Skip to content


Govind Laxman Gokhale Vs. Harichand Mancharam - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtMumbai
Decided On
Case NumberO.C.J. Suit No. 1456 of 1917
Judge
Reported inAIR1919Bom40; (1919)21BOMLR302; 50Ind.Cas.403
AppellantGovind Laxman Gokhale
RespondentHarichand Mancharam
DispositionSuit dismissed
Excerpt:
.....paper for the, sale shall he made by a vakil--earnest money to be paid on the completion of the bargain paper-agreement not a contract.;the defendant by a writing agreed to sell his immoveable property to the plaintiff on certain terms. the first clause in the writing was to the following effect:-- 'the bargain paper for the sale of the said immoveable property shall be made through a vakil within two days from this date and at the time of making the bargain paper i am to take from you by way of earnest money in respect thereof rs. 10,000, that is to say, you are to pay the same to me and as regards rupees two lacs and five thousand being the balance you are to pay the same to me at the time of execution of the sale deed by me.' the second clause in the writing referred to certain..........each party is to reserve to himself the right to retire from the contract, if, on looking at the formal contract, he rinds that though it may represent what he said, it does not represent what he meant to say. whenever, on the true construction of the evidence, this appears to be the intention, i think that the parties ought not to be held bound till they have executed the formal agreement.... i think the decisions settle that it is a question of construction whether the parties finally agreed to be bound by the terms, though they were subsequently to have a formal agreement drawn up. 14. in winn v. bull (1877) 7 ch d. 29, sir george jessel said:--i take it the principle is clear. if in the case of a proposed sale or lease of an estate two persons agree to all the terms and say 'we.....
Judgment:

Marten, J.

1. This is an action for specific performance of an alleged contract dated 28th November 1917 for the sale by the defendant to the plaintiff of a property at Grant Road for Rs. 2,15,000. The defence is that there was no concluded contract, but merely an agreement to enter into a contract, which in law amounts to nothing. The point is that in the document sued on, there is a reference to a further document being executed, and the question is whether that reference prevents the document sued on being an enforceable contract.

2. The document sued on is in duplicate, but as each duplicate is in the first person, the words of each part are not precisely the same. There are also some other differences in the precise wording of the two duplicates which I will consider later on. Both duplicates are in Gujarati. Taking the duplicate, Exh. A, signed by the defendant, it ran thus:

To Govind Laxman Gokhale. Given in writing by Harichand Mancharam. To wit. What is written is as follows. I agree to sell you for Rs. two lacs and fifteen thousand my immoveable property near Play House at Grant Road....

3. Then follows a formal description of the property. Then the document proceeds:

The conditions in respect thereof are as follows :--(1) The bargain paper for the sale of the said immoveable property shall be made through a Vakil within two days from this date and at the time of making the bargain paper I am to take from you by way of earnest money in respect thereof Rs. 10600, that is to say, you are to pay the same to me and as regards Rs. two lacs and five thousand being the balance you are to pay the same to me at the time of the execution of the sale deed by me.

4. Then Clause 2 refers to certain suits in the High Court pending against the defendant, the vendor, and that if those suits are decided against him, the bargain is to be cancelled and the deposit returned.

5. Then Clause 3 provides for sharing the costs of the sale equally.

6. Clause 4 deals with the completion of the sale and fixes it at six months from the date of the bargain paper. Then it proceeds:--

On the decision in the case being given in my favour during the said period I am to get passed marketable titles for you, and to complete the matter of sale. If perchance the suits pending in the High Court are not disposed of within six months, then this agreement shall be in force till the disposal of the said suits, and on the said suits being decided in my favour. I am to complete the matter of this sale; and if the High Court suits be decided in my favour within six months, I am to complete and you are to get completed the matter of sale within six months.

7. Then Clause 5 provides for the vendor getting the signature of a certain adopted son along with the vendor's signature on the sale-deed.

8. Clause 6 says that the defendant has not to pay brokerage. Then the document concludes 'I have given and have taken from you the agreement to the above effect of my and your freewill and pleasure.' Then follows the date the 28th November 1917 and the signature of the defendant.

9. What happened afterwards was that the defendant's solicitors prepared a draft contract in English, but that eventually the parties did not agree on its terms and consequently this suit was brought. It should be observed that the plaintiff's solicitors, Messrs. Khanderao, Laud and Mehta, in entertaining and altering this draft contract, were particularly careful to do so without prejudice to their client's rights under the existing document, Exh. A, which they contended was a binding agreement. (See their letters of 30th November and 3rd December 1917).

10. Turning then to the document sued on, Exh. A, the defendant relies on Clause 1 and ho says that the reference to a bargain paper prevents any contract being arrived at until that bargain paper has been executed. He also relies on what is perhaps a preliminary point, namely, that there is a slight difference in the wording between the two duplicates, Exh. A and : Exh. A 1, and that that difference either prevents an agreement being arrived at, or alternatively shows that there was to be no bargain unless and until it was arrived at in a Vakil's Office.

11. As regards what I have called the preliminary point, I do not think there is any substantial difference between the two duplicates. In particular, as regards Clause 1, I think it immaterial that the second sentence speaks in Exh. A of 'bargain paper' and in Exh. A 1 of 'bargain'. I think therefore that the preliminary point fails and that it is immaterial which duplicate is used.

12. I accordingly come to the main question, viz., whether the document, Exh. A, is a contract, or is in Jaw nothing. Questions of this description arise very frequently in England and the cases on either side of the line depend on rather fine distinctions of wording. Consequently, any particular case may well give rise to differences of opinion. Speaking generally, the authorities say that in each case the question is one of construction of the particular document as to what was the intention of the parties. These authorities include judgments of such eminent Judges as Lord Blackburn, Sir George Jesse), and Lord Parker, and one cannot do better than quote what they say.

13. In Russiter v. Miller (1878) 3 A. C 1124, , Lord Blackburn at page 1152 said as follows:--

Parties often do enter into a negotiation meaning that, when they have (or think they have) came to one mind, the result shall be put into formal shape, and then (if on seeing the result in that shape they find they are agreed) signed and made binding; but that each party is to reserve to himself the right to retire from the contract, if, on looking at the formal contract, he rinds that though it may represent what he said, it does not represent what he meant to say. Whenever, on the true construction of the evidence, this appears to be the intention, I think that the parties ought not to be held bound till they have executed the formal agreement.... I think the decisions settle that it is a question of construction whether the parties finally agreed to be bound by the terms, though they were subsequently to have a formal agreement drawn up.

14. In Winn v. Bull (1877) 7 Ch D. 29, Sir George Jessel said:--

I take it the principle is clear. If in the case of a proposed sale or lease of an estate two persons agree to all the terms and say 'we will have the terms put into form,' then all the terms being put into writing and agreed to, there is a contract.

If two persons agree in writing that up to a certain point the terms shall be the terms of the contract, but that the minor terms shall be submitted to a solicitor, and shall be such as are approved of by him, then there is no contract, because all the terms have not been settled.

15. Then at page 32, he said:--

It comes, therefore, to this, that where you have a proposal or agreement made in writing expressed to be subject to a formal contract being prepared, it means what it says; it is subject to and is dependent upon a formal contract being prepared. When it is not expressly stated to be subject to a formal contract it becomes a question of construction, whether the parties intended that the terms agreed on should merely be put into form, or whether they should be subject to a new agreement the terms of which are not expressed in detail.

16. In Von Hatzfeldt-Wildenburg v. Alexander [1912] 1 Ch. 284, Parker J. (as he then was) said at page 288 as follows:--

It appears to be well settled by the authorities that if the documents or letters relied on as constituting a contract contemplate the execution of a further contract between the parties, it is a question of construction whether the execution of the further contract is a condition or term of the bargain or whether it is a mere expression of the desire of the parties as to the manner in which the transaction already agreed to will in fact go through. In the former case there is no enforceable contract either because the condition is unfulfilled or because the law does not recognize a contract to enter into a contract. In the latter case there is a binding contract and the reference to the more formal document may be ignored. The fact that the reference to the more formal document is in words which according to their natural construction import a condition is generally if not invariably conclusive against the reference being treated as the expression of a mere desire.

17. I do not think it necessary to go through the other English authorities, but I may quote what Lord Cranworth says in Ridgway v. Wharton (1857) 6 H.L.C. 238, viz.:--

I again protest against its being supposed, because persona wish to have a formal agreement drawn up, that therefore they cannot be bound by a previous agreement, if it is clear that, such an agreement has been made; but the circumstance that the parties do intend a subsequent agreement to be made, is strong evidence to show that they did not intend the previous negotiations to amount to an agreement.

18. I may also state that of later authorities Mr. Justice Kekewich in Lloyd v. Nowell [1805] 2 Ch. 744 and Mr. Justice Joyce in Watson v. McAllum (1902) 87 L.T. 547 both arrived at similar conclusions to Parker J. in Von Hatzfeldt-Wildenburg v. Alexander (1857) 6 H.L.C. 238, viz., that there was no contract. The latter case of Watson v. McAllum is fairly near the present one.

19. Two Indian authorities, Koylash Chunder Doss v. Tariney Churn Singhee I.L.R.(1884) Cal. 588 and Whymper v. Buckle I.L.R.(1879) All. 469 were cited to me, and they rely on the same principles as the English authorities.

20. Now applying to Exh. A the principles laid down in the above judgments, I think the words 'the conditions in respect thereof are as follows' are important, and that it is also important that the first of the conditions referred to is for a bargain paper through a Vakil. The reference to the more formal document (viz., the bargain paper) is therefore a 'condition', and according to Lord Parker, that fact is 'generally if not invariably conclusive against the reference being treated as the expression of a mere desire.' Further, I think there was a special reason here for the parties requiring the services of a Vakil before they were to be finally bound. That reason was the situation with reference to the two High Court suits which Was a peculiar one, and which Clauses 2 and 4 of Exh. A might not entirely meet.

21. Then, too, I think it is in favour of the defendants that the earnest money was to be paid on the execution of the bargain paper and not on the execution of Exh. A.

22. Counsel for the plaintiff argued that the reason for the bargain paper was because Exh. A was in Gujarati and the parties wanted a formal document in English. I do not think this was 'the' reason. It may perhaps have been a reason amongst others, and even if so, I am by no means satisfied that it points to the parties being finally bound by the Gujarati document.

23. I have duly considered the other arguments that were addressed to me on the true construction and effect of Exh. A. In the result I am of opinion and so hold that on the true construction of Exh. A and in the events which have happened, there is no binding contract between the plaintiff and defendant. The suit will, therefore, be dismissed with costs.

24. I should add that if I had been of opinion that there was a binding contract, I could not at this stage have decreed specific performance. The two High Court suits referred to in Exh. A have not yet been tried, and it depends on their result whether the defendant has anything to sell. At most, therefore, I could have made a declaration as to the existence of a binding contract, and adjourned the remaining issues till after the decision of the two suits. In his reply, counsel for plaintiff admitted that this view was correct and expressed his willingness to abide by it.

25. I answer the formal issues as follows:--

(1) Whether the suit is maintainable having regard to the fact that the writing sued on was conditional upon an agreement being entered into?

A. No.

(2) Whether there was a concluded contract between the parties and if so what are the terms thereof?

A. No.

26. It is unncessary to answer the remaining issues.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //