TMI Blog1968 (3) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... different view as regards the effect of Ex. A-15. The evidence adduced on behalf of respondent No. 1 does not show that the drawing up of a written agreement was a pre-requisite to the coming into effect of the oral agreement. It is therefore not possible to accept the contention of The appellant that the oral agreement was ineffective in law because there is no execution of any formal written document. As regards the other point, it is true that there is no specific agreement with regard to the mode of payment but this does not necessarily make the agreement ineffective. The mere omission to settle the mode of payment does not affect the completeness of the contract because the vital terms of the contract like the price and area of the land and the time for completion of the sale were all fixed. We accordingly hold that Mr. Gokhale is unable to make good his argument on this aspect of the case. - Civil Appeals Nos. 427 and 428 of 1963 - - - Dated:- 4-3-1968 - RAMASWAMI, V., SHAH, J.C. and MITTER, G.K. JJ. H. R. Gokhale and K. Jayaram, for the appellant (in both the appeals). S. T. Desai, P. Parameshwara Rao and R. V. Pillai, for the respondents (in both the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the return of the plaint for presentation to the Subordinate Judge s Court. The plaint was therefore filed in the Sub-ordinate Judge s court, Vijayawada and numbered as O.S. 203 of 1954. While this litigation was going on the 1 st respondent who had built a Cinema theatre on the site was actively trying to purchase the site from the co-sharers. He filed O.S. No. 124 of 1953 in the Subordinate Judge s court alleging that all the partners of the firm except the appellant had entered into an oral agreement with him on July 6, 1952 to sell 137 shares in the site and that in pursuance of the agreement partners who owned 98 shares had executed sale deeds in his favour and the other partners owning 39 shares did not do so. The 1st respondent there-fore claimed specific performance of the agreement to sell 39 shares owned by the said partners and contended that sale of those shares in favour of the appellant was not binding upon him. The suit was transferred to the District Court of Masulipatam and was numbered as O.S. No. 1 of 1956. The suit referred to earlier in which the appellant claimed partition and recovery of possession of his 62 shares was also finally transferred to the Dist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... greement. It was the case of respondent No. 1 that on July 6, 1952 there was a meeting of all the male partners at the house of Desu Virabhadrayya and at that meeting there was an agreement reached between all of them (except the appellant) and himself that they should sell to him their shares (and the shares of those whom they represented) at the rate of ₹ 3,375/- for eight shares. A written agreement was to be drawn in 2 or 3 days and the mode of payment of the purchase money was also to be settled later. It was further agreed that the sale deeds were to be executed in three months. In pursuance of the agreement all the co-sharers except defendants 1 to 9 executed sale deeds and the plaintiff therefore became the owner of 98 shares. The first witness in proof of the oral agreement was respondent No. 1 himself. He deposed that P.Ws. 5, 6 and 8, Sri Devata Rama Mohana Rao, Sri Addepalli Nageswara Rao and Sri Thoomu Srimannarayana respectively were present at the meeting of the shareholders. He also said that the first defendant, the son of the 2nd defendant, was there to represent the latter, and that Gopala Krishnaiah, son of the 3 rd defendant, and the 7th defendant (who r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent No. 1 supports the evidence of P.W. 2 P.W. 3, Sri S. Narayana Rao, a District Judge and a family friend of respondent No. 1 also testified that he was informed of the negotiations by the first respondent for purchasing the shares and he was also told by the first respondent about the conclusion of the agreement. Exhibit A-26 dated July 14, 1952, a letter written by him to the first respondent. supports this evidence. P.Ws. 2 and 3 are highly respectable witnesses and the High Court was right in taking the view that their evidence strongly corroborates the case of respondent No. 1 with Tegard to the conclusion of the oral agreement for sale on July 6, 1952. The evidence of respondent No. 1 is also corroborated by the evidence of P.Ws. 5 and 6 Sri Devata Rama Mohana Rao and Sri Addepalli Nageswara Rao which has been believed by the High Court. On behalf of the appellant it was said that respondent No. 1 has not given any reason in the plaint or in the evidence as to why a written agreement was not entered into. There may be some force in this argument. But no such question was put to P.W. 1 in crossexamination, nor was he asked to give any explanation. On the other hand, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng them and refers to the mode of payment of the purchase money agreed to between respondent No. 1 and the persons selling the shares. The High Court has observed tive. The mere omission to settle the mode of payment does no, case of respondent No. 1 and we see no reason to take a different view as regards the effect of Ex. A-15. We proceed to consider the next question raised in these appeals, namely whether the oral agreement was ineffective because the parties contemplated the execution of a formal document or because the mode of payment of the purchase money was not actually agreed upon. It was submitted on behalf of the appellant that there was no contract because the sale was conditional upon a regular agreement being executed and no such agreement was executed We do not accept this argument as correct. It is well-established that a mere reference to a future formal contract will not prevent a binding bargain between the parties. The fact that the parties refer to the preparation of an agreement by which the terms agreed upon are to be put in a more formal shape does not prevent the existence of a binding contract. There are. however, cases where the reference to a future ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her it was a mere expression of the desire of the parties for a formal agreement which can be ignored. The evidence adduced on behalf of respondent No. 1 does not show that the drawing up of a written agreement was a pre-requisite to the coming into effect of the oral agreement. It is therefore not possible to accept the contention of The appellant that the oral agreement was ineffective in law because there is no execution of any formal written document. As regards the other point, it is true that there is no specific agreement with regard to the mode of payment but this does not necessarily make the agreement ineffective. The mere omission to settle the mode of payment does not affect the completeness of the contract because the vital terms of the contract like the price and area of the land and the time for completion of the sale were all fixed. We accordingly hold that Mr. Gokhale is unable to make good his argument on this aspect of the case. We shall next deal with the question whether the appellant was a bona fide purchaser for value without notice of the prior oral agreement. The first sale deed obtained by the appellant was on July 29, 1952. P.W. 2 stated in his evidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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