Bombay High Court
Om Bldrs.(P) Ltd vs 1B. Anil Chinubhai Kilachand And ... on 5 October, 2015
Bench: R.S. Dalvi
(1) S 211/88 (J)
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
Amk
SUIT NO. 211 OF 1988
Om Builders (P) Ltd. .. Plaintiff
Vs.
Anil Chinubhai Kilachand & Ors. .. Defendants
Mr. Mahendra Ghelani a/w. Ms. F. Sethna, Ms. Anooja Menon, Mr. Chirag
Dave, Mr. Adhiraj Malhotra i/b Duttmenon Dunmorrsett for the Plaintiff.
Mr. Zal Andhyarujina a/w. Mr. Vishal Kanade, Ms. Pinky Patel i/b Desai &
Diwanji for Defendant No.1(B).
Mr. Mayur Khandeparkar a/w. Ms. Sneha Patil i/b K. K. Associates for
Defendant Nos. 1(D) & 1(E).
ig CORAM : MRS. ROSHAN DALVI, J.
Date of reserving the Judgment : 22.07.2015
Date of pronouncing the Judgment : 05.10.2015
JUDGMENT
1. The plaintiff has sued for specific performance of the agreement
between the plaintiff and the original defendant, now represented by his
heirs and legal representatives being the executors of his will dated
02.06.1983, and for reliefs incidental thereto. The plaintiff has also sued for
alternative reliefs of refund of the part payment of consideration made by
him and for damages which alternative reliefs are not pressed. The original
defendant did not file any written statement. He expired soon after the suit.
The written statement has been filed by defendant No.1(A) to 1(E) who are
the heirs and legal representatives of the original defendant. Defendant
No.1(A), who was his wife, has also expired. Defendant No.1(B), who is his
son, has contested the suit. Defendant No.1(C), who is one of the executors
of the will of the original defendant, since probated, has signed the written
statement along with other defendants but has given separate oral evidence
independently and not on behalf of the other defendants. Defendant
No.1(D) and 1(E) are also his heirs and legal representatives who have
(2) S 211/88 (J)
contested the suit separately though upon largely the same defence.
2. The defendants have contended that there was no concluded
binding and subsisting agreement between the plaintiff and the original
defendant, that the agreement dated 02.06.1983 is not valid and enforceable
as it was conditional, the condition not having been fulfilled, so that it is not
enforceable, the plaintiff was not ready and willing to perform its obligation
under the agreement and the suit property is a dwelling house of the original
defendant and other co-owners and hence not liable to specific performance
of the undivided interest of the original defendant therein. Their further
defence is the non admission of the averments in the plaint relating to the
negotiations between the parties, the agreement of the co-owners to sell the
entire property in which the original defendant had 1/4 th share, right, title
and interest and the further payments made.
3. The agreement between the plaintiff and the original defendant
is for the sale of the 1/4 th undivided share, right, title and interest of the
original defendant in the said premises which was a part of the entire
property of the original defendant and the other three co-owners. The
agreement shows various terms and conditions, the most important of which
is the payment of the price by the plaintiff and the execution of the
conveyance of the 1/4th undivided share of the original defendant by the
original defendant. There are certain usual representations and covenants
made by the original defendant and certain obligations of the original
defendant under the agreement. There are no obligations of the plaintiff
except for payment of the purchase price under the said agreement. The
plaintiff, in fact, has certain, otherwise unusual, rights under the said
agreement. The original defendant has also executed the usual irrevocable
power of attorney in favour of the plaintiff.
4. Based upon the pleadings between the parties the following
(3) S 211/88 (J)
issues came to be framed by Justice Chandrachud as he then was on
28.04.2009 which are answered as follows:
ISSUES
(1) Whether the plaintiff proves that the agreement dated 2 nd June,
1983 is valid and subsisting and/or enforceable against the
defendants. - Yes
(2) Whether the plaintiff proves that all the co-owners of the suit
property have completed the sale of their share of the suit property to
the plaintiff. - No. But not material to the suit.
(3) Whether the plaintiff proves that it has at all times been ready
and willing to perform the Agreement dated 2nd June, 1983. - Yes.
(4) Whether the plaintiff proves that it is entitled to specific
performance of the Agreement dated 2nd June, 1983. - Yes.
(5) If the answer to the issue no.4 above is in the affirmative,
whether the plaintiff proves that it is in addition also entitled to
compensation, and if so, in what amount. - Not pressed.
(6) Whether if the plaintiff proves that in the alternative to specific
performance, it is entitled to the refund of a sum of Rs.4,45,000/- (or
any other amount) with payment of interest thereon at the rate of
18% per annum for their respective dates of payment (or any other
rate). - Not pressed.
(7) Whether the plaintiff proves that it is entitled to damages and if
so, in what amount. - Not pressed.
5. The plaintiff has examined himself and has been cross-examined
by defendant Nos.1(B), 1(D) & 1(E). Defendant Nos.1(B), 1(D) & 1(E) have
not examined themselves. Defendant No.1(C) has examined himself and has
been cross-examined by the plaintiff and defendant Nos.1(B), (1(D) & 1(E).
The plaintiff has to first prove that the agreement is valid and subsisting and
enforceable against the defendants. This would be seen essentially upon the
interpretation of the agreement itself and the acts of the parties thereunder
(4) S 211/88 (J)
in respect of the terms, covenants and conditions under the agreement. The
plaintiff must then prove that it was ready and willing at all times to perform
the agreement which is yet valid and subsisting and is still ready and willing
to do so. Since it has been the case of the defendants in the written
statement that the agreement is conditional upon the sale of the property by
all the co-owners which has not been completed by the other co-owners, it
would have to be seen whether the plaintiff would require to prove the
completion of sale by the other co-owners if the covenants have to be
enforced. If such condition, if any, is not to be enforced such proof would
not be called for. The Court would then have to consider what relief, if any,
the plaintiff would be entitled to.
Issue No.1 - Re : Validity and enforceability of the
agreement dated 02.06.1983 between the plaintiff and the original
defendant.
6. The original defendant had, amongst others, two properties:
one, in Kandivali called "Kandivali property" and the other at Napeansea
Road called the suit property in which he had 1/4 th undivided share, right,
title and interest. The plaintiff has received and produced the letter of the
original defendant dated 09.02.1982 which was written prior to the
agreement between the parties on the personal letterhead of the original
defendant and signed by him. It has been admitted in evidence and marked
Exhibit P7 upon the fact of the receipt of the letter having been proved by
the oral evidence of the plaintiff's director (See. Bishwanath Rai Vs.
Sachidanand Singh, AIR 1971 SC 1949 @ 1953) and would require to be
considered while appreciating the evidence as a whole. In the letter, Exhibit
P7 the original defendant has referred to a meeting with the plaintiff's
director in which the parties had decided to prepare the documents of sale
with regard to the suit property. He has stated that Mr. Shishir Diwanji was
the common solicitor and was instructed to prepare a power of attorney in
favour of the plaintiff to develop the property and "complete the same". The
(5) S 211/88 (J)
original defendant admitted receipt of "a further" part payment of Rs.4.50L
in respect of the above property which he appropriated and adjusted towards
his share in the purchase price of the sale of the suit property.
7. The defendants have not admitted the letter. The defendants
have not even denied the letter or stated or contended that it was forged.
"Further part payment of Rs.4.50L" even before the agreement was entered
into has not been admitted by the defendants. The parties have acted upon
the letter. Mr. Shishir K. Diwanji has been the common solicitor of the
parties. The parties indeed prepared an agreement of sale with regard to the
property mentioned in the letter. The original defendant has also executed a
power of attorney on the same day also drafted by the firm of attorneys of
Mr. Shishir Diwanji. The fact of the appointment of the solicitor, the
agreement to prepare the documents of sale of the property mentioned in the
letter and the execution of the power of attorney are proved by the very act
of the parties. Indeed Mr. Shishir Diwanji, Solicitor of M/s. Ambubai and
Diwanji, Solicitors has drafted the agreement as also the power of attorney.
The dockets of the documents as also the purchase of the stamp papers days
before the execution of the agreement evidence this aspect. The evidence
has shown that the letter would get proved upon the signature of the original
defendant being proved by defendant No.1(C) as all other documents,
letters, receipts being proved, as shall be seen presently. The payment of
Rs.4.50L, which is a subsidiary aspect, would have to be seen from other
documentary evidence. The expression "further part payment" would show
various part payments made before 09.02.1982, the date of the said letter.
8. The letter is followed by the execution of the agreement
between the plaintiff and the original defendant itself. The suit agreement is
not only in respect of the suit property but also in respect of the Kandivali
property, but with which this suit is not concerned, and hence the agreement
with regard to such property need not be considered. The agreement is on a
(6) S 211/88 (J)
stamp paper dated 10.05.1983 purchased by M/s. Ambubai and Diwanji,
Solicitors in which Mr. S. K. Diwanji was a partner. It would be imperative to
consider the relevant recitals as also the clauses of the agreement in detail
and see the respective rights and obligations of the parties to the agreement.
Recitals
(a) Recital No.1 in the agreement shows the property which is
agreed to be sold. It is described as land, hereditaments and premises
described in the schedule to the agreement which shows the entire
property. The premises agreed to be sold by the original defendant as
the vendor is shown to be his 1/4th
undivided share, right, title &
interest in the entire property. The 1/4th share is described as "the
premises". The entire property is described as "the said property".
(b) Recital No.2 shows negotiations which have been going on
between the original defendant and the plaintiff as the vendor and the
purchaser as also with the co-owners of the vendor jointly or
alternatively for the sale of the shares of each of the co-owners. It also
mentions about independent negotiations.
(c) Recital Nos. (vi), (vii) & (viii) show that because of delay on the
part of the other co-owners in executing the agreement for sale of the
suit property, the original defendant alone agreed to sell his 1/4 th
undivided share, right, title & interest for Rs.75L and executed the
agreement.
(The other recitals relate to the Kandivali property).
Clauses
(d) The price for the sale of the undivided
th
share, right, title and interest of the vendor was fixed
at Rs.75L. (Clause 1)
(7) S 211/88 (J)
(e) The purchaser is stated to have made on
account payments from time to time to the vendor
th
towards the sale of his undivided 1/4
share (Clause
1(a)).
Some of the part payments made prior to the
agreement on specified dates have been recited
aggregating to Rs.2.05L (Clause 1(a)).
(Defendant No.1(B), 1(D) & 1(E) accept the payment of
the amounts specified in the agreement through their
counsel.)
(f) Rs.20,000/- was paid at the time of the
execution of the agreement making a total of Rs.2.25L
(Clause 1(b)).
Obligation of the (g) The balance amount of Rs.73.75L was to be paid
plaintiff
against completion of sale by all the co-owners
(Clause 1(c)).
(h) The sale was to be completed by the parties
within 5 years.
(It was accordingly to be completed before 01.06.1988
: the suit has been filed on 18.12.1987). Either party
could make time the essence of the contract after the
period of 5 years on giving 15 days notice in writing
(Clause 3).
(The suit has itself been filed prior to the period of the
completion of the contract).
Obligation of the (i) The original defendant as the vendor was to
original
deliver the documents of title to M/s. Ambubai and
defendant
Diwanji within 4 days of the agreement (Clause 4).
Obligation of the (j) The original defendant as the vendor was to
original
make out a marketable title (Clause 5).
defendant
(8) S 211/88 (J)
Obligation of the (k) The original defendant as the vendor and all
original
other necessary parties were to execute the
defendant
conveyance in favour of the purchaser (Clause 7).
Obligation of the (l) The original defendant as the vendor was to put
original
the plaintiff as the purchaser in possession of the
defendant
premises agreed to be sold (which is his 1/4 th
undivided share, right, title and interest in the entire
property) by delivering vacant possession on the
completion of sale (Clause 8).
Right of the (m) The plaintiff as the purchaser would be free and
plaintiff
entitled to enter upon and remain on the property
subject to the consent of the other co-owners (Clause
8).
(This is upon the mandate under Section 44 of the
Transfer of Property Act, 1982 (the TP Act)).
Obligation of the (n) The original defendant as the vendor was to get
original
the consent of all other persons, if any, interested in
defendant
the premises agreed to be sold (which was his 1/4th
undivided share in the entire property) and was to get
the documents executed by them (Clause 13).
(This would relate to the servants etc. of the original
defendant who may have occupied any portions. This
consent related to the "premises" and not the "property".)
Right of the (o) If the sale was not completed (by execution of
plaintiff
the conveyance) due to default on the part of the
original defendant as the vendor, the plaintiff as the
purchaser would be entitled to specific performance of
the agreement and payment of interest @ 18% p.a. on
the earnest money paid and costs, charges and
expenses incurred and the loss and damage suffered as
also the return of earnest money (Clause 16).
(9) S 211/88 (J)
Rights of the (p) If the purchase was not completed (by execution
original
of conveyance) due to default on the part of the
defendant
plaintiff as the purchaser, the original defendant as the
vendor would be entitled to specific performance and
to claim costs, charges and expenses incurred by him
from the plaintiff (Clause 17).
Right of the (q) The plaintiff as the purchaser was to be free and
plaintiff
entitled to deal with other co-owners as he wished to
arrive at any arrangement or compromise with them
(Clause 18).
(This was because there were prior negotiations with the
other co-owners as is evidenced from the recitals.)
Right of the (r) The plaintiff as the purchaser was also entitled,
plaintiff
if it desired, to obtain partition of the share of the
vendor from the remaining co-owners or one or more
of them (Clause 19).
(This would be the statutory entitlement of the purchaser
of the undivided share of the co-owner.)
Obligation of the (s) The original defendant as the vendor was to
original
execute in favour of the plaintiff as the purchaser an
defendant
irrevocable power of attorney to enable it to effectively
and efficiently exercise its rights under the agreement
(Clause 20).
(The original defendant as the vendor executed such
power of attorney on the date of the agreement itself or
on the next day as shall be seen presently.)
(t) The schedule to the agreement shows the entire
property in which the original defendant had 1/4 th
undivided share.
(10) S 211/88 (J)
(u) The agreement is signed by the original
defendant and witnessed by defendant No.1(C), one
Mr. D. J. Shukla (Shukla) who is stated to have been
his confidant, his chartered accountant and also one of
the executors under his will. The agreement is also
executed by the director of the plaintiff and is
witnessed by Mr. K. M. Diwanji, solicitor who is the
other partner of M/s. Ambubai and Diwanji, Solicitors.
(v) The receipt clause shows the receipt of Rs.2.05L
being the amount of deposit or earnest paid by the
plaintiff to the original defendant. It is signed by the
original defendant and witnessed by Shukla.
Hence against the only obligation of the plaintiff to make balance
payment and that too only against completion of sale by the other co-owners
of the original defendant, the original defendant had to discharge various
obligations. The plaintiff had various rights including the right to deal with
the other co-owners and obtain partition. It is contended on behalf of
defendant No.1(B) that the completion of sale by the other co-owners was
not an obligation of either party. Upon such a contention it is seen that the
contract was not dependent upon it; it only showed the time of balance
payment. Only once the other owners complete their sale it would oblige the
plaintiff to make balance payment to the original defendant.
9. The defendants have not denied the execution of the agreement
in the written statement. The defendants have not even averred that they
did not admit the execution of the agreement. They have craved leave to
refer to the agreement for ascertaining its true meaning, construction and
legal effect. The plaintiff has proved the execution of the agreement by
direct oral evidence. The agreement has been marked Exhibit P-1 upon such
evidence. Defendant No.1(C) has further given evidence of how the
agreement was executed. He has identified the signatures of all the parties
(11) S 211/88 (J)
who executed the agreement in his presence as also his own signatures. The
evidence of defendant No.1(C), which shall be considered presently, shows
how he was a confidant of the original defendant. He was a professional
chartered accountant. He is shown to have been chartered accountant of the
original defendant as also his family for 40 years. His father is stated to have
been the chartered accountant and confidant of the family for another 50
years. The personal friendly association of defendant No.1(C) with the
original defendant has not been challenged.
10. It is for such an agreement that the plaintiff's suit for specific
performance and the contest of defendant Nos.1(B), 1(D) & 1(E) to execute
the conveyance as the heirs and legal representatives of the original
defendant, their father, whose property they succeeded to, would have to be
seen. The essential case of the defendants is that the agreement is
conditional upon an uncertain further event not within the control of either
party and the condition is not fulfilled by such future event happening and
hence it is not enforceable. The condition is stated to be the completion of
the sale by other co-owners. Defendant No.1(A) would contend that
payment of the balance consideration only against the other co-owners
completing their sale is an essential term of the contract from the point of
view of both the parties and defendant Nos.1(D) & 1(E) would also contend
that the plaintiff has sought to alter the contract by not enforcing and
abiding the condition which the plaintiff cannot do and the Court cannot
rewrite the contract.
11. A reading of the entire agreement does not show any such
condition or alteration of any such condition and consequently the contract.
Only Clause 1(c) of the agreement shows that the balance consideration of
Rs.73.75L was payable against the completion of sale by all the co-owners.
It is only the plaintiff who can refuse to pay the balance consideration or any
part thereof remaining due and payable upon the execution of the agreement
(12) S 211/88 (J)
if all the co-owners have not completed the sale. The co-owners were not
required to complete the sale under this agreement. It would be the
completion of sale under their separate and distinct agreements. The
negotiations were going on between the plaintiff as also those co-owners as
recited in recital (ii) of the agreement. That was for the sale of the entire
property jointly or for the sale of the property alternatively for their
respective shares. The completion of sale by the original defendant was to
be within 5 years of the agreement as agreed in Clause 3 thereof. It was to
be the obligations of the original defendant without any condition under
Clause 7 of the agreement. In fact, the original defendant was also to put
the plaintiff in vacant possession of his 1/4 th share (the said premises) upon
the completion of the sale. That was another obligation of the original
defendant which is not conditional upon any other factor. Similarly the
original defendant was also to get consent of other persons in his 1/4 th share
of the entire property (if there were such rights at all under Clause 13 of the
agreement). That was also not conditional upon any other factor. Both the
parties were entitled to get the agreement specifically enforced upon a
failure of other party under Clauses 16 & 17 of the contract. Clauses 18 & 19
are the guiding beacons to determine the condition, if any, upon which the
completion of sale was to be. The plaintiff was entitled to deal with other
co-owners to arrive at any arrangement or compromise under Clause 18 of
the agreement. That was the plaintiff's right and not an obligation. The
plaintiff would exercise that right in respect of the other 3/4 th share of the
other three co-owners. This would show that the completion of the sale of
their shares could be "alternatively" executed as sale of shares of each of
them as recited in recital (ii). This would show that the execution of the
conveyance of the original defendant's 1/4th share was not at all dependent
upon the sale, if at all, of the other 3/4 th share or any of those shares. Clause
19 gave the plaintiff the ultimate right to obtain partition of the share of the
original defendant which was agreed to be purchased by the plaintiff and
which would be purchased upon completion of the sale by the defendant.
(13) S 211/88 (J)
This would be in terms of the law relating to sale of undivided share of a co-
owner in an immovable property. The purchaser would be entitled to
partition of the entire property upon stepping into the shoes of the original
co-owner who sold his undivided share to the purchaser. There would be
no need or necessity for the plaintiff to obtain partition under Clause 19
of the agreement if the execution of the conveyance and accordingly the
completion of the sale was to be conditional upon the sale of the
property by all the co-owners. The clause would have been redundant if
the parties so intended. Clause 19 speaks eloquently of the intent of the
parties.
12. The original defendant agreed to sell his 1/4th share in the entire
property. That was after negotiations that went on with the other co-owners
and the plaintiff for about one year. The negotiations not having fully
succeeded on the date of the execution of the agreement, the original
defendant executed the agreement only of his undivided 1/4 th share. He was
to be paid consideration for his undivided 1/4 th share. Only the payment of
balance consideration by the plaintiff was to be upon the completion of sale
by all the co-owners. That was also the right only of the plaintiff. The
plaintiff could have refused to pay the consideration to the original
defendant for his 1/4th share if the other co-owners had not completed
the sale either jointly or alternatively of each of their shares. The
original defendant who was entitled to sue for specific performance could
have sued for enforcement of the contract by demanding the balance
consideration only if the other co-owners had completed their respective
shares upon the negotiation that they had with the plaintiff. The plaintiff
alone could have resisted the payment of the further consideration until
he obtained sale from the other co-owners either jointly or alternatively
of each of their shares.
13. The plaintiff has sued for specific performance. The plaintiff
(14) S 211/88 (J)
had not obtained the sale from the other co-owners on the date of the suit.
(The plaintiff is stated to have obtained the sale of one other 1/4 th share
after the filing of the suit but which makes no difference). Yet the plaintiff
sued for specific performance. The plaintiff must then be ready and willing
to perform his part of the contract. The only obligation of the plaintiff was
the payment of the balance consideration. Only the obligation of the
plaintiff is against the completion of sale by the other co-owners. Hence
only the obligation of the plaintiff may at best be stated to be
conditional upon the completion of the sale by all the co-owners.
14. The obligations of the original defendants are one too many, the
important ones of which have been recited above. The most important one
is the execution of the Deed of Conveyance under Clause 7 within 5 years
under Clause 3 when called upon and then to put the plaintiff in possession
of the conveyed share under Clause 8. The fact that the plaintiff has called
upon the original defendant to specifically perform the agreement, is because
it wants the original defendant to convey his 1/4 th share in the entire
property. That would be upon payment of the balance consideration. Hence
even if the other co-owners have not completed the sale, the plaintiff cannot
demand specific performance and not perform his part of the contract. The
plaintiff accepts his obligation under the contract. It accepts it
unconditionally. It has offered to pay Rs.73.75L to the defendants. It must
be taken to be ready and willing to pay the consideration to the original
defendant also even if the completion of sale by the other co-owners is not
complete and despite the right in favour of the plaintiff to decline payment
to complete the sale if the original defendant demanded the completion of
the sale.
15. The contention of the defendants that the agreement is
conditional upon the sale of the property by all the co-owners even in the
case of the plaintiff's demand for specific performance under Clause 16 of the
(15) S 211/88 (J)
agreement is upon a complete misreading of what are the rights and
obligations of the contracting parties, the reciprocal promises, the terms and
conditions of the contract and covenants and stipulations in agreement for
sale.
16. The word "Condition" is defined in 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 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 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."
It is upon such legal definition that the expression "against completion
of sale" must be considered. The completion of sale is the prerequisite for
the original defendant obtaining the balance consideration of Rs.73.75L from
the plaintiff. If the completion of sale is not made by all the co-owners the
original defendant cannot ask for specific performance of the contract from
the plaintiff. To that end it would be the essence of the instrument. It has to
be seen whether it would similarly be the prerequisite for the plaintiff to
demand specific performance. Since the payment of price which is the
obligation of the plaintiff under the contract, must precede specific
performance, it is for the plaintiff to offer the price even before completion of
sale by the other co-owners if the plaintiff demands specific performance.
Hence it would follow as a matter of corollary that since the plaintiff has
demanded specific performance, the plaintiff cannot rest upon Clause 1(c) of
the contract to state that though the original defendant, or the present
defendants, must execute the conveyance in favour of the plaintiff, the
(16) S 211/88 (J)
plaintiff would pay the balance consideration only against the completion of
sale by all the co-owners.
17. In other words, the obligation of a party dependant upon the
stipulation cannot be enforced by the other party until he performs the
condition that is shown as his obligation in the contract. It is not for the
party in favour of whom a condition prevails to insist upon the condition to
be performed. Hence the original defendant or the present defendants must
perform their obligations which are not conditional upon any other
circumstances when the plaintiff offers to pay the balance consideration
though it is not against the completion of sale by all the co-owners. Thus the
contract which is fully amenable to specific performance would be
specifically performed.
18. Defendant Nos. 1(B), 1(D) & 1(E) would argue that because the
remaining co-owners had not completed their sale, the agreement cannot be
a concluded agreement and cannot be valid and subsisting. This argument
would be upon the premise that the entire property has to be sold as a whole
and only when all the co-owners complete their sale. The agreement dated
02.06.1983 between the plaintiff and the original defendant is precisely to
the contrary and that is evidenced by the second recital where the parties
have left the scope for a joint Deed of Conveyance if all the co-owners agreed
as also separate Deeds of Conveyance alternatively for the separate shares of
each of the co-owners which would be one by one from time to time if all of
them did not complete the sale together. The original defendant could not
be concerned with the sale by the other co-owners if the original defendant
was to obtain the balance purchase price which is the only obligation of the
plaintiff under the reciprocal promises of the contracting parties.
19. The contention in the written statement is that the contract is
conditional. It has been argued on behalf of defendant No.1(B) as well as
(17) S 211/88 (J)
defendant Nos.1(D) & 1(E) that the suit contract is a contingent contract.
The contingency has not occurred. Hence the suit contract cannot be
enforced and would become impossible to perform.
20. Mr. Andhyarujina argued that the contingency for the
completion of the contract was other co-owners giving their consent to the
completion of the contract under Clause 1(c) of the suit agreement dated
02.06.1983. It would be imperative to set out that clause again which runs
thus:
"The balance sum of Rs.73,75,000/- shall be paid against completion
of sale by all the co-owners."
The plaintiff had made payment of earnest amount. The balance
amount was to be paid upon all the co-owners completing the sale. This
completion would not be under the suit contract; it would be under their
respective separate contracts. There is no mention of "consent" by any other
co-owners. The consent would imply that other co-owners would allow the
original defendant to enter into the contract. The co-owners are entitled to
sell their undivided share in their co-owned property without the permission
or consent of others. Hence the consent is not required by law. The consent
is not even contemplated by parties to make a contract to the contrary. What
is meant and understood by that expression, at best, is that the other co-
owners would also complete the sale of their shares under their respective
agreements as the plaintiff was negotiating with all of them and all the
others except the original defendant had not by then agreed with the
plaintiff to sell their undivided share in the suit property to the plaintiff and
complete their sale.
21. The sole obligation of the plaintiff under the contract was the
payment of the agreed price. The price was not payable in installments. The
plaintiff paid the earnest upon consideration of which the original defendant
executed the agreement. The next step in the contract between the parties
(18) S 211/88 (J)
was the last. The plaintiff had to do nothing other than make the balance
payment. The sale was contemplated as stated above within a period of 5
years under Clause 3 of the contract after which time was to be made
essence by either party if desired. Hence after 5 years if the sale was not
completed, the plaintiff would call upon the original defendant to complete
the sale and for which the plaintiff would have to tender the balance
consideration. Similarly the original defendant could call upon the plaintiff
to make the payment and complete the sale. Clause 1(c) only shows the
time when the balance payment was to be made and before which the
original defendant could not call upon the plaintiff to make the balance
payment.
22.
The contention that the payment was to be made only if all the
other co-owners complete the sale of their portions is misconceived. Though
the balance payment does not become due before all the other co-owners
completed their sale, nothing would prevent the parties from completing the
sale earlier if the plaintiff agreed to make the payment earlier than the time
when all the other co-owners completed the sale of their shares. Hence it is
the contention on behalf of defendant No.1(B) that the completion of
contract by other co-owners was not within the contract of the parties and
hence if the others did not complete their contracts, the agreement cannot be
enforced. It is under such circumstances that the law of contingency is
required to be considered.
23. 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.
Black's Law Dictionary by Bryan A. Garner Eighth Edition defines at
page 338 as (1) an event that may or may not occur; a possibility, (2) the
condition of being dependent on chance; uncertainty.
(19) S 211/88 (J)
Advanced Law Lexicon by P. Ramanatha Aiyar 3 rd 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.
24. Contingent contracts are set out and defined in Section 31 of the
Indian Contract Act, 1872 thus:
CHAPTER III
OF CONTINGENT CONTRACTS
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.
Illustration
A contracts to pay to B Rs.10,000 if B's house is burnt. This is a
contingent contract.
The illustration is truly educative. It shows a contingency which is
uncertain happening to affect the contract. Contingency is essentially based
upon uncertainty. The contract between the parties would have nothing to
do with it. Despite that if the contingency occurs, the contract may be
affected.
25. Section 32 of the Contract Act sets out when the contingent
contract can be enforced thus:
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.
Illustrations
(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.
(20) S 211/88 (J)
Mr. Andhyarujina would argue that the suit contract, being a
contingent contract to complete the sale, can be enforced only when all the
other co-owners completed their sale and since that is admittedly not done,
the contract cannot be enforced and the plaintiff cannot make payment to
the defendants as offered by the plaintiff. He would firmly resist receiving
the balance consideration to complete the contract upon the premise that it
would be illegal to do so.
26. Mr. Andhyarujina further relied upon Section 34 of the Contract
Act which runs thus:
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.
It is claimed that the contract has become impossible because the other
co-owners may complete the sale of their undivided share, right, title and
interest in the suit property in favour of any other person. Of course, if any
co-owner would do so and if the contract is contingent upon that co-owner
completing the sale, it would become impossible of performance when that
co-owner would sell his share to another. That eventuality is not shown to
have happened. No co-owner is shown to have sold his share to any third
party.
Consequently it is seen that the other co-owners have not rendered the
suit contract impossible.
27. The Court would have to see first of all whether the suit contract
is contingent as claimed by the defendant upon the aforesaid law. The
judgment relied upon by Mr. Andhyarujina as also Mr. Khandeparkar on
behalf of the defendants would require to be analysed.
(21) S 211/88 (J)
28. In the earliest case of Shardaprasad Vs. Sikandar AIR 1915
Nagpur 15, the 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 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.
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.
In our case the balance price was not to be paid only if all the co-
owners completed their sale (separately and individually); nor if they had
"consented" as has been argued on behalf of the defendants. In fact, they
have no right to refuse. The original defendant has the legal right to sell his
undivided share. The contract would have to be performed if the parties
have agreed to it. Only the plaintiff would make the balance payment at a
specified time after the others also agreed to sell their share. The execution
of the sale deed by the original defendant, if called upon was not contingent
upon any other party's act. It would, of course, be executed only when the
plaintiff made payment or offered to do so. The plaintiff, in fact, offered to
make balance payment within 5 years period and even though the plaintiff
was not liable to make it under the contract. The plaintiff has consistently
offered the price. Surprisingly the defendants have refused to accept it. The
bona fides of the act shall be considered presently; the law is clear.
(22) S 211/88 (J)
29. In the case of Kirpal Das Jivraj Mal Vs. Manager, Encumbered
Estates AIR 1936 Sind 26 it has been held that 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.
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.
I do not see how that case is at all comparable to the present case. All
that the original defendant agreed to sell was his 1/4 th share in the suit
property. He had to do so.
30. What is not a contingent contract is shown in the case of F.
Ranchoddas Vs. Nathmal Hirachand & Co., AIR (36) 1949 Bombay 356,
by Justice Chagla as he 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 "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
(23) S 211/88 (J)
damages.
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.
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.
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 new
contract.
In this case also construing the words "against completion of sale by
all the co-owners" as "upon the consent of all other co-owners" or "when all
the other co-owners complete their sale" would make a new contract
between the parties. Such a contract was not contemplated by the parties.
The original defendant received consideration for his undivided share. He
was not concerned with the other co-owners' shares. His only concern was in
receiving balance payment and the parties agreed that it would be made at a
specified time. Hence Clause 1(c) related to the mode of payment and the
manner of performance but was not dealing with the question of the very
obligation to perform the contract.
(24) S 211/88 (J)
31. The case of F. Ranchhodas Vs. Nathmal Hirachand & Co.,
(1949) 51 Bom LR 491 which has been referred in the case of 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.
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.
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 contingency. Of
course, if the sanction was refused upon an application, the contingency
would fail.
There is no such contingency in the suit contract. The original
defendant did not even have to procure the sanction or permission of the
other co-owners. The parties were not to wait needlessly for the completion
of sale by the other co-owners. It was precisely because of that that Clauses
(25) S 211/88 (J)
18 & 19 contemplated that the plaintiff would have to deal with the other
co-owners and to apply for partition of the original defendant's 1/4 th
undivided share upon he being transferred that share and which would be
the fall out of the agreement contemplated by the parties.
32. The aspect of obtaining sanction or permission of any authority
upon which a contract is conditioned came to be considered initially by the
Privy Council in the case of Dalsukh M. Pancholi Vs. The Guarantee Life
and Employment Insurance Co. Ltd. AIR (34) 1947 Privy Council 182
which has also been referred in the case of Rojasara (supra).
In that case the sale was to be effected "subject to" the Court's
approval. The Court refused the permission. The sale could not be effected.
The balance consideration was payable within 30 days of the approval of the
offer by the Court. Hence the contract was subject to the Court's approval.
The contract was decidedly made so. There were a large number of secured
creditors of the vendor. Hence the purchaser would want a clear title.
Similarly the vendor would want no further litigation. Hence both the
parties made the contract conditional upon the approval of the Court with
good reason. The condition was an essential term for both the parties. Such
a contract was held to be contingent and the contingency having failed, it
was held that there was no contract which could be made the basis for a
decree of specific performance.
Our contract is merely for sale of the undivided share of original
defendant. The suit contract is not for sale of the share of the original
defendant upon the other co-owners completing the sale or upon the other
co-owners consenting to the sale of the original defendant. Had the contract
been so also, until now the contract would not fail because the contingency
cannot be taken to have happened, no other co-owner having sold his
undivided share to any other party.
33. The case of M. V. Shankar Bhat Vs. Claude Pinto, (2003) 4
(26) S 211/88 (J)
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.
34. The judgment of the Privy Council in the case of Warehousing
& Forwarding Co. of East Africa Ltd. Vs. Jafferali & Sons Ltd., 1964 AC
1 : (1963) 3 All ER 571 holding that the principal was bound upon
ratification taking place was considered to see how the contract was
conditional.
The suit contract is not subject to any condition and hence neither
conditional, nor contingent.
35. 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."
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 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.
In the suit contract when the co-owners completed the sale of their
(27) S 211/88 (J)
undivided share in the suit property separately with the plaintiff, the plaintiff
would be obliged to make the payment of the balance consideration and the
original defendant would become entitled to enforce the contract and claim
the balance consideration. However, if the other co-owners did not execute
any such other separate and independent contract, the suit contract, not
being dependent upon such execution, would nonetheless have to be
completed; by the original defendant by executing the sale deed and by the
plaintiff upon paying the balance consideration and then applying for
partition, if and when required.
36. Mr. Andhyarujina would argue that the contingent contract
would become impossible of performance if the contingency does not happen
as provided in Section 36 of the Contract Act which runs thus:
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 know
or not to the parties to the agreement at the time when it is made.
He would contend that the suit contract was dependent upon the
completion of sale by all other co-owners or the consent of the other co-
owners. That having not been obtained, since despite negotiations the co-
owners have not sold their shares to the plaintiff, the contract has become
impossible of performance under Section 56 of the Contract Act. The
relevant part of Section 56 runs thus:
56. Agreement to do impossible act.- An agreement to do
an act impossible in itself is void.
Contract to do act afterwards becoming impossible or
unlawful.- A contract to do an act which, after the contract is made,
becomes impossible, or, by reason of some event which the promisor
could not prevent, unlawful, becomes void when the act becomes
impossible or unlawful.
..........
Mr. Andhyarujina would rely upon the second part of the section.
Thus he would state that the contract has become impossible by reason of
(28) S 211/88 (J)
the lack of consent or the completion of sale by the other co-owners, an act
which was beyond the control or performance of both the parties.
37. In the case of Satyabrata Ghose Vs. Mugneeram Bangur and
Co., AIR 1954 SC 44 it is held by the Division Bench of the Calcutta High
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.
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 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.
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.
(29) S 211/88 (J)
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.
In paras 15 & 16 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.
In this case the unfortunate eventuality is mentioned. In fact, it was
foreseen by both the parties. There are other co-owners who were also
negotiating the sale of their undivided share in the suit property and the
plaintiff would not be called upon to make payment of the balance
consideration only until all of them executed their respective contracts with
the plaintiff so as to give the plaintiff a clear title to the entire property by all
the co-owners. There was no eventuality that could happen to alarm the
parties later. There is, therefore, nothing which is impossible of performance
(30) S 211/88 (J)
and nothing based upon which alone the parties could perform their
respective obligations.
38. In the case of Boothalinga Agencies Vs. V.T.C. Poriaswami
Nadar, AIR 1969 SC 110 also Section 56 of the Indian Contract Act was
considered for analysing the doctrine of frustration of contract. It is held
that the doctrine of frustration of contract cannot apply when event which is
alleged to have frustrated the contract arises from the act or election of a
party.
Hence in short it would apply only to supervening impossibility or
illegality as observed in para 10 of the judgment.
When there was a positive prohibition imposed by the license upon the
appellant not to sell the items contracted for to any other party and he was
only permitted to utilize it for his consumption as raw material in his own
factory, it was held that the suit of the other party upon the contract could
not stand.
The impossibility, therefore, arose out of the license not being granted
for sale. It was for no fault of the party who was to send the goods. It was,
therefore, a supervening impossibility.
It need not detain us any longer that the suit contract is not rendered
impossible by any supervening impossibility. In fact, there is no impossibility
in completing the sale. Out of the several co-owners, one co-owner would
necessarily sell his undivided share followed by others. The law provides for
such separate and independent sale of undivided shares of a co-owned
property.
39. 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.
(31) S 211/88 (J)
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.
The Supreme Court held that non occurrence of contingency
dependent upon 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
promiser'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.
This 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.
In the present case if the original defendant failed to obtain the
certificate of marketable title or the then required permission of the Income
Tax Authority, the plaintiff may well terminate the contract upon the breach
or have specifically enforced the obligation of the original defendant under
Clauses 3 & 4 of the contract. Surely the original defendant cannot proclaim
that if he does not obtain marketable title or the income tax clearance, the
contract being a contingent contract upon obtaining such clearance would
fail if the clearance was not obtained.
The judgment however is useful only upto a point. Hence it shows
(32) S 211/88 (J)
that non performance of conditions under the contract cannot render a
contract impossible of performance even if its impossibility is based upon the
act of another.
40. 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.
41. The execution of the contract which is sought to be specifically
enforced has indeed to be seen to be proved. The plaintiff has averred about
the execution in para 2 of the plaint. It is its case that despite negotiations
with other co-owners they did not, at that time, agree to execute a
conveyance jointly and delayed the execution of the formal written
agreement and hence the parties to the suit entered into contract only for the
1/4th undivided share, right, title and interest in the entire property of the
original defendant on 02.06.1983.
42. The averments in para 2 of the plaint have not been denied in
para 6 of the written statement which deals with the same. The defendants,
who are the heirs and legal representatives of the original defendant, have
naturally not admitted that the co-owners agreed to sell their respective 1/4 th
share to the plaintiff. The defendants have neither admitted nor denied the
execution of the agreement dated 02.06.1983. In fact, they have craved
leave to refer to the said agreement for its interpretation. Other than such
statements, the defendants have denied the averments in para 2.
Consequently it is seen that the execution of the agreement is neither
specifically admitted nor specifically denied and is sought to be interpreted;
It has been interpreted as above.
43. The plaintiff must prove the execution of the agreement by
(33) S 211/88 (J)
direct oral evidence. The plaintiff has led the direct oral evidence of its
director. In paras 8 & 9 of the affidavit of evidence of the plaintiff's director
he has deposed about the negotiations with the co-owner and upon such
negotiations in preparing the plan for development and the co-owners not
having entered into a written agreement so that the agreement came to be
concluded by the plaintiff only with the original defendant for his undivided
1/4th share, right, title and interest to be sold to the plaintiff.
44. The plaintiff's director has been only slightly cross-examined on
this specific, clear oral evidence in question No. 115. He was asked the
nature of the agreement. He has replied that it was that the original
defendant "will sell" 1/4th of share to the company. In question No. 215 he
was asked with regard to the earnest of Rs.20,000/- paid on the date of the
agreement which he replied was paid as per the agreement.
45. Defendant No.1(C) has also led the evidence on the execution of
the agreement. In para 5 of his affidavit of evidence he has deposed that it
was executed in his presence inter alia by the original defendant and he has
attested it.
46. It is contended on behalf of the defendants that such evidence is
contrary to his written statement. It is not. As detailed above, the written
statement does not show denial of the execution by any of the defendants.
The evidence shows precisely what happened at the time of the execution by
one of the defendants who was then present. Even if defendant No.1(C),
who signed the written statement along with other defendants, did not then
admit that each of the co-owners agreed to sell to the plaintiff and only
craved leave to refer to the agreement for ascertaining its interpretation, it
could well be that thereafter he would give direct oral evidence of what
transpired at the time of the execution of the agreement if he was then
present. That is not a part of his pleading. It would be his evidence to
(34) S 211/88 (J)
support the pleading of non-denial of the execution of the agreement and of
craving leave to refer to the agreement for its interpretation.
47. Defendant No.1(C) was cross-examined and has clarified therein
that he was not even represented in the above suit. Defendant No.1(B) was
represented individually `. Defendant Nos.1(D) & 1(E) were represented
separately by their attorneys. In reply to question No.235 as to how
defendant No.1(C) came to file the affidavit of evidence he has clarified that
he had no papers of the estate with him. After the plaintiff's director filed
the affidavit of evidence, defendant No.1(B) informed him that he was
referred in the affidavit. Defendant No.1(C) accepted that as natural since
he was fully involved in the matter from time to time. He has deposed that
he has told defendant No.1(B) that he was to speak the truth and requested
the copy of affidavit of evidence. (Of course, defendant No.1(B) did not
provide him any copy). He received copies of letters from the attorneys of
the plaintiff. He realized that he was not represented by anyone in the
proceedings. He obtained the relevant papers from the plaintiff's attorneys.
That is how defendant No.1(C) came to depose about the execution of the
agreement, the power of attorney, the vouchers and the receipts relied upon
by the plaintiff and produced by the director of the plaintiff in his evidence.
48. Defendant No.1(C) has been cross-examined on the execution of
the agreement by the plaintiff's counsel. He has also been rather vaguely
cross-examined on this aspect by the defendants' counsel, an exercise which
has been skillfully avoided in respect of the plaintiff's director.
49. Question Nos. 43 to 54 in his cross-examination relate to the
execution of the agreement. He has deposed that he was familiar with the
signature of the original defendant and identified it. He affirmed the
attestation by him. He also deposed where the agreement was signed - in
the room of the original defendant at Oriental House on the 5 th floor. He was
(35) S 211/88 (J)
called there. The plaintiff's director was there. The original defendant and
he had gone to the office of the solicitor K. M. Diwanji who was then the
common solicitor of the parties. He has affirmed that the plaintiff's director
signed in the presence of the said solicitor when all of these parties were
present including himself. He has further deposed that K. M. Diwanji
attested the execution by the plaintiff's director. He identified the signature
of the original defendant also in the receipt clause as well as his own
signature as a witness. There can be no clearer direct oral evidence of the
execution of any document by a party present in the presence of the another
party whose evidence he has corroborated.
50. His further cross-examination on behalf of defendant No.1(B) is
under question Nos.243 to 246 when he was put the case of the defendant
No.1(B) that he was aware that there was no contract between parties. It
was then clarified to him that what was meant was that it was an invalid
agreement or that original defendant No.2 had treated it as an invalid
agreement. Since he could not depose as to how the original defendant No.2
had treated the agreement, he answered accordingly; the invalidity of the
agreement he would leave to the lawyers to decide (as he was a chartered
accountant). There is no direct cross-examination on the aspect of the
execution of the agreement directly brought out by this witness on behalf of
defendant No.1(B) to 1(E) at all despite scores of irrelevant questions on a
dozen irrelevant aspects wholly unconnected with the execution of the
agreement which is the sub-stratum of this case. It is sought to be suggested
that defendant No.1(C) deposed out of vengeance and spite against
defendant No.1(B) who sought to terminate his position as a chartered
accountant of the family after his father's death. This is disregarding the fact
that he had served his own father for decades and could not erase the
memory of what he did with his father during the execution of the
transaction.
(36) S 211/88 (J)
51. The original defendant further executed an irrecoverable power
of attorney which is marked Exhibit P-9 in evidence. The power of attorney
has been notarised a day after the execution of the suit agreement. It
authorized the plaintiff to take various actions with regard to the sale of the
suit premises being the undivided share of the original defendant. The
execution of the power of attorney is itself contended by the plaintiff to be in
part performance of the agreement for sale. The power of attorney is stated
to be insufficiently stamped and hence may not be considered in evidence.
However, under the letter of the original defendant dated 09.02.1982,
Exhibit P-7 in evidence, he had written to the director of the plaintiff that,
aside from preparing the documents of the sale of the suit property, he had
also instructed their common solicitor to prepare a power of attorney in
favour of the director of the plaintiff "authorizing him to develop the
property and complete the sale". Not surprisingly there is not much cross-
examination of the director of the plaintiff upon the execution of the power
of attorney or the acts of the plaintiff under the power of attorney.
52. The plaintiff has claimed in para 5 of the plaint that the plaintiff
made further payments, though not due, to the original defendant at his
request from time to time which was received and acknowledged by the
original defendant from time to time. This would show the acceptance of the
contract by both the parties as also their overt act of affirming the contract.
Nevertheless it may be mentioned that such further payments is of no
consequence because under the terms of the contract the balance
consideration was payable only under Clause 1(c) of the agreement at the
time of completion of sale.
53. The defendants have put the plaintiff to strict proof of the
further payments made by the plaintiff in para 9 of the written statement.
The plaintiff has produced several vouchers signed by the original defendant
dated 17.12.1982, 27.12.1982, 14.02.1983 & 16.05.1983 which are stated to
(37) S 211/88 (J)
be further payments made prior to the agreement. The plaintiff has also
produced copies of vouchers dated 21.03.1984, 05.06.1982, 27.04.1984,
14.12.1984, 21.12.1984 & 04.07.1985 showing further payments made after
the execution of the agreement. In para 8 of the affidavit of evidence of the
director of the plaintiff he has deposed that he has made substantial
payments by cheque and in cash to the original defendant. The Income Tax
Authority have made substantial additions to his returns for computing the
tax liability. The plaintiff's director has been cross-examined upon the
vouchers. He has identified the signature of the original defendant on the
original vouchers Exhibits P-2 to P-5. They, in fact, get proved by the direct
oral evidence of the plaintiff in the cross-examination of the plaintiff's
director. Upon the case put to the director that the vouchers did not contain
the signature of the original defendant, which is not the case of the
defendants in the written statement, he has volunteered to show the
endorsement made as also the initial in the pre-printed vouchers of the
plaintiff. His evidence would show that the endorsement "CB53" would
show cashbook 53 of the company's books. Similarly the other vouchers
would show CB59 & CB120 at Exhibits P-3 to P-5 respectively. He has further
deposed that some of these payments are made by cheques showing the
cheque number for the vouchers Exhibits P-3, P-4 & P-5. His direct oral
evidence would prove the contents of those documents subject only to the
cross-examination with regard to the truth of such contents. There has been
no cross-examination on that score.
54. The defendants called upon the plaintiff to produce the bank
statement maintained by the plaintiff to testify that the cheques were
honoured in favour of the original defendant. The plaintiff's director has, of
course, not produced the bank statement of 1982-83 in December, 2009
when he was cross-examined. It may be mentioned that his evidence
showing the initials on the vouchers by the plaintiff with the corresponding
cashbook entries would show the vouchers prepared in the normal course of
(38) S 211/88 (J)
the business of the plaintiff. The original defendant never disputed the
payments. The defendants never challenged the execution. The plaintiff was
called upon to prove the vouchers. The plaintiff was not called upon to
provide further particulars, a provision under Order 6 Rule 5 of the CPC
which was available to the defendant at the time of the filing of the suit as
also the written statement. Consequently upon reading the entire aforesaid
evidence, including the cross-examination on behalf of the defendants, the
entire contents of the vouchers get proved and the onus which was initially
on the plaintiff came to be discharged with the proof of the vouchers upon
which the burden would shift to the defendant to prove lack of receipt by the
original defendant, of the amounts mentioned in the vouchers as further
payments made by the plaintiff aside from the payments mentioned in the
agreement both prior to and after the execution of the agreement.
55. Defendant No.1(C) led independent evidence of the payments
made by the plaintiff also. In paras 7 & 8 of his affidavit of evidence he has
deposed that he was aware of various payments having been made by the
director of the plaintiff to the original defendant from time to time. He, of
course, did not remember the exact dates and the amounts paid, but he
deposed that the amounts exceeded the payments mentioned in the
agreement dated 02.06.1983. He has deposed that the original defendant
used to send the receipts/vouchers against the payments received from the
plaintiff and furnish the same either directly to the plaintiff or through him.
He has also been extensively cross-examined on such evidence. That
evidence also would have to be appreciated upon the fact that he was a
confidant of the original defendant worked for and with him over a period of
decades and was present in person at most times with the original
defendant. The attempt to sully his credibility as a witness on the ground of
the having fallen from favour of defendant No.1(B) does not tarnish his
evidence. He has been cross-examined by the plaintiff upon the vouchers.
He has affirmed the signatures of the original defendant on the original
(39) S 211/88 (J)
vouchers Exhibits P-2 to P-5 under question No.67. The contention that
defendant No.1(C) remain present during the hearing of the suit and
otherwise defend the suit would require his evidence to be discarded is
rather amusing; it would reflect that he is independent and has not identified
with the parties.
56. The plaintiff has produced copies of a further set of vouchers
which have been separately marked in evidence. The oral evidence as also
the cross-examination is done conjointly for all the vouchers. Hence the
copies of the other vouchers would also require to be considered. They are
similarly pre-printed by the plaintiff. They show the CB number which are
naturally different on all the vouchers. They have also been initialled by the
Accounts Officer of the plaintiff. They show that they are made out in the
normal course of the business of the plaintiff except on some vouchers where
there is no signature of the original defendant and on one voucher where
cheque number is not shown. Defendant No.1(C) has similarly deposed
about the execution of the vouchers by the original defendant.
57. The proof of the signature or handwriting of a person may be
made by the oral evidence of the person acquainted with the handwriting of
the person who has written or signed it under Section 47 of the Evidence Act
which runs thus:
47. Opinion as to handwriting, when relevant.- When the Court
has to form an opinion as to the person by whom any document was
written or signed, the opinion of any person acquainted with the
handwriting of the person by whom it is supposed to be written or
signed that it was or was not written or signed by that person, is a
relevant fact.
Explanation.- A person is said to be acquainted with the
handwriting of another person when he has seen that person write, or
when he has received documents purporting to be written by that
person in answer to documents written by himself or under his
authority and addressed to that person, or when, in the ordinary
course of business, documents purporting to be written by that person
have been habitually submitted to him.
(40) S 211/88 (J)
In this case the signatures of the deceased are identified by defendant
No.1(C). The fact that he was very closely acquainted with the deceased is
not only established, but accepted. The fact that he fell out of favour of
defendant No.1(B) after the death of the original defendant itself shows his
closeness to the original defendant. That closeness emanated from business
relationship, he being the professional acquaintance of the original deceased.
He is, therefore, the right person to be able to know, decipher and identify
the handwriting as also the signature of the deceased under Section 47 of the
Evidence Act, he having seen the deceased write as well as sign numerous
times as also he having been given various documents written and signed by
the deceased personally by the deceased.
58. Further the proof of the signature and handwriting of the
original defendant on the vouchers and other documents written and signed
by him as required under Section 67 of the Evidence Act can be given by
defendant No.1(C) under Section 47 thereof [See. Shri Baru Ram Vs. Smt.
Prasanni AIR 1959 SC 93 in Para 10].
59. In the case of Smt. Rami Bai Vs. Life Insurance Corporation of
India, Bhopal, AIR 1981 MP 69 at page 72 the Court has laid down 7 ways
to prove the contents of the documents. They can be proved by:
(1) One signatory.
(2) Person present when the document was signed.
(3) The expert.
(4) The acquaintance.
(5) comparison.
(6) admission of the signatory.
and
(7) scribe.
There are further the modes of proof, under Sections 47 & 67, which
(41) S 211/88 (J)
are not exhaustive. Other internal and external circumstances are required
to be taken into consideration by the Court [See. Gulzar Ali Vs. State of H.P.
(1998) 2 SCC 192]
60. Since defendant No.1(C) is not only an acquaintance who can
prove the handwriting and signature of the defendant but has personal
knowledge about the contents of the document, the original defendant
having told him about the document, the entire document would be
admissible in evidence upon his direct evidence [See. Madholal Sindhu Vs.
Asian Assurance Co. Ltd., AIR 1954 Bombay 305].
61. The proof of the truth of the contents of the documents can be
given by the person who can vouchsafe for the truth of the facts in issue.
[See. Ramji Dayawala & Sons (P) Ltd. Vs. Invest Import (1981) 1 SCC
80 and Narbada Devi Gupta Vs. Birendra Kumar Jaiswal (2003) 8 SCC
745 Para 16].
62. It has been held in the case of Umesh Bondre Vs. Wilfred
Fernandes, MANU/MH/1085/2006 : AIR 2007 Bom 29 : 2007(1) ALL MR
791 by this Court upon considering the ambit of Sections 47 & 67 of the
Evidence Act that on establishing the acquaintance with the handwriting of a
person and the competence to consequently identify his writing with which
such witness is familiar may also prove a document. That would, in fact, be
upon defendant No.1(C) vouchsafing the document. These legitimate
methods of proving the document accompanied by the acceptance of the
witness as such acquaintance to accept the document on record proves the
documents themselves. Seeing that defendant No.1(C) had been the
chartered accountant of the family for half a century, his acquaintance is
beyond question.
The vouchers are, therefore, proved by the evidence of the plaintiff's
director corroborated by the acquaintance, defendant No.1(C).
(42) S 211/88 (J)
The contents of the copies of the other vouchers have, therefore, come
to be similarly proved for want of any specific cross-examination upon them.
63. Under Section 32 of the Indian Evidence Act certain statements,
oral or documentary, made by persons who cannot be called as witnesses are
accepted on record as relevant facts to be considered in the evidence.
Section 32 runs thus:
Statements by persons who cannot be called as witnesses
32. Cases in which statement of relevant fact by person who is
dead or cannot be found, etc., is relevant.- Statements, written or
verbal, of relevant facts made by a person who is dead, or who cannot
be found, or who has become incapable of giving evidence, or whose
attendance cannot be procured without an amount of delay or expense
which, under the circumstances of the case, appears to the Court
unreasonable, are themselves relevant facts in the following cases:-
(1) ........
(2) or is made in course of business.- When the statement was
made by such person in the ordinary course of business, and in
particular when it consists of any entry or memorandum made by him
in books kept in the ordinary course of business, or in the discharge of
professional duty; or of an acknowledgment written or signed by him
of the receipt of money, goods, securities or property of any kind; or of
a document used in commerce written or signed by him; or of the date
of a letter or other document usually dated, written or signed by him.
(3) ..........
(4) ..........
64. The vouchers executed by the original defendant in the presence
of defendant No.1(C) and in which the signature of the deceased is identified
by defendant No.1(C) who knew his signature perfectly, being his confidant,
would fall under the aforesaid provisions. Indeed the original defendant
signed the vouchers containing the statement of the fact of receipt of
specified amounts by him as detailed in the vouchers as an acknowledgment
written and signed by him for the receipt of such money. The vouchers were
kept with defendant No.1(C), the chartered accountant of the original
defendant.
(43) S 211/88 (J)
65. In the case of R. V. E. Venkatachala Gounder Vs. Arulmigu
Viswesaraswami, AIR 2003 SC 4548 Clause 2 of Section 32 of the Evidence
Act has been considered in para 12 whilst referring to entries kept in the
ordinary course of the business of a person under Section 34 of the Act.
Such an entry found in the books of a deceased person kept in the ordinary
course of his business came to be accepted by the Court under the first part
of Section 32(2). The Court observed that such entry was relevant evidence
and accordingly admissible.
The Court further observed that in a given case though such entry is
admissible, the Court may still refuse to act on the entry in the absence of
some corroboration. In that case the appellant who relied upon such entries
himself deposed about the making of the entries by his own statement. Such
statement itself was accepted to be enough corroboration. The entries made
by the appellant's deceased father and later by him were accepted as correct
entries kept in the normal course of their conduct in collecting the rents
through the years.
66. The plaintiff's director has deposed in para 8 of the evidence
that the Income Tax Authorities have made substantial addition (presumably
to his income) upon considering the payments made and consequently the
consideration for the transaction. In reply to question No. 187 he has
deposed in the cross-examination that the Income Tax Department passed an
order against the plaintiff to pay more than Rs.30L tax on account with the
original defendant. The assessment order dated 26.05.1987 as called upon
has been produced. These payments are accepted to be not in terms of
Clause 1(a) of the agreement and are stated to be additional amounts not
mentioned in the agreement. Such a document would be admissible as a
relevant fact even without the evidence of defendant No.1(C). The evidence
of defendant No.1(C) puts an imprematur upon the document.
67. The plaintiff claims to have paid further amounts from time to
(44) S 211/88 (J)
time to the original defendant. The averments of the plaintiff in para 7 of
the plaint in that behalf is that since the original defendant required money,
at his request and instance, the plaintiff has made further diverse payments.
68. Para 11 of the written statement which deals with para 7 of the
plaint only refers to para 9 of the plaint which has been dealt with
hereinabove. The defendants have called for proof of the payments by the
plaintiff. The receipts for those separate payments were stated to have been
offered for inspection.
69. In para 8 of the affidavit of evidence of the director of the
plaintiff he has deposed that further payments were made by cheques as well
as in cash. Most of them were made in the presence of defendant No.1(C).
Some of them were made at the suggestion of Suresh Kilachand and
Ambadas Kilachand. Some payments were collected by defendant No.1(B)
and affirmed by the original defendant. The original defendant signed
vouchers for such cash receipts, most of which were deposited with
defendant No.1(C).
70. The director of the plaintiff has been cross-examined on this
aspect also. He has produced several receipts in a bunch. In reply to
question No.168 the plaintiff's director has stated that he paid the amount
far in excess of what was mentioned in para 11 of the plaint which shows
payment of Rs.4.5L made from time to time.
71. Defendant No.1(C), who corroborated the plaintiff's case of
execution of the agreement and who was the confidant of the original
defendant, has deposed about the payments made in cash or cheque by the
plaintiff, the receipts signed by the original defendant and the custody of the
receipts. In para 8 of his evidence he has deposed that the original
defendant used to sign on receipts/vouchers against the payments received
(45) S 211/88 (J)
from the plaintiff and furnished the same either directly to the plaintiff or
through him. He has further deposed that some receipts/vouchers were
received in a sealed cover by him from the original defendant with
instructions to hand the same over to the director of the plaintiff after the
death of the original defendant which he did. These receipts have not been
shown to be reflected in the books of the plaintiff unlike the vouchers which
show the cash book reference.
72. Of course, if the plaintiff had paid the amounts either by cheque
or in cash, the plaintiff would expect to be handed over the receipts thereof
within a reasonable time. This would show that the plaintiff did not demand
any receipt but the original defendant prepared receipts from time to time
and kept them together with himself. Defendant No.1(C) has been
extensively cross-examined on this otherwise incredible evidence. The
answer to question No.102 shows that the director of the plaintiff came to
his office to collect the envelope containing the receipts. If the original
defendant had himself collected and kept the receipts in a sealed cover and
handed it over to defendant No.1(C), there is no way for the director of the
plaintiff to know about such a curious act. In answer to question No. 97
defendant No.1(C) has deposed that in 1986 the sealed cover was given to
him which was already closed containing the receipts. Immediately
thereafter he has deposed that the receipts were kept in the envelope in his
presence. He kept the envelope with him as instructed by the original
defendant. He handed over the envelope to the plaintiff's director after the
death of the original defendant in the same condition that it was. He had
not verified the contents of the envelope but the plaintiff's director opened
the envelope and he had seen the receipts. This happened in 1989. Upon
being shown the receipts, he has deposed in answer to question No.105 that
they appeared to be the same receipts. He has identified the signatures on
the receipts as the ones appearing to be of the original defendant with which
he was familiar. He has further deposed in answer to question No.110 that
(46) S 211/88 (J)
the receipts were prepared by the secretary of the original defendant, during
some of the times when he was present. The payments were made against
the agreement for the suit property as told to him by the original defendant.
He has later deposed in answer to question No.114 that when the original
defendant handed over the receipts to him and closed the envelope, he had
told him that that was against the suit property. This could have happened
on but one day. The receipts had to be prepared from time to time over a
period of time. The original defendant could have closed the envelope only
after the last of the receipts was prepared. The evidence of the witness that
he was present on some of the occasions when the receipts were prepared
would show that on those occasions the envelope was not closed and hence
the fact that they were from Napean Sea Road property could not have been
told to him by the original defendant. The last of the receipts could have
been prepared in 1986 when the original defendant is stated to have closed
the envelope containing the receipts when he moved back to the suit
property.
73. Defendant No.1(C) has accepted that the payments were
received by the original defendant from time to time in cash. The original
defendant had requested payments in cash. The plaintiff was to be paid by
cheque upon returning the cash. If the cheque was to be returned, the
receipts would constitute a loan which would be a completely different
transaction. Rs.5.85 lacs are shown as "amount due to M/s. Om Builders
Pvt. Ltd." (plaintiff) in Schedule II to the probate petition of the estate of the
original defendant filed by the defendants as executors, Exhibit C-23 in
evidence. Of course, there is no evidence that any part of the cash payment
was returned. Defendant No.1(C) has further deposed in answer to question
No.117 that the amounts were taken in cash because they were to be given
to a friend. In reply to question Nos.305 & 306 he has deposed much later in
his cross-examination that he did not know who was the friend and had not
inquired. He has not been able to depose about the exact amount paid by
(47) S 211/88 (J)
the plaintiff to the original defendant. He had not kept record of the
payments made to the original defendant. In reply to question No.190 he
deposed that the plaintiff used to send monies to the original defendant
which would be sent to him and he would send it to the original defendant.
74. Much ado is made about the fact that the evidence of defendant
No.1(C) that he was informed about the execution of the receipt by the
original defendant himself is hearsay evidence and cannot be considered.
That contention is incorrect in law. Under Section 60 of the Indian Evidence
Act, 1872 direct oral evidence is the evidence of a witness who has heard it if
it is as to the fact which could be heard. Defendant No.1(C) having heard
directly from the original defendant what he deposed would be direct oral
evidence and not hearsay evidence. It may be clarified that if he had
deposed that the original defendant had informed someone else who
informed him about what the original defendant had done, that would have
been hearsay evidence. The evidence given by defendant No.1(C) as to what
he heard is on par with what his evidence would have been of what he saw if
he himself saw it. The question of hearing or seeing is treated at par under
Section 60 of the Indian Evidence Act.
75. Direct oral evidence would include evidence of the
understanding of a person as much as what the person has seen, heard,
perceived etc. Under Section 60 of the Indian Evidence Act what is direct
oral evidence is explained thus:
60. Oral evidence must be direct.- Oral evidence must, in all cases
whatever, be direct; that is to say-
If it refers to a fact which could be seen, it must be the evidence of a
witness who says he saw it;
If it refers to a fact which could be heard, it must be the evidence of a
witness who says he heard it;
If ...........
In the case of J. D. Jain Vs. The Management of State Bank of India
AIR 1982 SC 673 the Supreme Court considered what amounted to direct
(48) S 211/88 (J)
oral evidence which was not hearsay evidence. That was a case of a
domestic inquiry. The Court had to consider whether evidence given before
it in the absence of evidence of the person who was directly concerned with
the fact in issue could be taken to be hearsay evidence. One Kansal was
stated to have made a verbal complaint in the presence of four witnesses that
a person had authorized withdrawal of Rs.500/- from the bank. The entries
showed that Kansal had withdrawn Rs.1500/-. Another person had made
alteration in the figure and the words of that sum. The Tribunal held that
the evidence only established a complaint made by Kansal and the alteration
in the amount. The Tribunal took this to be hearsay evidence upon the
ground that it was learnt through the medium of a third person. For want of
evidence of Kansal the Tribunal held that there was no direct evidence that
the change in the amount was made.
Referring to the case of Subramaniam Vs. Public Prosecutor (1956)
1 WLR 965 : 100 SJ 566 of the Privy Council, parts of which was cited, the
Court considered that such evidence was not hearsay. The Privy Council
observed thus:
....... "Evidence of a statement made to a witness who is not himself
called as a witness may or may not be hearsay. It is hearsay and
inadmissible when the object of the evidence is to establish the truth of
what is contained in the statement. It is not hearsay and is admissible
when it is proposed to establish by the evidence, not the truth of the
statement but the fact that it was made. The fact that it was made
quite apart from its truth, is frequently relevant in considering the
mental state and conduct thereafter of the witness or some other
persons in whose presence these statements are made."
Seen that Kansal had made the verbal complaint with regard to the
interpolation of the amount in the presence of four witnesses, it was held in
para 11 of the judgment that:
..... the evidence of these four witnesses is direct as the complaint is
said to have been made by Kansal in their presence and hearing, it is,
therefore, not hearsay........
Of course, such evidence would be of the fact that the complaint was
made by Kansal and not the truth of the statement that the complaint was
(49) S 211/88 (J)
made by Kansal. For such proof further evidence would be required. That
would be the evidence of a person who knows further facts of the case.
76. In our case defendant No.1(C), who was the confidant of the
original defendant, knew various other personal matters of the original
defendant. His statement that the original defendant told him to keep the
receipts, showed him the receipts etc. must be understood along with fact
that he was himself present at the time the agreement was also executed and
hence knew about the foundation of those receipts. His deposition about
such intrinsic knowledge considered along with the fact that the original
defendant informed him about the execution of the receipts and executed the
receipts with regard to the suit property would, therefore, be the evidence of
the entire scenario. The marshalling of the evidence must take into account
his intrinsic knowledge along with what he directly heard from the original
defendant.
77. In the case of Shrichand Girdharilal Batra alias Shrichand
Girdharilal Punjabi Vs. Life Insurance Corporation of India 1994(2)
Bom.C.R. 190 @ 197-198 the Court considered the direct oral evidence
under Section 60 of the Evidence Act in para 20. The Court referred to the
2nd para of the section relating to what the witness had heard himself directly
from the person who spoke. That was the case of the case history narrated
to the doctor by a patient. The doctor reduced to writing what was narrated
to her. The Court held that such a writing fell within the 2 nd para of Section
60. Such a person can give evidence of that fact of what she heard. The
Court observed thus:
It is not in every case that a witness who hears something and gives
evidence in Court in respect thereof can be said to give hear-say
evidence.
The Court distinguished what is hearsay and what is not hearsay. It is
clear that what the witness hears directly from a person and deposes before
the Court is not hearsay. Hence the person, who has himself heard a
(50) S 211/88 (J)
particular fact which was told to him, can give direct evidence of that fact
just as much as he would give direct evidence of what he has seen whilst
narrating an incident. However if the witness deposes that he heard a
particular fact from a third party and not directly from the person who said
it, and if the third party is not called as a witness such statement is hearsay,
such statement of such witness remains inadmissible to prove the truth of the
facts stated. If that third party deposes whatever was directly told to him,
such statement would not be hearsay. The Court, therefore, defined hearsay
thus:
Hear-say, therefore means a secondary evidence of oral statement.
The Court gave the illustration of what would constitute and not
constitute hearsay. The illustration runs thus:
"A says that B told him about the happening of event X (though B is
not before the Court) A's assertion about event X, being not based on
his own observation, he is not qualified to speak to it. B's assertion
made out of Court cannot be accepted because it cannot be subject to
cross-examination and other tests. But if the object is only to prove
B's assertion of the event (and not to prove the event), A is competent
to speak to it and it may be received if it has any relevancy in the
case."
Applying the illustration to that case the Court accepted the recording
of a statement of the deceased by the doctor who deposed that she had
recorded what was narrated to her directly by the deceased. The Court,
therefore, held that the evidence of the doctor to the extent that the
deceased made such a statement was clearly admissible under the 2 nd para of
Section 60 and was not hearsay as to the fact that the deceased made such a
statement. That would not prove the truth of that statement. That truth
would have to be ascertained from further facts.
In our case also whatever the original defendant told, defendant
No.1(C) would have to be accepted as direct oral evidence of the fact of
what the original defendant told him. If that is the truth it could be seen
from other evidence including circumstantial evidence. If that is not the
(51) S 211/88 (J)
truth it could be separately established.
78. The entire oral evidence of the director of the plaintiff as also
defendant No.1(C) relating to the receipts is incredible and not capable of
acceptance specially upon the specific clarificatory evidence of defendant
No.1(C) that the receipts were given from time to time but were made and
kept by the original defendant with himself, were not demanded by the
plaintiff, were kept loose over a period of time, were kept in an envelope
only at the end of the period of the receipts given from time to time, which
was in 1986, when he moved back to the suit premises, which remained with
him until the death of the original defendant since the original defendant
had told him to give it to the plaintiff after his death for no apparent reason
and which the plaintiff's director himself came to collect presumably upon
the intuition that the original defendant who had signed the receipts from
time to time had informed defendant No.1(C) of such signing and later
informed him of keeping with him until his death when it was due to be
handed over to the plaintiff.
79. The original receipts produced in Court would show the non
acceptability of such evidence. Hence though the oral evidence of defendant
No.1(C) of what the original defendant told him about the payments in
respect of the suit property is admissible as direct oral evidence and not
hearsay evidence, the truth of the fact of what the original defendant stated
is not acceptable as credible evidence. Similarly the fact of giving the
receipts to defendant No.1(C) cannot be accepted as truthful upon the
appreciation of his own evidence in that regard read as a whole. None of the
receipts produced in a brown envelope can be accepted as truthful
documents showing payments made by the plaintiff as further payment for
the suit property.
80. Extensive evidence relating to payments made before and after
(52) S 211/88 (J)
the suit agreement under vouchers, copies of vouchers and receipts and the
argument about the arithmetics of payment has come to nothing because,
the plaintiff has fairly conceded that despite such payments (some proved
and some not), it is prepared to make payment of the entire balance
consideration under Clause 1(C) of the agreement, Exhibit P-1 in evidence.
81. Hence the agreement between the plaintiff and the original
defendant is proved, interpreted and found to be perfectly enforceable.
Hence issue No.1 is answered in the affirmative.
Issue No.2 - Re : Completion of sale by all the co-owners.
82. The first principles of the law of transfer of property owned by
co-owners must be first stated. Any co-owner can sell, as has the original
defendant, his undivided share, right, title and interest in the co-owned
property. There is no bar to such transfer in the Transfer of Property Act,
1882. Such share, being undivided, cannot be ascertained upon such
transfer. The property would have to be sub-divided and partitioned. Of
course, if all the co-owners sell their share to one transferee, (as had been
the aim and effort of the plaintiff and the original defendant in this case) no
partition would be made. That could not fructify. Hence the suit agreement,
Ex.P1, in evidence, was executed. Even thereafter, it was the effort and
desire of the plaintiff to obtain sale of the other shares. That did not come to
be. However, that is neither required in law nor demanded by the plaintiff.
83. The defendants appear to be wholly misdirected on this clear
legal aspect because of the nature of the suit property. It is a residential
bungalow. It belonged to 4 co-owners. The families of some of them lived
therein. The families of some of them are shown to have lived elsewhere.
The original defendant himself lived in the bungalow, moved out of the
bungalow and is shown to have moved back into the bungalow in 1986 after
the agreement was executed. It is sought to be contended that no specific
(53) S 211/88 (J)
performance of an agreement for sale of the undivided 1/4 th share of the
original defendant would be granted because the property is a residential
bungalow and consequently a dwelling house. That contention is made
upon a fundamental error. There is no law which shows or suggests that the
residential property owned by co-owners or even coparceners of an HUF
cannot be the subject matter of a suit for specific performance. The sale of
the undivided share, right, title and interest of any co-owner or coparcener in
any property, residential or commercial, be it the dwelling house or an open
land can be made. If it is a dwelling house, there would be a restriction
against the entry of the purchaser into the dwelling house to claim the actual
possession of the undivided share sold to him by one of the co-owners under
Section 44 of the Transfer of Property Act which runs thus:
44. Transfer by one co-owner.- Where one of two or more co-
owners of immovable property legally competent in that behalf
transfers his share of such property or any interest therein, the
transferee acquires as to such share or interest, and so far as is
necessary to give, effect to the transfer, the transferor's right to joint
possession or other common or part enjoyment of the property, and to
enforce a partition of the same, but subject to the conditions and
liabilities affecting at the date of the transfer, the share or interest so
transferred.
Where the transferee of a share of a dwelling-house belonging to an
undivided family is not a member of the family, nothing in this section
shall be deemed to entitle him to joint possession or other common or
part enjoyment of the house.
84. The purpose and object of the proviso is only the question of
privacy in a residential premises. An open plot of land can be easily sub-
divided or partitioned. If an undivided share of co-owner is sold to a third
party in a residential property, it cannot be equally easily sub-divided. It
would cause hardship and inconvenience to the co-owners who have not sold
their undivided share. Consequently it does not matter at all that the suit
property was a residential bungalow. The cross-examination on that score is
wholly inconsequential and need not be adverted to. It would be for the
plaintiff to obtain entry into the residential bungalow only in accordance
with law even if the original defendant had performed his part of the
(54) S 211/88 (J)
contract and his obligations under the contract and had handed over
possession of his undivided 1/4th share to the plaintiff, of course, upon the
receipt of the balance consideration shown in the agreement.
85. It is precisely for that purpose that Clauses 18 & 19 of the suit
agreement dated 02.06.1983, Exhibit P-1 in evidence, were so made. Under
these clauses the plaintiff was to be entitled to deal with co-owners; it was its
right, not its obligation. Under Clause 19 the plaintiff was to be entitled to
ask for partition of the share of the vendor from the remaining co-owners
being one or more of them; this was not an obligation of the original
defendant, but the right of the plaintiff. In fact, the original defendant had
already filed the partition suit earlier; the certified copy of the plaint is
produced and carries a presumption of its correctness requiring the Court to
accept it on record. Even one of the other co-owners one Suresh has filed a
partition suit. The 1/4th undivided share of the said person is stated to have
been sold to the plaintiff. The plaintiff itself would be entitled to file a
partition suit and obtain partition of the 1/4th undivided share transferred to
him by the original defendant as per the agreement dated 02.06.1983. The
entitlement to deal with other co-owners and the right of partition is
precisely because it was a family dwelling and the plaintiff, upon obtaining a
decree for specific performance, would not be entitled to enter upon the suit
property unless it was partitioned or sub-divided. This, of course, would be
only if the other co-owners had not consented to sell their undivided
share/shares to the plaintiff. Aside from the fact that this is the best
clinching evidence to show the intention of the two contracting parties to the
agreement dated 02.06.1983, Exhibit P1 in evidence, it shows that the
parties considered and dealt with their specific position in law with regard to
the entitlement of the original defendant agreeing to sell his undivided 1/4 th
share in the suit property and the plaintiff having the right to deal with co-
owners and to ask for partition.
(55) S 211/88 (J)
86. In fact designedly the plaintiff has not prayed for granting him
occupation of any part of the suit property as the premises agreed to be sold
to it is a dwelling house. The entry of the plaintiff in the suit premises would
only be by way of execution of the decree of specific performance for which
the plaintiff may be constrained to sue for partition of the share of the
original defendant. Hence under Clause 8 of the suit agreement, Exhibit P1
in evidence, the original defendant as the vendor is obliged, upon completion
of the sale, to put the plaintiff in possession by delivering vacant possession
of the parts of the suit property as are in his occupation and not to induct
any other person therein and the plaintiff would be entitled to enter upon
such part only subject to the consent of the co-owners since it is a dwelling
house. Such consent of the co-owners would not be required in an
immovable property which is not a dwelling house.
87. Consequently for the completion of the contract neither party
would need to wait for the completion of the sale by the other co-owners or
even the consent of the co-owners as a mandatory pre-requirement though
both the parties did consider it more affable to have the consent of the other
co-owners who could have joined in the conveyance. Consequently in view
of the Clauses 18 & 19 it cannot be stated that the payment of the balance
purchase price of Rs.73.75L was conditional upon the completion of sale by
all the co-owners as contended in para 1(b) of the written statement.
88. The plaintiff has sought to show that it had negotiations for sale
of the remaining undivided shares of other co-owners. It does not matter
whether the plaintiff obtained or did not obtain those shares. Consequently
the negotiations to obtain them also does not matter. The defendants,
wholly erroneously, appear to feel that because those negotiations had not
fructified into sale of the other undivided shares (except the share of one
Suresh Kilachand which is sold to the plaintiff), it would adversely affect the
plaintiff's right to obtain the share of the original defendant agreed by him
(56) S 211/88 (J)
under the suit agreement, Exhibit P-1 in evidence. The extensive cross-
examination on that score also is futile and requires to be ignored.
89. Consequently Issue No.2 becomes wholly inconsequential and
immaterial and is not even required to be answered to determine what relief
can be granted to the plaintiff in the suit though the other co-owners, except
Suresh Kilachand have indeed not completed the sale of their respective
shares. Hence issue No.2 is answered accordingly.
Issue No.3 Re. : Readiness & Willingness
90. The plaintiff has sought to show that he acted upon the
representations of the original defendant in dealing with the suit property.
The plaintiff has led evidence that its director had dealt with the certain
personnel of the Hyyatt Group Hotels. Of course, those dealings of the
plaintiff also cannot grant unto itself the right of specific performance if it is
otherwise unavailable to it in law. The cost and expense incurred by the
plaintiff to that end is also, therefore, not material to consider; only the
interpretation of the agreement and the legal right of the co-owner to sell his
undivided share and of the purchaser to purchase it is what matters.
91. The plaintiff would want to show that it was ready and willing
to perform its part of contract by such evidence. Though such evidence
would show that the plaintiff was optimistic of receiving 1/4 th share as also
the other shares of the other co-owners, the only readiness and willingness
required under the suit agreement is the payment of the balance price by the
plaintiff and ability to pay such price so soon as the original defendant would
offer to complete the contract as per its terms. The plaintiff has shown its
readiness and willingness to make the payment of the balance consideration
even if the other co-owners do not complete the sale of their respective
undivided shares which is a part of separate negotiations and separate
contracts.
(57) S 211/88 (J)
92. Counsel on behalf of the plaintiff stated to Court that though the
plaintiff would contend that it had paid the amounts mentioned in Clause
1(a) of the suit agreement as also the other payments from time to time
(which are stated to aggregate to about Rs.41L under the aforesaid receipts)
the plaintiff is ready and willing to make payments of the entire balance
consideration mentioned in Clause 1(c) of the suit agreement. This alone is
the extent of the readiness and willingness required in this case.
93. What is readiness and willingness of a person who applies for
specific performance has been considered in a number of cases. When the
plaintiff, who was a purchaser, paid advances to the bank upon the mortgage
created by the defendant from time to time after the offer of OTS (One Time
Settlement) of the defendant was refused by the bank, the plaintiff was held
to have shown his readiness and willingness [See. J. P. Builder Vs. A.
Ramdas Rao 2011 1 SCC 429]. The plaintiff must, of course, be
continuously ready and willing to perform his contract throughout the
relevant points of time. When the plaintiff was required to pay the balance
amount of consideration within 3 months of the date of obtaining the
confirmation letter from the bank, it was held that the plaintiff's readiness
and willingness cannot be questioned.
For the one time payment of the balance amount that has to be made
by the plaintiff, the plaintiff in this case is not even called upon to show his
readiness and willingness, which it has in fact done, because the plaintiff
always sought to complete the sale and the defendants never volunteered to
do so. The very defence of the defendants is a demonstration of their
conduct.
94. Consequently reliance upon the judgment, showing the means of
purchase as a requirement to be continuously shown, in the case of N. P.
Thirugnanam Vs. Dr. R. Jagan Mohan Rao (1995) 5 SCC 115 becomes
(58) S 211/88 (J)
wholly irrelevant. Similarly reliance upon the case of Inderchand Jain Vs.
Motilal (2009) 14 SCC 663 is made only to add to authorities without
considering their applicability. Of course, readiness and willingness must be
absolute and not conditional. It must be shown throughout not only at the
time of the judgment but such is not this case.
The plaintiff is, therefore, seen to be ready and willing to perform his
part of the contract in making the payment of balance consideration. Hence
Issue No.3 is answered in the affirmative.
Issue No.4 - Re.: Plaintiff 's entitlement to specific
performance
95. The plaintiff has offered an amount more than the balance
consideration under the contract. Counsel on its behalf stated that the
plaintiff is willing to pay from 10-20 times more than that amount
considering the inflation. Of course, the plaintiff is a developer and requires
to make a decent profit from his development and investment. He cannot be
made to pay the precise market price at such distance of time when the
original defendant did not and the present defendants would not comply
with their terms of the contract.
In the case of K. Prakash Vs. B. R. Sampath Kumar in Supreme
Court Civil Appeal No. 9047 of 2014 the consideration of Rs.16 lacs was
raised to Rs.25 lacs uncorelated to the market price whilst granting specific
performance because of the rise in price. However the Court observed in
paras 19 & 20 of the judgment that the rise in price is a normal change in
circumstances and, therefore, on that ground a decree for specific
performance cannot be reversed. The Court can, while granting specific
performance, impose such condition which may to some extent compensate
the defendant, owner of the property as in the case of Nirmala Anand Vs.
Advent Corpn (P) Ltd. 2002 8 SCC 146. However it has been observed in
the case of Nirmala Anand (supra) that the Court must bear in mind who
was the defaulting party and who took undue advantage over the other
(59) S 211/88 (J)
whilst balancing equities alongside the hardship to the defendant by
directing specific performance. The Court held that the totality of the
circumstances must be seen.
In this case the plaintiff at all times wanted to complete the sale. The
original defendant did not or could not complete it. After his death the
present defendants refused to complete it.
96. The plaintiff, on the other hand, acted upon the agreement. It
dealt with certain foreign parties for constructing a certain hotel. Of course,
that would augur to its benefit. It obtained partition of another 1/4 th share.
It offered not to continue to wait until the other co-owners agreed to transfer
their share to the plaintiff. It accepted that it would obtain only the original
defendant's 1/4th share and then go through the rigors of partitioning the
property and further negotiating with the other co-owners. The defendants
remained stoically silent, without more. Such a plaintiff must in law be
entitled to the fruits of the contract which would mean specific performance.
Such a plaintiff does not even deserve to be penalized at all for offering to
comply with the agreement and even offering a leeway to the other party by
giving up his right and not making the balance payment if he did not receive
the consent or the completion of the sale by the other co-owners. It is only
because of the extreme inflation in real estate values that the jurisprudence
of making good some loss caused by the defaulting party to the defaulting
party itself has come to be. Such judge-made law is, therefore, within the
aforesaid parameters.
97. In the case of Satya Jain Vs. Anis Ahmed Rushdie, (2013) 8
SCC 131 and 147 the market price was offered and hence directed to be
paid at the time of the grant of specific performance. The Court considered
the "galloping value of real estate". The plaintiff showed "live interest".
Though the plaintiffs were observed not to be in anyway responsible for the
delay, the Court exercised the discretion to direct specific performance based
(60) S 211/88 (J)
upon the facts of that case and on the principle of fairness and
reasonableness by directing the market price to be paid despite observing in
para 40 of the judgment that the efflux of time and escalation of price of
property was by itself not a valid ground to deny the relief of specific
performance as was consistently held by the Supreme Court earlier. Hence
in that case as the plaintiff offered the market price; specific performance
was directed upon paying such price.
98. In the case of Zarina Siddiqui Vs. A. Ramalingam (2015) 1
SCC 705 upon exercising discretion to grant specific performance the price
of the contract + Rs.15 lacs by way of price rise by way of escalation of time
came to be granted following the case of Satya Jain (supra). In that case
Rooke's case of the King's Bench came to be cited with regard to the
discretion in para 25 thus:
25. The King's Bench in Rooke's case said:
"........... discretion is a science not to act arbitrarily according to
men's will and private affection; so the discretion which is to be
exercised here, is to be governed by the rules of law and equity, which
are to oppose, but each in its turn to be subservient to the other. This
discretion in some cases follows the law implicitly; in others assists it,
and advances the remedy; in others, again, it relieves against the
abuse, or allays the rigour of it; but in no case does it contradict or
overturn the grounds and principles thereof, as has been sometimes
ignorantly imputed to this Court. That is a discretionary power,
which neither this, nor any other court, not even the highest, acting in
a judicial capacity, is by the Constitution entrusted with."
The Court specifically considered what was fair and reasonable for
both the plaintiff and the defendant in para 27 and concluded upon
considering the case of Nirmala Anand (supra) in para 28 that the
additional value would not be the market value of the property, and the
Court must bear in mind who was the defaulting party.
Further the Court held upon considering the case of K. Prakash Vs. B.
R. Sampath Kumar, (2015) 1 SCC 597 in para 30 of the judgment that the
Court should not exercise discretion on extraneous or sympathetic
(61) S 211/88 (J)
considerations but must do what is lawful to do.
Hence the normal price rise that could be noticed could not be entirely
granted. That would, in fact, put a premium on default. All parties,
knowing the history of escalation of price, would default much as the
defendants have for decades and then obtain for themselves the market
value then prevailing. It would be complete travesty of justice if the Court
surrendered to that extent. In view, therefore, in para 36 of the judgment,
the Supreme Court observed that time and again the Court had held that
efflux of time and escalation of price themselves were not valid grounds to
deny the relief of specific performance, phenomenal increase in price
notwithstanding. The discretion of the Court is, therefore, to be exercised as
held in the early case of Prakash Chandra Vs. Angadlal (1979) 4 SCC 393.
The rule, therefore, is the grant of specific performance once the plaintiff
shows a clear case of he having performed or being ready and willing to
perform is reciprocal promise under the contract. In that case upon seeing
the conduct of both the parties the Court held that the plaintiff's conduct had
not been such as to disentitle him to the reliefs of specific performance. [See
also Mahendra Mahadeo Deshbratar Vs. Kailash Bhauraoji
Chandankhede 2014(4) Bom.C.R. 877].
99. The plaintiff is rather generous. The Court would not permit
itself to offer any more price to the defendants who have resisted the sale
and defended the suit on the aforesaid frivolous grounds. Though it is
contended on behalf of defendant Nos.1(D) to 1(E) that the Court must
consider the comparative hardship which was not "forseen" by the
defendants, no such hardship is shown. No evidence of hardship is led. In
fact the probate petition filed by the defendants are who are the executors
under the will of the deceased original defendant showed the 1/4th share of
the deceased in the suit property valued at a mere Rs.40,543/- on the
premise that it was self occupied. The amount offered by the plaintiff far
exceeds the real and accepted valuation and would cause no hardship to
(62) S 211/88 (J)
accept it.
100. Consequently reliance upon the judgment where specific
performance was not granted on wholly distinguishable facts of those cases
[See K. S. Vidyanadam Vs. Vairavan, (1997) 3 SCC 1] or the case of
comparative hardship to the defendants (who are completely in default) [See
Janak Dulari Devi Vs. Kapildeo Rai (2011) 6 SCC 555] where the vendor
had to deliver the registered document only upon the receipt of entire
consideration, need not be considered further.
101. The plaintiff does not seek to strictly enforce Clause 1(c) of the
agreement dated 02.06.1983. The plaintiff is prepared to make payment of
the balance consideration as it had offered at the time of the filing of the
suit. Even that is resisted by the defendant Nos.1(B), 1(D) and 1(E). In the
defendants have contended, rather astoundingly that the plaintiff cannot be
ready and willing to pay the balance price and demand completion of
contract because the other co-owners have not completed the sale of their
individual shares !
102. It is argued on behalf of the defendant Nos. 1(B) and 1(D) to
1(E) that the offer of the plaintiff would tantamount to a waiver of its right
and privilege under the contract. It is contended that the payment of the
balance consideration against the completion of sale is the most important
essential requirement and must be accepted only strictly in accordance with
Clause 1(c). The defendant Nos.1(B), 1(D) & 1(E) claim that the plaintiff
cannot "waive" the requirement of making payment against all the co-owners
completing the sale under their respective contracts. It is contended on
behalf of defendant No.1(B) that the doctrine of waiver has no application to
a contingency under Section 32 of the Contract Act. Since all the co-owners
have not completed the sale, the defendants contend, that the plaintiff dare
not make payment or offer payment of balance consideration! These
(63) S 211/88 (J)
defendants contend that the plaintiff's offer of the balance amount, though
the other co-owners have not completed their sale under their separate
contracts, would mean that the plaintiff has waived the requirement of such
completion of sale. This contention is based upon the fundamental error
with regard to the law of waiver. Initially what is waiver of a right must be
understood. The dictionary meaning of waiver is "an act of not insisting on a
right or claim" (See pocket Oxford English Dictionary, Indian Edition,
Page 1038).
103. The plaintiff has not claimed waiver in the plaint. All that the
plaintiff has done at the hearing of the suit is to state that even though the
time has not become ripe for the payment of the balance consideration and
the plaintiff could have avoided the payment altogether and asked for the
specific performance, the plaintiff has sued for specific performance and
hence must show his readiness and willingness to perform the contract. The
plaintiff has not shown its readiness and willingness to offer the amount only
upon the defendants obtaining the completion of the sale by the other co-
owners. The plaintiff, of course, cannot so insist. The plaintiff may or may
not apply for specific performance of its contract. The plaintiff would not be
able to be rigid about the performance of its own obligation if it sues for
specific performance. The plaintiff justifiably and understandably does not
demand strict compliance of Clause 1(c) of the agreement whilst demanding
specific performance. The plaintiff instead has offered to make the payment
of the balance consideration though under the contract, the plaintiff could
have resisted it. The plaintiff has, therefore, only given up its right to insist
upon Clause 1(c) of the contract.
104. The plaintiff has, in fact, sought to dispense with the
requirement of making payment only against the act of the other co-owners
under Section 63 of the Contract Act, which runs thus:
63. Promisee may dispense with or remit performance of
promise.- Every promisee may dispense with or remit, wholly or in
(64) S 211/88 (J)
part, the performance of the promise made to him, or may extend
the time for such performance, or may accept instead of it any
satisfaction which he thinks fit.
105. In the case of Jagad Bandhu Chatterjee Vs. Smt. Nilima Rani,
1969(3) SCC 445 it has been held that neither consideration nor an
agreement is even required to constitute waiver.
In the case of Swiss Bank Corporation Vs. Jai Hind Oil Mills Co.,
1993 BLR 412 it has been held that waiver can be unilateral and does not
entail meeting of minds even with regard to fraud.
106. The plaintiff 's offer is much like the plaintiff giving up a
particular relief prayed by the plaintiff. It is well within the rights of the
plaintiff to give up a part of his/her/its claim e.g. in a suit for specific
performance and for damages, the plaintiff may give up a claim of one or the
other of the reliefs. This would not tantamount to waiver of the claim. Such
giving up of the rights is legitimate and allowable. That is what the plaintiff
has done. It is the defendants who claim that that is waiver and that it must
be pleaded and proved. The contention is frivolous as also mischievous.
107. Mr. Khandeparkar went further to argue that such waiver must
be specifically pleaded and proved before it is accepted by the Court. Such
an argument is made upon judge-made law cited by Mr. Khandeparkar. Such
an argument could be made only if the entire judgment is not read, analysed
and appreciated as shall be seen presently. The law cited is incomplete and
cases of waiver must be seen from the earliest times.
108. The waiver by a purchaser in a specific performance suit has
been considered since the earliest case of Hawksley Vs. Outram, (1892) 2
Ch 359. In that case the vendors agreed to sell their business as a going
concern to the purchaser for a specified amount. The agreement involved a
restraint from carrying on a business in a particular name within a specified
(65) S 211/88 (J)
space. In an action for specific performance it was held that the clause was a
restraint of trade and accordingly not binding upon the vendor. The
purchaser offered to waive the clause relating to restraint of trade and
demanded specific performance upon such waiver. It was argued that the
agreement must be read as if that clause was absent. It was observed that
clause was for the benefit of the purchaser and if the purchaser waived the
clause the vendor had nothing to complain of. The clause was separable
from the other parts of the contract and hence it was held that the sale could
be effectuated.
109. The case of Hawksley (supra) was sought to be relied upon in
the case of Kirpal Das Jivraj Mal Vs. Manager, Encumbered Estates, AIR
1936 Sind 26 which has also been considered earlier in context of
contingent contracts. That being held to be not a case of a contingent
contract and which could not have been enforced at all because only the land
adjoining the purchaser's land was agreed to be sold but which could not be
expected to come to the share of the vendor who was one of the co-owners
of the land to be sold, it was held that that the appellants could not waive
any of the conditions in their favour.
It would follow that if the contract was not contingent but only one of
the terms of the contract was to be performed upon the happening of the
event (as in this case) the purchaser can himself waive the condition in his
favour. Somehow, and it not explained how, but defendant Nos.1(D) and
1(E) would contend that it is not for the benefit of the plaintiff. It would not
be understood for whose benefit it would be. Perhaps it would only be for
the defendants to resist the sale entirely erroneously.
110. In the case of Dalsukh M. Pancholi Vs. The Guarantee Life
and Employment Insurance Co. Ltd. AIR (34) 1947 Privy Council 182
which has also been considered above, and which was held to be a
conditional contract since it was to be performed only subject to the Court's
(66) S 211/88 (J)
approval, the waiver by the purchaser was not allowed.
Since the suit contract is also not a conditional contract and not
subject to any condition it follows as a matter of corollary that one of the
required covenants of the contract can be waived by the plaintiff in whose
favour the condition is viz. that he would not be bound to make payment
until all the co-owners completed their sale in his favour.
111. The case of Dalsukh (supra) has been followed in the case of Dr.
Jiwan Lal Vs. Brij Mohan Mehra (1972) 2 SCC 757. That was a case on all
fours the facts of this case. The vendor and the purchaser entered into an
agreement for the sale of the property. The earnest amount was paid. The
balance was payable at the time of the sale deed. The premises was
occupied by the Income Tax Authority. It was agreed by the vendor and the
purchaser that the sale deed shall be executed within three months from the
date on which the premises was vacated. Clause 6 of the agreement
provided that if the premises was not vacated or were requisitioned by the
government, the vendor shall refund the earnest money with interest. The
premises were requisitioned. The vendor refused to execute the sale deed.
The purchaser demanded specific performance and sought to waive the
requirement of Clause 6 and his entitlement to the refund of earnest money.
Referring to the case of Dalsukh (supra) in para 11 of the judgment, the
Court observed that the Privy Council held that Clause 4 of that agreement
"was not exclusively for the benefit of the purchaser" and hence could not be
waived by him and the entire contract fell through. That was because the
property agreed to be sold in the case of Dalsukh (supra) was attached and
was bound to be sold by public auction and hence the parties had required
the specific condition that it would be subject to the approval of the Court.
That approval would enure for the benefit of both the parties. One party
unilaterally could not waive the benefit. Hence the waiver was not allowed.
But in the case of Jiwan Lal (supra) the Court considered a case quite
the opposite of the case of Dalsukh (supra) and observed at the end of para
(67) S 211/88 (J)
11 thus:
It would follow that where a stipulation is for the exclusive
benefit of one contracting party and does not create liabilities against
him, he can waive it, unilaterally. (See also Hawksley v. Outram
(1892) 3 Ch 359 at 376 and Morrell v. Studd and Millington
(1913) 2 Ch 648 at 660).
112. In the case of Waman Shriniwas Kini Vs. Ratilal Bhagwandas
and Co., AIR 1959 SC 689 the landlord allowed a tenant to keep a sub-
tenant. That would be illegal. It was held that the waiver could not be
pleaded to enforce an illegality but waiver was explained in para 13 of the
judgment thus:
Waiver is the abandonment of a right which normally everybody is at
liberty to waive. A waiver is nothing unless it amounts to a release.
It signifies nothing more than an intention not to insist upon the
right. It may be deduced from acquiescence or may be implied.
113. There is no provision in any of these cases where a party claims
to waive any right or benefit exclusively in favour of such party to plead the
waiver. Such waiver can be made at any time of the suit. In fact it is
common practice that certain part of the relief is not pressed. That would
not tantamount to waiver. No party has to plead such waiver. The plaintiff
has not claimed waiver in this case in his pleading. However it is argued on
behalf of the plaintiff, that from the very nature of the agreement and the
plaintiff's claim of specific performance that the plaintiff does not press for
what is in his favour under Clause 1(c) of the agreement and is prepared to
make payment nevertheless it would be waiver. This would, at best,
tantamount to implied waiver of Clause 1(c) of the agreement. Implied
waiver is contemplated in the case of Waman Shriniwas Kini (supra) as can
be seen from the extracted portion of that judgment above.
114. Yet Mr. Khandeparkar would argue that the plaintiff's case of
specific performance and his offer of payment of consideration which is a
sine qua non to specific performance would be waiver and such being the
(68) S 211/88 (J)
case it should have been pleaded and proved. The question of proof does
not arise and that aspect would determine the question of pleading. All that
the plaintiff has to do is not to insist upon the fact in his favour that he
cannot be called upon to make payment of the balance price. The plaintiff
has justifiably not done so. Hence the plaintiff is entitled to demand specific
performance. There is nothing for the plaintiff to prove. What need not be
proved need not be pleaded. Hence there is nothing for the plaintiff to plead
as waiver of his right. The plaintiff has rightly not pleaded any such waiver.
115. Mr. Khandeparkar relied upon the judgment upon a complete
misconception of the law stated therein to contend that the waiver must be
pleaded and proved. In the case of M/s. Motilal Padampat Sugar Mills Co.
Ltd. Vs. State of Uttar Pradesh, (1979) SCC 409 relied upon by Mr.
Khandeparkar it has indeed been shown in para 5 of the judgment that the
plea of waiver could not be allowed to be raised unless it was pleaded. It has
been held that the waiver was the question of fact and hence was required to
be pleaded and proved.
That was a case of waiver upon a contingency. The agreement was to
be tested without waiver. That was the case of the import under which an
exemption was granted from payment of import duty for three years. The
import rate was reduced from 7% to 3.5%. The importer was allowed the
reduced rate of import. The importer unknowingly accepted such rate.
When the importer realized that he would be entitled to exemption, he
challenged the levy made by the government. The government contended
that the importer had waived the requirement of exemption by paying
import duty albeit at a lesser rate.
Hence it is seen that the case of waiver made by a party which is
required to be pleaded and proved is the waiver of another party. Just as
when a party claims that the opposite party is bound by the principle of
promissory estoppel, he must plead and prove such a case, similarly when a
party claims that the opposite party has waived a right in that party's favour,
(69) S 211/88 (J)
he must naturally plead it as a question of fact and prove it to avail of the
benefit waived by the other party. Had the plaintiff contended that the
original defendant had waived any of his rights in the contract so that the
plaintiff need not perform its reciprocal promise and obligation to the
original defendant, it would certainly be required to plead and prove the
waiver. No party is required to plead or prove the waiver by itself, himself or
herself. A party may not press some of the rights under the contract. Such
non-pressing does not tantamount to waiver such as is contemplated in the
legal jurisprudence on waiver. In this case itself the original defendant as the
vendor was required to deliver the documents of title to the plaintiff as the
purchaser within 4 days of the execution of the suit agreement under Clause
4 thereof. The title deeds are not shown to have been delivered. The
plaintiff has not pressed that obligation of the original defendant. The
plaintiff has waived that requirement. The plaintiff is not required to plead
and prove that he has not insisted upon the delivery of the documents of the
title by the original defendant. Similarly in this case the original defendant
was to make out the marketable title free from all encumbrances under
Clause 5 of the suit agreement. If the title certificate is not issued by his
solicitor to the plaintiff, the plaintiff may yet be ready and willing to pay him
the balance purchase price and would then be entitled to specific
performance of the contract. Such allowance would not be waiver
contemplated in law which is required to be pleaded or proved. This concept
can be better understood by an illustration in the reverse. If the original
defendant, or even the present defendants, demand specific performance of
the contract by calling upon the plaintiff to make the balance consideration
whilst offering to execute the sale deed upon performing the other allied
obligations of the original defendant under the contract, the plaintiff may
resist the payment lawfully because all the other co-owners have not
completed their sale separately and independently of this contract. If the
plaintiff however seeks to enforce the contract, the plaintiff can only call
upon the defendants to execute the sale deed. This could be done only upon
(70) S 211/88 (J)
the offer of the balance consideration. Hence, the plaintiff having sued for
specific performance, the plaintiff has offered payment of the balance
consideration. The plaintiff, therefore, does not press for non payment even
though the other co-owners have not completed their sale.
Mr. Khandeparkar has completely misdirected himself is in relying
upon what is held in the judgment without considering the facts upon which
the law is laid down.
This case is diametrically opposite of the case of M/s. Motilal (supra).
The plaintiff who can enforce and who can demand the enforcement of a
clause in the contract has sought not to press it. The case is not of waiver at
all. It has not to be pleaded because there is nothing to prove. It has only
been stated to Court that that Clause 1(c) would not be enforced despite
being in favour of the plaintiff.
116. Similarly in the case of M. V. Shankar Bhat Vs. Claude Pinto,
(2003) 4 SCC 86 which has also been considered earlier and which was
subject to ratification by others and hence was held conditional upon the
ratification, it was held in para 37 of the judgment referring to the case of
Jiwan Lal (supra) that the waiver of the condition in that case was for the
benefit of the purchaser and hence was allowed. But in the case of M. V.
Shankar Bhat (supra) because it was not only for the benefit of the
purchaser, waiver of one of the clauses of the contingent contract was not
allowed.
117. Upon an analysis of the judgment in the case of Jiwan Lal
(supra) and in the case of M. V. Shankar (supra) it can be stated to be
settled law that when a clause in the contract is in favour of one party, that
party can simplicitor waive the requirement under the contract. There is no
requirement of pleading or proof of such implied waiver. All that the party,
in whose favour the particular clause is, would do is not to enforce it and
give up its claim and accept satisfaction of a part under Section 63 of the
(71) S 211/88 (J)
Contract Act.
118. Mr. Khandeparkar would further argue that the waiver would
give the plaintiff an unfair advantage over the defendants. It is not
understood how enforcement of an enforceable contract would tantamount
to advantage; the only advantage would be the decree passed in such party's
favour!
119. A good part of the evidence deals with the probate of the will of
the original defendant and the rights, duties and obligations of the executor
of the original defendant who are the defendants herein. It is not
understood how that aspect would matter to the legal rights of the parties
under the suit agreement, except for the fact that the value of the suit
property is mentioned therein as the share of the original defendant.
120. Seen from all angles, the case of the plaintiff is clear; the
plaintiff must pay the balance price and any further amount directed by the
Court upon escalation of the real estate value and obtain the sale deed in its
favour. Thus the plaintiff is entitled to specific performance of the agreement
dated 02.06.1983, Exhibit P1 in evidence. Hence Issue No.4 is answered in
the affirmative.
Issue Nos.5, 6 & 7 Re: Compensation refund and damages
121. The plaintiff has given up all these reliefs claimed by the
plaintiff in the suit. (The defendants have, mercifully, not argued that the
plaintiff cannot give up these reliefs and that such giving up would
tantamount to waiver of the reliefs claimed.) The plaintiff has not pressed
these issues. Hence they are not required to be answered.
122. Hence the following order :
(a) Upon the offer of the plaintiff to pay 10-20 times the amount
(72) S 211/88 (J)
agreed upon by the parties in the suit agreement dated 02.06.1983
which is accepted by the Court and disregarding the part payments
made, the plaintiff shall pay the defendant Nos. 1(B), 1(D) & 1(E)
representing the estate of the deceased original defendant Rs.14.75
Crores against the defendant Nos.1(B), 1(D) & 1(E) executing the
necessary sale deed in favour of the plaintiff or its nominee within 4
weeks from today. Specific performance of the suit agreement is
granted accordingly.
(b) Defendant Nos.1(B), 1(D) & 1(E) shall pay costs of this suit
fixed at Rs.2 lacs by each of them - totalling Rs.4 lacs - to the plaintiff.
(c) The Suit is disposed of accordingly.
ig (ROSHAN DALVI J.)
(73) S 211/88 (J)
C E R T I F I C A T E
"I certify that this Order uploaded is a true and correct copy
of original signed Order."
