Bombay High Court
Jay Kirtikumar Ashani vs Kewalram Khetpal on 22 December, 2023
2023:BHC-OS:15242-DB
Digitally signed
by MULEY
SHUBHAM
MULEY PRAVINRAO
SHUBHAM Date: 1 902-COMAP- 31763-23-J.doc
PRAVINRAO 2023.12.22
17:22:32
+0530
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMMERCIAL APPEAL (L) NO.31763 OF 2023
IN
INTERIM APPLICATION NO.3187 OF 2022
IN
COMMERCIAL SUIT NO.161 OF 2022
Jay Kirtikumar Ashani
Aged 24 years, Occupation: Business,
Residing at 501, Veena Sahil Villa, Shanker
Lane, Near Sreenath Tower, Kandivali
(West), Mumbai - 400 067 : Appellant/
Orig. Plaintiff
V/s.
1. Kewalram Khetpal
Aged 83 years, Occupation: Business,
having his principal place of business
at 21, B-2104, Chaitanya Tower,
Appasaheb Marathe Marg, Prabhadevi,
Mumbai - 400 025 and having his
current office address at United A/c
Supply, 9920 Westernpark Suite A,
Houston, Texas 77063 United States
of America
Shubham 1 of 33
::: Uploaded on - 22/12/2023 ::: Downloaded on - 23/12/2023 07:29:50 :::
2 902-COMAP- 31763-23-J.doc
2. Rajesh Chimanlal Ashani
Aged 64 years, Occupation: Business,
Residing at 501, Veena Sahil Villa,
Shanker Lane, Near Sreenath Tower,
Kandivali (West), Mumbai - 400 067 : Respondents/
Orig. Defendants
ALONG WITH
INTERIM APPLICATION (L) NO. 32351 OF 2023
IN
COMMERCIAL APPEAL (L) NO. 31763 OF 2023
Jay Kirtikumar Ashani
Aged 26 years, Occupation: Business,
Residing at 501, Veena Sahil Villa, Shanker
Lane, Near Sreenath Tower, Kandivali
(West), Mumbai - 400 067 : Applicant/
Appellant
In the matter of :
Jay Kirtikumar Ashani
Aged 26 years, Occupation: Business,
Residing at 501, Veena Sahil Villa, Shanker
Lane, Near Sreenath Tower, Kandivali
(West), Mumbai - 400 067 : Appellant/
Orig. Plaintiff
V/s.
1. Kewalram Khetpal
Aged 83 years, Occupation: Business,
Shubham 2 of 33
::: Uploaded on - 22/12/2023 ::: Downloaded on - 23/12/2023 07:29:50 :::
3 902-COMAP- 31763-23-J.doc
having his principal place of business
at 21, B-2104, Chaitanya Tower,
Appasaheb Marathe Marg, Prabhadevi,
Mumbai - 400 025 and having his
current office address at United A/c
Supply, 9920 Westernpark Suite A,
Houston, Texas 77063 United States
of America
2. Rajesh Chimanlal Ashani
Aged 64 years, Occupation: Business,
Residing at 501, Veena Sahil Villa,
Shanker Lane, Near Sreenath Tower,
Kandivali (West), Mumbai - 400 067 : Respondents/
Orig. Defendants
-----
Mr. Chetan Kapadia, Senior Advocate a/w Mr. Darshan Mehta
and Mr. Aditya Mapara i/by Dhurve Liladhar and Co. for the
Appellant/Applicant.
Mr. Tushad Cooper, Senior Advocate a/w Mr. Tushar Gujjar and
Mr. Deepak Singh i/by SL Partners for Respondent No.1.
-----
CORAM : DEVENDRA KUMAR UPADHYAYA, CJ. &
ARIF S. DOCTOR, J.
RESERVED ON : 04th DECEMBER, 2023
PRONOUNCED ON : 22nd DECEMBER, 2023
Shubham 3 of 33
::: Uploaded on - 22/12/2023 ::: Downloaded on - 23/12/2023 07:29:50 :::
4 902-COMAP- 31763-23-J.doc
JUDGMENT:
- (PER ARIF S. DOCTOR, J.)
1. The captioned Appeal is not board by consent of
Learned Senior Counsel for the parties, the same is taken on
board and heard finally.
2. The Appeal impugns an order dated 25th October
2023 by which the Appellant's Application for interim relief
came to be rejected.
3. Before adverting to the rival contentions, it is useful
to set out the following brief facts:-
i. The Appellant (Plaintiff in the Suit) has filed the
captioned Suit inter alia seeking specific performance
of a letter dated 12th August 2021 stated to be a
Letter of Intent for the sale of an office premises being
Office Premises No.96, Maker Maxity, 3 - North
Avenue BKC Mumbai - 400051, Area 5088 sq.ft.
alongwith two car parking spaces ("office premises").
It is not in dispute that the letter dated 12 th August
2021 was addressed by Respondent No. 2 as a broker
Shubham 4 of 33
5 902-COMAP- 31763-23-J.doc
to Respondent No.1 as the owner of the office
premises and the same was signed by both
Respondent No. 1 and 2 only.
ii. Simply put it is a case of the Appellant that the Letter
dated 12th August 2021 was a concluded contract for
sale of the said office premises, whereas it is the
contention of Respondent No.1 that the same was
merely a mandate given by Respondent No.1 to
Respondent No.2 as a broker to find prospective
purchasers for the sale of the said office premises.
The Letter dated 12th August 2021 is thus for
convenience referred to as LOI/letter dated 12th
August.
iii. Respondent No. 1 through his advocate by a letter
dated 16th October 2021 informed the advocate of the
Appellant that the said letter dated 12 th August was
merely an expression of interest and neither a binding
contract nor an agreement to enter into an
agreement. It was thus that the Appellant filed the
Shubham 5 of 33
6 902-COMAP- 31763-23-J.doc
Suit and has inter alia sought specific performance of
the LOI/letter dated12th August.
Submissions of Mr. Kapadia on behalf of the Appellant.
4. Mr. Kapadia, Learned Senior Counsel appearing on
behalf of the Appellant at the outset invited our attention to
LOI/ letter dated 12th August and submitted that the same
specifically provided in the subject for "sale of office premises".
He then pointed out that the same contained all the essential
terms necessary for sale of an immovable property, namely
price, description of the property etc. He pointed out that the
same was counter signed by Respondent No. 1 indicating
Respondent No. 1's unconditional acceptance of the terms
thereof. Basis this he submitted that there could be no manner
of doubt that Respondent No.1 had agreed to sell the said
Office Premises on the terms and conditions that were set out
in the LOI/letter dated 12th August . He pointed out that the
execution of a formal Agreement for Sale was thus a mere
formality which was to be entered into basis the terms already
agreed. He pointed out that the other obligations set out in
Shubham 6 of 33
7 902-COMAP- 31763-23-J.doc
the LOI/letter dated 12th August were normal conditions to be
performed in any agreement for sale of property and did not
therefore affect the fact that a concluded contract containing
all the essential terms and conditions had infact been arrived
at.
5. Mr. Kapadia then invited our attention to the
Impugned Order and pointed out therefrom that the Learned
Single Judge had rejected the grant of interim relief to the
Appellant only on two grounds (i) that the Appellant-Plaintiff
was never in the picture; and (ii) that the LOI/letter dated 12 th
August did not provide for the manner and who was required
to comply with the following:-
(i) Giving public notice.
(ii) NOC from the Builder
(iii) Search Report.
(iv) Indemnity Bond
(v) Power of Attorney
He submitted that it is only on the basis of these observations
that the interim relief had been denied to the Appellant.
Shubham 7 of 33
8 902-COMAP- 31763-23-J.doc
6. In dealing with the first contention, Mr. Kapadia
pointed out that the LOI/letter dated 12th August was executed
after due deliberation. He first invited our attention to the
LOI/letter dated 12th August which provided that retention
amount would be Rs. 2 crores. He submitted that the
LOI/letter dated 12th August was then sent to the Appellant
who was in the United States of America and the same after
negotiation was reduced to Rs.1 crore inter alia since the
Appellant was not in possession of the original title deeds of
the office premises. He submitted that after the terms were
orally discussed and agreed, an amount of twenty-five lakhs
was infact remitted by the Appellant to the Respondent No. 1
on 13th August 2021. He pointed that since Respondent No. 1
was in the United States, the LOI/letter dated 12th August was
signed and sent back by Respondent No. 1 on the 13 th August
2021. He therefore submitted that it was not open for
Respondent No.1 to contend that the identity of the purchaser/
Appellant was never known to him.
7. Mr. Kapadia then submitted that Respondent No.1
after execution of the LOI/letter dated 12th August also did not
Shubham 8 of 33
9 902-COMAP- 31763-23-J.doc
until 16th October 2021, once either question or offer to refund
the amount of Rs.25,00,000/- to the Appellant. Mr. Kapadia
pointed out that Respondent No.1 had infact specifically
acknowledged the receipt of the amount of Rs.25,00,000/-
from the Appellant in the letter dated 13 th August 2021. He
thus submitted that the contention that Respondent No.1 was
not aware of the identity of the proposed purchaser, and hence
finding that the Appellant was never in the picture was,
palpably incorrect.
8. Mr. Kapadia invited our attention to the email/letter
dated 12th July 2021 and pointed out that the LOI/letter dated
12th August was entered into only after the opinion of a senior
lawyer was obtained on how to proceed with the same given
the fact that the original title deeds were lost/unavailable with
Respondent No. 1. It was basis the opinion of the senior lawyer
that the LOI/letter dated 12th August was entered into. Mr.
Kapadia submitted that from 13 th August 2021 upto 9th
September 2021 Respondent No. 1 infact proceeded to act
upon the LOI/letter dated 12 th August. In support of his
contention that the LOI/letter dated 12th August was acted
upon by Respondent No. 1, he placed reliance upon viz.
Shubham 9 of 33
10 902-COMAP- 31763-23-J.doc
(i) An email dated 31st August 2021 addressed by the
Respondent No.1 to one Pradeep Mehta which reads thus:
"proceed as quickly as possible and try to close the first property
of Bandra Kurla Complex asap"
(ii) An email from Mr. Pradeep Mehta to Respondent No. 2
dated 03rd September 2021 asking to review the draft of police
complaint to be filed for missing original title deeds.
(iii) an email from Mr. Pradeep Mehta to Respondent No. 2
dated 09th September 2021 containing list of documents to be
collected from one Mr. Dhiraj Madhani son of erstwhile
consultant of Respondent no. 1.
Basis the above, he submitted that there was no manner of
doubt that Respondent No. 1 had accepted the LOI/letter dated
12th August as being a concluded contract and had proceeded
to act in furtherance thereof.
9. Insofar as the Appellant's obligations under the
LOI/letter dated 12th August , Mr. Kapadia submitted that the
Appellant was required to make the balance payment under
Shubham 10 of 33
11 902-COMAP- 31763-23-J.doc
the LOI/letter dated 12th August within 90 days after
completion of the formalities mentioned in the LOI/ letter
dated 12th August. He submitted that there was no such
requirement/obligation in the LOI/ letter dated 12 th August for
the Appellant to pay the remaining/balance consideration
within 90 days of execution of the said LOI/ letter dated 12 th
August. Mr. Kapadia then submitted that the Appellant was
ready and willing to pay the remaining consideration to
Respondent No.1 in terms of the Additional Affidavit filed by
the Appellant. He then invited our attention to the home loan
application made by the Appellant which was dated 9th
September 2021 to point out that the Appellant was always
ready and willing to complete the transaction by making
payment of the balance consideration.
10. Mr. Kapadia then submitted that it was well settled
that merely because the parties made reference to preparation
of a formal agreement/contract the same would not by itself
mean that a binding concluded contract between the parties
had not been arrived at. In support of his contention that mere
reference to a future contract would not prevent a binding
Shubham 11 of 33
12 902-COMAP- 31763-23-J.doc
bargain between the parties being performed, he placed
reliance upon a judgement of the Hon'ble Supreme Court in
the case of Kollipara Sriramulyu (Dead) by His Legal
Representative Vs. Aswatha Narayana (Dead by His Legal
Representatives and others1. For the same proposition, he also
placed reliance upon a judgement of this Court in the case of
Yusuf Mohamed Lakdawala Vs. Sudhakar Kashinath Bokade2 .
He submitted that what had to be seen was whether the
parties were ad idem on the essential terms of the contract to
be entitled to specific performance. In support of his
contention, he placed reliance upon the following judgment of
the Hon'ble Supreme Court in the case of Trimex International
Fze Ltd. Dubai Vs. Vedanta Aluminium Ltd., India 3
11. Mr. kapadia then placed relaidnce upon Nathani
Supariwala Realty Pvt. Ltd. Vs. Dawoodbhoy Fazalbhoy
(Muslim) Educational Trust & Ors.4 to submit that once the
parties had agreed upon essential terms pursuant to
negotiation then execution of a formal contract/agreement
encapsulating those terms was mere a formality.
1 (1968) 3 SCR 387
2 2007 SCC OnLine BOM 939
3 (2010) 3 SCC 1
4 Unreported order dated 4th March, 2015 in Notice of Motion (L) No.490 of 2014.
Shubham 12 of 33
13 902-COMAP- 31763-23-J.doc
12. Mr. Kapadia then submitted that merely because the
identity of the Appellant was not specifically mentioned in the
LOI/ letter dated 12th August, the same would not by itself
render the LOI/ letter dated 12th August incapable of being
specifically performed. In support of his contention, he placed
reliance upon a judgement of Calcutta High Court in the case
of Gostho Behari Sirkar Vs. Surs' Estates Ltd. 5 and pointed out
therefrom that what was an essential part of the contract was
whether the identity of the purchaser was ascertainable, and it
was not necessary that the actual name of the purchaser be
mentioned unless the personality of the purchaser was an
essential part of the contract. He pointed out from the facts of
the said case that in that case the draft agreement for sale
itself was sent to solicitors after due negotiation between the
respective solicitors of both the parties. He pointed out that
the terms of the contract had been agreed upon by the
respective solicitors and thus the same were binding upon their
respective parties. Basis this he submitted that it was not open
for Respondent No. 1 to contend that the identity of the
5 AIR 1960 Calcutta 752
Shubham 13 of 33
14 902-COMAP- 31763-23-J.doc
purchaser/Appellant not being revealed was a factor which
would render the LOI/ letter dated 12th August incapable of
specific performance. He pointed out that in the facts of the
present case the identity of the Appellant was infact known to
13. Mr. Kapadia then on the aspect of readiness and
willingness placed reliance upon a judgement of this Court in
the case of Bank of india, Limited and others Vs. Jamsetji A. H.
Chinoy and Messrs Chinoy and Company6 to submit that in
order to show readiness and willingness it was not necessary
to produce money or to vouch a concluded scheme for
financing the transaction. What was necessary to be seen was
whether the party was ready, willing and capable of performing
its obligations under the contract. He pointed out that in facts
of the present case the Appellant had infact produced an
Application for Home Loan to the extent of Rs.15,00,00,000/-
and was thus more than capable of complying with his
obligations under the terms of the LOI/letter dated 12 th
August.
6 J.C. 1949 Indian Appeals L.R. 76
Shubham 14 of 33
15 902-COMAP- 31763-23-J.doc
14. Basis the above, he submitted that the Learned
Single Judge had erred in exercising the discretion vested in
him and failed to consider the prima facie case in favour of
Appellant. In support of his contention that such an order was
liable to be interfered with in Appeal, he placed reliance upon
the following judgements of this Court viz; (1) Dr. Prithi Paul
Singh Sethi and ors. Vs. M/s. Twist Spin Industries & ors. 7 (2)
World Sport Group (India) Private Limited Vs. The Board of
Control for Cricket in India8 and (3) Goldmines Telefilms Pvt.
Ltd. Vs. Reliance Big Entertainment Pvt. Ltd and ors.9
15. Basis the above Mr. Kapadia submitted that the
Appellant had made out strong prima facie case for interim
relief. He submitted that the balance of convenience was
entirely in favour of the Appellant and against Respondent
No.1. He thus submitted that the captioned Appeal ought to be
allowed.
7 Judgment dt.19/11/2009 in Appeal No.357 of 2009.
8 2011 SCC OnLine Bom 242
9 Judgment dt. 24/11/2014 in Appeal (L) No.458 of 2014
Shubham 15 of 33
16 902-COMAP- 31763-23-J.doc
Submissions of Mr. Cooper on behalf of Respondent No.1.
16. Mr. Cooper learned counsel appearing on behalf of
Respondent No.1 at the outset submitted that there was in fact
no concluded and/or enforceable contract entered into between
the Appellant and Respondent No.1. He submitted that the LOI/
letter dated 12th August was merely a mandate given to
Respondent No. 2 as a broker to negotiate and find a purchaser
for the said office premises. Mr. Cooper pointed out that the
Appellant was not even a signatory to the said LOI/ letter dated
12th August and thus could never seek specific performance in
terms thereof. He then submitted that the LOI/ letter dated 12 th
August on the very face of it, could never be construed to be a
concluded contract since the same specifically contemplated
various other steps which were required to be taken for the
culmination of the sale of the said office premises. He then
pointed out that the Appellant admittedly not having signed the
LOI/ letter dated 12th August nor having produced any Power
of Attorney/Authority given to Respondent No. 2 to negotiate
and/or conclude much less to enter into a concluded
Agreement on his behalf, could not absent that seek specific
performance of such agreement. To illustrate his submission,
Shubham 16 of 33
17 902-COMAP- 31763-23-J.doc
he pointed out that in a converse case scenario, had
Respondent No. 1 chosen to file a Suit basis the LOI/ letter
dated 12th August it would only be against Respondent No.2
and not the Appellant.
17. Mr. Cooper submitted that the Appellant was
disentitled to any relief since the Appellant was himself unclear
and had taken contrary and varying stands qua performance of
the Appellant's obligations under the LOI/ letter dated 12 th
August , even assuming the same was to be treated as a
concluded contract/agreement. In support of his contention, he
pointed out the following, viz.
i. In Plaint it was stated by the Appellant that he had
agreed that balance money shall be paid by the
Appellant within 90 days from the payment of token
money whereas in Affidavit filed by Appellant on 27 th
June 2022 it was stated that balance money was to be
paid only upon completion of obligations mentioned in
the LOI/ letter dated 12th August.
Shubham 17 of 33
18 902-COMAP- 31763-23-J.doc
ii. On one hand it is the case of the Appellant that the LOI/
letter dated 12th August was a concluded contract and
on the other hand it is stated in the Plaint by the
Appellant that LOI/ letter dated 12th August was merely
to record principal terms and conditions of their
understandings and based on the same a formal and
definitive agreement was to be entered into.
iii. The Appellant in the pleadings stated that it was
promised by Respondent No.1 that the Agreement for
Sale/Final Sale Deed was to be executed once
Respondent No.1 receives the original title deeds of the
office premise, however, in the letter dated 21 st
September 2021 from the Appellant to Respondent No.1
it was stated that balance consideration was to be paid
against the execution and registration of necessary
documents as per terms inter alia agreed between
them.
Basis the above he submitted that the case of the Appellant
was one which kept varying and/or changing the goal post.
Shubham 18 of 33
19 902-COMAP- 31763-23-J.doc
18. He then invited our attention to paragraph 51 of the
Plaint to submit that basis what was pleaded therein, there was
no manner of doubt that specific performance could never be
granted on the basis of the LOI/ letter dated 12 th August , since
the Appellant had specifically pleaded viz.
"51. It is submitted that, the LOI was executed between
the parties herein to record in principal terms and
conditions of their understanding on the basis of
which, formal sale and transfer of the Suit Premises
was to be contemplated by entering into definitive
agreements. The parties herein had agreed to execute
and register the Sale Deed on the basis of the terms
and conditions and understanding which are
mentioned in the LOI. Defendant No.1 had promised,
assured and agreed that the Agreement for Sale/Final
Sale Deed of the Suit Premises will be executed and
registered once Defendant No.1 receives the original
title deeds of the Suit Premises."
From the above he submitted that the Appellant had himself
accepted in the Plaint and specifically pleaded that (i) The LOI/
letter dated 12th August was executed between Respondent
Nos. 1 & 2 to record principal terms and conditions of sale and
(ii) Formal sale and transfer was to be contemplated by
entering into definitive agreements.
Shubham 19 of 33
20 902-COMAP- 31763-23-J.doc
19. Basis this, Mr. Cooper submitted that there was no
manner in which the Appellant could claim that the LOI/letter
dated 12th August was a concluded contract. Mr. Cooper
submitted that even the email dated 12 th August, 2021 sent by
Respondent No.2 to Respondent No.1 clearly stated that the
LOI/ letter dated 12th August was being sent for the approval
or conformation of Respondent No.1 and nothing more. He
pointed out that this email was required to be read in
context/conjunction with letter dated 21st September, 2021
addressed by the Appellant to Respondent No.1 which
categorically mentioned that the Appellant was ready with the
necessary finance and shall make payment of the balance
consideration against the execution of necessary documents.
Thus he submitted that at the time of execution of the LOI/
letter dated 12th August it can be seen that even according to
the Appellant a concluded contract had not been arrived at.
Hence, he submitted that even according to the Appellant the
balance consideration was to be payable only upon execution
and registration of the necessary documents and not 90 days
from completing obligations in the LOI/ letter dated 12 th
August.
Shubham 20 of 33
21 902-COMAP- 31763-23-J.doc
20. Mr. Cooper then submitted that the Appellant was
thus seeking, by making payment of only a token amount of
Rs.25 lakhs, to lockup the Appellant's property which according
to him was now valued in excess of Rs. 40,00,00,000/- (forty
crores).
21. Mr. Cooper placed reliance upon a judgment of the
Gujarat High Court in the case of Amarlal L. Daulatani Vs.
Hiralal Somanath Modi 10 to submit that the amount of Rs.
25,00,000/- was only a token amount and could at the highest
be treated only as an expression of interest and nothing more.
He submitted that receipt of such a token amount could never
be construed as being earnest money especially when the
consideration in the LOI/ letter dated 12 th August was almost
Rs. 20 crore. He thus submitted that receipt of such token
amount therefore could not be stated to be evidence and/or
acceptance of a concluded contract for the sale of immovable
property. Thus, he submitted that on the basis of such token
amount no right could be claimed by the Appellant in the said
office premises.
10 2014 SCC Online Guj 15481
Shubham 21 of 33
22 902-COMAP- 31763-23-J.doc
22. Mr. Cooper then submitted that the email dated 31 st
August, 2021 sent by Respondent No.1 to Respondent No.2 had
been completely misconstrued by the Appellant since the same
pertained only to the Appellant's desire to obtain the title
documents urgently and not as being one which was addressed
in furtherance of any concluded contract for the sale of the
office premises. Mr. Cooper pointed out that the Appellant was
nothing but a front for Respondent No. 2. He submitted that
the Appellant was the nephew of Respondent No.2 and was
only 24 years old who was without any independent source of
income. He then drew our attention to the home loan
application and pointed out that the same was completely
inchoate and bereft of any details and/or material particulars.
He submitted that the said Application was one in name only
and had not been sanctioned by the bank. Basis this he
submitted that the Appellant could not be said to be ready and
willing to perform or having the means to perform the
obligations under the LOI/ letter dated 12 th August even
assuming the same was a concluded contract. He thus
Shubham 22 of 33
23 902-COMAP- 31763-23-J.doc
reiterated that the Appellant was at the highest an agent of
Respondent No. 2 a fact never disclosed to Respondent No. 1.
23. Mr. Cooper then without prejudice to his contention
that there was no concluded contract between the parties,
invited our attention to the Section 215 of Indian Contract
Act,1872 to submit that the Appellant being the nephew of the
Respondent No.2 it was duty casted upon the Respondent No. 2
to disclose the said fact to Respondent No.1. failing which the
Respondent No.1 had a right to repudiate the said transaction.
24. Basis the above, he submitted that the Learned
Single Judge had correctly rejected the Appellant's application
for interim relief.
25. We have heard learned counsel and considered the
rival contentions as also the various judgements that have
been cited by them and after giving our careful consideration to
the same, we find that the present Appeal deserves to be
dismissed for the following reasons: -
Shubham 23 of 33
24 902-COMAP- 31763-23-J.doc
(i) The entire case of the Appellant is that the letter dated
12th August 2021 was infact a concluded contract. It is
thus necessary for us to examine as to whether in the
facts of the present case, the same could be construed
to be so. However, before doing so, it is useful to set
out the observations of the Hon'ble Supreme Court in
the case of South Eastern Coalfields Limited and Others
Vs. S. Kumar's Associates AKM (JV) 11 which deals with
when a Letter of Intent can be construed as a
concluded contract, viz.
"22. We would like to state the issue whether a
concluded contract had been arrived at inter se the
parties is in turn dependent on the terms and
conditions of the NIT, the LoI and the conduct of the
parties. The judicial views before us leave little doubt
over the proposition that an LoI merely indicates a
party's intention to enter into a contract with the other
party in future. No binding relationship between the
parties at this stage emerges and the totality of the
circumstances have to be considered in each case. It is
no doubt possible to construe a letter of intent as a
binding contract if such an intention is evident from its
terms. But then the intention to do so must be clear
and unambiguous as it takes a deviation from how
normally a letter of intent has to be understood. This
Court did consider in Dresser Rand S.A. case that there
are cases where a detailed contract is drawn up later on
account of anxiety to start work on an urgent basis. In
that case it was clearly stated that the contract will
come into force upon receipt of letter by the supplier,
and yet on an holistic analysis-it was held that the LoI
11 (2021) 9 SCC 166
Shubham 24 of 33
25 902-COMAP- 31763-23-J.doc
could not be interpreted as a work order."
Thus, the Hon'ble Supreme Court has specifically
observed that constructing a LOI as a binding contract
is infact a deviation from how such a document is
normally to be construed.
(ii) Keeping in mind the aforesaid observations, we are of
the prima facie view that the said letter dated 12 th
August 2021 cannot be construed as a concluded
contract for the following reasons, viz.
(a) First, and crucially, the letter dated 12 th August 2021,
nowhere used the nomenclature "Letter of Intent".
What we find on a careful reading of the said letter is
that the same infact specifically provides that an
amount of Rs.25,00,000/- would be payable " on
Signing of MOU or letter of Intent". Hence even
accepting that Rs.25,00,000/- was received from the
Appellant, the next step would have been for the
Appellant to have insisted upon Respondent No. 1 to
execute an MOU/LOI as specifically provided for in the
Shubham 25 of 33
26 902-COMAP- 31763-23-J.doc
letter dated 12th August, 2021. The Appellant
admittedly did not do this. A plain reading of the letter
dated 12th August 2021 shows that the same was sent
by Respondent No.2 to Respondent No.1 as his
client/seller and nothing more.
(b) Second , the said letter concludes by Respondent
No.2 stating as follows :-
"I hope you will find the above in order in case if
you want any further information or clarification
please call"
(c) Third, the said letter also specifically refers to the
amount of Rs.25,00,000/- as being "token amount"
and specifically provides that the amount of
Rs.17,83,00,000/- (being the balance amount after
deducting token money and retention money) would
be payable on the completion of the various
requirements/obligations set out in the said letter
without specifying upon whom such obligation was
cast or what the consequence would be in the event of
failure and/or inability to perform those obligations.
Shubham 26 of 33
27 902-COMAP- 31763-23-J.doc
Basis the above we have no hesitation in holding that
the said letter dated 12th August, 2021 prima facie
could never be construed as a concluded contract. The
same is plainly in the nature of a mandate given by
Respondent No. 1 to Respondent No. 2 as a broker and
nothing more. We thus find that the observations of
the Learned Single Judge, cannot be faulted with.
(iii) Additionally, we must note that from a plain reading of
Paragraph 51 of the Plaint (already extracted above),
it is clear that the Appellant himself had accepted that
the letter dated 12th August was executed for
recording the principal terms and conditions of the
sale of office premises and a formal sale of the office
premise was to be contemplated by entering into
definitive agreements.
(iv) We find that in the present case the amount of
Rs.25,00,000/- was paid clearly as a `token
amount/expression of interest'. Firstly, we must note
that the same was admittedly paid even prior to the
Shubham 27 of 33
28 902-COMAP- 31763-23-J.doc
letter dated 12th August, being counter signed by
Respondent No. 1 and secondly even if it is assumed
to have been paid pursuant to a telephonic discussion
between Respondent No.1 and Respondent No.2, that
by itself, would not make the letter dated 12th August ,
a concluded contract between the Appellant and
Respondent No. 1. As already noted, the said amount
at the very highest could be construed as being an
expression of interest on the part of the Appellant and
nothing more. We find that the judgement in the case
of Amarlal L. Daulatani (supra) is squarely applicable
to this case.
(v) We also find that the judgements in the case of
Kollipara Sriramulu (supra), Yusuf M. Lakdawala
(supra) and Bank of India Ltd. and Others (supra)
would not apply to the facts of the present case since
we have already held that prima facie the letter dated
12th August, 2021 was not a concluded contract. We
must note that infact the Hon'ble Supreme Court in
Shubham 28 of 33
29 902-COMAP- 31763-23-J.doc
the case of Kollipara Sriramulu (supra) itself has
expressly held as follows :-
"3. ........................... It is well established that a mere
reference to a future formal contract will not prevent
a binding bargain between the parties. The fact that
the parties refer to the preparation of an agreement
by which the terms agreed upon are to be put in a
more formal shape does not prevent the existence of
a binding contract. There are, however, cases where
the reference to a future contract is made in such
terms as to show that the parties did not intend to
be bound until a formal contract is signed. The
question depends upon the intention of the parties
and the special circumstances of each particular
case. ............"
(vi) Equally we find the judgement of the Calcutta High
Court in the case of Gostho Behari Sirkar (supra) upon
which strong reliance was placed by the Appellant to
submit that merely because the identity of the
purchaser was not known, the same would not render
an otherwise enforceable contract as being
unenforceable would also not be applicable in the
present facts. We find that in the case of Gostho
Behari Sirkar (supra) (i) specific performance was
sought for, in respect of an Agreement for Sale and
not a Letter of Intent and (ii) the finding arrived at
Shubham 29 of 33
30 902-COMAP- 31763-23-J.doc
was after trial and not at the interlocutory stage. We
must note here that there can be no doubt that a
Letter of Intent cannot be equated an Agreement for
Sale. Hence, we find that the said judgement would
not apply to the present case.
(vii) We also find that the judgements in the case of Dr.
Prithi Paul Singh Sethi and Others (supra), World
Sport Group (India) Private Limited (supra) and
Goldmines Telefilms Pvt. Ltd. (supra) relied upon by
the Appellant to submit that this Court would have
jurisdiction to entertain with an interlocutory order
would also be of no assistance to the Appellant since
in the facts of the present case we have found that
the discretion exercised by the Learned Single Judge
to be proper for the reasons already recorded.
(viii) Additionally, we must note another factor which also
weighed with was that on 12th August, 2021 when
Respondent No. 2 already had a purchaser for the said
Shubham 30 of 33
31 902-COMAP- 31763-23-J.doc
office premises i.e. the Appellant, what was the need
to have addressed the said letter and contend the
same was an LOI. Respondent No. 2 could simply
have informed Respondent No. 1 that he had a
purchaser who was willing to purchase the property on
the terms set out in the said letter. It is not
fathomable as to why Respondent No. 2 would have
not disclosed this at that stage.
(ix) Crucially, we must note that the letter dated 12th
August has admittedly not been executed by the
Appellant. Additionally we find that the Appellant has
not produced any Power of Attorney or authority, in
favour of Respondent No.2 to enter into any contract
on his behalf. Hence, we find on a totality of the
aforesaid facts that the Learned Single Judge has
correctly not granted interim relief by holding as
follows :-
"34. From the above discussion, I do not think that the
concluded contract is made out. These are my prima
facie observations. Ultimately trial will be conducted
on the basis of evidence adduced by the parties. For
this aspect, I am not going into the issue of readiness
Shubham 31 of 33
32 902-COMAP- 31763-23-J.doc
and willingness and defects in the valuation affidavit
filed by defendant no.1.
35. I do not think that case for confirmation of ad-interim
relief is made out. Hence, the Interim Application is
dismissed."
26. We are in complete agreement with the findings of
the Learned Single Judge.
27. The Appeal is accordingly dismissed. In view of
disposal of Appeal, the Interim Application does not survive and
is disposed of accordingly.
28. We however make it clear that the observations in
this order are only for the purpose of considering the present
Appeal and nothing else.
(ARIF S. DOCTOR, J.) (CHIEF JUSTICE)
AFTER PRONOUNCEMENT
29. After the order was pronounced, Mr. Kapadia sought
a stay of the operation of the order for period of four weeks. He
Shubham 32 of 33
33 902-COMAP- 31763-23-J.doc
pointed out that there has been a stay in force. None appeared
on behalf of the contesting Respondent to oppose this request.
Hence, the operation of this order shall remain stayed for a
period of four weeks from the date on which the order is
uploaded.
(ARIF S. DOCTOR, J.) (CHIEF JUSTICE)
Shubham 33 of 33
