second Part out of the land admeasuring 728 Sq. Meters, the land admeasuring 618.729 Sq. Meters i.e. 740 Sq. Yards as per Final Plot and from creating any type of interest of any person therein and from transferring the same in Page 16 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 any manner and from creating any equity over the same and from committing any act that may frustrate the Agreement for Sale entered into with the Plaintiff.
(3) All the costs of this suit be awarded from the Defendant.
(4) Be pleased to grant such other and further reliefs as may be deemed fit and proper to this Hon'ble Court in the facts of the case."
10. The cause of action pleaded by the plaintiff-vendee in paragraph-8 of the plaint reads thus :
"8. When the Defendant executed a lawful Agreement for Sale in respect of the suit land on 07.10.2016 in favour of the Plaintiff and of late when it came to the notice that the Defendant has started making attempts to transfer the suit land to the others, the Plaintiff requested him to execute a sale deed by accepting the balance amount towards sale consideration after complying with the terms of the impugned Agreement for Sale and when the Defendant did not pay any heed to the same and flatly refused to execute the sale deed and when the Defendant continued his attempts of transferring the suit land to others and thereafter, when the same Page 17 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 has come to the notice of the Plaintiff recently, and on every day thereafter the cause of action to file the present suit has arisen within the jurisdiction of this Hon'ble Court. Therefore, the suit the Plaintiff is not barred by the law of limitation."
11. The defendant-vendor, on receipt of the summons issued by the court below, appeared and filed his written-statement vide Exh.19. The written-statement reads thus :
"In the present case, the written statement of the Defendant Krishna Pravinbhai Gujarati to the Plaint and Injunction Application of the Plaintiff is as follows:
1. Plaintiff's suit, being ex-facie erroneous, illegal and against the provisions of law, deserves to be rejected prima facie. Further, the Plaintiff's suit is clearly barred by the rule of non-joinder of parties.
The said Agreement for Sale (Sata Khat), being ex- facie inoperative, cannot be enforced in any manner. Therefore also the suit of the Plaintiff on account of being infructuous in the eyes of law cannot be tried further. Moreover, the Plaintiff has not paid any amount to the Defendant as mentioned in the Agreement for Sale nor has ever shown any readiness for the same. Thus, the so-called Agreement for Sale is also without consideration and the intention behind making of this Agreement for Sale is not sale but is made for security as part Page 18 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 of the understanding and, therefore, the so-called Agreement for Sale is inoperative and the said contract is not a concluded contract. Since the Plaintiff has filed the present suit by suppressing true facts before this Hon'ble Court, the Plaintiff has not come with clean hands before this Hon'ble Court and in these circumstances also the Plaintiff's suit deserves to be dismissed. Further, no reason has arisen to the Plaintiff for filing the present suit. Accordingly, the Plaintiff's suit is without cause of action and the Plaintiff's suit is also liable to be rejected prima facie on account of lack of cause of action. Thus, the Plaintiff's suit being not prima facie tenable, the Plaintiff's suit and injunction application is required to be rejected.
2. With respect to para-1 of the suit and injunction application of the Plaintiff, it is stated that the description of the land given by the Plaintiff in this paragraph is subject to the record. However, in fact, the suit land does not exist on the site and the proceedings in this regard are pending before the Surat Municipal Corporation and Town Planning Department and as such, it is currently not available on site and even when the land is not available on site and even when there is a question mark over whether the allotment will take place or not in future, the specific performance of the so- called Agreement for Sale in such circumstances cannot be granted.
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3. With respect to para-2 of the suit and injunction application of the Plaintiff, it is stated that all the contentions raised in the said suit are ex-facie erroneous, illegal and contrary to the facts. The Plaintiff has submitted incorrect facts before the Hon'ble Court. Further, it is not true and, therefore, not admitted that the Plaintiff has decided to purchase the suit land from the Defendant for sale consideration of Rs.1,39,21,500/- and the same is categorically denied. The contentions that the Defendant executed Agreement for Sale (Sata Khat) without possession in favour of the Plaintiff on 07.10.2016 and that the said Agreement for Sale was registered on 07.10.2016 with the Office of Hon'ble Sub-Registrar under Serial No.969, dated 07.10.2016, were required to be proved by the Plaintiff. Further, the Plaintiff has not placed on the record of the Hon'ble Court the fact that under which situation, under what circumstances, with what intention, as a part of which understanding, before which mediators and in what manner the Plaintiff has got executed the Agreement for Sale from the Defendant and by doing the same, the Plaintiff has filed the present suit before the Hon'ble Court by suppressing the material fact and in the circumstances, when the Defendant has not come before the Hon'ble Court with clean hands, no relief as prayed for in the suit and injunction application can be granted to the Plaintiff and the Page 20 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 Agreement for Sale entered into as a part of understanding for security purpose cannot actually be called an Agreement for Sale for sale and even if such Agreement for Sale is considered for the sake of argument, the specific performance of the Agreement for Sale cannot be done when there is no actual sale-purchase transaction and there is no motive behind the Agreement for Sale and, therefore, also the Plaintiff's suit is required to be rejected. The Plaintiff has the original letter of understanding dated 06.10.2016 entered into between the Plaintiff and the Defendant and by way of the present reply a notice has also been given to the Plaintiff for producing the original thereof before the Hon'ble Court.
4. With respect to para-3 of the suit and injunction application of the Plaintiff, it is stated that all the averments made in the said paragraph are not true and are not admitted and are contrary to the true facts and, therefore, all such averments are categorically denied herewith. The Defendant has/had never decided to actually sell the said property to the Plaintiff. The Plaintiff herein is not unknown to the Defendant. The father of the Plaintiff and the Defendant belong to the same Society and Caste, have known each other, have been doing business with each other since 2012 and have been doing business transactions with each other and on account of the business disputes Page 21 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 having arisen between the parties, the Plaintiff herein brought Bhupatbhai Gordhanbhai Goyani and Ratansang Vaalsang Ghelada, the members of the society, as a mediator and decided to settle the dispute between the parties through their mediation and as part of the same, an understanding was reached between the parties on 06.10.2016 in the presence of mediators and after the implementation of the said understanding, the accounts or disposal as may be settled by these mediators were to be accepted by both the parties. Further, the Defendants borrowed Rs. 70 lakh from Plaintiff in the bank account of their aunt on 21.03.2014 and the said amount was due and payable by the Defendants to the Plaintiff and for the said purpose, the accounts, management and distribution of the co-owned lands bearing Block No.220 paiki 1/paiki 2, 220 paiki 1/paiki 1, 218, 219, 227/2 and 228 paiki 1 situated in Masma Village and Mouje Village Samadhiyala, Taluka Gariyadhar, District Bhavnagar had to be done in presence of the mediators and as a part thereof, after the Defendant repaid the borrower amount of Rs.70 lakhs to the Plaintiff, it was decided to make the registered Agreement for Sale of the suit land owned by Defendant as security for the Plaintiff till the loan of the Plaintiff running in Axis Bank is completed and the accounts are settled and as against the same, the Plaintiff had to make writings in respect of the lands of Village Masma and Samdhiyala in favour of Page 22 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 the Defendant and as a part of this, first of all, the Defendant, at the request of the Mediators named Bhupatbhai Gordhanbhai Goyani and Ratansang Vaalsang Ghelada, executed an Agreement for Sale in respect of the suit land for security as part of the implementation of the understanding dated 06.10.2016, and, therefore, the Plaintiff had executed power of attorney in favour of the Defendant and the Defendant's brother Vikas Sureshbhai Gujarati in respect of the Open Land of the Plots bearing Plot No.1, 3, 13, 17, 26, 27, 28, 31, 36, 37, 39, 40, 41, 42, 44, 45, 46, 47, 48, 52, 55, 60, 61, 62, 63, 65, 66, 70, 71, 76, 77, 81, 91, 92, 93, 94, 98, 99, 100, 101, 102, 103, 104, 105, 119, 123, 124, 125, 126, 127, 128, 129, 141, 142, 144 forming part of the Plots of the Sona Industries Society, which was floated on the non-agricultural land of Block No.106, New Block No.626, admeasuring 26001 Sq. Meters of Mouje Village Masma and the said Power of Attorney has been registered in the books of Notary Shri Laxman N. Vaghasia on 17.10.2016 under Serial No.1301/2016 and one General Power of Attorney was also executed in favour of the Defendant in respect of the Open Land of total 19 Plots bearing Plot No.2, 14, 22, 25, 30, 56, 73, 74, 106, 107, 108, 113, 114, 130, 131, 135, 139, 140 and 145 forming part of the Plots of the Sona Industries Society, which was floated on the non-agricultural land of Block No.106, New Block No.626, admeasuring 26001 Sq. Meters Page 23 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 of Mouje Village Masma and the said Power of Attorney has been registered in the books of Notary Shri Laxman N. Vaghasia on 17.10.2016 under Serial No.1302/2016. Thereafter, the Plaintiff was supposed to release his share from the lands bearing Block No.220 paiki 1/paiki 2, 220 paiki 1/paiki 1, 218, 219, 227/2 and 228 paiki 1 of Mouje Village Samadhiyala, Taluka Gariyadhar, District Bhavnagar, in which the names of Defendants' family and the Plaintiffs are running jointly, but the Plaintiff did not execute any writing in respect of the same and the Plaintiff recanted before the mediators Bhupatbhai Gordhanbhai Goyani and Ratansang Vaalsang Ghelada, who were brought by him and refused to act accordingly. In the meantime, the above-mentioned plots of the lands situated in Mouje Village Masma, Taluka Olpad, District Surat, whose power of attorney was given to the Defendant and the members of his family Vikasbhai Sureshbhai Gujarat, were decided to be sold to Shaileshbhai Babubhai Andhan and Chandubhai Mohanbhai Gujarati and also entered into sale agreement in respect of the same with them. In the meanwhile, the Plaintiff recanted from the understanding arrived at on 06.10.2016 and the aforesaid powers, which were given in favour of the Defendants, have been revoked by him by giving notice dated 21.04.2017 and also wrongfully harassed the Defendants by filing application against them before the Police Station. "
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12. Thus, the defendant-vendor opposed the suit filed by the plaintiff-vendee mainly on the following grounds :
(1) Non-joinder of necessary party;
(2) Agreement for Sale being void, not enforceable;
(3) Suppression of material facts;
(4) No cause of action;
(5) The contract being contingent in nature, was not
enforceable on the date of the institution of the suit as the subject matter of the suit, i.e. the suit land, was not in existence and the event had yet to occur to enforce such contingent contract; and (6) The intention of the parties was not to genuinely entered into any agreement for sale of the suit property.
(7) The defendant-vendor had borrowed an amount of Rs.70 lakh from the plaintiff-vendee. By way of security, the defendant-vendor had executed the agreement for sale in favour of the plaintiff-vendee later. Until the entire amount of Rs.70 lakh is repaid and also the other liabilities of the bank are discharged, the agreement for sale was not to be given effect to.
13. The Civil Court, having regard to the case put up by the plaintiff-vendee in the plaint and also the case put up by the Page 25 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 defendant-vendor in his written-statement, framed the following issues vide Exh.16 :
"ISSUES
1. Whether plaintiff proves that the registered agreement to sell No.969 Dtd.7-10-2016 is legal and valid ?
2. Whether plaintiff proves that he is ready and willing to perform his part of agreement ?
3. Whether plaintiff is entitled to get relief of specific performance ?
4. Whether plaintiff is entitled to get optional relief of recovery of loss ? If yes, what amount ?
5. Whether plaintiff is entitled to get relief of declaration as well as injunction ?
6. Whether suit is maintainable ?
7. What is order & Decree ?"
14. The aforesaid issues came to be answered as under :
"1. Issue No.1 is in negative.
2. Issue No.2 is in negative.Page 26 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021
C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021
3. Issue No.3 is in negative.
4. Issue No.4 is in negative.
5. Issue No.5 is in negative.
6. Issue No.6 is in negative.
7. Issue No.7 is as per final decision."
15. The plaintiff-vendee examined himself vide Exh.26. Exh.26 is the examination-in-chief of the plaintiff-vendee in the form of an affidavit. His cross-examination on behalf the defendant- vendor is also on record. The plaintiff-vendee examined Shri Harsh Maheshkumar Gujarati vide Exh.45 as one of his witnesses. The defendant-vendor also examined himself vide Exh.58. The defendant examined one of his witnesses, namely, Ratansingh Valsang Ghelda, vide Exh.80.
16. The Civil Court, having regard to the evidence on record both, oral as well as documentary, came to the conclusion that the agreement for sale dated 7 th October 2016 itself was illegal and invalid and in such circumstances, the decree of specific performance as prayed for cannot be granted. The Civil Court also recorded a finding that having regard to the contingent nature of the contract, the suit itself was not maintainable. Ultimately, the suit came to be dismissed. The final order passed by the Civil Court reads thus :
Page 27 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 "FINAL ORDER
1. The suit of plaintiff is rejected.
2. It is hereby ordered that plaintiff has to pay costs worth of Rs.1,00,000/- One Lakh within in seven days in TALUKA LEGAL SERVICE AUTHORITY SURAT for the date of this order for wasting the valuable judicial time and misleading the court on valuable facts of non existence of suit property. In failure of payment of costs within time allotted, the warrant of attachment of the property will be issued against the plaintiff.
3. Parties to bear their own costs.
4. Decree be drawn accordingly."
17. Being dissatisfied with the judgment and decree passed by the court below dismissing the suit, the plaintiff-vendee is here before this Court with the present Appeal.
SUBMISSIONS ON BEHALF OF THE PLAINTIFF-VENDEE :
18. Mr.Pratik Acharya, the learned counsel appearing for the plaintiff-vendee, vehemently submitted that the court below committed a serious error in dismissing the suit and thereby declining to grant specific performance of the registered deed of agreement for sale duly executed by the defendant-vendor in favour of the plaintiff-vendee.
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19. Mr.Acharya would submit that the court below committed a serious error in recording a finding that the agreement for sale is illegal or invalid and, therefore, not enforceable in law. He would submit that the terms of the agreement are very clear. The defendant-vendor promised to execute the sale deed once the title of the final plot gets cleared and the same is allocated to the defendant-vendor. According to Mr.Acharya, although on the date of the institution of the suit the final plot might not be in existence, or in other words, in actual possession of the defendant-vendor, yet the court below could have passed a conditional decree directing the defendant-vendor to take the necessary steps to get the final plot cleared and allotted in his favour and thereafter proceed to execute the sale deed in favour of the plaintiff-vendee.
20. Mr.Acharya would submit that the court below erroneously proceeded on the footing that the contract in question is contingent in nature. According to Mr.Acharya, the case is not one of a contingent contract. Mr.Acharya would submit that on the date of the execution of the agreement for sale, the plaintiff- vendee issued post-dated cheques in favour of the defendant- vendor, drawn on the Axis Bank, of the total amount of Rs.1,30,00,000=00. Having accepted such cheques of a huge amount, the defendant-vendor cannot turn around and say that since the final plot has not yet been allotted to him, he is not in a position to execute the sale-deed.
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21. It is argued that the intention of the defendant-vendor is not bonafide and the defendant-vendor has been trying to defeat the interest and rights of the plaintiff-vendee accruing from the registered deed of agreement for sale.
22. Mr.Acharya would submit that the defendant-vendor, having accepted the post-dated cheques of the total amount of Rs.1,30,00,000=00, could have presented those with his banker for getting them encashed. Just because the defendant-vendor did not deem fit to get those cheques encashed, it cannot be said that the plaintiff-vendee is not ready and willing to perform his part of the agreement. According to Mr.Acharya, all that was required to be done by the plaintiff-vendee was to pay the balance amount of Rs.9,21,500=00 towards the sale consideration. He would submit that after paying almost 95% of the total sale consideration, the court could not have recorded a finding that the plaintiff-vendee is not ready and willing to perform his part of the contract.
23. Mr.Acharya would submit that if the court thought fit not to grant the discretionary relief of specific performance, then atleast the alternative relief prayed for by the plaintiff-vendee could have been considered. Mr.Acharya would submit that the plaintiff-vendee should be compensated in terms of money by way of damages.
24. Mr.Acharya vehemently submitted that the court below could have passed a conditional decree. In other words, according to Mr.Acharya, the court below could have asked the Page 30 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 defendant-vendor to take the necessary steps to get the final plot allotted in his favour and once allotted, the defendant-vendor could have been asked to execute the sale-deed in favour of the plaintiff-vendee.
25. In such circumstances referred to above, Mr.Acharya prays that there being merit in his Appeal, the same may be allowed and the impugned judgment and decree passed by the court below be set-aside. He prays that the Special Civil Suit filed by his client be allowed and appropriate conditional decree of specific performance may be passed by this Court.
SUBMISSIONS ON BEHALF OF THE DEFENDANT-
VENDOR :
26. Mr.R.S.Sanjanwala, the learned senior counsel, assisted by Mr.Tarak Damani, the learned counsel appearing for the defendant-vendor, on the other hand, has vehemently opposed this Appeal. Mr.Sanjanwala would submit that no error, not to speak of any error of law, could be said to have been committed by the court below in dismissing the suit filed by the plaintif- vendee. Mr.Sanjanwala laid much emphasis on the fact that the contract is of contingent nature. He would submit that a contingent contract can be enforced only upon an event happening. In other words, according to Mr.Sanjanwala, there was no legal cause of action on the date of the institution of the suit because on the date of the institution of the suit for specific performance, the subject matter of the agreement, i.e. the final plot, itself was not in existence. The final plot sanctioned in favour of the defendant-vendor was not in existence on the date Page 31 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 of the institution of the suit. He would argue that when the suit property itself is not available on the date of the institution of the suit or even on the date when the Civil Court proceeds to pass the final decree, then in such circumstances, how did the plaintiff-vendee expected the court to grant him a decree of specific performance.
27. Mr.Sanjanwala would submit that although the impugned judgment may not be happily worded, yet what is sought to be conveyed in the impugned judgment is that the plaintiff-vendee had not come before the court with clean hands. The plaintiff- vendee is guilty of suppression of many material facts, more particularly, the fact that the post-dated cheques of Rs.1,30,00,000=00 never came to be encashed by the defendant- vendor. The plaintiff-vendee was aware of this particular fact. However, he proceeded on the footing as if the defendant-vendor has pocketed a huge amount of Rs.1,30,00,000=00 and is now trying to wriggle out of his obligations and liabilities as stipulated in the agreement.
28. Mr.Sanjanwala would submit that his client had no intention to enter into any agreement for sale with the plaintiff- vendee. It is only because of some business transactions and the loan availed by his client from the plaintiff-vendee, that by way of security, the defendant-vendor had to execute the agreement for sale. According to Mr.Sanjanwala, the understanding was that once the loan amount is repaid, the agreement for sale would come to an end and it was understood between the parties that the agreement for sale shall not be further enforced.
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29. Mr.Sanjanwala, in support of his aforesaid submissions, has placed reliance on the following case-law :
(1) National Agricultural Cooperative Marketing Federation of India vs. Alimenta S.A., AIR 2020 SC 2681;
(2) Kapilaben and others vs. Ashok Kumar Jayantilal Sheth Through POA Gopalbhai Madhusudan Patel and others, (2019) 16 SCALE 723;
(3) P.D'Souza vs. Shondrilo Naidu, (2004) 6 SCC 649;
(4) Nirmala Anand vs. Advent Corpn. (P) Ltd., (2002) 5 SCC 481;
(5) Piarey Lal vs. Hori Lal, (1977) 2 SCC 221;
(6) Mugneeram Bangur & Co. (P) Ltd. vs. Gurbachan Singh, (1965) 2 SCR 630;
(7) Alopi Parshad and Sons, Limited vs. Union of India, AIR 1960 SC 588;
(8) Satyabrata Ghose vs. Mugneeram Bangur & Co. and another, AIR 1954 SC 44;Page 33 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021
C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 (9) Ganga Saran vs. Firm Ram Charan Ram Gopal, AIR 1952 SC 9;
(10) Ram Kumar Agarwalla vs. P.C.Roy and Co. (India) Ltd., AIR 1952 Cal. 397;
(11) Surpat Singh and others vs. Sheo Prasad Gupta, AIR 1945 Pat. 300.
30. In such circumstances referred to above, Mr.Sanjanwala prays that there being no merit in the present Appeal, the same be dismissed.
ANALYSIS :
31. Having heard the learned counsel appearing for the parties and having gone through the materials on record, the following points of determination fall for our consideration :
(A) Whether the case on hand is one of a contingent contract ?
(B) Whether the trial court is right in saying that the suit contract is invalid or void ?
(C) Whether the appellant-plaintiff has made out any case for grant of conditional decree of specific performance of the suit contract ?Page 34 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021
C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 (D) Whether the appellant-plaintiff is entitled to any relief other than the specific performance of the suit contract ?
32. We have given more than a fair idea as regards the nature of the suit, the defence taken in the written-statement and the terms and conditions of the registered agreement for sale.
33. Based upon the conditions, contracts can be broadly classified into two types:
Absolute Contracts: An absolute contract has no condition and it must be performed irrespective of the circumstances.
Contingent Contracts: A contingent contract contains a condition which makes the parties liable to perform the obligations only if the event, collateral to the contract, happens.
34. A contract which is contingent or dependent upon the occurrence or non-occurrence of some event is called a contingent contract. Insurance contracts are good examples of contingent contracts where the insurance company is required to compensate the policy holder only if a specified future event (accident, hospitalization, etc.) happens.
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35. Although a contingent contract is based upon an absolute promise to do something in the case of a specific future event, yet the promise is conditional in the sense that the party is liable to perform only if the said event happens (or does not happen).
36. The parties to a contingent contract must perform their duties if the imposed condition is met. The contract becomes void if the condition is not met. Thus, contingent contracts are meant to be performed only under specific circumstances.
37. The pivotal question we need to decide is, whether the case on hand is one of a contingent contract.
38. The contention of the defendant-vendor that the agreement is conditional upon the title being cleared and the final plot being allotted is, in our opinion, upon a complete misreading of the rights and obligations of the contracting parties, the reciprocal promises, the terms and conditions of the contract and the covenant and stipulation in the agreement for sale.
39. The word "condition" is defined in the Oxford English Dictionary, 11th Edition at page 298 as "the state of affairs that must exist before something else is possible". It is defined in the Black's Law Dictionary by Bryan A. Garner, 8 th Edition at page 312 as (1) a future and uncertain event on which the existence or extent of an obligation or liability depends; an uncertain act or event that triggers or negates a duty to render a promised performance, and (2) a stipulation or prerequisite in a contract, will, or other instrument, constituting the essence of the Page 36 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 instrument. If a court construes a contractual term to be a condition, then its untruth or breach will entitle the party to whom it is made to be discharged from all liabilities under the contract.
40. It is upon such legal definition that the expression "when the title to the said land becomes clear and marketable and when the land of final plot which is decided to be sold is allocated under the Town Planning Scheme in favour of the party to the second part, the party of the second part shall execute a registered sale-deed of the said land in favour of the party of the first part and shall handover the possession of the said land"
should be understood. It is also upon such legal definition that the expression "the time of this agreement for sale shall remain valid until the sale-deed of the said land is executed in favour of the party of the first part and the possession of the said land is handed over to the party of the first part" should be tried to be understood.
41. We shall now look into the provisions of the Indian Contract Act, 1872. Chapter III is of contingent contracts. Sections 31 to 36 read thus :
31. "Contingent contract" defined:-
A "contingent contract" is a contract to do or not to do something, if some event, collateral to such contract, does or does not happen.Page 37 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021
C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 Illustration :
A contracts to pay to B Rs.10,000 if B's house is burnt. This is a contingent contract.
32. Enforcement of contracts contingent on an event happening :-
Contingent contracts to do or not to do anything if an uncertain future event happens cannot be enforced by law unless and until that event has happened. If the event becomes impossible, such contracts become void.
Illustration :
(a) A makes a contract with B to buy B's horse if A survives C. This contract cannot be enforced by law unless and until C dies in A's lifetime.
(b) A makes a contract with B to sell a horse to B at a specified price, if C, to whom the horse has been offered, refuses to buy him. The contract cannot be enforced by law unless and until C refuses to buy the horse.
(c) A contracts to pay B a sum of money when B marries C. C dies without being married to B. The contract becomes void.
33. Enforcement of contracts contingent on an event not happening:-
Page 38 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 Contingent contracts to do or not to do anything if an uncertain future event does not happen can be enforced when the happening of that event becomes impossible, and not before.
Illustration :
A agrees to pay B a sum of money if a certain ship does not return. The ship is sunk. The contract can be enforced when the ship sinks.
34. When event on which contract is contingent to be deemed impossible, if it is the future conduct of a living person:-
If the future event on which a contract is contingent is the way in which a person will act at an unspecified time, the event shall be considered to become impossible when such person does anything which renders it impossible that he should so act within any definite time, or otherwise than under further contingencies.
Illustration :
A agrees to pay B a sum of money if B marries C, C marries D. The marriage of B to C must now be considered impossible, although it is possible that D may die and that C may afterwards marry B. Page 39 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021
35. When contracts become void which are contingent on happening of specified event within fixed time:-
Contingent contracts to do or not to do anything if a specified uncertain event happens within a fixed time become void if, at the expiration of the time fixed, such event has not happened, or if, before the time fixed, such event becomes impossible.
When contracts may be enforced, which are contingent on specified event not happening within fixed time:-
Contingent contracts to do or not to do anything if a specified uncertain event does not happen within a fixed time may be enforced by law when the time fixed has expired and such event has not happened, or, before the time fixed has expired, if it becomes certain that such event will not happen.
Illustration :
(a) A promises to pay B a sum of money if a certain ship returns within a year. The contract may be enforced if the ship returns within the year; and becomes void if the ship is burnt within the year.
(b) A promises to pay B a sum of money if a certain ship does not return within a year. The contract may be enforced Page 40 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 if the ship does not return within the year, or is burnt within the year.
36. Agreements contingent on impossible events void:-
Contingent agreements to do or not to do anything if an impossible event happens, are void, whether the impossibility of the event is known or not to the parties to the agreement at the time when it is made.
Illustration :
(a) A agrees to pay B 1,000 rupees if two straight lines should enclose a space. The agreement is void.
(b) A agrees to pay B 1,000 rupees if B will marry A's daughter C. C was dead at the time of the agreement. The agreement is void."
42. We may also refer to "Chitty on Contracts, Volume-I General Principles - Thirtieth Edition"
"2-148 Contingent and promissory conditions. The word "condition" may refer either to an event, or to a term of a contract (as in the phrase "conditions of sale") [Property and Bloodstock Ltd vs. Emerton (1968) Ch.94, 118] . Where "condition" refers to an event, that event may be either an occurrence which neither party undertakes to bring about, or Page 41 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 the performance by one party of his undertaking. The first possibility is illustrated by a contract by which A is to work for B, and B is to pay A £50, "if it rains tomorrow." Here the obligations of both parties are contingent on the happening of the specified event which may therefore be described as a contingent condition. The second possibility is illustrated by the ordinary case in which A agrees to work for B at a weekly wage payable at the end of the week. Here the contract is immediately binding on both parties, but B is not liable to pay until A has performed his promise to work. Such performance is a conditino of B's liability, and, as A has promised to render it, the condition may be described as promissory. An intermediate situation arises in the case of a unilateral contract, in which performance by the promisor becomes due on the performance by the promisee of the stipulated act (such as walking to York) or abstention (such as not smoking for a year). Since it follows from the nature of such a contract that the promisee has not promised to render the stipulated performance, the condition on which his entitlement depends is properly classified as contingent. Our concern here is with contingent conditions.
2-149 Conditions precedent and subsequent. Contingent conditions may be precedent or subsequent. A condition is precedent if it provides that a previously binding contract is to determine on the occurrence of the event: e.g. where A contracts to pay an allowance to B until B marries.
2-150 Effects of agreements subject to contingent conditions precedent in general. Where an agreement is Page 42 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 subject to a contingent condition precedent, there is, before the occurrence of the condition, no duty on either party to render the principal performance promised by him : for example, a seller is not bound to deliver and a buyer is not bound to pay. Nor, in such a case, does either party undertake that the condition will occur. But an agreement subject to such a condition may impose some degree of obligation on the parties or on one of them. Whether it has this effect, and if so what degree of obligation is imposed, depends on the true construction of the term specifying condition. Various possible degrees of obligation are discussed in paras 2-151 to 2-155 below.
2-151 Unrestricted right to withdraw. One possibility is that, before the event occurs, each party is free to withdraw from the agreement. In Pym v Campbell, (1856) 6 E. & B. 370, an agreement for the sale of a patent was executed, but the parties at the same time agreed that it should not "be the agreement" unless a third party approved of the invention. He did not approve, and it was held that the buyer was not liable for refusing to perform. The written agreement was "not an agreement at all". If this is taken literally, either party could have withdrawn even before the third party had given his opinion.
2-152 Restricted right to withdraw. A second possibility is that, before the event occurs, the main obligations have not accrued; but that, so long as the event can still occur, one (or both) of the parties cannot withdraw.Page 43 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021
C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 Thus in Smith v Butler, (1900) 1 Q.B. 694, A bought land from B on condition that a loan to B (secured by a mortgage on the premises) would be transferred to A. It was held that A could not withdraw before the time fixed for completion:
he was bound to wait until then to see whether B could arrange the transfer. However, if it becomes clear that the condition has not occurred, or that it can no longer occur, within the time specified in the contract, the parties will be under no further obligations under the contract. In such a case, the effect of the non-occurrence of the condition is that the parties are "no longer bound" by the contract, or that the contract is "discharged". What the parties have called a "condition precedent" can thus operate as, or have the effect of, a condition subsequent.
2-153 Duty not to prevent occurrence of the event. A third possibility is that, before the event occurs, the main obligations have not accrued; but that in the meantime neither party must do anything to prevent the occurrence of that event. Thus in Mackay v Dick (1881) 6 App. Cas. 251, an excavating machine was sold on condition that it could excavate at a specified rate on the buyer's property. The buyer's refusal to provide facilities for a proper trial was held to be a breach. Similarly, the seller would have been in breach, had he refused to subject the machine to the proper test. The same principle is illustrated by a case (Bournemouth & Boscombe Athletic F.C. vs. Manchester United F.C., The Times, May 22, 1980) in which a professional footballer was transferred for a fee, part of which was to be paid only after he had scored 20 goals.Page 44 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021
C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 Before he had done so, the new club dropped him from their first team, and they were held to be in breach as they had not given the player a reasonable opportunity to score the 20 goals. The duty not to prevent the occurrence of the condition has been explained as resting on an implied term and this explanation limits the scope of the duty in a number of ways. For example, the implied term may be only to the effect that a party will not deliberately prevent the occurrence of the condition; or (even more narrowly) that he will not wrongfully do so. The latter type of implication may allow a party to engage in certain kinds of deliberate prevention but not in others: for example, it may allow a company which has promised an employee the opportunity of earning a bonus to deprive him of that opportunity by going out of business, but not by simply dismissing him, before the bonus has become due.
2-154 Condition of "satisfaction". The implied term can also be excluded by an express contrary provision and, in particular, by a provision making the operation of a contract depend on the "satisfaction" of one of the parties with the subject-matter or other aspects relating to the other's performance. Thus it has been held that there was no contract where a house was bought "subject to satisfactory mortgage"; and where a boat was bought "subject to satisfactory survey" it was held that the buyer was not bound if he expressed his dissatisfaction, in spite of the fact that such expression was a deliberate act on his part which prevented the occurrence of the condition. The same is true where goods are bought on approval and the Page 45 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 buyer does not approve them, and where an offer of employment is made "subject to satisfactory references", and the prospective employer does not regard the references as satisfactory. There is some apparent conflict in the authorities on the question whether the law imposes any restriction on the freedom of action of the party on whose satisfaction the operation of the contract depends. In one case a proposed royalty agreement relating to the use by a manufacturer of an invention was "subject to detailed evaluation of production and marketing feasibility" by the manufacturer. It was held that his discretion whether to enter into the contract was "unfettered by any obligation to act reasonably or in good faith" and that, as his satisfaction had not been communicated to the other party, the agreement had not acquired contractual force. On the other hand, where a ship was sold "subject to satisfactory completion of two trial voyages" it was said that such a stipulation was to be construed as "subject to bona fides". The distinction between the two lines of cases turns, ultimately, on the construction of the agreement. Even if this requires the discretion to be exercised in good faith, it does not follow that it must be exercised reasonably; the matter may be left to the relevant party's "subjective decision". It has also been held that the party on whose satisfaction the operation of the contract depends must at least provide facilities for, or not impede, the inspection referred to in the agreement. Of course if the result of the inspection is unsatisfactory, the principal obligation of the contract will not take effect.
Page 46 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 2-155 Duty of reasonable diligence to bring about the event. A fourth possibility is that, before the event occurs, the main obligations do not accrue but that one of the parties undertakes to use reasonable efforts to bring the event about (without absolutely undertaking that his efforts will succeed). This construction was applied, for instance, where land was sold subject to the condition that the purchaser should obtain planning permission to use the land as a transport depot: he was bound to make reasonable efforts to obtain the permission, but he was free from liability when those efforts failed. Similarly, where goods are sold "subject to export (or import) licence", the party whose duty it is to obtain the licence does not prima facie promise absolutely that a licence will be obtained; but only undertakes to make reasonable efforts to that end. The principal obligations to buy and sell will not take effect if no licence is obtained; but if the party who should have made reasonable efforts has failed to do so he will be liable in damages, unless he can show that any such efforts, which he should have made would (if made) have necessarily been unsuccessful. The same principles have been applied where an agreement was made "subject to the approval of the court"; and where an agreement was made to assign a lease which could be assigned only with the consent of the landlord. In such cases the requisite approval or consent must be sought; but the main obligations do not accrue until the approval or consent is given, and if it is refused the principal obligation will not take effect."
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43. The word 'contingency' is defined in the Concise Oxford English Dictionary, Indian Edition Revised Eleventh Edition at page 308, as a future event or circumstance which is possible but cannot be predicted with certainty.
44. The word 'contingency' is defined in the Black's Law Dictionary by Bryan A. Garner Eighth Edition at page 338 as (1) an event that may or may not occur; a possibility, (2) the condition of being dependent on chance; uncertainty.
45. The Advanced Law Lexicon by P. Ramanatha Aiyar 3rd Edition defines 'contingency' at page 1012 as (1) a situation in which an event may or may not happen, (2) something that is liable, but not certain, to happen at some time in the future.
46. It is apposite to state at this stage that it is the defendant- vendor who could be said to have directly or indirectly assured the plaintiff-vendee that with a view to give effect to the terms and conditions of the agreement for sale, he would take all the necessary steps in accordance with law to get a clear, marketable title and also take all the necessary steps to get the final plot delivered to him. It is not the case of the defendant- vendor that the doors are closed for him for all times to come so far as the final plot is concerned. There is nothing on record to indicate what steps have been taken so far by the defendant- vendor to secure the final plot which has already been sanctioned, first by the Town Planning Officer, and later, by the Surat Municipal Corporation. It would have been altogether a different scenario if the concerned authority would have declined to allot the final plot in favour of the defendant-vendor by way of Page 48 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 some order, etc. In such circumstances, the defendant could have said that something which is not within his control cannot be enforced upon him. Keeping these aspects in mind, we should first see, whether the suit contract is a contingent one as claimed by the defendant-vendor.
47. In the earliest case of Shardaprasad vs. Sikandar, AIR 1915 Nagpur 15, the Bombay High Court held that the contract, the performance of which was dependent on the will of the third person, was contingent. Upon the refusal to consent by the third person specific performance could not be ordered. In that case the defendant agreed to sell his 4 annas share in a village after obtaining the requisite sanction under Section 45 of the Central Provinces Tenancy Act. The sanction was refused. There was no alternative contract to meet the event. The Bombay High Court held that the contract was contingent upon the sanction and could be performed only if the sanction was granted. If the sanction, which was the future event, provided in the contract was refused, the contract fell through.
48. The contract in that case was wholly different. It was dependent on the statutory sanction. It was, in fact, conditional upon such sanction. If the sanction is not granted and the contract is executed, it would be illegal. Hence the parties provided that the sale would be effected after obtaining the sanction.
49. In the case of Kirpal Das Jivraj Mal vs. Manager, Encumbered Estates, AIR 1936 Sind 26, it has been held that Page 49 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 the contract dependent upon the conduct of others is a contingent contract. In that case a Zamindar agreed to sell 800 acres of land adjoining that owned by the appellant to the appellant. The Zamindar purported to sell what was not his undivided share but precisely the 800 acres of his land adjoining and bordering the land of the appellant. The Zamindar could not give possession of that land because he could not get separate possession of that land. There was also no certainty that he could get separate possession because even if he sued his co- owners for partition, the precise 800 acres adjoining the appellant's land may not be allotted to his share.
50. The court observed that the contract was contingent, there being an implied condition that the partition will be made with the consent of other joint owners. The court held that the performance of the contract by the Zamindar was dependent upon the acts of the others - his joint owners and the contract implied a term that the Zamindar would sell the land only when the other joint owners agreed to partition and gave him 800 acres adjoining land of the appellant. Consequently the Court held that the contract executed by the Zamindar was unenforceable.
51. What is not a contingent contract is shown and explained in the case of F.Ranchoddas vs. Nathmal Hirachand & Co., AIR (36) 1949 Bombay 356, by Justice Chagla (as His Lordship then was). In that case the defendant entered into a contract of sale of goods of specified description which were to arrive by a specified shipment in January or February. The contract provided that Page 50 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 "the goods are to be given delivery of when they arrive". The defendant failed to deliver the goods on account of non arrival and the plaintiff sued for damages.
52. It was contended by the defendant that if the goods could not arrive, they were not to be delivered and that only if the goods arrived, the defendant was obliged to deliver the goods to the plaintiff. It was held that the contract contemplated that they could be delivered "when" they arrive and not only "if" they arrive.
53. It was held that when the parties provided that the goods were given delivery of when they arrive, they were dealing with the mode of performance and not the question of the very obligation of performance. Hence the contract is absolute one and not just contingent. It carried an absolute obligation and was not conditioned or contingent upon the arrival of goods in India.
54. It was observed in para 2 of the judgment that the contract only stated how delivery was to be given. The court referred to the case of the Privy Council of Hurnanarai vs. Pragdas, 25 Bom.L.R. 537, in which Lord Sumner whilst holding that construing the words "as and when received" to mean "if and when received" would be to convert the words specifying the deliveries into a condition precedent to the obligation to deliver. The Court would virtually make a new contract.
55. The case of F. Ranchoddas vs. Nathmal Hirachand & Co., (1949) 51 Bom LR 491, which has been referred in the case of Page 51 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 Rojasara Ramjibhai Dahyabhai vs. Jani Narottamdas Lallubhai, (1986) 3 SCC 300, was the case of sale agreement under which the vendor had to apply for permission from the Collector to convert the land into village site for non agricultural use. The vendee could sell the land to others when he converted it into village site at his own expense. The site was not converted. In the meantime Saurashtra Land Reforms Act, 1951 was enacted. The original vendor's right, title and interest was extinguished. The vendee acquired statutory rights and interest as an occupant. The original vendor did not obtain the requisite permission from the Collector. The vendee got the land converted into village site. The land had no legal impediment. The subsequent vendee was held entitled to specific performance.
56. The contention of the vendor that the agreement was a contingent contract (and not an absolute one) upon obtaining the permission of the Collector and that the contingency failed so that the specific performance could not be granted was negatived since the permission was not required and the contingency was not applicable after the enactment of the statute.
57. It is observed in para 12 of the judgment that there is always an implied covenant on the part of the vendor to do all things necessary to give effect to the agreement including obtaining the permission for the transfer of property. It must be the presumed intention of the parties that in order to give efficacy to the contract the required permission is obtained and the implied condition would include the sanction for the transfer. It was held that what the vendor was obliged to do could not be a Page 52 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 contingency. Of course, if the sanction was refused upon an application, the contingency would fail.
58. The case of M.V. Shankar Bhat vs. Claude Pinto, (2003) 4 SCC 86, is also similarly of a conditional contract. The agreement was "subject to ratification by the co-heirs to terms hereinafter appearing". It was observed in paras 14 & 15 of the judgment that the restrictive covenant would amount to a conditional agreement. It has been observed in para 31 of the judgment that when an agreement is entered into subject to ratification by others, a concluded contract is not arrived at. Such a clause is condition precedent for coming into force of a concluded contract.
59. The case of Ramzan vs. Hussaini, (1990) 1 SCC 104, was of a contract of sale to be executed upon a future specified event thus:
"This house is under mortgage with Jethmal Bastimal for Rs. 1000. When you will get this house, the description of which is given below, redeemed from M/s. Jethmal Bastimal and take the papers of the registry in your possession, on that day I will have the sale deed of the said house, written, executed and registered in your favour."
60. The redemption of mortgage was a condition precedent. The purchaser had to get the mortgage ready. It was observed that the agreement was a typical illustration of a contingent Page 53 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 contract under Section 36 of the Contract Act and became enforceable as soon as the event of redemption happened. Hence it was held that immediately after the redemption the defendant became liable to execute the sale deed which the plaintiff was entitled to enforce.
61. In the case of Satyabrata Ghose vs. Mugneeram Bangur and Co, AIR 1954 SC 44, it is held by the Supreme Court that the word "impossible" in Section 56 has not been used in the sense of physical or literal impossibility. The doctrine of frustration or impossibility, which are observed to be interchangeable expressions, are held to be supervening impossibility or illegality. It is held that Section 56 lays down a rule of positive law and does not leave the matter to be determined according to the intention of the parties. The Court can grant relief only upon a subsequent impossibility when it finds that the whole purpose of the basis of contract was frustrated by the intrusion or occurrence of an unexpected event or change of circumstances which was beyond what was contemplated by the parties at the time of the agreement. Besides, such an event must be so fundamental as to go to the root of the contract as a whole.
62. In that case the purchase of the land was for a development scheme started by a company. The object of the company was to develop the land and make it usable for residential purpose. Certain requisition orders were expected to be passed as war was on when the contract was entered into. The requisition orders were for taking temporary possession of Page 54 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 the land for war purposes which were normal events during the period. Upon the agreement being executed, roads and drains were to be constructed for making the land suitable for building and residential purposes. As soon as such development was completed the balance of the consideration money was payable and the conveyance was to be completed within one month of the completion of the roads and the payment of balance consideration.
63. The requisitioning scheme for military purposes was stated to be an impossibility which prevented the parties from completing the contract. The plaintiff sought to enforce the contract. The defendant claimed that it had become impossible by reason of the supervening events viz. Requisition.
64. In para 9 of the judgment the court held that the word "impossible" was not used in the sense of physical or literal impossibility. Only if an untoward event or change of circumstances totally upset the very foundation of the bargain, the contract became impossible of performance and the parties would be absolved from further performance as they did not promise to perform an impossibility. Referring to the judgment of the Supreme Court in the case of Ganga Saran vs. Ram Charan, AIR 1952 SC 9, the court held that Section 56 applied only in cases of physical impossibility, was dependent upon it and did not permit import of principles of English Law dehors Section 56. The court considered the illustration of a music hall being burnt down to prevent performance of a contract to perform at such hall or the illness of the artist to prevent her performance at a concert.
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65. In paras 15 & 16 respectively of the judgment the court considered the distinction between supervening impossibility under Section 56 and the contingency of a contract under Section 32 of the Contract Act. The court observed that if the contract was frustrated by an unexpected occurrence and beyond the contemplation of the parties, it would have to remain unenforced because there could be no question of finding an implied term agreed by the parties with regard to the contingency which they could not contemplate. The court observed that it would have to examine the contract and the circumstances under which it was made. The belief, knowledge and intention of the parties were evidenced upon which the court would conclude whether the changed circumstances destroyed the underlying object of the contract.
66. Further, the judgment of the Supreme Court in the case of J.P. Builders vs. A. Ramadas Rao, (2011) 1 SCC 429, considered whether or not a contract is contingent. In that case the plaintiff, who was the purchaser, agreed with the defendant, who was the vendor, to purchase the property. The defendant had created a mortgage of the bank which was to be cleared. The defendant applied for One Time Settlement (OTS) which was not accepted by the bank. The mortgage was not cleared. It was held that not obtaining clear title redeeming the mortgage cannot be construed as an impossible event allowing the vendor not to complete the sale. The contract was held to be not a contingent contract.
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67. The Supreme Court held that non occurrence of contingency dependent upon the acts and omissions of parties (endogenous) had to be distinguished from the non occurrence due to acts or omissions independent of the acts and omissions of the parties (exogenous). The Supreme Court considered that for the contract to be contingent the contingency would not be based upon collateral events dependent upon the performance of the promisor's obligation. Events dependent upon the duties of the vendor cannot make a contract contingent. Default of the mortgagor - vendor in obtaining the no objection certificate would be his default in non performance of his implied covenants for securing a clear title by clearing the mortgage loan. Non performance of such obligation by not obtaining the clearance did not render the contract a contingent one.
68. The aforesaid was upon the premise that the vendor cannot take advantage of his own inaction. If such a contention is allowed, any party who fails to perform his part of the contract would throw up his hands and state that he cannot perform the contract and hence the other party is not entitled to its performance. It would be an absurd situation if a party is allowed to do so.
69. In Motilal vs. Nanhelal, AIR 1930 PC 287, the sanction or certificate by the revenue authorities was necessary for the sale of the cultivating rights in the land in suit and in a suit for specific performance of an agreement to sell such rights, it was held by Their Lordships of the Privy Council that the vendor having agreed to transfer the cultivating rights in the land there Page 57 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 was implied covenant on his part to do all things necessary to effect such transfer which will include an application to the revenue officer to sanction the transfer according to the C. P. Tenancy Act. In other words, what their Lordships held was that the fact that such application had not been made and the sanction of the appropriate authorities not obtained was not a bar to the grant of a decree for specific performance of the agreement to sell.
70. In Mrs.Chandnee Widya Vati vs. Dr.C.L. Katial, AIR 1964 SC 978, the plaintiff entered into a contract for sale of a house belonging to the defendant and built on a leasehold plot granted by the Government. One of the terms in the agreement between the parties was that the vendor shall obtain the permission of the Chief Commissioner to the transaction of sale within 2 months of the agreement and if the said permission was not forthwith coming within that time, it was open to the purchaser to extend the date or treat the agreement as cancelled. The defendant made an application to the proper authorities for the necessary permission but withdrew it later on. The plaintiff then called upon the defendant to fulfill her part of the contract but when she failed to do so, a suit was instituted for specific performance of the contract or, in the alternative, for damages. It was argued before Their Lordships of the Supreme Court that the contract was not enforceable being of a contingent nature and the contingency not having been fulfilled. Their Lordships repelled the argument in the following words :
"The main ground of attack on this appeal is that the contract is not enforceable being of a contingent nature and Page 58 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 the contingency not having been fulfilled. In our opinion there is no substance in this contention. So far as the parties to the contract are concerned, they had agreed to bind themselves by the terms of the document executed between them. Under that document it was for the defendant-vendor to make the necessary application for the permission to the Chief Commissioner. She had as a matter of fact made such an application but for reasons of her own decided to withdraw the same. On the findings that the plaintiff's have always been ready and willing to perform their part of the contract and that it was the defendant who willfully refused to perform her part of the contract, and that time was not of the essence of the contract, the Court has got to enforce the terms of the contract and to enjoin upon the defendant- appellant to make the necessary application to the Chief Commissioner. It will be for the Chief Commissioner to decide whether or not to grant the necessary sanction.
In this view of the matter, the High Court was entirely correct in decreeing the suit for specific performance of the contract. The High Court should have further directed the defendant to make the necessary application for permission to the Chief Commissioner, which was implied in the contract between the parties. As the defendant-vendor, without any sufficient reasons, withdrew the application already made to the Chief Commissioner, the decree to be prepared by this Court will add the clause that the defendant, within, one month from today, shall make the necessary application to the Chief Commissioner or to such other competent authority as may have been empowered to Page 59 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 grant the necessary sanction to transfers like the one in question, and further that within one month of the receipt of that sanction she shall convey to the plaintiffs the property in suit. In the event of the sanction being refused, the plaintiffs shall be entitled to the damages as decreed by the High Court ....."
71. The principle laid down in the aforesaid decision of the Supreme Court was followed later on in the case of Nathulal vs. Phoolchand, AIR 1970 SC 546.
72. The Peshawar High Court, in the case of Gujjar Mal Ram Rattan Puri vs. Governor-General of India through Post-Master General, Punjab, reported in AIR 1942 Peshawar 33, observed as under :
"The proposition of law which was laid down by the learned trial Judge that the mere fact that the formal agreement had not been executed would not necessarily imply that there was no completed contract between the parties is obviously correct. It is unnecessary to refer to any other authority on this point than the judgments of their Lordships of the Privy Council. The following proposition has been laid down in two cases reported in A.I.R. 1924 P.C. 156 and A.I.R. 1933 P.C. 29 :
"Where the documents or letters relied on as constituting a contract contemplate the execution of a Page 60 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 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 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 binding contract and the reference to the mere formal document may be ignored."
Again, in another judgment of their Lordships reported in 28 I.C. 930 it has been laid down that "equity will support a transaction though clothed imperfectly in legal forms to which finality attaches especially if it had been acted upon by the parties for a long time."
In our opinion, the facts of the present case clearly indicate that the execution of the formal document was not necessary to the completion of the contract. The conduct of the parties in acting upon the contract before the formal agreement was drawn up is the clearest evidence of this fact. The defendants entered upon their duties in pursuance of a completed contract. The Post Master General allowed them to enter on those duties. The defendants drew a subsidy which was allowed to them under the terms of the contract. They appointed their servants with express reference to S.4 of the agreement. They were through their Page 61 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 servants conveying the money from the post office to the bank in accordance with para. 19 of the formal agreement. In these circumstances we agree with the trial Court that there was a completed agreement between the parties. We can however see no reason why that completed agreement should not include the conditions of para. 19 of the formal agreement."
73. Thus read and interpreted the suit contract is not contingent. It is a usual contract having reciprocal promises of the parties thereto, which is valid and subsisting, and the breach or inaction of which is specifically enforceable. At this stage, we once again remind ourselves of the proposition of law explained by Justice Chagla in the case of F.Ranchoddas (supra). We once again reiterate our observations as contained in para-34 of this judgment that the expression "when the title to the said land becomes clear and marketable and when the land of final plot which is decided to be sold is allocated under the Town Planning Scheme in favour of the party to the second part, the party of the second part shall execute a registered sale-deed of the said land in favour of the party of the first part and shall handover the possession of the said land". The emphasis is on the word "when". This is exactly what Justice Chagla explained in F.Ranchoddas (supra). Thus, when the parties in the present case provided that the sale-deed shall be executed when the title to the said land becomes clear and marketable and when the land of final plot is allocated under the Town Planning Scheme, they were dealing with the mode of performance and not the question of the very obligation of performance. Hence, the contract could be said to be absolute one and not just Page 62 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 contingent. It carried an absolute obligation and it was not conditioned or contingent upon the title to the said land becoming clear and marketable and the final plot being allocated under the Town Planning Scheme.
74. In Ramesh Chandra Chundiak vs. Chuni Lal Sabharwal, AIR 1971 SC 1238, the Supreme Court considered the argument advanced that the contract was unenforceable being a contingent contract. In that case, the appellants entered into an agreement with the respondents for the purchase of a plot allotted by the Rehabilitation Ministry to the respondents and a sum of Rs.7,500/-was paid as earnest money towards the purchase-money of Rs.22,500/-. The balance was to be paid on the execution of the sale deed by the respondents. The sale deed was not executed in favour of the respondents by the Government until 21-5-1956. Their title was incomplete and sanction had to be obtained from the Rehabilitation Ministry. The period for execution of the sale deed was extended to obtain the sanction. It was agreed while extending the period for execution of the sale deed that the same shall be got executed after the receipt of the sanction. The respondents further undertook to inform the appellants as soon as the sanction was received and to execute the sale deed within a week and get it registered on receipt of the balance amount of consideration. It was held that there was no question of time having ever been made the essence of the contract. So long as the vendor's own title was incomplete, there was no question of the sale being completed. The Supreme Court, in the circumstances, held that subsequent cancellation of the agreement was not justified and a decree for specific performance was granted.
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75. The forgoing discussion would show that the relief of specific performance cannot be denied on the alleged ground that the agreement is a contingent contract.
76. We may also refer to a recent pronouncement of the Supreme Court in the case of Energy Watchdog; Prayas (Energy Group) and others vs. Central Electricity Regulatory Commission and others, reported in 2017 (4) Scale 580, wherein the Supreme Court, while explaining Sections 32 and 56 respectively of the Contract Act, observed as under :
"33. Prior to the decision in Taylor vs. Caldwell, (1861-73) All ER Rep 24, the law in England was extremely rigid. A contract had to be performed, notwithstanding the fact that it had become impossible of performance, owing to some unforeseen event, after it was made, which was not the fault of either of the parties to the contract. This rigidity of the common law in which the absolute sanctity of contract was upheld was loosened somewhat by the decision in Taylor vs. Caldwell in which it was held that if some unforeseen event occurs during the performance of a contract which makes it impossible of performance, in the sense that the fundamental basis of the contract goes, it need not be further performed, as insisting upon such performance would be unjust.Page 64 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021
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34. The law in India has been laid down in the seminal decision of Satyabrata Ghose v. Mugneeram Bangur & Co., 1954 SCR 310. The second paragraph of Section 56 has been adverted to, and it was stated that this is exhaustive of the law as it stands in India. What was held was that the word "impossible" has not been used in the Section in the sense of physical or literal impossibility. The performance of an act may not be literally impossible but it may be impracticable and useless from the point of view of the object and purpose of the parties. If an untoward event or change of circumstance totally upsets the very foundation upon which the parties entered their agreement, it can be said that the promisor finds it impossible to do the act which he had promised to do. It was further held that where the Court finds that the contract itself either impliedly or expressly contains a term, according to which performance would stand discharged under certain circumstances, the dissolution of the contract would take place under the terms of the contract itself and such cases would be dealt with under Section 32 of the Act. If, however, frustration is to take place de hors the contract, it will be governed by Section 56.
35. In M/s Alopi Parshad & Sons Ltd. v. Union of India, 1960 (2) SCR 793, this Court, after setting out Section 56 of the Contract Act, held that the Act does not enable a party to a contract to ignore the express covenants thereof and to claim payment of consideration, for performance of the contract at rates different from the stipulated rates, on a vague plea of equity. Parties to an executable contract are Page 65 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 often faced, in the course of carrying it out, with a turn of events which they did not at all anticipate, for example, a wholly abnormal rise or fall in prices which is an unexpected obstacle to execution. This does not in itself get rid of the bargain they have made. It is only when a consideration of the terms of the contract, in the light of the circumstances existing when it was made, showed that they never agreed to be bound in a fundamentally different situation which had unexpectedly emerged, that the contract ceases to bind. It was further held that the performance of a contract is never discharged merely because it may become onerous to one of the parties.
36. Similarly, in Naihati Jute Mills Ltd. v. Hyaliram Jagannath, 1968 (1) SCR 821, this Court went into the English law on frustration in some detail, and then cited the celebrated judgment of Satyabrata Ghose v. Mugneeram Bangur & Co. Ultimately, this Court concluded that a contract is not frustrated merely because the circumstances in which it was made are altered. The Courts have no general power to absolve a party from the performance of its part of the contract merely because its performance has become onerous on account of an unforeseen turn of events.
37. It has also been held that applying the doctrine of frustration must always be within narrow limits. In an instructive English judgment namely, Tsakiroglou & Co. Ltd. v. Noblee Thorl GmbH, 1961 (2) All ER 179, despite the closure of the Suez canal, and despite the fact that the customary route for shipping the goods was only through Page 66 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 the Suez canal, it was held that the contract of sale of groundnuts in that case was not frustrated, even though it would have to be performed by an alternative mode of performance which was much more expensive, namely, that the ship would now have to go around the Cape of Good Hope, which is three times the distance from Hamburg to Port Sudan. The freight for such journey was also double. Despite this, the House of Lords held that even though the contract had become more onerous to perform, it was not fundamentally altered. Where performance is otherwise possible, it is clear that a mere rise in freight price would not allow one of the parties to say that the contract was discharged by impossibility of performance.
38. This view of the law has been echoed in 'Chitty on Contracts', 31st edition. In paragraph 14-151 a rise in cost or expense has been stated not to frustrate a contract. Similarly, in 'Treitel on Frustration and Force Majeure', 3rd edition, the learned author has opined, at paragraph 12- 034, that the cases provide many illustrations of the principle that a force majeure clause will not normally be construed to apply where the contract provides for an alternative mode of performance. It is clear that a more onerous method of performance by itself would not amount to an frustrating event. The same learned author also states that a mere rise in price rendering the contract more expensive to perform does not constitute frustration. (See paragraph 15-158) Page 67 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021
39. Indeed, in England, in the celebrated Sea Angel case, 2013 (1) Lloyds Law Report 569, the modern approach to frustration is well put, and the same reads as under:
"111. In my judgment, the application of the doctrine of frustration requires a multi-factorial approach. Among the factors which have to be considered are the terms of the contract itself, its matrix or context, the parties' knowledge, expectations, assumptions and contemplations, in particular as to risk, as at the time of the contract, at any rate so far as these can be ascribed mutually and objectively, and then the nature of the supervening event, and the parties' reasonable and objectively ascertainable calculations as to the possibilities of future performance in the new circumstances. Since the subject matter of the doctrine of frustration is contract, and contracts are about the allocation of risk, and since the allocation and assumption of risk is not simply a matter of express or implied provision but may also depend on less easily defined matters such as "the contemplation of the parties", the application of the doctrine can often be a difficult one. In such circumstances, the test of "radically different" is important: it tells us that the doctrine is not to be lightly invoked; that mere incidence of expense or delay or onerousness is not sufficient; and that there has to be as it were a break in identity between the contract as provided for and contemplated and its performance in the new circumstances."Page 68 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021
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77. Thus, having regard to the aforesaid discussion, we hold that the contract between the parties is legal and valid. The contract could be said to be absolute one and not just contingent. It carried an absolute obligation and it was not conditioned or contingent upon the title to the said land becoming clear and marketable and the final plot being allocated under the Town Planning Scheme.
78. The aforesaid takes us to the second part of our discussion. Having taken the view that the contract is legal,, valid and enforceable in law, whether the appellant-plaintiff is entitled to the specific performance of the contract.
79. In the aforesaid context, we are of the view that if the plaintiff-vendee is able to make out a case for grant of specific performance, then we may consider to pass a conditional decree of specific performance. In other words, it is open for this Court to direct the defendant-vendor to take all possible steps in accordance with law to get the final plot allotted in his favour. For that, the court may direct the defendant-vendor to take up the matter with the competent authorities. Once the final plot is allotted, then the defendant-vendor would have to execute the sale-deed in favour of the plaintiff-vendee. It is only if, after all the efforts, for some reason or the other, or to put it in other words, the concerned authority declines for all times to come to allot the final plot, the contract could be said to have stood frustrated. It appears from the bare recitals in the agreement that the final plot has already come to the defendant-vendor. It is Page 69 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 not clear why it has taken so long for the actual allotment. There could be inter se disputes between the defendant and others so far as the final plot is concerned, but the plaintiff is not concerned with the same. The defendant-vendor, in the agreement for sale, has made it very clear that the final plot has been allotted to him, and no sooner it is actually allotted and is put into possession, then he shall execute the sale-deed in favour of the plaintiff-vendee.
80. We could have declined passing the conditional decree for the specific performance of the contract provided that the suit agreement was frustrated, and as such, was not subsisting. However, such is not the case. It is not the case of the defendant-vendor that the proceedings which he is talking about and pending before the Surat Municipal Corporation and the Town Planning Department have come to an end and it has been finally decided that the final plot is not to be allotted to the defendant-vendor. All that he has said is that some judicial and non-judicial proceedings are pending though in the agreement for sale the defendant-vendor has made himself very clear that he is the owner of the original parcel of agricultural land and on Town Planning Scheme being enforced he has been allotted the final plot. Thus, by merely saying or asserting that the final plot as on date does not exist and, therefore, the contract cannot be enforced is something contrary to law.
81. However, having regard to the evidence on record, we have reached to the conclusion that we should not grant specific performance of contract in favour of the plaintiff. Section 20 of the Specific Relief Act empowers the court with a discretion as to Page 70 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021 C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 decreeing specific performance. It cannot be said that in every case wherever there is a valid contract or subsisting agreement a decree for specific performance ought to be passed. It is a discretionary relief. The Supreme Court, in the case of N.P.Thirugnanam (Dead) by Lrs. vs. Dr.R.Jagan Mohan Rao and others, reported in (1995) 5 SCC 115, has observed that the remedy for specific performance is an equitable remedy and is in the discretion of the court, which discretion requires to be exercised according to the settled principles of law and not arbitrarily as adumbrated under Section 20 of the Specific Relief Act, 1963. This Court is not bound to grant specific performance on the decree because there is a valid agreement for sale. The discretion is with the court. The court can exercise such discretion equitably depending upon the facts and circumstances of each case. It may also be noted that "specific performance" is compelling a person to perform his contract or statutory obligation. The word "specific" requires careful scrutiny. It is settled proposition of law that the expression "specific" means, it must be specific enough to avoid being vague and general.
82. The reason why we are inclined to decline to grant relief of specific performance is that the plaintiff-vendee does not seem to have approached the civil court with clean hands. According to the plaintiff-vendee, he issued post-dated cheques drawn in favour of the defendant-vendor of the total amount of Rs.1,30,00,000=00 towards the earnest money, and according to him, all that was required to be done at his end was to pay the balance amount of the sale consideration, i.e. Rs.9,21,500=00. However, he has suppressed an important fact that such post-
Page 71 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 dated cheques never came to be encashed by the defendant till this date. It is also not clear, whether such post-dated cheques were in fact handed over physically by the plaintiff-vendee to the defendant-vendor, or just for the purpose of agreement for sale, the cheques were shown to have been drawn in favour of the defendant-vendor. The defendant-vendor has altogether a different story to narrate as regards the agreement for sale. The plaintiff-vendee, in his oral deposition, has admitted that he knew on the date of the institution of the suit that the cheques had not been encashed, and if that be so, then it was his duty to bring it to the notice of the court by making the necessary averments in the plaint in that regard. He has given an impression as if only Rs.9,21,500=00 is to be now paid to the defendant-vendor. This circumstance reflects on the bonafide and conduct of the plaintiff-vendee and the conduct of the plaintiff-vendee plays a crucial role when it comes to grant of decree for specific performance. The cheques drawn by the plaintiff-vendee in favour of the defendant-vendor are of the year 2016. The suit instituted by the plaintiff-vendee is of the year 2017. Once the cheques are issued aggregating to the tune of Rs.1,30,00,000=00 towards the earnest money and if such cheques are not encashed, what is expected of the plaintiff- vendee to do. The plaintiff-vendee obviously would inquire with the defendant-vendor why he had not encashed the cheques. However, no inquiry was undertaken by the plaintiff-vendee in that regard and straightway proceeded to file the suit on what we may term as a very feeble cause of action. The overall conduct of the plaintiff-vendee does not inspire any confidence.
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83. The aforesaid dubious conduct or circumstance lends credence to the case put up by the defendant-vendor that there was no actual or real intention to sell the suit property to the plaintiff-vendee. It is only on account of the disputes arising from the business between the parties and with a view to settle the dispute through mediation, by way of a security the agreement for sale was executed, otherwise it was understood between the parties that such agreement was never to be enforced. This is evident from the record of this case, more particularly, the oral evidence. There is one circumstance in the form of admission on the part of the plaintiff-vendee which we must take note of it. The plaintiff-vendee, in his cross- examination, has admitted that on the date of the execution of the agreement for sale he had knowledge that the defendant- vendor is not the sole owner of the property in question and the brother of the defendant-vendor has a share in the suit property. If such a fact was within the knowledge of the plaintiff-vendee, then he owes an explanation as to how come he entered into an agreement for sale with respect to the suit property only with the defendant-vendor.
84. The points of determination framed by us in paragraph-30 are answered accordingly :
(1) The case on hand is not one of a contingent contract.
(2) The trial court committed an error in recording a finding that the suit contract is invalid or void.Page 73 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021
C/FA/1951/2021 CAV JUDGMENT DATED: 01/09/2021 (3) The appellant-plaintiff has failed to make out any case for grant of conditional decree of specific performance of the suit contract.
(4) The appellant-plaintiff is not entitled to any other relief.
85. In the overall view of the matter, we are convinced that no case is made out by the appellant-plaintiff for the grant of the relief of specific performance.
86. In the result, this Appeal fails and is hereby dismissed. In view of the disposal of the main Appeal, the Civil Application does not survive and the same is disposed of accordingly.
(J. B. PARDIWALA, J.) (VAIBHAVI D. NANAVATI, J.) /MOINUDDIN Page 74 of 74 Downloaded on : Wed Sep 01 23:54:28 IST 2021