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P. PANNEERSELVAN versus A. BAYLIS

High Court of Madras

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P. Panneerselvan v. A. Baylis - L.P.A.NO.21 OF 2000 [2005] RD-TN 623 (25 August 2005)



IN THE HIGH COURT OF JUDICATURE AT MADRAS



DATED:25/08/2005

COROM

THE HONOURABLE MR. JUSTICE P.K. MISRA

AND

THE HONOURABLE MR. JUSTICE N. KANNADASAN

L.P.A.NO.21 OF 2000

and

C.M.P.Nos.2068 of 2003

and

13916 of 2004

P. Panneerselvan .. Appellant / Defendant -Vs-

A. Baylis

S/o.V. Anbumani .. Respondent / Plaintiff Appeal filed under Clause 15 of the Letters Patent against the judgment dated 14.12.1999 in A.S.No.600 of 1987 passed by the learned single Judge.

For Appellant : Mr.T.R. Rajagopalan

Senior Counsel for

Mr.T.R. Rajaraman

For Respondent : Mr.S.V. Jayaraman

Senior Counsel for

Mr.M. Kamalanathan

:J U D G M E N T



P.K. MISRA, J

Defendant is the appellant against a confirming decision of the learned single Judge in A.S.No.600 of 1987.

2. 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.

3. The plaintiffs 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 defendants 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 lawyers notice on 16.12.1983 and also made a paper publication on 17.12.1983. The defendant sent a reply dated 27.12.1 983 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.

4. 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 defendants 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 defendants 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 plaintiffs 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.

5. 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.

6. 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.

7. 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.

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

9. 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.

10. 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 1 73/5 -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.

11. 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.

12. 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 plaintiffs case ought to have been accepted.

13. 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.

14. 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.

15. 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.

16. As per the plaintiffs 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 clients 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 defendants 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.

17. 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 plaintiffs 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.

18. 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.

19. In A.I.R. 1959 SC 639 (DAMODHAR TUKARAM MANGALMURTI AND OTHERS v. 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 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 :- 8. 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 in Council v. Volkart Bros., ILR 50 Mad 595 (AIR 1927 Mad 513). 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.

20. Similar views have been expressed in several decisions of different High Courts, including the decisions reported in A.I.R 1990 Kerala 198 (KANDAMATH CINE ENTERPRISES (PVT.) LTD v. JOHN PHILIPOSE), A. I.R. 1967 Gujarat 81 (BAI MANGU v. BAI VIJLI AND OTHERS), A.I.R. 1966 Kerala 311 (NAIR SERVICE SOCIETY, CHANGANACHERRY v. R.M.PALAT AND OTHERS), A.I.R. 1984 Calcutta 153 (REMINGTON RAND OF INDIA LTD., v. SOHANLAL RAJGHARIA AND OTHERS) and A.I.R. 1951 Orissa 291 (RAJKISHOR MOHANTY & ANOTHER v. BANABEHARI PATNAIK & 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.

21. Das, J. (as His Lordship then was) observed:- 9. ... Under 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.2 72 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 Secy. of State v. Volkart Bros, 50 Mad.595 : (A.I.R. (14) 1927 Mad,. 513).) Similar considerations apply to the non-fixing of the time of performance.

22. 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.

23. 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.1,00,00 0/- 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.

24. The plaintiff had prayed for an alternative relief for refund of consideration. Now that the plaintiffs prayer for specific performance of the contract cannot be granted, there cannot be any dispute regarding refund of the consideration.

25. 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.

26. 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.

27. 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. Index : Yes

Internet: Yes

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Reproduced in accordance with s52(q) of the Copyright Act 1957 (India) from judis.nic.in, indiacode.nic.in and other Indian High Court Websites

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