IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.M.JOSEPH & THE HONOURABLE MR. JUSTICE M.L.JOSEPH FRANCIS THURSDAY, THE 26TH NOVEMBER 2009 / 5TH AGRAHAYANA 1931 AS.No. 59 of 1995 D ------------------------------------ OS.1418/1991 OF THE IST ADDL. SUB COURT,THRISSUR .................... APPELLANT(S) IN AS/ PLAINTIFFS IN SUIT: ----------------------------------------------------------- PAULY MEMORIAL SHUTTLE CLUB, REPRESENTED BY ITS: i) PRESIDENT, FRANCIS, AGED 41, S/O. PALATHINKAL PAVU, CHIYYARAM VILLAGE, THRISSUR TALUK, THRISSUR DISTRICT. ii) SECRETARY, JOY, S/O. THOTTAN VARGHESE, AGED 43, MISSION QUARTERS, CHEMBUKAVU VILLAGE, THRISSUR. iii) TREASURER, ANTONY, S/O. THANCHAN RAPPAI, OLLUR VILLAGE, THRISSUR TALUK. BY ADV. SRI.S.V.BALAKRISHNA IYER, SENIOR ADVOCATE SRI.M.M.TEENA, P.B.KRISHNAN SRI.K.JAYAKUMAR RESPONDENT(S) IN AS/DEFENDANTS IN SUIT: ------------------------------------------------------------------ YOUNG MEN CHRISTIAN ASSOCIATION, THRISSUR, REPRESENTED BY ITS: i) PRESIDENT, VARGHESE JACOB, PALACE ROAD, CHEMBUKKAVU VILLAGE, CHEMBUKKAVU DESOM, THRISSUR TALUK, THRISSUR DISTRICT. AS.NO.59 OF 1995 D ii) SECRETARY, SHAJU J. NELLISSERY, PALACE ROAD, CHEMBUKKAVU VILLAGE AND DESOM, THRISSUR TALUK, THRISSUR DISTRICT. ADV. SRI.A.M.SHAFFIQUE FOR R1&R2 THIS APPEAL SUIT HAVING BEEN FINALLY HEARD ON 26/11/2009 ALONG WITH AFA NO. 8 OF 1998, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: K. M. JOSEPH & M. L. JOSEPH FRANCIS, JJ. -------------------------------------------------- A.S.NO.59/95 D & AFA.NO. 8/98 --------------------------------------------------- Dated this the 26th November, 2009 JUDGMENT K.M. Joseph, J. These Appeals being connected, they are disposed of by the following common judgment. A.F.A.8/1998: 2. Appellant in AFA 8/98 is the plaintiff in O.S.No.556/1981 of the Sub Court, Thrissur and the respondent in A.S.No.132/1988 on the file of this Court. 3. We shall refer to the appellant as the plaintiff and the respondents as defendants. The Suit was filed seeking specific performance of a contract to sell plaint B schedule property which is 15 cents in extent, situated in Thrissur. Briefly put, the case of the plaintiff is as follows: AS.59/95 & AFA.8/98 2 There is a contract to sell plaint B schedule property for a consideration of Rs.45,000/-. It is their further case that an amount of Rs.100/- was paid on 28.11.1979 and the plaintiff is ready and willing to perform the contract by paying the balance consideration of Rs.44,900/-. It is their case that the plaintiff was in possession of 30 cents of land belonging to the Attokaran family under a lease arrangement. In the middle of a litigation launched for eviction by the owner, it was decided by the plaintiff to purchase 30 cents. However, the plaintiff was not with funds. There was the YMCA Badminton Club. It was a sister concern. It was decided to bring out a souvenir and funds were raised. It was agreed that the amount will be used to purchase the property and building and to construct an indoor court in the name of Pauly Memorial Shuttle Indoor Court. Later, defendants 2 onwards who were Members of the YMCA Club changed their attitude. Later, it was decided that 15 cents out of 30 cents would be sold in favour of the plaintiff. For the AS.59/95 & AFA.8/98 3 same, the plaintiff was given a sum of Rs.50,000/- as loan by the Ist defendant, Pauly Memorial Shuttle Club. It was further agreed that the plaintiff would create a charge over the 15 cents assigned in its favour by the owner. It is also agreed that the plaintiff would return Rs.50,000/- within six months, but, if the amount is returned after six months the plaintiff would be liable to pay interest at 12 percent. It was also resolved that the expenses for taking the Sale Deed in the name of the first defendant has to be borne by the plaintiff. The erstwhile owner executed Ext.A9 sale deed in favour of the plaintiff in respect of 15 cents. The previous owner executed Ext.A10 sale deed in respect of the balance 15 cents for a sum of Rs.35,000/- to the Ist defendant. It is the case of the plaintiff that an agreement was prepared on 17.11.1979 as per which the plaintiff need pay only the consideration mentioned in Ext.A10 Sale Deed. It was agreed that the sale shall be executed within six months and if it is not done, the consideration would be Rs.45,000/= and not Rs.35,000/= mentioned in Ext.A10. An amount of Rs.100/= AS.59/95 & AFA.8/98 4 was paid as advance. The agreement prepared through a scribe was signed by the representatives of the plaintiff and entrusted to defendants 2, 3 and 6. Though the latter persons signed the agreement, the agreement and duplicate had not been returned. By September, 1980, necessary funds were raised. But, defendants 2 and 3 demanded payment of the loan amount also. The plaintiff agreed, but the full funds could not be raised immediately and Rs.25,000/= was paid and the plaintiff was ready with the full amount by January, 1981. It is the case of the plaintiff that time is not the essence of the contract. It is the further case that they were ready and wiling to take the sale deed in respect of plaint B-schedule property. But, defendants were not ready to convey. Hence the suit. The defendants in the Written Statement contended, inter alia, as follows: The first defendant Society is a Society registered under the Societies Registration Act and it is not a sister concern of the plaintiff. The YMCA Shuttle Club and Pauly Memorial Club are two separate clubs. It is true that the plaintiff decided to AS.59/95 & AFA.8/98 5 purchase the property and building. Without any participation of the plaintiff, money had been collected and souvenir published. It was suggested that with the funds raised by publication of the souvenir, the property should be purchased and construction of Pauly Memorial Shuttle Indoor Court can be considered later. Many of the office bearers of the YMCA itself could not agree. By that time, the first defendant club was also functioning. Since the plaintiff was not able to raise funds for purchase of the entire property, they discussed with the Members of the first defendant club and it was decided that necessary property for construction of Pauly Memorial Shuttle and Indoor Court should be purchased by the first defendant. A decision alleged to have been taken on 12.10.1979, is not correct. It is stated that the actual decisions were as follows: Y.M.C.A. was not able to raise funds for the purchase of A schedule property. It is decided that B schedule property be purchased by Pauly Memorial Club for constructing Pauly Memorial Shuttle Indoor Court and the balance extent be AS.59/95 & AFA.8/98 6 purchased by Y.M.C.A. and for that purpose, an amount of Rs.50,000/= be taken as loan from the Pauly Memorial Club giving the said property as charge to the Pauly Memorial Club. Considering the fact that the Pauly Memorial Club is advancing loan of Rs.50,000/=, the expenses for taking the sale deed be borne by the Y.M.C.A. and for the loan amount, no interest need be paid for the first three months and thereafter to pay 12% interest. It is further resolved there that as decided earlier, the Pauly Memorial Shuttle Indoor Court be constructed by the Y.M.C.A. and the loan amount be returned to the Pauly Memorial Club within six months and if that be so, the B schedule property be conveyed to the Y.M.C.A. and the period of six months shall not in any case be changed and an agreement to this effect has to be executed. It is not true that the decision was to purchase B schedule for the time being in the name of Pauly Memorial Club, for and on behalf of Y.M.C.A. It is true that it was agreed to execute an agreement for sale and Antony Kavalakkat was entrusted for preparing the documents and the AS.59/95 & AFA.8/98 7 agreement. It is true that the 4th defendant was entrusted with the duty of preparation of document. The Y.M.C.A. President Varghese Paul also involved in that matter. It is not true that an agreement has been prepared on 17.11.1979. The sale deeds in favour of both plaintiff and first defendant, the hypothecation deed, and the agreement has been prepared on 28.11.1979 and brought to 4th defendant. When the 4th defendant perused the documents and agreement for sale, it is found that the agreement for sale is not in conformity with the decisions taken. Hence the agreement has been returned. No advance of Rs.100/= has been received by the defendant. It is also not true that the agreement has been entrusted with defendants 2, 3 and 4. Nobody has signed in agreement or duplicate for the first defendant. The expenses for the preparation of documents has been given to the document writer by the plaintiff and account for the expenses has been given by the document writer to the 4th defendant and a copy of the same has been handed over to Varghese Paul by the 4th defendant. The correctness of the balance sheet of the AS.59/95 & AFA.8/98 8 plaintiff is not known to the defendants. It was a concession given to the plaintiff to take the sale deed of B schedule property from the first defendant within six months from the date of sale deed in favour of the first defendant. On the expiry of six months that right has been lost to the plaintiff. Time was the essence of the contract. It is not true that in September 1980, the plaintiff was prepared to take the sale deed. In any case, the plaintiff was not entitled to get the document at that time. The agreement was to pay the loan amount and the balance sale consideration together and there was no subsequent agreement regarding payment of the loan amount. 4. The learned trial Judge decreed the suit. He found that the case of the plaintiff that the Ist defendant was a trustee could not be accepted. However, the court found from the evidence that an agreement was shown to exist and the first defendant had agreed to sell plaint B-schedule property to the plaintiff upon the plaintiff paying the consideration which is passed from the Ist defendant in favour of the original owner which is shown as AS.59/95 & AFA.8/98 9 Rs.35,000/- and in view of the fact that the payment was made beyond six months, the plaintiff was to pay a sum of Rs.45,000/-. It is also found that the plaintiff is also obliged to pay a sum of Rs.50,000/- which the Ist defendant had given as loan with interest at 12 percent. It is also found that the plaintiff had paid advance of Rs.100/- to the Ist defendant and thus after deducting Rs.100/- the plaintiff was directed to deposit the balance amount of Rs.44,900/- and also the amount paid as loan with interest and the Ist defendant is directed to execute the sale deed thereupon in respect of plaint B-schedule property. 5. The defendants filed Appeal before this Court. Learned Single Judge of this Court reversed the judgment of the learned Sub Judge. The learned Single Judge took the view that this is a case where the plaintiff had not established an agreement in any certainty. The learned Judge further found that the case that the plaintiff paid a sum of Rs.100/- as advance could not be accepted. Learned Single Judge also found that the entries made in Ext.A5(a) in regard to the meeting that took place on AS.59/95 & AFA.8/98 10 12.10.1979 did not inspire his confidence, noting that in the minutes the figure 1980 was written and then struck off and thereafter 1979 was inserted. The meeting is alleged to have taken place on 12.10.1979. He would reason that it is improbable, that when minutes were written in the year 1979, for a person to write 1980 even though the reverse may have been a possibility. Learned Single Judge also did not find execution of Ext.A19 inspired the confidence of the Court. Ext.A19 is alleged to be written by Dw1 who is the 4th defendant showing payment of advance of Rs.100/- to the Ist defendant. 6. We heard Sri. N. Subramaniam, learned counsel for the appellant and Sri. K. Jayakumar learned counsel on behalf of the respondents. 7. Shri N. Subramaniam contended that the learned Single Judge erred in interfering with the Judgment of the trial court. According to him, there was indeed a concluded contract and what remained was only the execution of a formal written agreement. The fact that the parties contemplated the execution AS.59/95 & AFA.8/98 11 of a formal written agreement would not, however, rob the earlier oral concluded contract of its legal efficacy. He would rely on the following decisions for the proposition that the parties may contemplate the execution of a formal written agreement to reduce to writing the terms of an already concluded oral contract. In such cases, the oral contract will be enforceable (See H.G. Krishna Reddy And Co. v. M.M. Thimmiah and Another (AIR 1983 Madras 169), The Firm of A.M. Mylappa Chettiar, by Partners, A.M. Muthu Chettiar And A.M. Mylappa Chettiar v. Aga Mirza Mahomed Shirazee (1954 Indian Cases 550) and Kollipara Sriramulu (dead) by his legal representative v. T. Aswatha Narayana (dead) by his legal representative and Others (AIR 1968 SC 1028)). He would further point out that as noted by the learned Sub Judge, the definite case of the defendants was that the written terms of the karar were not agreeable to the defendants and it was returned back. But, it is stated by DW1 as follows: AS.59/95 & AFA.8/98 12 He placed considerable reliance on Ext.A5 (a). Ext.A5(a) is the alleged Minutes of the meeting of the office bearers of the YMCA and the first defendant Club on 12.10.1979. It is pointed out that the Minutes would show that the office bearers of the first defendant agreed, in view of the facts, that fifteen cents would be taken in the name of the plaintiff, while the conveyance in respect of the fifteen cents would be taken in the name of the first defendant. It is pointed out that the Minutes would show that the parties agreed to re-convey the property upon the consideration in respect of the property taken in the name of the first defendant being paid. He would also submit that the grant of the loan by the first defendant to the plaintiff are all referred to in the said Minutes. In other words, he would submit that Ext.A5(a) would reveal the existence of a concluded contract. No doubt, under Ext.A5(a) the parties contemplated AS.59/95 & AFA.8/98 13 the execution of a formal agreement. But, as already submitted, it is the appellant's case that the execution of the written agreement was considered only to be of a formal expression of the contract already concluded between the parties. Shri N. Subramaniam would further submit that being an agreement for purchase of immovable property, time was not the essence of the contract and no notice has been issued by the defendants making time the essence of the contract. He would further submit that the fact that there may have been an increase in the price of immovable property, should not deter this Court from enforcing the contract. In this regard, he relied on the decision in P. D'souza v. Shondrilo Naidu ((2004) 6 SCC 649). He took us through the pleadings and evidence. 8. Per contra, Shri K. Jayakumar, learned counsel for the respondents would submit that there is no concluded contract between the parties. He would further submit in the alternative, that the appellant was not ready and willing, even assuming that there was a contract. He would point out the discrepancy in the AS.59/95 & AFA.8/98 14 date in Ext.A5(a). He would further submit that Ext.A5(a) contemplated the execution of the actual agreement. He submits that the defendants were agreeable in conveying the B schedule property to the plaintiff on certain terms and conditions. But, when the written agreement came to be prepared, it did not contain certain terms and conditions. He would point out that the parties did contemplate the execution of an agreement embodying all the terms and conditions to enforce the contract. Such a contract has never came into being and, therefore, there can be no question of enforcing specific relief. He would take us through the pleadings and point out that quite clearly, there was no concluded contract between the parties to be specifically enforced. He would further submit that Ext.A5(a) is dated 12.10.1979. He would submit that it is the admitted case that as on the date of Ext.A5(a), the first defendant Club did not exist. He would further point out that if one goes by Ext.A5(a), no time was stipulated for the plaintiff to pay the amount. He would point out that actually what the parties had contemplated AS.59/95 & AFA.8/98 15 was Rs.35,000/= to be paid within a period of six months along with Rs.50,000/= availed as loan by the plaintiff from the first defendant. Time was to be treated as of the essence of the agreement. He would submit that these conditions were not incorporated in the written agreement which was handed over to the office bearers of the first defendant. He would pose the question as to which seller would agree to a contract which did not stipulate for a time limit for execution of the sale deed after receiving Rs.45,000/= as contended by the plaintiff. He would reiterate that apparently Ext.A5(a) was written up later on. He would refer to the decision in Mrs. Sandhya Rani Sarkar v. Smt. Sudha Rani Debi & Others (AIR 1978 SC 537) to point out that the huge delay involved would result in the most unjust result. He would also refer to the decision in P. D'souza v. Shondrilo Naidu ((2009) 1 SCC 475 Paragraph 2) to point out that an executory contract cannot be enforced. A.S.NO.59 OF 1995 D 9. This Appeal is filed by the defendants in the other Suit AS.59/95 & AFA.8/98 16 to enforce the mortgage executed by the YMCA to secure the debt of Rs.50,000/= about which we have already referred to. The Suit stands decreed. However, the complaint of the mortgagee is that the court below has only permitted the appellant to withdraw the sum of Rs.52,542/= deposited by the mortgagor in the Suit for specific performance (OS No.556/81) from which the connected Appeal arises. According to the appellant, this deposit is not in terms of Section 83 of the Transfer of Property Act. He would submit that the amount could not have been withdrawn by the appellant, except by prejudicing the case of the appellant in the other Appeal. Also, he would submit that Section 83 does not contemplate the deposit made by the mortgagor in the manner done in the facts of this case and the appellant stood to lose interest. 10. Per contra, learned counsel for the respondents would submit that all the ingredients of Section 83 of the Transfer of Property Act have been satisfied in the facts of this case, and he would submit that there is no merit in the Appeal. AS.59/95 & AFA.8/98 17 11. Findings in AFA.NO.8/98: Two questions arise in this Appeal. The first question is whether there is a concluded contract to be enforced ? Secondly, even if there is a concluded contract, was the plaintiff ready and willing ? There can be no doubt that even an oral contract can be specifically enforced. But, the party seeking enforcement, must establish the agreed terms and there can be no scope for any ambiguity. A genuine ambiguity would be fatal to the formation of an enforceable contract. There must be meeting of minds for the emergence of an enforceable agreement. We agree with the learned counsel for the appellants and even the learned counsel for the respondents does not seriously dispute the principle adumbrated in the various decisions that if there is an oral contract which is otherwise enforceable, the mere fact that the parties contemplated the execution of a formal written agreement would not deflect from the enforcement of the AS.59/95 & AFA.8/98 18 former. It is a matter of appreciation of the pleadings and evidence to consider whether in a given case, the parties have agreed to all the terms which they wish to merely re-produce in writing or whether the parties agreed that they would enter into a written agreement and conferring efficacy to the transaction when the written agreement is executed. 12. In the facts of this case, when examining the pleadings and the deposition, we arrive at the following findings: The plaintiff decided to purchase the property including plaint A and B schedule properties from the erstwhile owner. It was short of funds. A decision was taken to raise funds. A souvenir was issued. Some funds were raised. It attempted to avail financial facilities from a Bank. It failed to do so. Thereupon, it was agreed that the erstwhile owner would execute the conveyance of fifteen cents in the name of the plaintiff. Even for taking the said conveyance, the plaintiff did not have the necessary funds. It availed a loan of Rs.50,000/= from the first defendant. To secure the same, a charge was AS.59/95 & AFA.8/98 19 created over plaint A schedule property purchased in the name of the plaintiff. There was a talk about what is to happen to the B schedule property purchased by the first defendant. There is no serious challenge to the finding by the trial court which has not been disturbed by the learned Single Judge either, that the first defendant is not a trustee of the plaintiff. 13. The plaintiff pleaded that the conveyance of B schedule property was to be done upon the plaintiff paying a sum of Rs.35,000/=, if it was paid within six months and a sum of Rs.45,000/= if it was paid after six months. There is no serious dispute that it was the plaintiff which spent Rs.4,878/= towards purchase of stamp papers and the other expenses involved in taking the conveyance of B schedule property in the name of the first defendant. 14. Ext.A5(a) does not contain the period of time within which the plaintiff was to perform its part of the contract. It does not provide that a sum of Rs.50,000/= taken as loan admittedly by the plaintiff, is to be returned to the first AS.59/95 & AFA.8/98 20 defendant within six months along with the sale consideration., and that there could not be any extension of time beyond six months. According to the defendants, the defendants were agreeable for executing a conveyance in respect of B schedule to the plaintiff provided the plaintiff had agreed for payment of the sale consideration for B schedule property and a sum of Rs.50,000/= being repaid within six months and if it was specifically agreed that the plaintiff was to perform its obligations within six months and the period of time was to be made the essence of the contract. 15. There is no dispute that the alleged written agreement is not produced in the court. No doubt, the trial court has proceeded to draw an inference against the defendants for non- production of the written agreement. This, the trial court draws by relying on the answer given in cross-examination by DW1 that the written agreement which was handed over to the defendants for their execution was not returned to the plaintiff as it had not been executed by the defendants. The learned Single AS.59/95 & AFA.8/98 21 Judge would characterize this answer as a stray answer in the course of lengthy cross-examination. It is to be noted that before the learned Single Judge, a petition was filed for production of the said agreement. An affidavit is filed by the defendants to the effect that the agreement is not with them. 16. Going by the pleadings, clearly the plaintiff had approached this Court seeking enforcement of the agreement to convey the property, without there being an understanding that a sum of Rs.50,000/= taken as loan is to be repaid along with the