P. Panneerselvan vs A. Baylis

P.K. Misra, J.—Defendant is the appellant against a confirming decision of the learned single Judge in A.S. No. 600 of 1987.

The plaintiff has filed the suit for specific performance of contract to execute the sale deed in respect of 1 acre 30 cents in R.S. No. 174/5 in

Uthangudi Village within Madurai District.

The plaintiff''s case is as follows :-

The defendant had purchased R.S. No. 174/4 measuring 60 cents and 174/5 measuring 1 acre 30 cents in Uthangudi village. The defendant

intended to purchase another 4 acres 15 cents of land adjacent to the aforesaid land and had paid advance for the said property. The defendant

required further funds to complete such transaction and contacted the plaintiff, who was his friend. The defendant offered to sell 1 acre 30 cents

either out of land bearing R.S. No. 174/5 or an equal extent of 1 acre 30 cents out of 4 acres 15 cents, which the defendant intended to purchase,

for a total consideration of Rs. 1,00,000/-. On the basis of the aforesaid request of the defendant, the plaintiff had paid the entire sale consideration

of Rs. 1 lakh by cheque dated 10.10.1983 and the defendant had encashed the said cheque. The defendant had represented that he would

purchase 4 acres and 15 cents within one or two months and he would execute the sale deed in favour of the plaintiff within a period of three

months. The defendant executed an agreement of sale in favour of the plaintiff on 10.10.1983. The plaintiff subsequently learnt that the defendant''s

proposal to purchase 4 acres 15 cents did not materialise, and, therefore, the plaintiff requested the defendant to execute the sale deed in respect

of R.S. No. 174/5 measuring 1 acre 30 cents, as the entire amount had already been paid. But, the defendant postponed the matter on some

excuse or other and finally refused to execute the sale deed on 14.12.1983. The plaintiff issued lawyer''s notice on 16.12.1983 and also made a

paper publication on 17.12.1983. The defendant sent a reply dated 27.12.1983 making false and frivolous allegations. The plaintiff issued a

rejoinder to the notice issued by the plaintiff on 5.1.1984. Thereafter, the plaintiff filed the suit for specific performance of the contract. In the

alternative, the plaintiff claimed that the amount of Rs. 1,00,000/- should be paid along with interest at the rate of 18% from 10.10.1983 to

17.4.1984 and subsequent interest on Rs. 1,00,000/- till the date of payment.

In the written statement, the defendant took a stand that he had not offered to sell 1 acre 30 cents either out of R.S. No. 174/5 or an equal

extent of 1 acre 30 cents out of 4 acres 15 cents, proposed to be purchased by him. It was pleaded by him that there was no agreement to sell any

specified extent of land and it was indicated that :

...The draft of the alleged agreement which was corrected by the plaintiff himself will clearly disclose that the rate per cent has to be arrived at only

subsequently after talks. ...No where in the plaint or in his notice the plaintiff had stated as to how the extent of 1 acre 30 cents was fixed or was

there any negotiation. If so, at what rate per cent and whether there was any consensus. It is curious that even the alleged agreement is undated. In

spite of this defendant''s reply notice the plaintiff has not chosen to give any basis as to the extent viz., 1 acre 30 cents against which he seeks

specific performance.

In the written statement, the defendant also took a specific stand :

...In fact on 15.12.83 the plaintiff came to the defendant''s shop premises in the upstairs with a transistor with tape recorder in his hand. The

defendant himself stated that he intended to have the talks recorded with the aid of the tape recorded and further told the defendant that he may

also have the talks tape recorded if he feels necessary. The defendant who was surprised at this strange behaviour of the plaintiff also got a tape

recorder for the purpose of recording. The defendant further submits that the matter was then talked over by both the plaintiff and the defendant

and the talks after sometime also continued on the next day on 16.12.83 morning. The defendant submits that the entire conversation and the talk

between the parties have been tape recorded by the plaintiff and the defendant as well separately. The plaintiff has purposely suppressed this fact

in the plaint. It is submitted that a play of the tape recorded available with the plaintiff and that with the defendant will disclose what all transpired

between the parties and it will also prove in no unmistakable terms that the plaintiff''s claim for specific performance of the definite extent viz., 1

acre 30 cents will not lie. It will clearly show that the parties could not arrive at the price percent and the exact extent that could be the subject

matter of sale.

The trial court came to the conclusion that on 10.10.1983 there was an agreement between the parties for the sale of 1 acre 30 cents of land

and the defendant having received the entire consideration of Rs. 1,00,000/- was bound to execute the sale deed. Accordingly, the suit was

decreed with costs.

In appeal, the findings and the decree of the trial court were confirmed by the learned single Judge, giving rise to the present appeal under

Clause 15 of the Letters Patent.

In the present appeal, the main contention raised by the counsel for the appellant is to the effect that there was no completed agreement between

the parties and even assuming that there was any agreement, such agreement is uncertain regarding the extent of land to be sold and the

consideration amount to be paid per cent and even regarding the identity of the land to be sold.

Learned counsel for the respondent has supported the reasonings given by the courts below.

Law is well settled that in a Letters Patent appeal, the Division Bench is not constrained to go into the fact as well as law. However, where

concurrent findings have been rendered, the court would be slow to interfere with such findings, save and except for weighty reasons.

In the present case, the main question relates to interpretation of the alleged agreement. The agreement, which has been marked as Ex.A-2,

has been signed by the defendant alone. Since the fate of the litigation depends upon construction of such document, the entire document is

extracted hereunder :-

I, P. Paneer Selvan, S/o. late S. Ponmuthu Nadar, 21. East Vadam Bokki Street, Madurai -1. have purchased 1 acre 90 cents of land which is

locate at 92 Uthangudi Village, Madurai R.S. No. 174/4 - 60 cents and 174/5 - 1 acre 30 cents from Mr. D.K. Dhurwasan S/O. late S.

Krishnasamy Iyer Door No. 94. A, East Veli Street, Madurai and from his younger brother Mr. D.K. Sundara Rao, Door No. 172. East Veli

Street, Madurai. And the document was registered on the date of 6 -10 -83 at Madurai Mahal register office. And I also intend to purchase 4

acres 15 cents of land which is located at the same area R.S. No. 173/2 - 69 cents, 174/2 - 1 acres 31 cents, 175/1 - 74 cents, 174/3 -83 cents

and 173/5 -58 cents from the above mentioned party.

And I have taken a State Bank of India cheque No. A85 567448 dated 10-10-83 for rupees one lakh from SB A/C No. 32881 of Mr. Baylis,

7/255, Alwar Nagar, Nagamalai, Madurai 19, assuring him that I will offer the lands worth the full amount of rupees one lakh at the rate we have

mutually agreed upon on individual integrity, either from the purchased land 1 acre 90 cents or from the land which I intend to purchase i.e 4 acres

15 cents of land. If it is not possible to purchase the 4 acres 15 cents, the lands will be provided to Mr. Baylis only from the purchased land i.e. 1

acre 90 cents within a period of three months.

It is significant to note that in the aforesaid ""agreement"", which is not dated, there is no whisper that the defendant had agreed to sell 1 acre 30

cents of land nor there is anything to indicate that R.S. No. 174/5 was to be sold. A fair reading of the ""agreement"" as a whole only indicates that

the defendant had agreed to offer the lands worth Rs. 1,00,000/- ""at the rate we have mutually agreed upon on individual integrity"". The agreement

is totally silent about the rate per cent of the land. Even the agreement no where states about the extent of land to be sold. A bare reading of the

agreement leaves no room for doubt that the terms were ""beautifully vague"" to say the least. The agreement does not indicate that if the defendant

is not able to purchase 4 acres 15 cents of land, he would sell 1 acre 30 cents of land in R.S. No. 174/5.

At this stage, it is necessary to note the contention raised by the learned Senior Counsel for the respondent/plaintiff to the effect that the

document clearly indicates that the parties had ""mutually agreed upon"" the rate and since the defendant has not come out with any clear statement

regarding the rate, the plaintiff''s case ought to have been accepted.

We do not think such a contention can be countenanced, more particularly, in a suit for specific performance of a contract. Apart from the

general principle of law that the plaintiff must succeed on the strength of his own case and not on the basis of the weakness in the case of the

defendant, in a suit for specific performance of contract, the plaintiff is obviously required to prove that there is a definite contract which is capable

of being specifically enforced.

In the present case, the only certainty is regarding the total consideration amount of Rs. 1,00,000/-, which was admittedly paid to the

defendant. However, neither the identity of the land to be sold nor the extent of land to be sold nor even the rate of land per cent had been

indicated. In such a scenario, it is difficult to accept the contention of the learned Senior Counsel for the respondent that a completed agreement

was in existence between the parties.

Learned counsel appearing for the respondent has also submitted that as observed by the trial court as well as the learned single Judge, soon

before the agreement the defendant himself had purchased the lands at the rate of Rs. 300/- to Rs. 400/- per cent, and, similarly, the plaintiff had

also purchased land in the vicinity at the rate of Rs. 300/- to Rs. 400/-, and, therefore, it is reasonable to conclude that the defendant had agreed

to sell 1 acre 30 cents of land for Rs. 1,00,000/-. It is indeed very difficult to appreciate the logic in such contention. The extent of land now

claimed by the plaintiff is 1 acre 30 cents and the total consideration money is Rs. 1,00,000/-. If one divides the consideration money with the area

of the land, the rate comes to Rs. 769/- and odd per cent. To say the least, this appears to be extremely unlikely as there is no apparent reason as

to why such an odd amount is to be fixed as the rate of the land instead of fixing a round figure.

As per the plaintiff''s case, on 14.12.1983, the defendant refused to complete the transaction and, on 16.12.1983, notice was issued by the

lawyer on behalf of the plaintiff. In such notice, it is indicated as if the defendant offered to sell 1 acre 30 cents either in the land bearing R.S. No.

174/5 or an equal extent of land in 4 acres 15 cents to be purchased by the defendant. A reply to the aforesaid notice was sent by the defendant,

wherein it was indicated:

It is incorrect and mischievous to state as if there was an agreement to sell any specific extent for definite and ascertained consideration.

It is further indicated :

... The draft of the alleged agreement, which was corrected by your own client himself, will clearly disclose that the rate per cent will have to be

arrived at only subsequently after talk between the parties. Hence without ascertaining or arriving at the consideration or price for arriving at the

extent for one lakh, as alleged by your client (but which is denied) unless the rate per cent is negotiated and fixed, the exact extent could not be

fixed. It is significant that there is no whisper in your client''s notice with regard to the fact whether the rate per cent was arrived at and much less at

what rate.

In such reply it was also indicated that the plaintiff had come to the defendant''s shop on 15.12.1983 and the conversation between them had been

tape recorded separately by both the parties. Subsequently even though a reply to the aforesaid reply was sent by the Advocate of the plaintiff on

5.1.1984, nothing was indicated about the assertion that the rate of the land per cent had never been fixed.

At this stage, it is necessary to take note of Ex.B-1, which is the corrected draft, on the basis of which Ex.A-2 was typed out in a stamp paper

and signed by the defendant. This draft, which had been typed out by the defendant, was admittedly corrected by the plaintiff in his own

handwriting. It is significant to note that the draft initially contained the expression,

I will offer the lands worth around rupees 2500/- per cent to the total value of rupees one lakh which I have taken"".

Such expression was scored through, and in the plaintiff''s handwriting it was corrected to read :

I will offer the lands worth to the full amount of Rs. one lakh at rate we have mutually agreed upon on individual integrity.

As already indicated, this corrected draft was typed out on a stamp paper and signed by the defendant. Even though the rate is stated to have been

mutually agreed upon, it is difficult to come to a conclusion that in fact the parties had agreed upon to a particular rate and, if so, what was the

agreed upon rate.

Learned counsel for the respondent has taken great pains to cite several decisions to the effect that if the exact amount payable is not indicated,

the Courts have jurisdiction to fix a fair and equitable amount so that the intention of the parties to the contract should not be frustrated.

In Damodhar Tukaram Mangalmurti and Others Vs. The State of Bombay, , the original lease was for a period of 30 years with a provision for

renewal for another 30 years with the condition that the rent was as provided in the lease deed ""subject to such fair and equitable enhancement as

the lessor shall determine"". The appeal before the High Court was referred to a Division Bench. Justice B.P. Sinha, the Chief Justice of Bombay

High Court, was of the opinion that the Civil Court had no jurisdiction to determine what would be the fair and equitable rent for the purpose of

giving effect to the clause of renewal, whereas the other learned Judge came to the conclusion that the Court could determine the fair and equitable

rent so that the clause of renewal can be given effect to. On such difference of opinion, the matter was referred to a third Judge, who agreed with

the views of the learned Chief Justice that the Civil Court had no jurisdiction to determine the fair and equitable rent. In appeal, the majority view

observed :-

We think that the clause should be read as a whole and every offer should be made to give effect to all the words used therein. The relevant

portion of the clause states- ""such fair and equitable enhancement as the lessor shall determine"". If the construction is that whatever the lessor

determines as fair and equitable enhancement must be treated as binding on the lessee, then the words ''fair and equitable'' are not given the

meaning and sense which they have according to the ordinary acceptation of those words.

''Fair'' and ''equitable'' mean fair and equitable in fact, and not what the lessor subjectively considered to be fair and equitable. The words ''fair''

and equitable both mean ''just or unbiased'' (see the Concise Oxford Dictionary, 4th Edn. p.426 and p.402). If the intention was to leave the

enhancement to the subjective determination of the lessor, the clause would have more aptly said- ''such enhancement as the lessor shall

determine''. We consider that the words ''fair and equitable'' must be given their due meaning and proper effect. The question then asked is - what

meaning is to be given to the words ''such... as the lessor shall determine''. It is indeed true that these words constitute an adjectival clause to the

expression ''fair and equitable enhancement'', but we consider that the meaning of the adjectival clause is merely this: the lessor must first determine

what it considers to be fair and equitable enhancement; but if in fact it is not so, it is open to the lessee to ask the Court to determine what is fair

and equitable enhancement. We do not think that on a proper construction of the clause, the intention was to oust the jurisdiction of the Court and

make the determination of the enhancement by the lessor final and binding on the lessee. We think that the conclusion at which Mudholkar J,

arrived on this point was correct, though not exactly for the reasons given by him.

(9) If the construction stated above is the correct construction, then no further difficulty is presented by cl. III. The learned Judges of the High

Court unanimously expressed the view that the lease was not void for uncertainty, and in that view we concur. There is authority in support of the

view that a covenant to settle land ''at a proper rate'' or ''upon such terms and conditions as should be judged reasonable'' is not void for

uncertainty: see New Beerbhoom Coal Co. Ltd. v. Boloram Mahata, 7 Ind App 107, and Secretary of State for India Vs. Volkar Brother, . In the

former case, Sir Barnes Peacock who delivered the judgment of their Lordships said:

The High Court affirmed the decision, but not for reasons which their Lordships consider to be correct. They affirmed it upon the ground that it

was impossible to determine what was a reasonable rate. Their Lordships cannot think that in the present case the Court, upon a proper inquiry,

would have been unable to determine it. There might have been considerable difficulty in fixing the rate; but difficulties often occur in determining

what is a reasonable price or a reasonable rate, or in fixing the amount of damages which a man has sustained under particular circumstances.

These are difficulties which the Court is bound to overcome.

Similar views have been expressed in several decisions of different High Courts, including the decisions reported in Kandamath Cine

Enterprises (Pvt.) Ltd. Vs. John Philipose, , Bai Mangu Vs. Bai Viji and Others, , Nair Service Society, Changanacherry Vs. R.M. Palat and

Others, , Remington Rand of India Ltd. Vs. Sohanlal Rajgharia and Others, and Rajkishor Mohanty and Another Vs. Banabehari Patnaik and

Others, . The said Division Bench decision of Orissa High Court is more relevant in the sense that such decision relates to a case of specific

performance in respect of an agreement of sale, whereas other decisions relate to renewal clauses in lease agreement, where exact consideration

money had not been fixed. In the said contract, there has been an agreement to sell a property but the specific sum for which the property to be

sold had not been indicated. Even though the two learned Judges gave their separate opinions, both the Judges more or less agreed on the point of

law to the effect that in the absence of any specific amount, the court itself could fix a reasonable amount as consideration so that the intention of

the parties to complete the sale transaction could be enforced.

Das, J. (as His Lordship then was) observed:-

... u/s 29, Contract Act, it is only agreements the meaning of which is not certain or is not capable of being made certain that are void. A

contract to sell at a reasonable price is one that can be made certain within the meaning of this section, that is by fixation of the price by the Ct. on

the standard of reasonableness in case the parties do not ultimately agree. This principle has been laid down by the House of Lords in Hillas &

Co., v. Arcos Ltd. (1932) 147 L.T. 503 followed in Folley v. Cklassique Coaches Ltd. (1934) 2 K.B. 1: 103 L.J.K.B. 550. Also vide (1941)

A.C. 251. This last case shows where the line is to be drawn. As observed by Lord Wright at p.272 of (1941) A.C. 251:

The Ct. could not indeed make a contract for the parties or go outside the words they had used, except in so far as there were appropriate

implications of law, as for instance, the implications of what was just & reasonable, where the contractual intention was clear, but the contract was

silent in some detail which the Ct. could thus fill in.

It is also well settled that such a binding contract for sale at a fair price is capable of specific performance. (See Secretary of State for India Vs.

Volkar Brother, .) Similar considerations apply to the non-fixing of the time of performance.

We are afraid the decisions cited by the counsel for the respondent cannot rescue the respondent, in the peculiar facts and circumstances of the

case.

In the present case, the defect in the agreement is not that the consideration amount had not been fixed. As a matter of fact, the total

consideration of Rs. 1,00,000/- had been paid. The difficulty is regarding the property, which was to be sold. The agreement does not specifically

indicate that a particular property was to be sold. The agreement merely indicates that out of future property to be acquired or from the property

already acquired, property worth Rs. 1,00,000/- is to be conveyed. If there would have been acceptable materials to indicate that in fact the

parties had agreed the land required to be sold at a particular rate per cent, even the court could have come to the assistance of the plaintiff by

saying that the land of equivalent value is required to be sold. In the present case, in the absence of any rate regarding the rate per cent and in the

absence of specific identity of the property, we are constrained to come to the conclusion that the plaintiff cannot seek for specific performance of

the contract as the contract continues to be vague and indefinite.

The plaintiff had prayed for an alternative relief for refund of consideration. Now that the plaintiff''s prayer for specific performance of the

contract cannot be granted, there cannot be any dispute regarding refund of the consideration.

Learned counsel for the appellant has submitted that as a matter of fact the appellant had deposited such amount in the bank. The plaintiff in the

plaint has claimed 18% interest from the date of payment till filing of the suit. It is the case of the defendant himself that his intention was to borrow

the money to purchase lands and, as he was dealing with the real estate business. It is thus obvious that the transaction to some extent was a

commercial transaction. In such view of the matter, the claim of interest at 18% from the date of payment by the plaintiff/respondent till the date of

filing of the suit cannot be denied and the plaintiff is therefore entitled to a sum of Rs. 9,419.18, as claimed by him. Such amount shall be paid by

the defendant within a period of thirty days from the date of receipt of a copy of this judgment. Since the amount of Rs. 1,00,000/- has been

subsequently deposited by the defendant and earning interest, the plaintiff is entitled to such deposited amount of Rs. 1,00,000/- along with the

accrued interest.

The trial court had decreed the suit with costs. Learned single Judge while confirming the decree for specific performance, dismissed the

appeal without costs. In other words, the present appellant, who had filed the appeal, was not required to pay the costs of the appeal, but the

direction of the trial court regarding cost of the suit had not been interfered with.

Keeping in view the facts and circumstances of the case, we set aside the judgment and decree of the courts below and modified the decree by

observing that, in respect of specific performance of the contract, the plaintiff shall be entitled to a sum of Rs. 1,00,000/-. Since the sum of Rs.

1,00,000/- has been deposited by the appellant, the plaintiff is entitled to receive such amount along with accrued interest. In addition to the said

amount, the plaintiff is also entitled to a sum of Rs. 9419.18/-. Since the plaintiff had to file the suit and the trial court had granted costs, the said

direction of the trial court regarding cost of the suit is upheld and such cost is required to be paid by the defendant / appellant. However, so far as

the appeal before the learned single Judge and the present appeal are concerned, the parties have to bear their own costs. The appeal is

accordingly allowed to the above extent and the decree of the trial court is modified. Consequently, the connected miscellaneous petitions are

closed.