Randhir Singh Chandok v. Vipin Bansal

Pradeep Nandrajog, J.— On 10.8.2006 following issue was framed:—

“Whether the suit is maintainable on account of the defence that the receipt-cum-undertaking dated 26.12.2005 is in the nature of an agreement to enter into an agreement to sell? Onus on parties.”

2. IA No. 5145/2006 is plaintiff's application under Order 39 Rule 1 and 2 seeking an interim injunction to restrain the defendants from selling or encumbering the suit land till disposal of the suit. IA No. 7050/2006 is defendants’ application seeking recall of the ex-parte injunction granted on 5.5.2006

3. Suit seeks specific performance of an agreement dated 26.12.2005

4. As would be evident from the issue framed, question arises whether the document stated as an agreement to sell is an agreement to sell or is it in the nature of an agreement to enter into an agreement. To put it differently, did the parties conclude their bargain intending to enter into a legal relationship with each other when document dated 26.12.2005 was executed between plaintiff and defendant No. 2 who is the son of defendant No. 1 or whether parties contemplated that to bind them, a formal agreement to sell would be entered into.

5. The document dated 26.12.2005 reads as under:—

Receipt-cum-Undertaking

I, Mohit Bansal S/o Shri Late Sh. Suresh Bansal R/o H1/3 Modal Town Part IIIrd. RECEIVED WITH THANKS SUM OF RS. 500000/- (Rupees Five lacs only) cash/by cheque No. ____ on dt. ________, drawn on __________in advance on ___________ as a earnest money or part payment FROM Shri Randhir Singh Chondak S/o Shri Prahald Singh R/o 1/72 West Punjabi Bagh, New Delhi in respect of sale of a agricultural land, land area measuring ________, out of Khasra @Rate 72.50 lakh per aqar, situated in the revenue estate of village Chhawla, New Delhi. The deal is settled for Rs. 3,26,25,000/- (Rupees three crore twenty six lacs and twenty five thousand only), Balance is to be paid at the time of registration/sale deed at the convenience of the purchaser. I shall obtain NOCs and shall inform the purchaser within three month (31-3-06).

I shall be responsible for any tax, dues, loan, tacavies, litigation till the date of registration and thereafter these shall be paid by the purchaser. I and my legal heirs have no right in the physical possession now.

The purchaser is fully entitled to get the sale deed registered in its own name or in the name of its nominee/s. In case I fail to get the sale deed registered, then I will be liable to return the double the advance received by me within a week time and then the seller will be liable for damages and interest @24% as well. The seller shall transfer the balance land in the name of his wife or family member at his cost to facilitate mutation.

This receipt is executed, signed and delivered by the said executant at Delhi on this 26.12.05 in the presence of the following witnesses:

D.O Agreement - 5.1.06

WITNESSES.

1. Sd/-(illegible) 26.12.05EXECUTANT

2. Yogesh Kumar S/o Shri Khzan SinghSd/-

V.P Office-Chhala N.D Sd/- (Mohit Bansal)

6. Portions of the document dated 26.12.2005 noted in italics are in handwriting. Rest is typed.

7. Mr. Mukul Rohatgi, learned senior counsel for the defendants submitted and for which argument reliance was placed upon a decision of a learned Single Indge of this Court and a decision of another learned Single Judge of the Madras High Court reported as 2003 (68) D.R.J 70, Lalit Kumar Sabharwal v. Ved Prakash Vijh and AIR 2001 Madras 447, Pushpa Bai v. Dr. Williams & Ors. that the document in question does not bear the signatures of the plaintiff and since an agreement to sell must have mutuality, the document cannot be classified as an agreement to sell between the parties.

8. In my decision dated 21.8.2006 in CS(OS) No. 1415/2003, Sanjay Puri v. Radhey Lal & Ors., I had noted the decision in Lalit Kumar Sabharwal's case (supra) wherein a receipt, similar in words as the present receipt, unsigned by the plaintiff, was held to be lacking in mutuality and therefore unenforceable as an agreement to sell.

9. But noting that the learned Single Judge had cited no principle of law to hold so, noting Section 2(h) of the Indian Contract Act 1872 and Section 9 of the Transfer of Property Act, 1882 as also the decisions reported as (1835) 3 A&E 355 Dobell v. Hutchinson, (1866) LR-1 Ex. 342 Reuss v. Picksley & Anr., (1901) 1 Ch. 543 Lever v. Koffler and (1960) 1 WLR 286, Parker & Anr. v. Clark & Anr., I had held that law does not prohibit a written offer, signed by one party being accepted orally by the other party. I had held that a written offer was a good memorandum if proved to be accepted by the plaintiff by parol evidence.

10. The second submission made by Shri Mukul Rohatgi, learned senior counsel had two distinct limbs. The first was based on the concluding para of the receipt wherein following has been recorded:—

“The purchaser is fully entitled to get the sale deed registered in its own name or in the name of its nominee/s. In case I fail to get the sale deed registered, then I will be liable to return the double the advance received by me within a week time and then the seller will be liable for damages and interest @24% as well. The seller shall transfer the balance land in the name of his wife or family member at his cost to facilitate mutation.”

11. Indeed, I find no sense in the last two lines of the para noted herein above wherein it is recorded that ‘the seller shall transfer the balance land in the name of his wife or family member at his cost to facilitate mutation’.

12. One is left wandering what that ‘balance land’ is.

13. Submission made by Shri Mukul Rohatgi was that the document in question was picked up without any application of mind and a tentative consent was recorded without noting that parts thereof were extraneous to the subject matter of the rest.

14. Second submission was that endorsement by defendant No. 2 who was acting on behalf of his father by recording ‘D.O Agreement - 5.1.06’ evidenced that a formal agreement had to be entered into which would have contained the detailed reciprocal obligations of the parties.

15. I concur with both submissions advanced by Shri Mukul Rohatgi, learned senior counsel for the defendants.

16. Perusal of the document which has been filed in original shows that a photocopy of a pre-typed proforma has been used on which, by hand, blanks have been filled up. Indeed, the concluding two lines of the para of the document noted in para 10 above make no sense at all and are totally unconnected with the general tenor of the document.

17. On the second submission, which I find reinforces the first, the words ‘DO. Agreement - 5.1.06’ are not without a meaning and have to be given due weightage.

18. Sale consideration is Rs. 3,26,25,000/- (Rupees Three Crores Twenty Six Lakhs and Twenty Five Thousand only). Only Rs. 5 lacs has been received under the receipt dated 26.12.2005 The amount received is minuscule in comparison with the sale consideration. Document records: D.O Agreement - 5.1.06

19. Defendants state that the alphabet ‘D’ stands for ‘date’ and the alphabet ‘O’ stands for ‘of’. Defendant state that ‘D.O Agreement - 5.1.06’ means ‘date of agreement - 5.1.06’.

20. Learned counsel for the plaintiff has not been able to furnish any satisfactory explanation nor has he been able to explain what was meant when the afore noted sentence was added by hand in the document in question.

21. It is settled law that a document has to be construed meaningfully and every attempt has to be made to give meaning to every phrase and every sentence in a written document.

22. I can think of no other meaning for the words ‘D.O Agreement -5.1.06’ other than to mean ‘date of agreement - 5.1.06’.

23. It is settled law that where parties intended to create legal obligations by putting their agreement in a more formal shape, till same is done, no concluded contract comes in existence. As observed by Lord Cairns in the report published as Rossiter v. Miller, (1878) 3 AC 1124:—

“If you find not an unqualified 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 you cannot find a concluded contract.”

24. In the report published as AIR 1968 SC 1028, Kollipara Sriramulu v. T. Aswatha Narayana it was observed:—

“It is well established that a mere reference to a future formal contract will not prevent a binding bargain between the parties. The fact that the parties refer to the preparation of an agreement by which the terms agreed upon are to be put in a more formal shape does not prevent the existence of a binding contract. There are, however, cases where the reference to a future contract is made in such terms as to show that the parties did not intend to be bound until a formal contract is signed. The question depends upon the intention of the parties and the special circumstances of each particular case. As observed by the Lord Chancellor (Lord Cranworth) in Ridgway v. Wharton, (1857) 6 HLC 238 at p. 263, the fact of a subsequent agreement being prepared may be evidence that the previous negotiation, did not amount to a concluded agreement, but the mere fact that persons wish to have a formal agreement drawn up does not establish the proposition that they cannot be bound by a previous agreement.”

25. Ex facie, document in question is not an agreement to sell. At best it is a memorandum of a tentative understanding between the parties that rate of land at which sale would be effected would be Rs. 72.5 lacs per acres. From the total sale consideration noted, it could further be gathered that the deal relates to 4.5 acres land. But, by recording ‘D.O Agreement - 5.1.06’ it is clear that parties intended to enter into a proper agreement to sell on 5.1.2006

26. Normal practice in Delhi is to receive at least 10% of the total sale consideration as earnest money when agreement to sell is entered into. In the instant case a meagre amount of Rs. 5 lacs has been received. By recording that an agreement would be entered into on 5.1.2006 it is clear that the intention was to record detailed obligations of the parties in a properly drafted and executed agreement to sell and at that time receive a better earnest money.

27. I hold that the document is not an agreement to sell. Parties clearly intended to create legal obligations by 5.1.2006 on which date a proper agreement to sell was to be executed.

28. I accordingly hold that the action for specific performance is not maintainable. Noting that plaintiff has parted with Rs. 5 lacs I pass a decree in sum of Rs. 5 lac in favour of plaintiff and against the defendant No. 1. I award interest to plaintiff and against defendant No. 1 @10% per annum from date of decree till date of realization.

29. Since suit stands disposed of, pending applications are disposed of as infructuous.

29. No costs.