Case: Mukul Sharma Vs. Orion India (P.) Ltd. Through Its Managing Director

As per paragraph (1) 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 drawing No.GBA/891/03A dated 14.12.1990 and half of the built up area on the mezzanine 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.1 agreement includes the common area?  (ii) Whether the plaintiff is entitled to specific performance as 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 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. The relevant portion of annexure Ex.3 letter dated 9.3.1998 reads as follows :(1) That the built-up area as in clause 1(i), (ii) & (iii) of the Agreement between yourself and the Company (Deed No.5581 dated 25/8/98) should be defined as the area within the four walls excluding the common area as lift well, lobby, corridor, etc.  (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 shortly6. This was followed by Ex.4 letter dated 16.3.1998 wherein it is stated in the very opening paragraph of the said letter as follows :Further to our letter No.ORION/44-1/98/028 dt.9/3/98, we furnish below the built-up areas calculated for drg. Nos.GBA/891/03A, 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 by you(All emphasis supplied)  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 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 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 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 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, mezzanine floor and the third floor. Out of this total built up area of 8726.43 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 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 of 8726.43 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 of letter 9.3.1998, the plaintiff had 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.

Court's reasoning:
Thereafter and therefor, under the true spirit of section 5 of the Contract Act, defendant cannot resile from the mutually agreed position10. In Abdulla Ahmed vs. Animendra Kissen Mitter – AIR 1950 SC 15 , this Court has dealt with a similar situation and it has been held thatExtrinsic evidence to determine the effect of an instrument is permissible where there remains a doubt as to its true meaning. Evidence of the acts done under it is a guide to the intention of the parties in such a case and particularly when acts are done shortly after the date of the instrumentThis 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