Holding

An oral agreement for the sale of immovable property is enforceable only if the plaintiff proves that all vital terms, including price and essential conditions, were settled; here such proof was lacking, so no contract existed.

Summary

The appellants, four brothers, sued the first defendant for specific performance of an alleged oral contract to sell a building in Hyderabad for Rs.10,00,000. The trial court found an oral contract existed, but the High Court set aside the decree, holding that mere acceptance of price was insufficient without proof of agreement on other essential terms such as advance payment, time of execution and the vendor's obligation to obtain clearance under the Urban Land Ceiling Act. The Supreme Court examined the evidence and held that an oral contract for sale of immovable property is enforceable only if the plaintiff proves consensus ad idem on all vital terms; the plaintiffs failed to do so. Consequently, the Court found no concluded contract and held that Section 55 of the Transfer of Property Act was inapplicable because the parties were still negotiating. The appeals were dismissed, leaving the trial court's decree set aside.

Issues considered

Whether an oral agreement for the sale of immovable property can be specifically performed.
Whether the plaintiff has discharged the heavy burden of proving consensus ad idem on all vital terms of the contract.
Whether Section 55 of the Transfer of Property Act applies when parties have not concluded a contract.
Whether the purchase of stamp papers and preparation of draft receipts constitute evidence of a concluded oral contract.

Legislation cited

Subjects

oral contractspecific performancesale of immovable propertyconsensus ad idemTransfer of Property ActSection 55burden of proofurban land ceiling authority

Judgment

BRIJ MOHAN AND ORS.
A
v.
SMT. SUGRA BEGUM AND ORS.

JULY, 19, 1990

[L.M. SHARMA AND N.M. KASLIWAL, JJ.] B

Specific Relief Act-Specific pe1ormance of contract of sale of
immovable property on basis of oral agreement alone-Heavy burden
lies on plaintiff to prove consensus ad idem.

Transfer of Properly Act-Section 55-Provision not applicable
where patties consciously negotiated but failed in respect of any term or c
condition resulting in agreement not being concluded.

The appellants-plaintiffs are four brothers. They filed a sui1
against defendant No. 1, Smt. Mahboohunnisa ·Begum, (Since deceased
and represented by legal heirs) for specific performance of oral contract D
of sale of a building in Hyderabad. The property was later sold hy
defendant No. 1 to defendants Nos. 3 and 4.

The plaintiffs' case was that plaintiffs Nos. 1 and 2, on behalf of
themselves and their younger brothers, plaintiffs Nos. 3 and 4, had
preliminary negotiations for the purchase of the suit property through E
Shri Arif Ali, advocate; that eventually on 3rd May, 1979 they met Aril
Ali and offered to pay Rs.10,00,000, which was the price demanded by
the owner; that Arif Ali, after getting the confirmation of the said offer
from the first defendant on phone, said that the plaintiffs should meet
the first defendant on 6th May, 1979 and that she would in the mean-
while purchase the stamp papers for making the formal agreement of F
sale incorporating the oral agreement arrived at on 3rd May, 1979; that
- ).
on 6th May, 1979 the plaintiffs met the first defendant in the presence of
Arif Ali and other, wherein the amount of earnest money to be paid,
time for registration of the sale deed etc. were decided; that at that
meeting Sbri Arif Ali, prepared first and the final drafts Of the receipt
in his own handwriting and handed over these drafts to the first G
plaintiff to get the final draft typed and duly stamped; that Arif Ali also
delivered the stamp papers to the first plaintiff for typing the formal
agreement of sale; that at the meeting held on 6th May, 1979 the
plaintiffs Nos. 1 and 2 were also permitted to proceed with the publica-
tion of the notices in the newspapers; that after the public notice was
published, the first defendant got a reply notice published and got H

413
414 SUPREME COURT REPORTS [1990] 3 S.C.R.

issued a legal notice dated 8.5. 79 through her advocate, alleging that
A
there was no agreement for sale; that thereafter, the first and second
plaintiffs made sincere and repeated attempts to convince the first
defendant that there was in existence a concluded contract for sale of
the suit property, and that the execution of the agreement of sale was a
mere formality. On these allegations, the plaintiffs sought the relief of
B specific performance of the agreement.

The first defendant in her written statement stated that certain
negotiations had taken place between her and plaintiffs Nos. I and 2,
but the negotiations had failed. It was further stated that there was no
concluded or enforceable contract between the parties; that no price
was settled or agreed upon and even the condition for advance payment
c aud other terms and conditions were not agreed upon; that no ftnal
receipt or document had been prepared; and that the first defendant
never asked for the purchase of stamp papers.

The Trial Court found that on the facts and circumstances of the
D case, it was established that the plaintiffs had entered into an oral
contract of sale with the first defendant on 3.5. 79. The Trial Court
accordingly decreed the plaintiffs' suit for specific performance.

Two separate appeals, were filed in the High Court. A Division
Bench of the High Court allowed the appeals and set aside the decree
E passed by the trial court. The High Court held that in order to
determine the binding nature of a contract between the parties, the
mere acceptance of sale price was not sufficient. The High Court
further observed that in the absence of evidence that the other terms
also were discussed over the phone and settled on 3.5. 79, it could not be
said that there was a concluded contract on 3rd May, 1979, and that it
F was obviously for that reason that a further meeting was fixed at the
house of the 1st defendant on 6th May, 1979. The High Court did not
agree with the contention of the plaintiffs that all the terms of contract,
including the stipulation with regard to the payment of advance amount
and the vendor's responsibility to obtain the permission from the Urban
Land Ceiling Authority, had been settled by 3.5. 79 and what was left to
G be done on 6.5.1979 was merely to incorporate the terms already
arrived at into a formal document on stamp paper.

Before this Court'it was contended on behalf of the appellants that
an agreement for sale of immovable property could be made orally; that
in the facts and circumstances of the case all the fundamental and vital
H terms of the contract were settled and concluded on 3.5.1979 itself and
BRIJ MOHAN v. SUGRA BEGUM 415

even if the other details like mode of payment of consideration, obtain-
A
~ing of no objection certificate from Land Ceiling Anthorities etc.
remained unsettled, the same contd be settled subsequently or deter-
mined in accordance with sec. SS of the Transfer of Property Act; that
the only vital terms for a valid agreement of sale of an immovable
property were the identity of the property and the price; that both these
vital terms were settled and concluded on 3.S.79; and that the act of B
--- .::y-
purchasing stamps on 3.S. 79 by defendant No. 1 and the draft receipts,
·" prepared by Shri Arif Ali, clearly lent support to the case of the
Y plaintiffs.

Kollipara Sriramulu v. T. Aswathanarayana & Ors., [1968] 3

- SCR 387 and Nathulal v. Phoolchand, [1970] 2 SCR 8S4, relied upon.

On the other hand, it was contended on behalf of the respondents
c
_>,· that no vital or fundamental terms of the contract were discussed,
agreed or settled on 3.S.79; that neither any earnestfadvance money to
be paid was settled, nor, any time for the payment of such money or
time for execution of agreement of sale or rmal sale deed and its regist- D
ration, was settled; that even if time may not be an essence of a term of
contract for sale of immovable property, it was a vital term without
which no concluded contract could be arrived at; that any agreement in
the third week of April, 1979 to the effect that defendant No. ·1 would
bring the no objection certificate from the Urban Land Ceiling
- y Authorities was found not proved by the High Court and as such there
E
was no question of applying the principles contained in section SS of the
Transfer of Property Act; that a no objection certificate was necessary
to be obtained from Urban Land Ceiling Authorities and the defendant
No. 1 and her husband being old persons had clearly taken the stand
that they wonld not bring such certificate; and that therefore no rmal
and concluded contract took place on any date. ' F
Dismissing the appeals, this Court,

HELD: (1) There is no requirement of law that an agreement or
contract of sale.of immovable property should only be in writing. How-
ever, in a case where the plaintiffs come forward to seek a decree for G
specific performance of contract of sale of immovable property on the
basis of an oral agreement along, heavy burden lies on the plaintiffs to
- /). prove that there was consensus ad-idem between the parties for a con-
cluded oral agreement for sale of immovable property. Whether there
was such a concluded oral contract or not would be a question of fact to
be determined in the facts and circumstances of each individual case. It H
416 SUPREME COURT REPORTS [ 1990] 3 S.C.R.

A has to be established by the plaintiffs that vital and fnndamental terms
for sale of immovable property were concluded between the parties -f
orally and a written agreement if any to be executed subsequently
would only be a formal agreement incorporating such terms which had
already been settled and concluded in the oral agreement. 142~8-D]
B
(2) From a perusal of the evidence it would be abundantly clear \
that nothing wa> settled on 3.5. 79 except the fact that the plaintiffs had ~--

conveyed their offer to purchase the suit property for Rs.10,00,000 and
Shri Arif Ali, after speaking to defendant :'llo. I on phone conveyed that Y
she was willing to sell the property for Rs.10,00,000. [4318]

C (3) '.'lo averment was made in the plaint that defendant No. I had
agreed to obtain the permission from the Urban Land Ceiling Authority
in the meeting held in the third week of April, 1979. The High Court
-
was right in concluding that it was unbelievable that in the third week of .,,(,
April, 1979 when still there was a wide gap of Rs.2,00,000 in the price
D payable for the suit building, the parties would have stipulated about
the condition as to who should obtain the permission under the Urban
Land Ceiling Act. [431C-F]

( 4) The High Court rightly believed the contention of defendant
No. 1 that the agreement fell through because the plaintiffs insisted that
defendant No. I should obtain the permission from the Urban Land
E
Ceiling Authority while defendant No. 1 did not agree for the same. [432C]

(5) The general principles contained in section 55 of the Transfer of
Property Act regarding rights and liabilities of buyer and seller can
only apply in the absence of a contract to the contrary and not in a case
F where the parties consciously negotiated hut failed in respect of any
term or condition, as a result of which the agreement itself could not be
settled or concluded. [432E]

(6) Once it is heldfestablished in the present case that no agree-
ment was finally concluded or settled on 6.5. 79 and negotiations failed,
O as before this date it was never setted ·that defendant No. I would bring
the no objection certificate from Urban Land Ceiling Authority, there
was no question of applying general principles contained in section 55 of
the Transfer of Property Act. [432Fj

Kollipara Sriramulu v. T. Aswathanarayana & Ors., [1968] 3
ff SCR 387, distinguished.
BRD MOHAN v. SUGRA BEGUM IKASLIWAL, J.] 417

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1893
'- and 1894 of 1989. A

From the Judgment and Order dated 24.9.1987 of the Andhra
Pradesh High Court m C.C.C.A. No. 152 of 1984 and C.C.C.A.
No. 150 of 1984.
B
K. Parasaran, Shanti Bhushan, A.D.N. Rao and A. Subba Rao
'Y for the Appellants.

M.C. Bhandare, K. Madhava Reddy, Subodh Markandeya, Mrs.
Chitra Markandeya, W.A. Nomani, G.S. Giri Rao, A.K. Raina and
D. Prakash Reddy for the Respondents.
c
The Judgment of the Court was delivered by

KASLIWAL, J. The Plaintiffs by Special Leave have filed these
appeals against the Judgment of Andhra Pradesh High Court,
Hyderabad, dated 24th September, 1987. D

The four plaintiffs who are brothers filed the present suit on 17th
July, 1979 for specific performance of oral contract for sale of a build-
ing known as "Roshan Manzi!" located in an area of 4165 sq. yards in
_ ~__, Saifabad, Hyderabad. M/s. Gopi Hotel was the tenant in the premises.
According to the case as set up in the plaint the first plaintiff Brij E
Mohan learnt some time in the first week of April, 1979 that the
defendant No. 1 Smt. Mahboobunnisa Begum (since deceased) was
contemplating the sale of the property in question and that Shri Arif

- }
Ali, her Advocate and income tax practitioner was assisting her in
finding a purchaser. Shri Arif Ali had mentioned the above intention
of the first defendant to Sh. Ibrahim Moosa of M/s. J. Moosa &
Company who was known to the first plaint.iff. On learning from Shri
Ibrahim Moosa the first and second plaintiffs, namely, Brij Mohan and
F

hgmohan along with Sh. Ibrahim met Sh. Arif Ali. Sh. Arif Ali gave
the details of the property and also showed the plans of the property to
them. Sh. Arif Ali stated that the defendant was expecting the price
of Rs.10.00,000. The plaintiffs Nos. 1 and 2 offered Rs.7,00,000. Shri a·
Arif stated that he will ascertain from the defendant her reaction to ihe
said offer. A fortnight later i.e. in the third week of April, 1979 the
- -'"' _ plaintiffs Nos. 1 and 2 along with Sh. Ibrahim Moosa and Sh. Arif Ali
went to the residence of the defendant, who was insisting on the pay-
ment of Rs.10,00,000 as the sale price. At the said meeting the
husband of the defendant was also present. The plaintiffs Nos. 1and2 H
418 SUPREME COURT REPORTS [1990] 3 S.C.R.

increased their price from Rs.7,00,000 to Rs.8,00,000. The first
A defendant said that she would think over and inform the plaintiffs Nos. I
1 and 2 throught Sh. Arif Ali. On 3rd May, 1979 the plaintiffs Nos. I
and 2 along with Shri Ibrahim Moosa met Sh. Arif Ali. Arif Ali stated
that the defendant was agreeable to sell the property to plaintiffs only
for Rs.10,00,000 and not a pie less. Thereupon the plaintiffs agreed to
B pay Rs.10,00,000 as the sale price. Shri Arif Ali after getting the \.,___
confirmation of acceptence of the said offer of the plaintiffs Nos. 1 and
2 from the first defendant said that the plaintiffs Nos. 1 and 2 should
y
•
meet the defendants on 6th May, 1979 and that she would in the
meanwhile purchase the stamp papers for making the formal agree-
ment for sale incorporating the oral agreement arrived at.

c It was further alleged in the plaint that on 6th May, 1979 the first
and second plaintiffs along with Shri Ibrahim Moosa met the first
defendant and her husband in the presence of the said Sh. Arif Ali. In
the said meeting the amount of earnest money to be paid, time for
--<
registration of the sale deed etc., were decided. The said Shri Arif Ali
D prepared in his own handwriting a draft of the receipt incorporating
the terms of the orally concluded agreement for sale. The araft was
scrutinised by the husband of the first defendant who suggested some
alterations. The said Shri Arif Ali thereupon prepared final draft of '
the receipt in his own hand. He handed over the first and the final draft
to the first plaintiff to get the later typed and duly stamped. He also
J!l delivered the stamp papers to the first plaintiff for being used for --< -
typing of the formal agreement of sale.

It was further stated in the plaint that during the said meeting
held on 6th May, 1979, the plaintiffs Nos. 1 and 2 were permitted to
proceed with the publication of the notices in the newspapers. Accord-
·-...
)-

F ingly, the contents of the publication were got prepared by them
~-
bonafidely anticipating that the first defendant will execute the receipt ~
after receiving the stipulated earnest money in the course of the day,
ie. 6.5.79. However, for reasons known to herself the first defendant
deliberately and wantonly evaded meeting the first and second

G
plaintiffs to receive the advance and execute the receipt.

It was further stated in the plaint that after the public notice was
...
published in the newspapers taking advantage of her wanton and deli-
berate act of evasion, the first defendant got a reply notice published }'- ---
in the newspaper and got issued a legal notice dated 8.5.79 through her
Advocate, falsely alleging that there was no agreement for sale. There-
H after the first and second plaintiff made sincere and repeated attempts
BRD MOHAN v. SUGRA BEGUM [KASLIWAL, J.l 419

to convince the first defendant that the false and baseless pleas taken
~ by her were detrimental to the interest of all concerned and there is A
inexistence a concluded contract for sale of the suit property and that
the execution of the agreement of sale was a mere formality as well the
receipt for the advance. Since the first defendant persisted in her
illegal conduct, the plaintiffs got issued a final notice dated 27th June,
1979 calling upon the first defendant to execute the agreement, receive B
the earnest money and issue a valid receipt within three days of the
receipt of the notice thus giving the first defendant one more oportu-
nity. The plaintiffs neither recieved any reply nor the first defendant
complied with the demands made in the notice. It was further alleged
in the plaint that the plaintiffs Nos. I and 2 had negotiated for the
purchase of the property on behalf of themselves and plaintiffs Nos. 3
and 4 who were their younger brothers. The concluded contract for c
sale entered into with the first defendant was for the benefit of all the
;..c four plaintiffs. Hence all the four plaintiffs had joined in the filing of
the suit.

The second defendant was M/s Gopi Hotel who was the tenant of D
the first defendant in the suit premises. The plaintiffs further avered
that they have been and are ready and willing to pay to the first
defendant the sale consideration of Rs.10,00,000. The plaintiffs under-
take to deposit the same in the court at any time during the pendency
of the suit or within a time fixed by the Hon'ble Court for the deposit
of the same after passing the decree or at the time of execution and E
registration of the sale deed. The plaintiffs on the above allegations
sought the relief of specific performance of the agreement of sale in
respect of the suit property after payment of sale consideration of
Rs.10,00,000

The first defendant Smt. Mahaboobunnisa Begum filed a written F
statement on 21st January, 1980 stating that certain negotiatioins took
place between her and plaintiffs Nos. 1 and 2, but no contract was
finalised with them and the negotiatioins failed. According to her,
under an agreement of sale dated 22nd June, 1979 she agreed to sell
the property in question to defendants Nos. 3 and 4, namely, Smt.
Sugra Begum and Smt. Saira Banu. It was submitted in the reply that it G
was wholly incoqect to suggest of an oral contract of sale on 3rd May,
1979 in respect of sale of the suit property, in favour of the plaintiffs.
There was a proposal of sale of the suit property and plaintiffs did
approach for negotiations. However, the allegation of the plaintiffs
approaching during first week of April, 1979 with Arif Ali, Income Tax
practitioner. was wholly erroneous. In fact plaintiff No. 1 approached H
420 SUPREME COURT REPORTS [1990) 3 S.C.R.

A No. 1 with Arif Ali and Ibrahim Moosa for negotiations, and plaintiffs
Nos. 1 and 2 came along with them somewhere during the last week of ~
April, 1979 and tried to negotiate, and thereafter, again they
approached on 6tl] May, 1979, but negotiations could not be finalised
and the answering defendant did not agree to sell the suit property to
the plaintiffs Nos. 1 and 2. In fact, details have been mentioned in the 1111111111

B counter, filed in I.A. pertaining to injunction bearing No. 679(19, 11
which may be read as part of the written statement. There was no
concluded or enforceable contract, arrived at on 3rd May, 1979, as
alleged and contended. It was further alleged that there was no price Y
settled or agreed and even the payment for advance was not settled
and other terms and conditions were not agreed upon, even on 6th
C May, 1979 and the negotiations failed and nothing was settled. There
was no concluded contract and the plaintiffs had no cause of action to
file the present suit for specific performance. The parties never
'intended to have an oral agreement, and the negotiations if any, never ~
resulted in a concluded contract, and even if the negotiations had been
finalised, it had to be reduced into a written agreement, and the writ-
D · ing contemplated was not formal as alleged and contended by the
plaintiffs, but was a condition and a term of contract. The plaintiffs
with ulterior motive had taken the plea of oral contract

It was further submitted in the written statement that it was true
that plaintiffs Nos. 1 and 2 did approach the answering defendant 0n
E 6th May, 1979 along with Ibrahim and Arif, and even in the said
meeting negotiations failed and the parties did not and could not arrive
at a concluded contract; and even in the said negotiations on 6th May,
1979 matters remained unsettled and were not concluded. It was
plaintiff No. 1 who attempted to prepare receipt, it was wholly erron-
eous to suggest of any draft receipt or a final receipt being prepared
F after scrutiny made by the husband of the answering defendant. There
was no final document prepared and there was no final settlement of
terms and conditions of contract. The answering defendant was not
aware of the purchase of stamp paper and she never asked for the
purchase of the stamp papers. The blank stamp papers and incomplete
and unsigned draft receipts in no way spell out a concluded contract
G and the suit is untenable.

It was also alleged in the reply that even on 6th May, 1979 there
was no completed or concluded contract and negotiations failed. Con-
sequently, the plaintiffs took away the blank incomplete papers, and
rushed with utmost haste to get it published in the newspaper, making
H false allegations of having paid Rs.50,000 as advance under the sale
BRIJ MOHAN v. SUGRA BEGUM [KASLIWAL, J.) 421

agreement etc., and immediately, the answenng defendant sent a suit-
able reply contradicting the said allegations. There was no bona/ides in A
their action. It was done with ulterior motive to cause loss and damage
to the defendant. When no earnest money had been paid or received,
che plaintiffs Nos. 1 and 2 had no right to make false allegations and
mislead the public and consequently the answering defendant suffered
heavy loss. B

The second defendant M/s. Gopi Hotel only took the plea in the
written statement that he was a tenant in the building. Defendants
Nos. 3 and 4 supported the case of the first defendant and claimed
ownership in the suit property by virtue of a registered sale deed dated
19th November, 1979 executed in their favour. It may be made clear at
this stage that according to defendant No. 1 an agreement to sell the c
property in question was made by the first defendant in favour of
defendants Nos. 3 and 4 on 22.6. 79. After the injunction being vacated
by the High Court the first defendant sold the suit property for a sum
of Rs.10,00,000 in favour of defendants Nos. 3 and 4 by a registered
sale deed dated 19th November, 1979. Defendant No. 1 died on 3rd D
November, 1982 during the pendency of the suit as such defendants
Nos. 5 to 9 were imp leaded as legal representatives of defendant
No. 1.

The Learned Trial Court recorded the summary ef the findings
which are reproduced in its own words. E

49. Summary of the findings:

"On the facts and circumstances of the case, it is estab-
lished that the plaintiffs entered into an oral contract of
sale with D. 1 on 3.5.79. The terms settled were that D. i F
should sell the suit property for a sum of Rs.10,00,000 and
D. 1 should obtain permissions from the authority under
Land Ceiling Act and also Income Tax Act. The sale deed
should be executed within six months from 6.5.79. It is also
settled that vacant possession was not to ·be given on the
date of contract of sale, and the parties are aware that the G
defendant No. 2 was only a tenant in the premises. The
only aspect left open on 3.5.79 is that mode of payment
should be fixed on 6.5.79. On 6.5.79 it was agreed tht D. I
should receive Rs.50,000 as advance and these terms were
reduced info writing in Exs. A. ·J and A. 2, but, before the
ink could dry, the defendant No. I on the evening of H
422 SUPREME COURT REPORTS [ 1990] 3 S.C.R.

6.5.79, refused to receive the amount. This resulted in the
A breach of contract on the part of D. I. So the plaintiffs are
entitled to specific performance of oral contract of sale
concluded on 3.5.79. Subsequent sale to defendants 3 and 4
do not create any rights in favour of them and in order to
prevent D. 3 and D. 4 from claiming any rights in future,
B they should also be made to join D. 5 to D. 9 in executing
the registered sale deed. Defendant No. 2 is admittedly not
entitled to any proprietory rights in the property and he is
only a tenant. As to whether D. 2 is liable to be evicted or
not it is held that the Plaintiffs are entitled to seek eviction
at an appropriate time when they become full owners of the
property. Defendants 3 and 4 shall not be liable to contri'
c bute any thing towards expenses for the executing of the
registered sale deed and defendants 5 to 9 as legal rep-
resentatives of'· D. 1 are bound to perform their part of
contract by obtaining permission required under the Urban
Land Ceiling Acts and Income Tax act and any other Act
D required execute the sale deed and register the sale upon
receiving the entire consideration of Rs.10,00,000. The
expenses for registration of the sale deed shall be borne out
in equal halfs by defendants 5 to 9 on the one hand and the
plaintiffs on the other hand".

E As a result ·of the above findings the trial court decreed the
plaintiffs suit for specific performance. Two separate appeals, one by
defendants Nos. 5 to 9 and the other by defendants Nos. 3 and 4 were
filed in the High Court challenging the decree passed by the trial court.
A Division Bench of the High Court by Judgment dated 24th Septem-
ber, 1987 allowed both the appeals and set aside the decree passed by
p the trial court. As two separate appeals Nos. 150 and 152 of 1984 were
disposed of by one single order the plaintiffs filed the above two civil
appeals before this Court by Special Leave.

The High Court observed that the only question which arose for
consideration in both the appeals was whether there was a concluded
G oral contract between the parties, namely, plaintiffs 1 and 2 on one
side and the first defendant on the other, on 3rd May, 1979 as alleged
by the plaintiffs? According to the High Court to decide this question,
the only available oral evidence was that of P.W. lBrij Mohan, P.W. 3
J agmohan and D. W. 2 Arif Ali. As regard the negotiations which took
place between the parties in the third week of April, 1979, the High
H Court observed that the negotiations which took place between the
BRIJ MOHAN v. SUGRA BEGUM [KASLIWAL, J.] 423

- parties in the third week of April, 1979 were not in dispute and which
A
'- were to the effect that when the first defendant was insisting on pay-
ment of Rs.10,00,000, plaintiffs l and 2 increased their offer from
Rs. 7,00,000 to Rs.8,00,000 and the first defendant promised them to
think over and inform the plaintiffs through Arif Ali. The High Court
then considered the bargain that took place between the partis on 3rd
_ __..J May, 1979. The plaintiffs apart from their own statements as P.W. 1 B
and P.W. 3 had also examined P.W. 2, the Income Tax Inspector
y B-Ward Circle No. 4, Hyderabad to show that defendant No. 1 was an
income tax and wealth tax assessee and Sh. Arif Ali, Advocate and
Income tax practitioner used to look after her tax matters. The
plaintiffs had also examined P.W. 4, Mohd Yusuf a stamp vendor to
prove Exhibit X-25 sales register of stamps and ExhibitX-26 an entry
of sale of Ex. A. 3 non judicial stamps for Rs.5 to defendant No. 1
c
Smt. Mahboobnissa Begum. Similarly plaintiffs had examined P.W. 5
>-Sheikh Ismail another stamp vendor for having sold a stamp Exhibit
A-4 to one Abdul Khalik on behalf of Smt. Mehboobnissa Begum vide
entry E1[. X-27 in the register of stamps. The plaintiffs by the aforesaid
evidence wanted to establish that one stamp was purchased by Smt. D
Mehboobnissa Begum herself and another through Mohd. Khalik for
executing the agreement for sale in favour of plaintiffs. The High Court
in this regard observed that it was not necessary to discuss the evidence
of P. W. 4 as to whether the first defendant personally went to him and
~ - purchased the stamp paper. The first defendant who is a lady from
aristocratic family would not have gone all the way to Chotta Bazar to E
purchase a non-judicial stamp worth Rs.5. P.W. 4 deposed that he
cannot identify whether the person who came for purchase of the
-Jr. stamp paper was Smt. Mehboobnissa Begum or not. It may be that
some person by name Smt. Mehboobnissa purchased the stamp
papers. P.W. 5 simply stated that he sold exhibit A-4 to one Adbul
' Khalik on behalf of Smt. Mehboobnissa Begum. D.W. 2, Arif Ali F
.} however said that neither any transaction nor talks took place between
the plaintiffs 1 and 2 and himself on 3rd May, 1979. The High Court
did not agree with the submission of the Learned counsel for the
plaintiffs made before them that the purchased of the stamps Exhibit
A-3 and A-4 was a strong cricumstanoe in favour of a concluded con-
tract. The High Court in this regard observed that first of all it was not G
firmly established that the purchase of the stamps was for the purpose
of this transaction only. In view of the evidence of D. W. 2 much
- _..1_ weight cannot be given to the evidence of P.Ws. 4 and 5. The High
Court further observed that even assuming that these two stamps were
purchased pursuant to the talks that took place between D. W. 2 and
P. Ws. 1 and 3 it would not improve the case of the plaintiffs. The H
424 SUPREME COURT REPORTS [1990) 3 S.C.R.

stamps were blank and nothing was engrossed on them. This circum-
A
stances, at the most would show that meeting on 6th May, 1979 was -f
fixed between the plaintiffs 1 and 2 and the first defendant for further
negotiations. The High Court then observed that as regards the meet-
ing which took place on 6th May, 1979 and the fact that the negotia-
tions fell through was admitted by both the parties. Therefore, the
B crucial question for determination was whether all the terms of the ~
oral contract were entered into between the parties on 3rd May, 1979 ..
or any terms were left open to be discussed and determined in the y
meeting to be held on 6th May, 1979.

The High Court then considered the argument of the plaintiffs
according to whom Exhibit A-1 draft receipt was y;ritten by D.W. 2
c Sh. Arif Ali on 6th May, 1979 stating that the suit premises was agreed
to be sold for Rs.10,00,000 and the permission for Vrban Land Ceiling
Authority will be obtained by the first defendant and the registration --',
will be completed within six months from that date. The plaintiff's
further case was that the first defendant's husband who was present
D suggested some alterations basing on which Exhibit A-2 fair draft was
prepared and that when the plaintiffs took the agreed advance amount
of Rs.50,000 in the evening, the first defendant refused to accept the
advance amount and resiled from the contract. As against the above
contentions of the plaintiffs, D.W. 2 Sh. Arif Ali who is the rep-
resentative of the first defendant deposed that in the meeting between
E the parties which took place in April, 1979 the vendor did not take the
responsibility of obtaining .clearance under the Urban Land Ceiling
Act. He denied the suggestion that in the third week of April, 1979 the
first defendant offered to sell the suit property for Rs.10,00,000 and
that she would obtain the clearance under the Urban Land Ceiling
Act. On the other hand he deposed that when the plaintiffs offered
F Rs.8,00,000 the first defendant told them that she would consider and
communicate her view through D. W. 2 some time later. The High l -·
Court in this regard clearly observed that the contention of the
plaintiffs that even in the third week of April, 1979 before the parties
could agree upon the sale price for the suit building, there was discus-
sion about the obtaining of clearance under the Urban Land Ceiling
G Act and that the first defendant undertook to obtain that clearance
certificate cannot be believed. The High Court further observed as
under:

"As seen from their own evidence, by the 3rd week of
April, 1979 plaintiffs 1 and 2 increased their offer from
H Rs.7.00,000 to Rs.8,00,000. At the time of the earlier
BRU MOHAN v. SUGRA BEGUM IKASLIWAL, J.j 425

negouations when the plaintiffs offered Rs.7,00,0UO (seven
A
lakhs) and the 1st defendant was not willing to accept that
offer, there was no stipulation as to who should obtain the
clearance under the Urban Land Ceiling Act. If so, it is
unbelievable that in the 3rd week of April, 1979 when still
there was a wide gap ofRs.2,00,000in the price payable for
the suit building, the parties would have stipulated about B
the condition as to who should obtain the permission under
the Urban Land Ceiling Act. Therefore, the evidence of
P. Ws. 1 and 3 can be believed to the extent that they
approached Arif Ali on 3.5.1979 and Arif Ali in his tum
communicated their willingness to pay the price of
Rs.10,00,000 for the suit premises and the 1st defendant
accepted that offer." c

;:.... The High Court on the basis of the above finding then held that
in order to determine the binding nature of the contract between the
parties, the mere acceptance of sale price is not sufficient. It was not
the case of the plaintiffs that the other terms of the contract were also D
discussed by D. W. 2 over the phone and their acceptance was
communicated to them by the 1st defendant through D. W. 2. It was
obviously tor that reason that a further meeting was nxed at The 'house
of the 1st defendant in the morning of 6th May, 1979 which had admit- •
,.... .>-_ tedly taken place.
E
The High Court further held that it must be remembered that
this agreement is in respect of a valuable property and the main inten-
tion was to reduce the terms of agreement into writing and when the
parties are very much relying on the alleged oral agreement dated 3rd
May, 1979, there would definitely have been a reference in Exhibits
A- 1 and A-2 to the oral agreement said to have taken place on 3rd F
May, 1979. The absence of the same in Exhibits A-1 and A-2 against
throws a serious doubt about the alleged agreement, dated 3rd May,
1979. In any event the mere fact that there was a meeting between the
plaintiffs Nos. 1 and 2 and D.W. 2 on 3rd May, 1979 does not establish
that there was a concluded contract between the parties on that day
because admittedly the first defendant was not present at that time. G
What all had happened according to P.Ws. 1and3 is that they offered
to pay Rs.10,00,000 for the suit building and D.W. 2 having contacted
the 1st defendant over the phone conveyed to them her acceptance of
the price fixed. In the absence of evidence that the other terms also
were discussea over the phone and settled at that time and the 1st
defendant agreed. for the terms, it cannot be said that there is a con- H
426 SUPREME COURT REPORTS [1990] 3 S.C.R.

eluded contract on 3rd May, 1979. The fixation of price is only one of
A the terms of the contract and by mere acceptance of the price it cannot -I
be said that there is a concluded contract between the parties in the
absence of proof of fixation of other conditions mentioned in Exhibits
A-1 and A-2, viz., undertaking by the 1st defendant to obtain permis-
sion from Urban Land Ceiling Authority and the amount of advance to
be paid. It is not the case of the plaintiffs 1and2 that prior to 6.5.79
B
there was an agreement between the parties as to the amount of
\. ...
advance to be paid. The High Court thus held that in the absence of
any consensus being arrived at between the two contracting parties Y
about these important aspects of the agreement it cannot be said that
there is a concluded oral contract between the parties on 3 .5. 79.

c It is important to note that even exhibit B-4 an agreement of sale
dated 22.6. 79 executed between the 1st defendant and defendants
Nos. 3 and 4 does not impose the condition that the 1st defendant, the -"'.
vendor, should obtain the clearance from the Urban Land Ceiling
Authority within the stipulated period of six months. The High Court
D in this regard observed that this evidence showed that the contention
of the 1st defendant that the agreement fell through by reason of the
plaintiffs insisting on her obtaining the permission from the Urban
Land Ceiling Authority and the expression of her inability to comply
with that demand appeared to be correct. The High Court clearly held
that there was no clinching evidence to show that this stipulation was
E thought of by the parties on any day prior to 6.5.79. The High Court, "-< -
therefore, did not agree with the contention of the Learned Counsel
for the plaintiffs that all the terms of contract including the stipulation
with regard to the payment of advance amount and that the vendor
alone should obtain the permission from the Urban Land Ceiling
Authority were settled by 3.5.79 and what was left to be done on
F 6.5.79 was merely to incorporate the terms already arrived at into a (
formal document on Exhibits. A-3 and A-4 stamp papers. It was ~
further observed that had there been a meeting between plaintiffs Nos.
1and2 and the first defendant on 3.5.79 and there was a direct conver-
sation between them, there may be a possibility for drawing such an
inference. But, as observed already, what all liad happened on 3.5.79
G was that plaintiffs Nos. 1 and 2 expressed their willingness to pay a
consideration of Rs.10,00,000 for the suit building and the first
defendant expressed her acceptance of that offer through D. W. 2. The
other terms could not have been settled between the parties in the ~ -
third week of April, 1979 because by that time there was no agreement
between the parties with respect to the sale consideration. Without the
H price being settled, and especially when there was a gap ofRs.2,00,000
BRIJ MOHAN v. SUGRA BEGUM [KASLIWAL, J.J 427

in the price accepted by the first defendant and the price offered by the
first plaintiff, the parties would not have discussed the other terms of A
the agreement such as the advance money to be paid and the responsi-
bility of the vendor to obtain the permission from the Urban Land
Ceiling Authority.

It was submitted by the learned counsel for the appellants that B
the High Court itself has arrived to a finding that D.W. 2 Sh. Arif Ali
on 3.5.79 after having a talk with defendant No. 1 on phone had
conveyed her acceptance to sell the property for a sum of
Rs.10,00,000. It was submitted that an agreement for sale of immov-
able property could be 1,11ade orally and so far as mode of payment of
consideration is concerned, can be settled subsequently.. It was submit-
ted that in the facts and circumstances of the present case all the c
fundamental and vital terms of the contract were settled and con-
cluded on 3.5.79 itself and even if the other details like mode of pay-
ment of consideration, obtaining of no objection certificate from Land
Ceiling Authorities etc. remained unsettled, the same could be
determined in accordance with Sec. 55 of the Transfer of Property Act. D
Oral contract is permissible and so far as other terms which remain
unsettled, the same can be determined by operation of law. It was
contended that the only vital terms for a valid agreement of sale of an
immovable property were the identity of the property and the price.
Both these vital terms were settled and concluded on 3.5.79 and when
the plaintiffs were always ready and willing to perform their part of the E
contract, a decree for specific performance should have been passed in
their favour. It was further contended that the stand taken by the
defendant No. 1 and tried to be supported by Sh. Arif Ali D.W. 2 that
no meeting took place on 3.5.79 at all was held not believable by the
High Court itself. It was further contended that the act of purchasing
stamps on 3.5.79 by defendant No. 1 and the draft receipts Exhibits F
'). A-1 and A-2 prepared by Sh. Arif Ali D.W. 2 himself clearly lend
support to the case of the plaintiffs. Reliance in support of the above
contention was placed on Kollipara Sriramulu v. T. Aswathanarayana
& Ors., [1968] 3 SCR 387 and Nathulal v. Phoolchand, [1970] 2 SCR
854.
G
On the other hand it was contended on behalf of the respondents
that no vital or fundamental terms of the contract were discussed,
-,_,...i agreed or settled on 3.5.79. It was contended that even if the case of
the plaintiffs is believed, all that happened on 3.5.79 was that plaintiffs
had agreed to purchase the property for Rs.10 lakhs to which the
defendant N. 1 had conveyed her acceptance through D.W. 2. Neither H
428 SUPREME COURT REPORTS [1990] 3 S.C.R.

any earnest/advance money to oe paid was settled, nor, any time for
A the payment of such money or time for execution of agreement of sale
or final sale deed and its registration, was settled. It was argued that
even if the time may not be an essence of a term of contract for sale of
immovable property, it is a vital term without which no concluded
contract can be arrived at. Admittedly no meeting was held on 3.5.79
B in the presence of the defendant No. 1 and it was agreed to have a
meeting of the plaintiffs and defendant No. I on 6.5. 79. It was also an
admitted position that neither any consideration passed nor any docu-
ments were signed by the parties on 3.5.79. So far as 6.5.79 is
concerned admittedly the negotiations failed between the parties on
that day. It was further contended that if the, terms had already settled
on 3.5.79 itself where was the necessity of executing draft receipts on
c 6.5.79 and in any case if it was a mere formality then the plaintiffs
should have brought a typed agreement on the stamps for formal
signature of the parties. It was also argued tl)at the plaintiffs failed to
examine Ibrahim Moosa who was an independent and a very impor-
tant witness in the whole transaction and an adverse inference should
D be drawn against the plaintiffs for not examining Ibrahim Moosa. The
defendant No. 1 had produced a counter affidavit Exhibit C-1 dated
27. 7. 79 in reply to injunction application filed by the plaintiffs and she
had taken a clear stand that no terms were settled or concluded on
3.5. 79. It was further argued that admittedly the plaintiffs had not paid
any earnest/advance money to the defendant No. 1 towards the alleged
E transaction but still they malafidely stated in the notice of 7.5.79 '"""< -
published in the Newspaper that an amount of Rs.50,000 had been
paid to defendant No. 1. The defandant No. 1 in these circumstances
had immediately got published a contradiction on 8.5.79 and this
clearly goes to show the malafide and ulterior motive of the plaintiffs.
It was also argued that any agreement in the third week of April, 1979
F to the effect that defendant No. 1 would bring the no objection certifi-
cate from the Urban Land Ceiling Authorities was found not proved l' -
by the High Court and as such there is no question of applying any
principles contained in Sec. 55 of the Transfer of Property Act. It was
also contended that the findings recorded by the High Court are sup-
ported by evidence and this Hon. Court should not interfere against
G such finding in the exercise of its jurisdiction under Article 136 of the
Constitution of India. It was also argued that Sh. Arif Ali was not
holding general power of attorney on behalf of defendant No. 1 and he
had no authority to settle or conclude any terms in respect of a transac-
tion of immovable property on behalf of defendant No. 1. No objec-
tion certificate was necessary to be obtained from Urban Land Ceiling
H Authorities and the defendant No. 1 and her husband being old person
BRIJ MOHAN v. SUGRA BEGUM (KA.SLJWAL, J.] 429

had clearly taken the. stand that they would not bring such certificate
~ .and no final and concluded contract took place on any d~te. · · A

We have given our careful .consider.ation to the arguments
advanced by Learned Counsel for the parties and have thoroughly
perused the record . .We ·agree with the contention of the Learned
·--"</ counsel for the appellants to the extent that there is no requirement of B
law that an agreement or contract of sal.e of immovable property
y should only be in writing. However, in a case where the plaintiffs come
forward to seek a decree for specific performance of contract of sale of
immovable property on. the basis of an oral agreement alone, heavy
burden lies on the plaintiffs to prove that there was consensus aa-zdem
between the parties for a concluded oral agreement for sale ot immov-
able property. Whether there was such a concluded oral contract or c
not .would be a ql\estion of. fact to be determined in the facts and
.,,. circumstances of each individual case. It has to be established by the
plaintiffs that vital and fundamental 'terms for sale of immovable pro-
perty were concluded between the parties orally and a written agree-
ment if any to be executed subsequently would only be a formal agree- D
ment incorporating such terms which had already been settled and
concluded in the oral agreement.

Now we shall examine the facts and circumstances of the present
case in order to find whether the plaintiffs have been able to prove that
there was a concluded oral agreement between the parties on 3.5. 79 in E
order to seek decree for specific performance of contract in their
favour. Admitted facts of the case are that the transaction in question
related to a sale of an immovable property for no less than a sum of
Rs.10,00,000 in May, 1979. 3.5.79 is the crucial date on which the oral
agreement is alleged to have been concluded. Admittedly on that date
even earnest/advance money had not been settled. It was also not F
)'
settled as to when the earnest/advance amount and the balance
amount of sale consideration would be paid. It was also not settled as
to when the final sale deed would be executed and registered. No talk
with regard to any terms of the oral agreement took place in the
presence of the vendor defendant No. 1 on 3.5.79. It was also not
decided whether actual possession or only symbolical possession of the G
premises in question would be given by the vendor. No consideration
actually passed even on 6.5.79 and negotiations failed. Apart from the
above admitted facts of the case we would consider as to what hap-
pened on 3.5.79. The plaintiffs have alleged in the plaint that in the 3rd
week of April, 1979 plaintiffs Nos. 1 and 2 along with Sh. Ibrahim
Moosa and Sh. Arif Ali went to the residence of the defendant who H
430 SUPREME COURT REPORTS [1990) 3 S.C.R.

A was insisting on the payment of Rs.10,00,000 as the sale price. At the
said meeting the husband of the defendant was also present. The -I
plaintiffs Nos. 1 and 2 increased their price from Rs.7,00,000 to
Rs.8,00,000. The first defendant said that she would think over and
inform the plaintiffs Nos. 1 and 2 through Sh. Arif Ali. On 3.5.79 the
plaintiffs 1 and 2 along with Shri Ibrahim Moosa met Shri Arif Ali. He
B stated that the defendant was agreeable to sell the plan schedule pro- ~--
perty to plaintiffs only for Rs.10,00,000 and not a pie less. Thereupon
the plaintiffs agreed to pay Rs.10,00,000 as the sale price. Shri Arif Ali y
after getting the confirmation of acceptance of the said offer of the
plaintiffs No. 1 and 2 from the first defendant said that the plaintiffs
Nos. 1and2 should meet the defendants on 6.5.79 and that she would
C in the meanwhile purchase the stamp papers for making the formal
agreement for sale incorporating the oral agreement arrived at. Then
there is an averment with regard to the meeting of 6.5. 79 between the
first and second plaintiffs along with Shri Ibrahim Moosa and the first
defendant and her husband in the presence of Sh. Arif Ali. It has been
alleged that in the said meeting of 6.5.79 the amount of earnest money
D to be paid, time for registration of the sale deed etc. were decided.
Now it is an admitted case of the plaintiffs themselves that negotiations
failed on 6.5.79 and the defendant No. 1 resiled to sign any of the
receipts nor accepted any earnest/advance money nor any agreement
was even typed on the stamp papers nor signed by defendant No. I.

E In the oral evidence P.W. 1 Shri Brij Mohan, plaintiff No.
stated that in the meeting arranged in the 3rd week of April, 1979 Shri
Ibrahim and Shri Arif Ali came to the plaintiff's shop and then they all
went to the residence of defendant No. I. The second plaintiff also r
accompanied them. The husband of defendant No. 1 Shri Yunus was
also present at the meeting. He was introduced to them as the retired
F Law Secretary. Defendant No. 1 insisted for Rs.10,00,000 as consi- ,( -
deration of the suit property and told the plaintiffs that she would
obtain the permission from the ceiling authority. Shri Brij Mohan then
stated that they raised their offer to Rs.8,00,000 defendant No. 1 told
them that she would think over for two or three days and inform them
through Shri Arif Ali. Thereafter Shri Brij Mohan states regarding the
G bargain held on 3.5.79. According to him he himself, second plaintiff
and Mr. Ibrahim Moosa went to Shri Arif Ali on 3.5.79. Shri Arif Ali
told them that defendant No. 1 was not willing to sell the suit property ~ -
for less than Rs.10,00,000. And if they were willing to purchase for
Rs.10,00,000 then they were welcome to do so at any time. Shri Brij
Mohan then said that they agreed to purchase the suit property for
H Rs.10,00,000 and asked Shri Arif Ali to get the confirmation from
BRIJ MOHAN v. SUGRA BEGUM {KASLIWAL, J.) 431

defendant No. 1. Shri Arif Ali spoke to defendant No. 1 on telephone
A
""" and then informed that defendant No. 1 was willing to sell the property
to them for Rs.10,00,000. Shri Arif Ali then said that they would buy
the stamps for agreement and fixed 6.5.79 morning for a meeting with
defendant No. 1. From a perusal of the above evidence it would be
abundantly clear that nothing was settled on 3.5.79 except the fact that
-/ the plaintiffs had conveyed their approval to purchase the suit pro- B
perty for Rs.10,00,000 and Shri Arif Ali after speaking to defendant
y No. 1 was willing to sell the property for Rs.10,00,000. Admittedly at
the same time a meeting was fixed with defendant No. I on the mom-
ing of 6.5. 79. According to the case set up by defendant No. I she had
never agreed to obtain tbe permission from the ceiling Authority. It
would be important to note that no averment was made in the plaint
that defendant No. 1 had agreed to obtain the permission from the c
:. ceiling Authority in the meeting held in the third week of April, 1979.
However, Shri Brij Mohan plaintiff has soughtto introduce this fact
for the first time in his statement in the Court that defendant No. 1 had
told them in the meeting held in the third week of April, 1979 that she
would obtain the permission from the ceiling Authority. We are D
unable to accept the above statement of Shri Brij Mohan that in the
meeting held in the third week of April, 1979 itself the defendant No. 1
had agreed that she would obtain the permission from the ceiling
Authority. It is an admitted position that till the meeting held in the
--y 3rd week of April, 1979 the plaintiffs had offered Rs.8,00,000 and the
first defendant had told them that she would consider and communi- E

..,. cate her views through Shri Arif Ali some time later. We agree with
the conclusion of the High Court in this regard that without first
determining the sale price, it was quite unlikely that the parties would
have bargained as to who should obtain the clearance under the Urban
Land Ceiling Act. It was known. to the parties that until the clearance
.L). under the Urban Land Ceiling Act and the Income Tax clearance, the F
property will not be registered. The High Court was right in conclud-
ing that it is unbelievable that in the third week of April, 1979 when
still there was a wide gap of Rs. 2,00,000 in the price payable for the
suit building the parties would have stipulated about the condition as
to who should obtain the parmission under the Urban Land Ceiling
Act. It is further pertinent to mention that even in Exhibits A-1 and G
A-2 which are drafts of agreement of sale there is no reference to the
~· ....... oral agreement said to have taken place on 3.5.79. In case all the terms
had already been concluded in the oral contract between the parties on
3.5.79 and only a formal agreement was to be reduced in writing on
6.5.79, then in that case there ought to have been a mention in the
draft agreement exhibits A-1 and A-2 regarding the oral agreement of H
432 SUPREME COURT REPORTS [ 1990] 3 S.C.R.

A 3.5.79. According to the statement of Shri Brij Mohan plainfiff No. 1
himself, nothing was dis.cussed with defendant No. 1 herself and for ?'·
'that reason a (urther meeting was fixed at the house of the first
defendant in the morning of 6.5.79. Shri Arif Ali may have been an
Income Tax Advocate looking after the income tax and wealth tax
matters of defendant No. 1 but he was not a General Power ·of
B Attorney holder to negotiate or settle any terms with regard to any \.,,.
transaction of immovable property belonging to defendant No. I. It is
further important to note that even in the agreement to sell exhibit B-4 'y
dated 22.6. 79 between defendent No. 1 and defendants Nos. 3 and 4,
.no responsibility had been taken by the defendant No. 1 for obtaining
;the clearance from the Urban Land Ceiling Authority. The High
Court in these circumstances righty believed the contention of the
C defendant No. 1 that the agreement fell through because the plaintiffs
insisted th~t defendant No. 1 should obtain the permission from the ~
:Urban Land Ceiling Authority while defendant No. 1 did not agree for
the same. There was no clinching evidence to show that this stipulation
was thought of by the parties on any day prior to 6.5.79. Thus in the
.0 above circumstances when the parties were consciously negotiating
about the bringing of no objection certificate from the Urban Land
,Ceiling Authority and the case put forward by defendant' No. 1 in this
regard has been believed there is no question of applying the principle
contained in Section 55 of the Transfer of Property Act. The general
principle contained in Sec. 55 of the Transfer of Property Act regard- y -
E ing rights and liabilities of buyer and seller can only apply in the
absence of a contract to t'he contrary and not in a case where the
.parties consciously negotiated but failed in respect of any term or
,condition, as a result of which the agreement itself could not be settled -r--
or concluded. Once it is held, established in the present case that no
11greement was finally concluded cir sattled on 6.5. 79 and negotiations
F failed and before this date it was never settled that defendant No. 1 .( ~-·
-would bring the no objection certificate from Urban Land Ceiling
Authority, there is no question of applying general principles con-
tained in Sec. 55 of the Transfer of Property Act.

In Kollipara Sriramula v. T. Aswathanarayana & Ors. (supra)
G was a case where in 1953 respondent No. 1 filed a suit alleging that all
the partners of t'he firm except the appellant had entered into an oral
agreement with him on July 6, 1952 to sell 137 shares in t'he site except ~ ~
the 23 shares belonging to appellant No. 1, that 98 shares had actually
been sold to him, that 39 shares had not been sold to him and had been
instead sold to appellant No. 1. Respondent No. 1 in these brcum-
.H .stances claimed specific performance of the agreement to sell the
BRIJ MOHAN v. SUGRA BEGUM (KASLIWAL, J.) 433

aforesaid 39 shares by their owners and contended that the sale of
~ those shares in favour of appellant No. 1 was not binding upon him. A
The Trial Court decided against respondent No. 1 but the High Court
decided in his favour. On the basis of above facts this Court held that
the High Court was right in holding that there was an agreement to sell
137 shares in the site to respondent No. 1. A mere reference to a future
formal contract does not prevent the existence of a binding agreement B
.,/ between the parties unless the reference to a future cohtract is made in
such terms as to show that the parties did not intend tb be bound until
·y a formal contract is signed. The question depends upon the intention
of the parties and the special circumstances of each particular case.
The evidence did not show that the drawing up of a written agreement
was a pre-requisite to the coming into effect of the oral agreement, nor·
did the absence of a specific agreement as to the mode of payment C
necessarily make the agreement ineffective, since the vital terms of the
~ contract like the price and area of the land and the.time for completion
of the sale were all fixed. The facts of the above case clearly show that
it related to sale of 137 shares and that in ·pursuance of the agree111ent
partners who owned 98 shares had already executed sale deeds in D
favour of the plaintiffs/respondents and the other partners owning 39
shares did not do so. The High Court as well as this Court believed the
evidence of the plaintiff/respondent for conveying the entire 137
shares by an oral agreement dated July 6, 1952. This Court also found
that the plaintiff respondents had built a valuable cinema theatre
-Y building on the disputed site and yet very strong reasons to make an E
outright purchase of the site otherwise he would be placed in a precari'
ous legal position. Negotiations for purchase were going on for several
years passed and considering this background, the case of the respon-
dent with regard to the oral agreement appeared highly probable.

In the above backiround this Court on Page 394 observed as p
-> under:
"It is, the.efore, not possible to accept the contention of
the appellant that the oral agreement was ineffective in law
because there is no execution of any formal written docu-
ment. As regards the other point, it is true that there is no G
specific agreement with regard to the mode of payment but
this does not necessarily make the agreement ineffective.
The mere omission to settle the mode of payment does not
affect the completeness of the contract because the vital
terms of the contract like the price and area of the land and
the time for completion of the sale were all fued." H
434 SUPREME COURT REPORTS [ 1990] 3 S.C.R.

A Thus even in the above case the time for completion of the sale
was considered as one of the vital terms of the contract. Further in the
above case part of the agreement had been performed i.e. partners
having 98 shares had already executed sale deeds and this Court had
believed the oral agreement for sale of 137 shares. Thus the above case
is totally distinguishable and renders no assistance to the appellants in
B the case before us.

Thus we find no force in these appeals and the same are dismis-
sed. In the facts and circumstances of the case we make no order as to 'y
costs.

C R.S.S. Appeals dismissed.