TMI Blog1990 (7) TMI 373X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of the property in question and that Shri Arif Ali, her Advocate and income tax practitioner was assisting her in finding a purchaser. Shri Arif Ali had mentioned the above intention of the first defendant to Sh. Ibrahim Moosa of M/s. J. Moosa Company who was known to the first plaintiff. On learning from Shri Ibrahim Moosa the first and second plaintiffs, namely, Brij Mohan and Jagmohan along with Sh. Ibrahim met Sh. Arif Ali. Sh. Arif Ali gave the details of the property and also showed the plans of the property to them. Sh. Arif Ali stated that the defendant was expecting the price of ₹ 10,00,000/-. The plaintiffs Nos. 1 and 2 offered ₹ 7,00,000/-. Shri Arif stated that he will ascertain from the defendant her reaction to the said offer. A fortnight later i.e. in the third week of April, 1979 the plaintiffs Nos. 1 and 2 along with Sh. Ibrahim Moosa and Sh. Arif Ali went to the residence of the defendant, who was insisting on the payment of ₹ 10,00,000/- as the sale price. At the said meeting the husband of the defendant was also present. The plaintiffs Nos. 1 and 2 increased their price from ₹ 7,00,000/- to ₹ 8.00.000/-. The first defendant s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act of evasion, the first defendant got a reply notice published in the newspaper and got issued a legal notice dated 8.5.79 through her Advocate, falsely alleging that there was no agreement for sale. Thereafter the first and second plaintiff made sincere (sic)d repeated attempts to convince the first defendant that the false and baseless pleas taken by her (sic)ere detrimental to the interest of all concerned and there is in existence a concluded contract for sale of the suit property and that the execution of the agreement of sale was a mere formality as well the receipt for the advance. Since the first defendant persisted in her illegal conduct, the plaintiffs got issued a final notice dated 27th June, 1979 calling upon the first defendant to execute the agreement, receive the earnest money and issue a valid receipt within three days of the receipt of the notice thus giving the first defendant one more opportunity. The plaintiffs neither received any reply nor the first defendant complied with the demands made in the notice. It was further alleged in the plaint that the plaintiffs Nos. 1 and 2 had negotiated for the purchase of the property on behalf . of themselves and plainti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en statement. There was no concluded or enforceable contract, arrived at an 3rd May, 1979, as alleged and contended. It was further alleged that there was no price settled or agreed and even the payment for advance was not settled and other terms arid conditions were not agreed upon, even on 6th May, 1979 and the negotiations failed and nothing was settled. There was no concluded contraband the plaintiffs had no cause of action to file the present suit for specific performance. The parties never intended to have an oral agreement, and the negotiations, if any, never resulted in a concluded contract, and even if the negotiations had been finalised, it had to be reduced into a written agreement, and the writing contemplated was not formal as alleged and contended by the plaintiffs, but was a condition and a term of contract. The plaintiffs with ulterior motive had taken the plea of oral contract. 8. It was further submitted in the written statement that it was true that plaintiffs Nos. 1 and 2 did approach the answering defendant on 6th May, 1979 along with Ibrahim and Arif, and even in the said meeting negotiations failed and the parties did not and could not arrive at a conclude ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial Court recorded the summary of the findings which are reproduced in its own words. 49. Summary of the findings: On the facts and circumstances of the case, it is established that the plaintiffs entered into an oral contract of sale with D.1 on 3.5.79. The terms settled were that D.1 should sell the Suit property for a sum of ₹ 10,00,000/- and D.1 should obtain permissions from the authority under Land Ceiling Act and also Income Tax Act. The sale deed should be executed within six months from 6.5.79. It is also settled that vacant possession was not to be given on the date of contract of sale, and the parties are aware that the defendant No. 2 was only a tenant in the premises. The only aspect left open on 3.5.79 is that mode of payment should be fixed on 6.5.79. On 6.5.79 it was agreed that D.1 should receive ₹ 50,000/- as advance and these terms were reduced into writing in Exs. A.1 and A.2, but, before the ink could dry, the defendant No. 1 on the evening of 6.5.79, refused to receive the amount This resulted in the breach of contract on the part of D.1. So the plaintiffs are entitled to specific performance of oral contract of sale concluded on 3.5.79, Sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in dispute and which were to the effect that when the first defendant was insisting on payment of ₹ 10,00,000/-, plaintiffs 1 and 2 increased their offer from ₹ 7,00,000/- to ₹ 8,00,000/- and the first defendant promised them to think over and inform the plaintiffs through Arif Ali. The High Court then considered the bargain that took place between the parties on 3rd May, 1979. The plaintiffs apart from their own statements as P.W.1 and P.W.3 had also examined P.W.2, the Income Tax Inspector B-Ward Circle No. 4, Hyderabad to show that defendant No. I was an income tax and wealth tax assessee and Sh. Arif Ali, Advocate and Income tax practitioner used to look after her tax matters. The plaintiffs had also examined P.W.4, Mohd. Yusuf a stamp vendor to prove Exhibit X-25 sales register of stamps and Exhibit X-26 an entry of sale of Ex. A.3 non judicial stamp for ₹ 5/- to defendant No. 1 Smt. Mahboobnissa Begum. Similarly plaintiffs had examined P.W.5 Sheikh Ismail another stamp vendor for having sold a stamp Exhibit A-4 to one Abdul Khalik on behalf of Smt. Mahboobnissa Begum vide entry Ex. X-27 in the register of stamps. The plaintiffs by the aforesaid evidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccording to whom Exhibit A-1 draft receipt was written by D.W.2 Sh. Arif Ali on 6th May, 1979 stating that the suit premises was agreed to be sold for ₹ 10,00,000/- and the permission for Urban Land Ceiling Authority will be obtained by the first defendant and the registration will be completed within six months from that date. The plaintiff's further case was that the first defendant's husband who was present suggested some alterations basing on which Exhibit A-2 fair draft was prepared and that when the plaintiffs took the agreed advance amount of ₹ 50,000/- in the evening, the first defendant refused to accept the advance amount and resiled from the contract. As against the above contentions of the plaintiffs, D.W.2 Sh. Arif Ali who is the representative of the first defendant deposed that in the meeting between the parties which took place in April, 1979 the vendor did not take the responsibility of obtaining clearance under the Urban Land Ceiling Act. He denied the suggestion that in the third week of April, 1979 the first defendant offered to sell the suit property for ₹ 10,00,000/- and that she would obtain the clearance under the Urban Land Ceiling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g on the alleged oral agreement dated 3rd May, 1979, there would definitely have been a reference in Exhibits A-1 and A-2 to the oral agreement said to have taken place on 3rd May, 1979. The absence of the same in Exhibits A-1 and A-2 again throws a serious doubt about the alleged agreement, dated 3rd May, 1979. In any event the mere fact that there was a meeting between the plaintiffs Nos. 1 and 2 and D.W.2 on 3rd May, 1979 does not establish that there was a concluded contract between the parties on that day because admittedly the first defendant was not present at that time. What all had happened according to P.Ws. 1 and 3 is that they offered to pay ₹ 10,00,000/- for the suit building and D.W.2 having contacted the 1st defendant over the phone conveyed to them her acceptance of the price fixed. In the absence of evidence that the other terms also were discussed over the phone and settled at that time and the 1st defendant agreed for the terms, it cannot be said that there is a concluded contract on 3rd May, 1979. The fixation of price is only one of the terms of the contract and by mere acceptance of the price it cannot be said that there is a concluded contract between t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hrough D.W.2. The other terms could not have been settled between the parties in the third week of April, 1979 because by that time there was no agreement between the parties with respect to the sale consideration. Without the price being settled, and especially when there was a gap of ₹ 2,00,000/- in the price accepted by the first defendant and the price offered by the first plaintiff, the parties would not have discussed the other terms of the agreement such as the advance money to be paid and the responsibility of the vendor to obtain the permission from the Urban Land Ceiling Authority. 17. It was submitted by the learned Counsel for the appellants that the High Court itself has arrived to a finding that D.W.2 Sh. Arif Ali on 3.5.79 after having a talk with defendant No. 1 on phone had conveyed her acceptance to sell the property for a sum of ₹ 10,00,000/-. It was submitted that an agreement for sale of immovable property could be made orally and so far as mode of payment of consideration is concerned, can be settled subsequently. It was submitted that in the facts and circumstances of the present case all the fundamental and vital terms of the contract were set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ither any consideration passed nor any documents were signed by the parties on 3.5.79. So far as 6.5.79 is concerned admittedly the negotiations failed between the parties on that day. It was further contended that if the terms had already settled on 3.5.79 itself where was the necessity of executing draft receipts on 6.5.79 and in any case if it was a mere formality then the plaintiffs' should have brought a typed agreement on the stamps for formal signature of the parties. It was also argued that the plaintiffs failed to examine Ibrahim Moosa who was an independent and a very important witness in the whole transaction and an adverse inference should be drawn against the plaintiffs for not examining Ibrahim Moosa. The defendant No. 1 had produced a counter affidavit Exhibit C-1 dated 27.7.79 in reply to injunction application filed by the plaintiffs and she had taken a clear stand that no terms were settled or concluded on 3.5.79. It was further argued that admittedly the plaintiffs had not paid any earnest/advance money to the defendant No. 1 towards the alleged transaction but still they malafidely stated in the notice of 7.5.79 published in the Newspaper that an amount of & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would only be a formal agreement incorporating such terms which had already been settled and concluded in the oral agreement. Now we shall examine the facts and circumstances of the present case in order to find whether the plaintiffs have been able to prove that there was a concluded oral agreement between the parties on 3.5.79 in order to seek decree for specific performance of contract in their favour. Admitted facts of the case are that the transaction in question related to a sale of an immovable property for no less than a sum of ₹ 10,00,000/- in May, 1979. 3.5.79 is the crucial date on which the oral agreement is alleged to have been concluded. Admittedly on that date even earnest/advance money had not been settled. It was also not settled as to when the earnest/ advance amount and the balance amount of sale consideration would be paid. It was not settled as to when the final sale deed would be executed and registered. No talk with regard to any terms of the oral agreement took place in the presence of the vendor defendant No. 1 on 3.5.79. It was also not decided whether actual possession or only symbolical possession of the premises in question would be given by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them as the retired Law Secretary. Defendant No. l insisted for ₹ 10,00,000/- as consideration of the suit property and told the plaintiffs that she would obtain the permission from the ceiling authority. Shri Brij Mohan then stated that they raised their offer to ₹ 8.00.000/- defendant No. l told them that she would think over for two or three days and inform them through Shri Arif Ali. Thereafter Shri Brij Mohan states regarding the bargain held on 3.5.79. According to him he himself, second plaintiff and Mr. Ibrahim Moosa went to Shri Arif Ali on 3.5.79. Shri Arif Ali told them that defendant No. l was not willing to sell the suit property for less than ₹ 10,00,000/-. And if they were willing to purchase for ₹ 10,00,000/- then they were welcome to do so at any time. Shri Brij Mohan then said that they agreed to purchase the suit property for ₹ 10,00,000/- and asked Shri Arif Ali to get the confirmation from defendant No. 1. Shri Arif Ali spoke to defendant No. l on telephone and the informed that defendant No. 1 was willing to sell the property to them for ₹ 10,00,000/-. Shri Arif Ali then said that they would buy the stamps for agreement and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no reference to the oral agreement said to have taken place on 3.5.79. In case all the terms had already been concluded in the oral contract between the parties on 3.5.79 and only a formal agreement was to be reduced in writing on 6.5.79, then in that case there ought to have been a mention in the draft agreement exhibits A-1 and A-2 regarding the oral agreement of 3.5.79. According to the statement of Shri Brij Mohan plaintiff No. l himself, nothing was discussed with defendant No. l herself and for that reason a further meeting was fixed at the house of the first defendant in the morning of 6.5.79. Shri Arif Ali may have been an Income Tax Advocate looking after the income tax and wealth tax matters of defendant No. l but he was not a General Power of Attorney holder to negotiate or settle any terms with regard to any transaction of immovable property belonging to defendant No. 1. It is further important to note that even in the agreement to sell exhibit B-4 dated 22.6.79 between defendant No. 1 and defendants Nos. 3 and 4, no responsibility had been taken by the defendant No. 1 for obtaining the clearance from the Urban Land Ceiling Authority. The High Court in these circumstanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the site to respondent No. 1. A mere reference to a future formal contract does not prevent the existence of a binding agreement between the parties unless 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. The evidence did not show that the drawing up of a written agreement was a pre-requisite to the coming into effect of the oral agreement, nor did the absence of a specific agreement as to the mode of payment necessarily make the agreement ineffective, since 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. The facts of the above case clearly show that it related to sale of 137 shares and that in pursuance of the agreement partners who owned 98 shares had already executed sale deeds in favour of the plaintiffs/respondents and the other partners owning 39 shares did not do so. The High Court as well as this Court believed the evidence of the plaintiff/respondent for conveying the entire 137 shares by an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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