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Govind Laxman Gokhale Vs. Hirachand Mancharam - Court Judgment

LegalCrystal Citation
SubjectProperty;Contract
CourtMumbai
Decided On
Case NumberO.C.J. Appeal No. 17 of 1919
Judge
Reported inAIR1919Bom154; (1919)21BOMLR1047
AppellantGovind Laxman Gokhale
RespondentHirachand Mancharam
DispositionAppeal allowed
Excerpt:
.....find the true and important ingredients of an agreement in that which has taken place between two parties in the course of a correspondence, then, although the correspondence may not set forth, in a form which a solicitor would adopt if he were instructed to draw an agreement in writing, that which is the agreement between the parties, yet, if the parties to the agreement, the thing to be sold, the price to be paid, and all those motors so clearly and distinctly stated, although only by letter, an acceptance clearly by letter will not the less constitute an agreement in the full sense between the parties, merely because that letter may say, we will have this agreement put into due form by a solicitor. now to my mind that clause is perfectly clear......in the case there has been a concluded agreement, if there is a provision for the execution of a formal agreement thereafter, and this is to be regretted as once the general rule of construction has been laid down by authority, a decision arising from its application to a particular set of facts cannot operate as a precedent, for the very remote chance of any two sets of fact being absolutely similar may be excluded. and in my humble opinion no judge can be fettered by an attempt by another judge to lay down any special rule of construction based on his opinion on the facts of the case before him.7. the general rule of construction was laid down by the house of lords in rossiter v. miller (1878) 3 a c. 1124 and it will be as well to set out the facts of that case. certain land had been.....
Judgment:

Macleod, C.J.

1. This is an appeal from the decision of Marten J. dismissing the suit which the plaintiff had filed praying that the defendant might be ordered to specifically perform an alleged agreement dated the 28th November 1917 and to do all acts necessary for carrying out his part of the agreement.

2. The facts are not in dispute and the evidence in the case is purely documentary.

3. On the 28th November 1917 the plaintiff and defendant drew up two writings in Gujarati which are Exts. A and A I in the case. It is admitted that for all intents and purposes the documents are in identical terms. Exh. A was signed by the defendant and Exh. AI by the plaintiff. The plaintiff contended that those two documents constituted a complete agreement for the sale by the defendant to the plaintiff of a certain property for Rs. 2,15,000. Looking at the documents this would at first sight appear obvious. They contain the names of the parties, the description of the property to be sold, the price to be paid, a provision regarding the division of the costs of the conveyance, etc., the conditions that the seller must make out a marketable title, and that the vendor must get the signature of a certain adopted son on the sale deed, a provision that the seller has not to pay brokerage, and the time for completion. Finally each party writes ' I have given and taken from you the agreement to the above effect of my own free will and pleasure.' The main defence is contained in para 2 of the written statement.

The defendant says that the Gujarati writings signed by the plaintiff and defendant respectively were merely the terms agreed on as a basis for the contract and not the contract itself which was to be made through a Vakil as stated in Clause 1 of the Gujarati writing.

4. After these documents were executed a draft agreement in English was prepared but the parties could not agree to the terms of the draft. Eventually, on the 8th December 1917, the defendant's solicitors wrote that as the plaintiff did not agree to the terms of the draft agreement as altered by them there was no course left open to the defendant but to break off the negotiation for the sale of the property. That the Gujarati Chitti was not the agreement which the parties intended to enter into for the sale of the property as their client understood that the altered agreement for sale and all the necessary terms and conditions of such sale would be entered into at the office of the Vakil as provided in the said Chitti. This contention found favour with the learned trial Judge.

5. After referring to various authorities he said:

I think the words 'the conditions in respect there of are as follows' are important, and 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 partita requiring the services of a Vakil before they were finally bound. That reason was the situation with reference to the two High Court suits which was a peculiar one, and which Clause 2 and 4 of Exh. A might not entirely meet.

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.

6. The fallacy in this argument, with due respect, is the failure to observe that the word ' condition ' has two meanings. It is often used as synonymous with ' term ' and ordinarily when it is stated in a document which takes the form of an agreement that ' the conditions are as follows ' as it is stated in Exh. A, the word ' condition ' means term.' The commonest occasion when the word has this meaning is when conditions of sale are drawn up for an auction. When a successful bidder signs the agreement annexed to the conditions of sale those conditions become part of' the contract. Therefore the mere fact that a bargain paper was to be made through a Vakil cannot of itself prove that there was a condition precedent to the agreement becoming effectual as a term of the agreement. There are a great many cases reported where the question before the Court has been whether or not on the evidence in the case there has been a concluded agreement, if there is a provision for the execution of a formal agreement thereafter, and this is to be regretted as once the general rule of construction has been laid down by authority, a decision arising from its application to a particular set of facts cannot operate as a precedent, for the very remote chance of any two sets of fact being absolutely similar may be excluded. And in my humble opinion no Judge can be fettered by an attempt by another Judge to lay down any special rule of construction based on his opinion on the facts of the case before him.

7. The general rule of construction was laid down by the House of Lords in Rossiter v. Miller (1878) 3 A C. 1124 and it will be as well to set out the facts of that case. Certain land had been laid out in plots and a plan prepared. Eight conditions were printed on the plan headed, 'the following are the conditions of sale.' After the conditions came the following clause. ' Each purchaser will be required to sign a contract embodying the foregoing conditions and providing for the payment of a deposit at the rate of 10 per cent, and for the completion of the purchase within two months of the contract. Miller offered orally to purchase some of the lots for 1000 and was informed he must purchase under the conditions printed on the plan. Then certain letters passed and it was contended that Miller's offer had been accepted.

8. Cairns L. C. said : 'The main question...is whether there was...a concluded contract.' Then after setting out the conditions of sale and the correspondence the Lord Chancellor proceeded :

I pause there for the purpose of pointing out...that in these conditions there are to be found the terms...of a contract, such as might reasonably be ex. pected to be proposed with regard to sales of plots of land of this description... If you find, not an unqualified acceptance of a contract, but an acceptance subject to the condition that an agreement is to be prepared and agreed upon between the parties, and until that condition is fulfilled no contract is to arise then undoubtedly yon cannot, upon a correspondence of that kind, find a concluded contract.

9. Lord Hatherley said:

If you can find the true and important ingredients of an agreement in that which has taken place between two parties in the course of a correspondence, then, although the correspondence may not set forth, in a form which a solicitor would adopt if he were instructed to draw an agreement in writing, that which is the agreement between the parties, yet, if the parties to the agreement, the thing to be sold, the price to be paid, and all those motors so clearly and distinctly stated, although only by letter, an acceptance clearly by letter will not the less constitute an agreement in the full sense between the parties, merely because that letter may say, 'We will have this agreement put into due form by a solicitor.

10. Lord Blackburn said:

But the mere fact that the parties have expressly stipulated that there shall afterwards be a formal agreement prepared, embodying the terms, which shall be signed by the parties does not, by itself, show that they continue merely in negotiation. It is a matter to betaken into account in construing the evidence and determining whether the parties have really come to a final agreement or not. But as soon as the fact is established of the final mutual assent of the parties so that those who draw up the formal agreement have not the power to vary the terms already settled, I think the contract is completed.

11. Lastly Lord Gordon said:

No doubt these conditions provided for a subsequent and formal deed being executed by the parties; but that deed was only for the purpose of more formally setting forth the conditions upon which the parties had agreed. If there was anything introduced into the proposed deed, which the purchaser considered beyond the terms and conditions on which he purchased the property, he would have been entitled to object, and, if necessary, the proper terms of the deed could have been adjusted at the sight of a Court of Law.

12. The facts of that case more nearly approach the facts of this case than the facts of any of the other cases which have been cited to us. There wore conditions of sale which were considered to be the terms upon which the lots were offered for sale. It was provided that each purchaser was to sign a contract embodying the conditions and providing for the payment of a deposit But the facts of this case are very much stronger as the alleged contract is to be found not in correspondence between the parties but in a document which is in the form of a regular agreement. Each party writes that he has given and taken an agreement to the above effect, that is to say, according to the conditions or terms in the document and not subject to any condition. And there is this further fact that Messrs. Hiralal & Co. by their letter of the 1st December certainly considered that the agreement by a Vakil was to be drawn up in consonance with the terms of the Gujarati Chitti. If that document was merely the basis for a future agreement then it would be open to either party to suggest fresh terms as to price and any other matter.

13. Now I turn to the facts in the cases on which the respondent relied.

14. In Winn v. Bull (1817) 7 Ch.D 29there was an agreement for a lease of a freehold but subject to the preparation and approval of a formal contract.

15. Jessel M. R. said :

The plaintiff says in effect, 'I agree to grant you a lease on certain terms, but subject to something else being approved.' He does not say, 'Nothing more shall be required'... but 'something else is required.... That being so, the agreement is uncertain in its terms....

In Lloyd v. Nowell (1895) 2 Ch. 744, the defendant wrote 'subject to the preparation by my solicitors and completion of a formal contract, I am willing to sell to you the Lease, etc.

16. Kekewich J. said:

I cannot myself get out of the plain meaning of the words: 'I am willing to sell, not absolutely, but subject to the preparation by my solicitor, and completion, of a formal contract'....That provision seems to me to go to the root of the contract.

17. In Watson v. McAllum (1902) 87 L.T547, 548 the letter ran: 'We agree to sell the above for 1,775 subject to agreement stating fully the conditions being prepared and signed at our office on Monday.'

18. Joyce J. said: ' What is the effect of the words 'subject to'? They introduce a condition or proviso.'

19. Lastly in Von Hatzfeldtwildenburg v. Alexander (1912) 1 Ch. 284, the case so much relied upon by the learned trial Judge, there was an offer by letter to accept 25,000 for the lease of a certain house and a reply by letter accepting ' subject to the following conditions ' and one condition was that the buyer approved her surveyors' report on the structure, and drainage, etc., another was that the buyer's solicitors should approve of the title and the form of contract. The plaintiff did not approve of her surveyors' report, and the defendant withdrew the offer to sell.

20. It will be seen, therefore, that in all these cases the words 'subject to' were used and it was held that they imported a condition or proviso.

21. I may also refer to the decision of Jessel M. R. in Crossley v. Maycock (1874) L.R. 18 where the learned Judge said :

The principle which governs these cases is plain. If there is a simple acceptance of an offer to purchase, accompanied by a statement that the acceptor desires that the arrangement should be put into some more formal terms, the mere reference to such a proposal will not prevent the Court from enforcing the final agreement to arrived at.

22. Lastly the remarks of Spankie J. in Whymper v. Buckle I.L.R.(1879) 3 All. 469seem directly in point. The learned Judge said :

With all this authority before us we may safely conclude that, unless the defendants can show that by mutual consent there was a condition antecedent to a contract to the effect that there should be no binding agreement until a written contract had been executed by the parties, or that the assent communicated in their letter of the 20th December, 1877, was subject to the provision as to a written contract, then, assuming that any agreement has been proved, that agreement would be binding upon the parties. The case therefore must stand or fall to pieces on the evidence.

23. To say that the words 'the conditions thereof are as follows ' appearing in a document which has all the appearance of a final agreement, import that all that follows constitutes conditions antecedent to a contract is begging the question. An agreement having been executed, the defendant has to show that it was not to take effect until certain conditions precedent had been fulfilled.

24. It has been argued that because some dispute might arise when drawing up the clause in the formal agreement corresponding to condition 4 in Exh. A. Now to my mind that clause is perfectly clear. If the pending suits are not disposed of within six months the agreement is to remain in force until they are disposed of. Disposal must mean final disposal. It could not be read into the clause that if the defendant got a decision in his favour in the first Court, the plaintiff would be bound to purchase without regard to the chance of the decision in the first Court being reversed on appeal. But the fact that a dispute might arise in drafting the formal agreement was considered by Lord Gordon in Rossiter v. Miller in the passage I have referred to above and cannot in any way affect the question we have to determine, unless the defendant can show that the condition in Clause 4 is so uncertain that it is patent that no agreement was arrived at and that the parties intended that the actual agreement should be settled thereafter when the bargain paper was executed. Bur, that has not been shown ; the question raised by the defendant's solicitors whether the defendant's agreement was passing to and fro between the parties is no longer of any importance as we have been told the suits have been settled and the defendants are free to convey, but as long as the suits were pending there would have been no difficulty that I can see in the event of disputes arising over the terms of the agreement, in getting them or any others adjusted by the Court.

25. In my opinion, therefore, there was a binding agreement on the 28th November 1917 and the plaintiff is entitled to specific performance.

26. On the issues, I do not understand the form of the first issue and I think it should be struck out.

27. On the second issue I should say there was a concluded contract the terms of which are to be found in Exh. A. I would answer issue (3) in the negative, issue (4), in the affirmative and issue (5), in the affirmative.

28. The result is that the appeal must be allowed and the plaintiff's claim decreed with costs in both Courts.

Heaton, J.

29. I concur.


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