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Nair Service Society, Changanacherry Vs. R.M. Palat and ors. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtKerala High Court
Decided On
Case NumberA.S. No. 210 of 1962
Judge
Reported inAIR1966Ker311
ActsSpecific Relief Act, 1877 - Sections 12 and 21; Specific Relief (Amendment) Act, 1963 - Sections 9 and 10; Contract Act, 1872 - Sections 29
AppellantNair Service Society, Changanacherry
RespondentR.M. Palat and ors.
Appellant Advocate K. Velayudhan Nair,; V.S. Moothathu,; K.J. Joseph,;
Respondent Advocate C. Sankaran Nair, Adv.
DispositionAppeal partly allowed
Cases Referred(Emery v. Wase
Excerpt:
.....for specific performance of contract - in order to enable court to decree specific performance terms of contract must be clear, certain and complete - contract must be free from doubt and ambiguity so as to leave nothing to conjecture or to be supplied by court. - - 'the implication which the law draws from what must obviously have been the intention of the parties, the law draws with the object of giving efficacy to the transaction and preventing such a failure of consideration as cannot have been within the contemplation of either side; not to impose on one side all the perils of the transaction, or to emancipate one side from all the chances of failure, but to make each party promise in law as much, at all events, as it must have been in the contemplation of both parties that..........was intended by the parties, it is not possible to imply such a term. a contract to sell at a fair price or at a fair valuation or to let out properly for a reasonable rent or a fair or a proper rent is specifically enforceable on the principle cerium est quod ccrtum rcddi potest (that is certain which can be made certain).even if a contract is vague in language, if it is capable of being made certain, it can be enforced. section 29 of the contract act enunciates this principle; and it is open to the court to enforce the contract with the terms so ascertained. in secretary of state v. volkart brothers, ilr 50 mad 595: (air 1927 mad 513) it was held that a clause for renewal of a lease 'upon such terms and conditions as should be judged reasonable' was not void for uncertainty. in.....
Judgment:

Krishnamoorthy Iyer, J.

1. The second defendant is the appellant. The appeal arises out of a suit filed by the respondent for specific performance of the contract contained in the compromise petition Ext. A-1 or Ext. B-2 dated 19-11-1964 and for recovery of Rs. 1,500 as damages for the removal of some trees from the property by the appellant.

2. The facts relevant to this appeal are stated below. Ext. B-1 dated 4-12-1943 is a permanent lease executed by the respondent and others in favour of the appellant for 1000 acres of land. The respondent filed O. S. No. 398 of 1952 on the fde of the Munsiff's Court, Walluvanad, against the appellant for an order of injunction to restrain the appellant from entering into the property scheduled in that case on the ground that the appellant violated the terms of Ext. B-1 and was trying to trespass into the properties which lie adjacent to those included in Ext. B-1. The parties to the suit fifed Ext. A-1 or B-2 compromise petition in pursuance of which the suit was dismissed. Ext. A-2 is the plan appended to Ext. A-1 demarcating the property included in Ext. B-1.

In the compromise petition it was agreed that the trees in the property delineated in Ext. A-2 should be valued by Sri. S. K. Nairand Sri. A. Raghavan Nair, the advocates who appeared for the parties in O. S. No. 398 of 1952, or by their nominee within two months of Ext. A-1 and the price should be deposited by the appellant within 15 days thereafter. If there was any difference of opinion between the advocates in the valuation they should refer the matter to an umpire who should fix the price. The appellant was hound to deposit the price fixed by the umpire for payment to the respondent.

The advocates who appeared for both the parties in O. S. No. 398 of 1952 appointed Sri Karunakaran Nair to assess the value of the trees after making a local inspection. He submitted a report to the advocates assessing the value of the trees at more than Rs. 70,000. Shri S. K. Nair, by his letter Ext. A-4 dated 3-5-1954, addressed to the parties and Sri A. Raghavan Nair, requested that he might be relieved of the responsibility to value the trees under the terms of Ext. A-1. Subsequent to Ext. A-4, the value of the trees in the property was not fixed by Sri. A. Raghavan Nair and Sri S. K. Nair. The respondent therefore filed the present suit for specific performance of the contract in Ext. A-1 by compelling the appellant to pay the value of the trees in the properly marked out in Ext. A-2 to be determined by the Court and also for the recovery of the value of the trees cut and removed by the appellant from the property as damages.

3. A commission was issued by the trial Court to value the trees in the property and also to fix the value of the trees cut and removed by the appellant. Ext. C-1 is the report of the Commissioner fixing the value of the standing trees and value of the trees removed by the appellant. The value of the trees was fixed at Rs. 20,991.71 while the damage was assessed at Rs. 574.

4. The trial Court granted a decree against the appellant for Rs. 30,992 being the value of trees standing in the property and for Rs. 574 being the damages on account of removal of trees by the appellant.

5. In appeal the decree of the trial Court awarding damages was not challenged by the appellant; and we therefore confirm that portion of the decree.

6. Though a number of points were raised by the learned advocate for the appellant against [he decree granting specific performance, his main contention was that the contract evidenced by Ext. A-1 is too vague and uncertain to be specifically enforced. His case was that under Section 29 of the Contract Act (1 of 1872) 'as contract, the terms of which the Court cannot find with reasonable certainty, cannot be specifically enforced'. The submission of the learned advocate was that Ext. A-1 did not fix the price for the sale of the standing trees to the appellant and from Ext. A-1 it is not possible for the Court to imply a term that a fair and reasonable price was intended by the parties which, alone will enable the Court to grant specific performance to the respondent on the basis of the price to be ascertained by the Court.

7. Clause (4) of Ext. A-1 which is the relevant clause is in the following terms:

(After reproducing the clause in the original script the judgment proceeds) : The above clause provides the machinery for fixing the price of the tress. It cannot be gainsaid that price is a material term in a contract of sale and in appropriate cases it is open to the Court to imply a term that the parties intended a fair and reasonable price. The reason for this rule was stated in The Moorcook, (1889) 14 PD 64 at p. 68 by Bewen, L. J. in these terms: 'The implication which the law draws from what must obviously have been the intention of the parties, the law draws with the object of giving efficacy to the transaction and preventing such a failure of consideration as cannot have been within the contemplation of either side; and I believe if one were to take all the cases, and they are many, of implied warranties or covenants in law, it will be found that in all of them the law is raising an implication from the presumed intention of the parties with the object of Riving to the transaction such efficacy as both parties must have intended that at all events it should have. In business transactions such as this, what the law desires to effect by the implication is to give such business efficacy to the transaction as must have been intended at all events by both parties who are businessmen; not to impose on one side all the perils of the transaction, or to emancipate one side from all the chances of failure, but to make each party promise in law as much, at all events, as it must have been in the contemplation of both parties that he should be responsible for in respect of those perils or chances.'

The question which therefore arises for consideration is whether the term in Ext. A-1 which prescribes a mode for ascertaining the value of trees can be construed as providing for sale at a fair and reasonable price. If there is no statement in the contract regarding the price to be paid the law allows a standard of reasonableness. Accordingly a fair or reasonable price is recoverable on the basis of a term to be implied in the contract. But when the terms of a contract exclude that a reasonable or a fair market price was intended by the parties, it is not possible to imply such a term. A contract to sell at a fair price or at a fair valuation or to let out properly for a reasonable rent or a fair or a proper rent is specifically enforceable on the principle cerium est quod ccrtum rcddi potest (that is certain which can be made certain).

Even if a contract is vague in language, if it is capable of being made certain, it can be enforced. Section 29 of the Contract Act enunciates this principle; and it is open to the Court to enforce the contract with the terms so ascertained. In Secretary of State v. Volkart Brothers, ILR 50 Mad 595: (AIR 1927 Mad 513) it was held that a clause for renewal of a lease 'upon such terms and conditions as should be judged reasonable' was not void for uncertainty. In The New Beerbhom Coal Co. v. Bularam Mahata, (1880) ILR 5 Cal 932 (PC) their Lordships of the Judicial Committee was of the view that where there is no express stipulation as to the price payable in a contract to sell land specific performance can be granted on the basis of the reasonable price of the land to be ascertained by the Court. In Foley v. Classique Coaches Limited, 1934-2 KB 1 at p. 13, Maugham, L. J., observed:

'It is indisputable that unless all the material terms of the contract are agreed there is no binding obligation. An agreement to agree in the future is not a contract; nor is there a contract if a material term is neither settled nor implied by law and the document contains no machinery for ascertaining it.'

Ext. A-1 contains the machinery to ascertain the price. It was not possible to fix the value of the standing trees in accordance with the procedure prescribed in Ext. A-1 in view of the unwillingness expressed by Sri S. K. Nair under Ext. A-4. But the contention of learned advocate for the respondent was that from Clause (4) of Ext. A-1 the inference is possible that the parties intended payment of a fair and reasonable price and in view of the failure of the method prescribed in Ext. A-1 it is open to the Court to decree specific performance for the amount found in Ext. C-1.

This contention of the learned advocate for the respondent cannot, in our view, be accepted. In order to enable the Court to decree specific performance, the terms of the contract' must be clear, definite, certain and complete. The contract must be free from doubt, vagueness and ambiguity so as to leave nothing to conjecture or to be supplied by the Court. When the contract provides a method for fixing the price, the question has arisen whether it can be specifically enforced when the method prescribed had failed.

In Milness v. Gery, (1807) 14 Ves Jun 400 the point arose whether an agreement for sale according to the valuation of two persons, one chosen by each party, or of an umpire, to be appointed by those two in case of disagreement could be specifically enforced. In dismissing the Bill the Master of the Rolls observed at pp. 406 and 407 thus:

'The more I have considered this case, the more I am satisfied, that, independently of all other objections, there is no such agreement between the parties, as can be carried into execution. The only agreement into which the defendant entered, was to purchase at a price, to be ascertained in a specified mode. No price having ever been fixed in that mode, the partlies have not agreed upon any price. Where then is the complete and concluded contract, which this Court is called upon to execute? The price is of the essence of a contract of this sale. In this instance the parties have agreed upon a particular mode of ascertaining the-price. The agreement, that the price shall be fixed in one specific manner, certainly does not afford an inference, that it is wholly indifferent, in what manner it is to be fixed, The Court, declaring, that the one shall take, and the other shall give a price, fixed in anyother manner does not execute any agreement of theirs; but makes an agreement for them; upon a notion, that it may be as advantageous as that, which they made for themselves. How can. a man be forced to transfer to a stranger that confidence, which upon a subject, materially interesting to him, he has reposed in an individual of his own selection? No substantial difference arises from the circumstances, that in this case the decision may ultimately fall to an umpire, not directly nominated by tile parties; as through the medium of the original nominees they had an influence upon the choice, No one could be chosen without the concurrence of the persons, in whose judgment they reciprocally confided.

The case of an agreement to sell at a fair valuation is essentially different. (Emery v. Wase, (1801) 5 Ves 846; (1803) 8 Ves 505). In that case no particular means of ascertaining the value are pointed out: there is nothing therefore, precluding the Court from adopting any means adapted to that purpose. The case, in which the Court has modified particular, subordinate, parts of an agreement, falls far short of the decree, that is now demanded. Perhaps some of those cases may be thought rather to require defence for the length to which they have gone, than to furnish a justification for still farther extending the discretionary power, of which they are instances. The Court never professes to bind a man to any agreement, except that, which he has made; but sometimes hold the agreement, which it executes, and that, which he has made to be substantially the same; when to common understandings there is a very perceptible difference between them. The Court however has never gone the length of compelling a party to buy or sell the whole subject of his agreement at a price, that he has never fixed, and that was never fixed in any mode, to which he has given his consent.'

Fry, in his Treatise on the Specific Performance of Contracts, 6th Edition, in paragraphs 353, 355, 356 and 357 sums Up the law in these terms:

'In all sales it is evident that price is an essential ingredient, and that where this is neither ascertained nor rendered ascertainable, the contract is void for incompleteness, and incapable of enforcement.

Accordingly where A agreed to sell an estate to B for 1,500 pounds less than any other purchaser would give, the contract was held void: for if the estate was not to be sold to any other purchaser than B, it was impossible to know what such a purchaser would give for it. So again, where there was a contract to sell at a price to be fixed by two surveyors, and they made their valuation, but that did not sufficiently and finally ascertain the price, specific performance was refused; and the like was the result of a similar case, where the valuation was such as the Court could not act on, by reason of circumstances of great impropriety on the part of one of the valuers, and the valuation being based on an erroneous view of the facts.

XX XX XX XX Where the contract appoints a way of determining the price, the Courts have in some cases deemed that way essential; in other cases they have deemed it non-essential, and have treated the contract as essentially one to sell at a fair price. In all cases where the principal subject of the contract is to be valued In a specified manner, the manner has, it is believed, been held essential: the manner has often been held non-essential where it is applied, only to an incident to the main subject, as timber to land, fixtures to a house, or plant to a business.

Where the contract specifies a way of ascertaining the price which is essential, the contract is conditional till the ascertainment, and is absolute only when the price has been determined in the manner agreed upon. In case of default in this respect the contract remains imperfect, and incapable of being enforced: for the Court will never direct the payment of such a sum as A may fix.'

Is the method for fixing the price provided in Clause (4) of Ext. A-1 an essential or a non-essential term? If it is essential and the mode prescribed has failed, the Court will not enforce specific performance. Clause (4) in Ext. A-1 was intended to value the principal subject of the contract in a specified manner which is therefore essential. The contract is therefore conditional and becomes absolute only when the price is fixed in accordance with the mode prescribed. On account of the default the contract is imperfect and cannot be Specifically enforced.

8. In view of the above position, the Court below was not right in fixing the value of the trees and granting a decree against the appellant. In the result, the decree and judgment of the Court below to the extent it awards an amount of Rs. 20,992 as value of trees to the respondent is set aside and the appeal allowed to that extent. The decree awarding the respondent Rs. 574 as damages for trees cut and removed by him with interest at 5 per cent thereon is confirmed and the appeal dismissed to that extent. The parties to this appeal are liable to pay and receive proportionate costs both in this and in the trial Court,

9. The respondent has filed a memorandum of cross-objection claiming an additional value for the trees based on Ext. A-3report. Even in the plaint the respondent hasestimated the value of the trees only atRs. 5,100. Since we have held that the contract is not specifically enforceable, the memorandum of cross-objection has only to be dismissed and it is hereby dismissed but withoutcosts.


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