MUKUL SHARMA versus ORION INDIA (P) LTD. THROUGH ITS MANAGING  DIRECTOR
[2016] 2 S.C.R. 666, Supreme Court of India, 2016
Outcome: Appeal(s) allowed (Granted)
Segment: Ratio
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[2016] 2 S.C.R. 666 
MUKUL SHARMA 
v. 
ORION INDIA (P) LTD. THROUGH ITS MANAGING 
DIRECTOR 
(Civil Appeal No. 4997 of2016) 
MAY 10,2016 
[KURIAN JOSEPH AND ROHINTON FALi NARIMAN, JJ.) 
Specific performance: Suit for specific performance of 
agreement - As per the agreement, certain proportion of built-up 
area was liable to be handed over to the plaintiff-appellant - Dispute 
as to what is the built-up area - Appellant sent a letter stating that 
built up area was understood to include the common area -
Defendant agreed to the definition of built up area as given by 
plaintiff in order to resolve the matter - This was followed by another 
letter by defendant· wherein· they stated that all common area were 
excluded as suggested by the plaintiff - Trial court decreed the suit 
- However, High Court set aside the decision of the trial court - On 
appeal, held: It was defendant who changed his stand and accepted 
the position as raised by plaintiff - Thereafter and therefore, under 
the spirit of s.5 of the Contract Act, defendant cannot resile from 
the mutually agreed position. 
Allowing the appeal, the Court 
HELD: 1. It is not a case where the plaintiff resilea from the 
agreement. It is a case where the defendant himself subsequently 
accepted the dispute raised by the plaintiff with regard to the 
concept of 'built-up area'. In express terms, the respondent-
defendant has subsequently agreed that the built-up area will not 
include the common area
like lift well, corridor, lobby, duct, etc. 
Admittedly, the expression "built up area" is not defined in the 
sale deed. It is something to. be deciphered from the conduct of 
the parties. No doubt, the appellant plaintiff had, after five years 
of the sale deed, as per letter understood the built up area as 
including common area. But subsequently, he disputed the 
position and it was the respondent-defendant who accepted and 
agreed to the position that built up area does not include common 
area. It is not as if an attempt is made for interpreting the express 
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MUKUL SHARMA v. ORION INDIA (P) LTD. THROUGH ITS 
MANAGING DIRECTOR 
terms of an agreement, by subsequent condnct. It is a sitnation 
where there is a dispnte on a concept relating to an expression/ 
concept which is not explained in the agreement. The plaintiff 
had initially understood the concept in a particular angle or manner . 
. Bnt that does not prevent him from raising a dispute. And on 
raising such a dispnte, nothing prevented the defendant from 
insisting the plaintiff to stick to his original stand. On the contrary, 
it is the defendant who changed his stand and accepted the position 
as raised by the plaintiff. Thereafter and therefor, under the true 
spirit of section 5 of the Contract Act, defendant cannot resile 
from the mutually agreed position; [Para 9] (670-C-G] 
Abdulla Ahmed vs. Animendra Kissen Mitter AIR 1950 
SC 15:1950 SCR 30; Godhra Electricity Co. Ltd & Am: 
vs. The State of Gujarat & Anr. AIR 1975 SC 32:1975 
(2) SCR 42 - referred to. 
Case Law Reference 
1950 SCR 30 
referred to 
Para 10 
1975 (2) SCR 42 
referred to 
Para 10 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4997 of 
2016. 
667 
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From the Judgment and Order dated 01.09.2015 of the High Court, 
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at Guwahati,.in RFA No. 38 of2006. 
Shyam Divan, Sr. Adv., P. V. Yogeswaran for the Appellant. 
Avijit Bhattacharjee, Ms. Upma Shrivastava for the Responden.t. 
The following Order of the Court was delivered 
ORDER 
I. Leave. granted. 
2. The appellant filed Title Suit No.195
of 1998 before the Civil 
Judge (Senior Division) No. I at Guwahati praying for specific 
performance of the instrument dated 25.8.1992 between the appellant 
and the respondent. 
3. The dispute is only on a narrow compass. As per paragraph (1 L 
of the aforesaid agreement, half of the built up area on the ground floor 
of the proposed North Block of the complex as per the drawingNo.GBA/ 
891/03Adated 14.12.1990 and half of the built up area on the mei:zanine 
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SUPREME COURT REPORTS 
[2016] 2 S.C.R. 
floor of the same building and complete built up area on the first floor in 
the same building, were liable to be handed over to the appellant. On a 
dispute as to what is the built up area, the appellant filed the civil suit. 
The suit was decreed. Aggrieved by the same, the respondent-defendant 
filed first appeal before the High Court. The following points for 
determination were found to arise in the first appeal : 
(i) 
Whether the parties had entered into agreement knowing that 
'built up area' as mentioned in Ext. I agreement includes the 
common area? 
(ii) 
Whether the plaintiff is entitled to specific performance as 
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claimed? 
(iii) 
Whether plaintiff is entitled to a money decree as prayed for? 
4. As per the impugned order, the High Court has taken the view 
that the built up area includes the common area as understood by the 
parties. Reliance is placed on Ex.'H' letter dated 15.9.1997 written by 
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the appellant-plaintiff to the respondent-defendant. As per the said letter, 
indisputably, the built up area has been understood to include the common 
area. 
5. However, the High Court has failed to appreciate Ex.3 letter 
dated 9 .3 .1998 and Ex.4 letter dated 16.3 .1998 in the correct perspective. 
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The relevant portion of annexure Ex.3 letter dated 9.3.1998 reads as 
follows: 
"(!)That the "built-up area" as in clause l(i), (ii) & (iii) of the 
Agreement between yourself and the Company (Deed No.5581
dated 25/8/98) should be defined as "the area with in the four walls 
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excluding the common area as lift well, lobby, corridor, etc. 
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(2) That our method of calculation and the area so calculated is 
not acceptable to you. 
Since we wish to resolve this long outstanding issue as early as 
possible, we agree to your definition of"built-up area" and shall 
recalculate the area to be allotted to you and shall inform you 
shortly." 
6. This was followed by Ex.4 letterdated 16.3.1998 wherein it is 
stated in the very opening paragraph of the said letter as follows: 
"Further to our letter No.ORION/44-1198/028 dt.9/3/98, we furnish
MUKUL SHARMA v. ORION INDIA (P) LTD. THROUGH ITS 
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MANAGING DIRECTOR 
below the built-up areas calculated for drg. Nos.GBA/891/03A, 
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GBA/891/04A and GBA/891/05A using our accepted definition 
of "built-up area''. Please note that all common area such as lift 
well, corridor, lobby, duct, etc., have been excluded as suggested 
QyyQy,." 
(All emphasis supplied) 
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7. It is unfortunate that the High Court has gone by the earlier 
understanding of the plaintiff on the concept of built-up area and wholly 
ignoring the understanding mutually entered into between the plaintiff 
and the defendant on a later date. According to the High Court, since 
the plaintiff had once accepted the position that built-up area included c 
common areas, he is always bound by the same. If plaintiff had once 
accepted the position in regard to the concept of 'built-up area' he cannot 
resile subsequently in view of bar under section 5 of the Indian Contract 
Act, 1872, once offer and acceptance is complete, it is held. 
8. The relevant consideration by the High Court at para 26 of the 
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impugned judgment reads as follows: 
"If Ext.3 and Ext.4 are studied and compared it would appear 
that prima facie, defendant undertook to accept the definition of 
'built up area' given by the plaintiff and therafter deferred the 
matter for recalculation of the entitlement on the light of such 
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definition. But in the subsequent communication, the defendant 
made recalculation as to entitlement of the
plaintiff by applying 
his own definition of the 'built up area' and thus included common 
areas in the 'built up area'. This letter was written on 16.3 .1998. 
But prior to that it is the plaintiff who had accepted the concept of 
'built up area' as given by the defendant in his letter dated 15.9.1997 
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and made his own calculation about the entitlement of 'built up 
area'. According to the version of the plaintiff in the said letter 
dated 15.9.1997 (Ext.H), he was allotted possession of 8726.43 
sq.ft of 'built up area' in total in three floors, namely, first floor, 
mezz.anine floor and the third floor. Out of this total 'built up area' 
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of8726.43 sq.ft., plaintiff himself admitted in the said letter that 
there was 558.19 sq.ft. common area in the first floor, 544.74 
sq.ft common area in the mezzanine floor and 540 sq.ft in the 
third floor. Thus, out of 8726.43 sq.ft 'built up area' handed over 
to the plaintiff, there was 558.19 sq.ft+ 554. 74 sq.ft+ 540 sq. ft= 
1652.93 sq.ft common areas and balance 7083.50 sq.ft under 
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SUPREME COURT REPORTS 
(2016) 2 S.C.R. 
exclusive possession of the plaintiff. The plaintiff after showing 
this calculation claimed thereafter that he was still entitled to 
3445.57 sq.ft in the top floor i.e. eighth floor. The sum of8726.43 
sq.ft+ 3445.57 sq.ft is 12172 sq.ft and so there is logic behind this 
calculation shown by the plaintiff. Once this calculation is accepted, 
it is clear that prior to issuance ofletter 9.3.1998, the plaintiffhad 
accepted the proposition that built up area would include common 
areas. If plaintiff had accepted the proposition of the defendant in 
regard to concept of'built up area' he cannot resile subsequently 
in view of bar under section 5 of the Indian Contract Act, 1872." 
9. It is not a case where the plaintiffresiled from the agreement. It 
is a case where the defendant himself subsequently accepted the dispute 
raised by the plaintiff with regard to the concept of 'built-up area'. In 
express tenns, the respondent-defendant has subsequently agreed that 
the built-up area will not include the common area like lift well, corridor, 
lobby, duct, etc. Admittedly, the expression "built up area" is not defined 
in the sale deed. It is something to be deciphered from the conduct of 
the parties. No doubt, the appellant plaintiff had, after five years of the 
sale deed, as per letter Ex.'H' dated 15.9.1997 understood the built up 
area as including common area. But subsequently, he disputed the position 
and
it was the respondent-defendant who accepted and agreed to the 
position that built up area does not include common area. It is not as ifan 
attempt is made for interpreting the express terms of an agreement, by 
subsequent conduct. It is a situation where there is a dispute on a concept 
relating to an expression/concept which is not explained in the agreement. 
The plaintiff had initially understood the concept in a particular angle or 
manner. But that does not prevent him from raising a dispute. And on 
raising such a dispute, nothing prevented the defendant from insisting 
the plaintiff to stick to his original stand. On the contrary, it is the defendant 
who changed his stand as per Ex.3 and Ex.4 and accepted the position 
as raised by the plaintiff. Thereafter and therefor, under the true spirit of 
section 5 of the Contract Act, defendant cannot resile from the mutually 
agreed position. 
I 0. In Abdulla Ahmed vs. Animendra Kissen Miller - AIR 1950 
SC 15, this Court has dealt with a similar situation and it has been held 
that" 
"Extrinsic evidence to detennine the effect of an instrument is 
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pennissible where there remains a doubt as to its true meaning.
MUKUL SHARMA v. ORION INDIA (P) LTD. THROUGH ITS 
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MANAGING DIRECTOR 
Evidence of the acts done under it is a guide to the intention of the 
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parties in such a case and particular]y when acts are done shortly 
after the date of the instrument." 
This was followed in The Godhra Electricity Co. Ltd & Anr. vs. 
The State of Gujarat & Anr. - AIR 1975 SC 32 : 
"In these circumstances, we do not think we will be justified in 
not following the decision of this Court in Abdulla Ahmed vs. 
Animendra Kissen Mitter - 1950 SCR 30 at p.46 = (AIR 1950 
SC 15 at p.21 ), where this Court said that extrinsic evidence to 
determine the effect of an instrument is permissible where there 
remains a doubt as to its true meaning and that evidence of the 
acts done under it is a guide to the intention ·of the parties, 
particularly, when acts are done shortly after the date of the, 
instrument." 
11. We, accordingly, allow this appeal, set aside the impugned 
judgment of the High Court with regard to the finding on the 'built-up 
area' and restore that of the trial court. 
12. We find that the High Court has remanded the matter to the 
trial court forthe purpose of calculation of the built up area to be handed 
over to the plaintiff-appellant. We direct the trial court to make the 
calculation in terms of this judgment and accordingly, dispose of the suit 
expeditiously. 
No costs. 
Devika Gujral 
Appeal allowed. 
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