Supreme Court of India
NANDKISHORE LALBHAI MEHTAversusNEW ERA FABRICS PVT. LTD. & ORS.
- Citation
- 2015 INSC 490
- Decided
- 8 July 2015
- Disposal
- Dismissed
- Bench
- RANJAN GOGOI
Holding
The sale agreement was a contingent contract; because the labour union never gave consent, the contract terminated and the appellant is only entitled to a refund with interest, not specific performance.
Summary
The appellant, Nandkishore Lalbhai Mehta, entered into a sale agreement with the respondents for a plot in Mahim, subject to obtaining consent from the Mill Mazdoor Sabha (labour union) and various statutory permissions. The union refused consent, and the respondents declared the agreement cancelled and offered to return the earnest money. The appellant sued for specific performance; a single High Court judge decreed in his favour, but the Division Bench set aside that decree, holding the agreement was contingent and could not be enforced without the union's consent. On appeal, the Supreme Court affirmed that the contract was indeed contingent on the union's approval and that, since consent was never obtained, the agreement terminated, leaving the appellant entitled only to a refund of the paid amount with interest at 18% per annum. Consequently, the appeals were dismissed and the decree for specific performance was not restored.
Issues considered
- The agreement for sale was contingent upon obtaining consent of the Mill Mazdoor Sabha and statutory permissions.
- Whether the appellant waived the condition of labour union consent, thereby barring termination of the contract.
- Whether evidence (letters) not pleaded in the plaint could be admitted to establish the union's consent.
- Whether specific performance could be granted despite the failure of a condition precedent.
- The appropriate remedy for the appellant if the contract is deemed terminated.
Legislation cited
- Development Control Regulations, 1991s. 56(3)(c)(1)
- Indian Contract Act, 1872s. 56
- Industrial Disputes Act, 1947s. 25
- Specific Relief Act, 1963s. 20
- Urban Land (Ceiling & Regulation) Act, 1976s. 22, s. 27
Subjects
specific performancecontingent contractlabour union consentamendment of pleadingsurban land ceiling actcontract terminationrefund with interest
Judgment
[2015] 7 S.C.R. 631
NANDKISHORE LALBHAI MEHTA A
v.
NEW ERA FABRICS PVT. LTD. & ORS.
(Civil Appeal No.1148 of 2010)
B
JULY08, 2015
[RANJAN GOGOi AND R.K. AGRAWAL. JJ.)
Specific performance: Sale of suit property by
respondent subject to consent of Labour Union -Appellant- c
buyers paid earnest money as per the agreement to the
respondents-buyers - Labour Union refused to give the
consent for sale of the suit property- Respondent informed
this fact to the appellant that the agreement stood cancelled
and that they would return the amount - Appellant waived D
the condition of obtaining the consent of labour but still
agreement did not materialize- Suit for specific performance
by appellant- Single judge of High Court decreed the suit-
Division Bench set aside the decree - On appeal, held: In
the plaint filed by appellant, specific case was pleaded by E
appellant that the Labour Union colluded with the respondents
- However, at the time of leading the evidence, case was
made out that Labour Union agreed to the proposed sale on
certain conditions offered by respondent - Such evidence
could not be allowed to be led in the absence ofpleadings in F
the plaint - Since there was new plea or a/legation of fact
inconsistent with the previous pleadings of the parties, steps
ought to have been taken by appellant to amend the plaint
which was not done - As the Labour Union did not give its G
consent to the proposed sale, agreement for sate could not
have been performed and had ceased - Appellant is only
entitled to refund of the amount along with interest @ 18%
per annum stipulated therein.
H
631
632 SUPREME COURT REPORTS [2015] 7 S.C.R.
A Dismissing the appeals, the Court
HELD: 1. In the plaint filed by the appellant, the
plea set up was that at the instigation of the defendants
and in collusion with them, the Mill Mazdoor Sabha has
B refused to give its permission to the sale of the mill
premises of Defendant No. ·1 to the plaintiff. It was not a
case set up by the appellant that the Mill Mazdoor Sabha
had agreed to the proposed sale on certain conditions
offered by the respondents. In view of the settled
C position of law, fresh pleadings and evidence which is
in variation to the original pleadings cannot be taken
unless the pleadings are incorporated by way of
amendment of the pleadings. The Division Bench of the
High Court was perfectly justified in holding that unless
D the plaint is amended and a specific plea is taken that
the Mill Mazdoor Sabha had agreed for the proposed sale
on certain terms and conditions offered by the
respondents, the two letters viz., Exh Nos. P-27 and P-
28 could not have been taken into consideration at all.
E Further, it was the case of the appellant that the said two
letters were given by the former Director of Respondent
No. 1. He was not produced as a witness so as to
establish that these tw<;> letters were in fact given by the
F Mill Mazdoor Sabha. Further, in the statement of PW-2,
he has only stated that the letter must have ben sent by
the Mill Mazdoor Sabha and the post-script might have
been written by Mr. Pathak as it bears his signature. He
had not stated that it was written in his presence. Mere
G identifying the signature of Mr. Pathak would not prove
the contents of the said letter which was being relied
upon by the appellant. Even if the two letters viz., Exh.
Nos. P-27 and P-28 are taken into consideration, from a
reading of the said letters, it appears that the contents
H are contradictory of one another. In the letter dated
NANDKISHORE LALBHAI MEHTA v. NEW ERA FABRICS 633
PVT. LTD. & ORS.
05.12.1977 (Exh. P-27), the Mill Mazdoor Sabha had A
demanded an option to provide alternate empk>yment
and to pay full compensation to those workers who do
not want alternate employment as per the law. In the
note below the said letter, a mention was made that a
proposal was given to pay 60 per cent compensation B
which was not acceptable. In the earlier part of the letter
dated 10.01.1978 (Exh. P-28), it was specifically
mentioned that they do not agree to the proposed sale
and the matter be treated as closed. However, in the note,
it was mentioned that they are agreeable to the proposal C
given in the discussion and to the proposed sale. Letter
dated 10.01.1978 is contradictory to the earlier part of
the letter, and therefore, the Division Bench rightly
disbelieved these two letters. [Paras 27 to 29] (686-C-H;
0
687-A-E]
2. The submission that the appellant has waived
the condition regarding taking of consent from the labour
for the proposed sale and, therefore, this could not be a
ground for cancelling the contract is misconceived. In E
the agreement dated 19.10.1977, it was specifically
mentioned that the sale also be subject to defendants
being able to settle with labour and labour agreeing to
the sale contemplated and if they are not able to settle F
with labour and to get them to agree to the sale herein
contemplated they will not be bound to complete the
sale. The moment labour do not agree to the sale
contemplated, under the terms of the contract, the
respondents were not bound to complete the sale. The G
maximum period of nine (9) months does not mean that
once the labour had declined to give their consent for
the proposed sale, the contract subsists for a period of
nine (9) months and it cannot be terminated before that
period. The agreement for sale is a contingent H
634 SUPREME COURT REPORTS [2015] 7 S.C.R.
A agreement depending upon obtaining permission under
Section 22 and Section 27 of the ULCAct, property being
converted from industrial zone to residential use and
settlement with the labour and the labour agreeing to
the sale contemplated therein. If any of the conditions
B are not tulfilled, the respondents were not bound to
complete the sale and the appellant was only entitled
for return of the money with interest@ 18% per annum
from the date of refusal of any of the permission or
consent or agreement mentioned above. [Para 30] [687-
C G-H; 688-A-D]
. Bachhaj Nahar vs. Nilima Manda/ & Anr. 2008 (14)
SCR 621: (2008) 17 SCC 491; Shalimar Chemical
Works Limited vs. Surendra Oil and Dal Mills
D (Refineries) and Others 2010 (10) SCR 703: (2010) 8
SCC 423; H. Siddiqui (Dead) By Lrs. vs. A. Ramalingam
2011 (5) SCR 587 : (2011) 4 sec 240; R. V.E.
Venkatachala Gounder vs. Aru/migu Viswesaraswami
& V.P Temple and Another2003 (4) Suppl. SCR 450:
E (2003) 8 SCC 752; HPA International vs. Bhagwandas
Fatehchand Daswani and Others 2004 (3) Suppl.
SCR 31: (2004) 6 SCC 537; Irwin v Wilson [2011]
EWHC 326 (Ch); M. Meenakshi and Others vs.
Metadin Agarwal and Others 2006 (5) Suppl.
F
SCR 505: (2006) 7 SCC 470; K. Narendra vs. Riviera
Apartments (P) Ltd. 1999 (3) SCR 777: (1999) 5 SCC
77 - relied on.
Chandnee Widya Vati Maden vs. Dr. C.L. Katia/ and
G Others (1964) 2 SCR 495;
The Maharao Sahib Shri Bhim Singhji vs. Union of
India and Ors. (1981) 1 SCC 166; Pasupu/eti
Venkateswarlu vs. Motor & General Traders 1975 (3)
H SCR 958: (1975) 1 SCC 770 - referred to.
NANDKISHORE LALBHAI MEHTA v. NEW ERA FABRICS 635
PVT. LTD. & ORS.
Case Law Reference A
(1964) 2 SCR 495 referred to. Para4
(1981) 1 sec 166 referred to. Para 5
1975 (3) SCR 958 referred to. Para 6 B
2008 (14) SCR 621 relied on. Para 9
2010 (10) SCR 703 relied on. Para 10
2011 (5) SCR 587 relied on. Para 11 c
2003 (4) Suppl. SCR 450 relied on. Para 12
2004 (3) Suppl. SCR 31 relied on. Para 14
D
2006 (5) Suppl. SCR 505 relied on. Para 16
1999 (3) SCR 777 relied on. Para 18
CIVIL APPELLATE JURISDICTION: Civil Appeal No.
1148of2010 E
From the Judgment and Order dated 06.05.2008 in
Appeal No. 245 of2006 in Suit No. 1414of1979 passed by
the Division Bench of the High Court of Judicature at Bombay.
WITH F
C.A. Nos. 1131-1132of2010
P. H. Parikh, Vinod A. Bobde, Harin P. Raval, Kavin .
Gulati, Parag P. Tripathi, Gopal Jain, Mamta Sadh, Lalit Bhasin,
Nina Gupta, Mudit Sharma, P.V. Yogeswaran, ParvezA. Khan, G
Vishal Prasad, Shivaji M. Jadhav, Rahul Jain, Kamna Sagar,
Anando Mukherjee, Kuna I Bahri, Sunil Kumar Verma, Ankur
Saigal, Sh ally Bhasin Maheswari for the appearing parties.
The Judgment of the Court was delivered by H
636 . SUPREME COURT REPORTS [2015] 7 S.C.R.
A R. K. AGRAWAL, J. Civil Appeal No. 1148 of 2010
1) This appeal has been filed against the judgment and
order dated 06.05.2008 passed by the Division Bench of the
High Court of Judicature at Bombay in Appeal No. 245 of 2006
in Suit No. 1414of1979 whereby the High Court allowed the
B appeal filed by respondents herein while setting aside the
decree dated 12.12.2005 passed by the learned single Judge
of the High Court in favour of the appellant herein in Suit No.
1414 of 1979 for specific performance of the agreement dated
19.10.1977.
c
Brief facts:
2) (a) In October, 1977, Respondent Nos. 1 and 2
agreed to sell their respective right, title and interest in the
o property admeasuring approximately 13011 sq. yards or
thereabouts of Mahim T.P.S. 111, Plot No. 264 opposite Matunga
Western Railway in favour of Shri Nandkishore Lalbhai Mehta
- the appellant herein which was resolved under an Agreement
for Sale dated 19.10.1977 on certain terms and conditions.
E
(b) The relevant terms of the agreement are as under:-
1.Area of the Property : 13011 Square Yards.
F 2. Price : Lumpsum price of Rs. 78,06,600/-
(Rupees Seventy-eight lacs six
thousand and six hundred only); It is
agreed that the price shall not be
revised or amended for any reason
G whatsoever including any legislation
or otherwise;
5. Payment : Rs. 11,50,000/-(Rupees Eleven lacs
fifty thousand only) to be paid as
H
NANDKISHORE LALBHAI MEHTA v. NEW ERA FABRICS 637
PVT. LTD. &ORS. [R. K.AGRAWAL, J.)
earnest to your Solicitor Mr. D.H. A
Nanavati as follows:-
(a) Rs. 7,50,000/- (Rupees Seven lacs
fifty thousand only) on confirmation of
this letter by you and balance of Rs. B
4,00,000/-(Rupees four lacs only) on
or before 241h October 1997 time
being of the essence. Provide fur:ther
that the sums of Rs.7,50,000/-
(Rupees Seven lacs-fifty thousand c
only) be utilized by you New Era
Fabrics Pvt. Ltd. for the purpose of
carrying out the Consent Terms in the
High Court and small Causes Court
D
suit mentioned above.
The time for the payment thereof has
expired and you will therefore offer the
same to the other side and on their E
accepting to extend the time till the
payment thereof under the said two
Consent Terms the said amount will
be paid by you to them; in the event
of their declining and insisting on F
going on with the suit or your
settlement of the suit as per the
Consent Terms not materializing you
will return the said amount to me on
such refusal or settlement falling G
through and I will not be entitled to any
interest thereon or costs. In the event
of my failing to pay to your Solicitor
the sum of Rs. 7,50,000/- on the
execution thereof and Rs. 4,00,000/- H
638 SUPREME COURT REPORTS [2015] 7 S.C.R.
A (Rupees four lacs only) on or before
24th October 1977 you will be entitled
to forfeit the amount of Rs. 7,50,000/
- paid by me till such default and the
Agreement herein will stand
B automatically cancelled. I enclose
herewith my Solicitors' cheque of Rs.
7,50,000/- (Rupees Seven lacs fifty
thousand only) in your Solicitor's
favour which may be cashed after
c confirmation by you of the terms
contained herein, ifthe terms are not
confirmed you will return the said
cheque to me;
D (b) : Half of the balance of the consider-
ation money mentioned in the
paragraph 2 above will be paid by me
on receipt of the permissions under
E Sections 22 and 27 of the Urban Land
(Ceiling & Regulation) Act being
obtained as also the permission for
conversion into residential user being
obtained as well as your settling with
F your labour and getting their
permission as herein provided and
vacant possession of the said land
being handed over to me and the
balance of the consideration by equal
G quarterly installments to be paid within
one year from the date of possession
of the plot being handed over to me
as herein provided;
H 6. Sale : The sale shall be subject to permiss-
NANDKISHORE LALBHAI MEHTA v. NEW ERA FABRICS 639
PVT. LTD. &O~S. [R. K.AGRAWAL, J.]
ion being obtained under Sections 22 A
and 27 of the Urban Land (Ceiling &
Regulation) Act, 1976. The sale shall
also be subject to the property being
converted from Industrial Zone to
residential use. The sale shall also be B
subject to your being able to settle
with your labour and your labour
agreeing to the sale contemplated
herein. If N.O.C and change of users
and the permission provided herein c
are not obtained within a period of 9
months from the date hereof and if you
are not able to settle with your labour
and to get them to agree to the sale
D
herein contemplated you will not be
bound to complete the sale herein
contemplated and the Agreement will
survive only to the extent of the return
of my money which will be paid within E
6 months of the expiration of the
aforesaid nine months with interest at
18.% per annum from the date of
refusal of any of the permission or
consent or agreement set out above, F
till the repayment of money with
interest and till then you will not be
entitled to do any act, deed, matter or
thing whereby or by reason whereof
the security created as herein G
provided in my favour will be affected
or jeopardize in any manner
whatsoever. .....
(emphasis supplied)
H
640 .._. · SUPREME COURT REPORTS [2015] 7 S.C.R.
A : You will sign such application forms,
etc. for the aforesaid permissions as
may be necessary, as well as forms
for permissions of building
Department from B.M.C. and
B sanction of plans etc. for new
construction on the said property and
any other permission from Town
Planning or any other Department;
C 8. Vacant possession : Vacant possession shall be handed
over to me within 3 months of all the
above mentioned permissions being
obtained and your settling with your
labour agreeing to the sale herein
D
contemplated .....
(c) Pursuant to the said agreement, the appellant herein
paid a sum of Rs. 11,50,000/- as part of earnest money in two
installments of Rs. 7,50,000/- and Rs. 4,00,000/- each on
E 20.10.1977 and 24.10.1977 respectively.
(d) Pursuant to Point No. 6 of the agreement dated
19.10.1977, the sale was subject to the permission being
obtained under Sections 22 and 27 of the Urban Land (Ceiling
F and Regulation) Act, 1976 (hereinafter referred to as 'the ULC
Act'); the property being converted from industrial zone to
residential use and to give vacant possession of the land after
settling with the labour.
G (e) In order to materialize the agreement, further steps
were taken. Respondent No. 1, vide letter dated 08.11.1977,
intimated the Labour Union about the Agreement and
requested to give their consent to the same. Vide letter dated
09.11.1977, Respondent No. 2 approached the Arbitrator, Town
H Planning Scheme to have the said property converted into
NANDKISHORE LALBHAI MEHTA v. NEW ERA FABRICS 641
PVT. LTD. & ORS. [R. K. AGRAWAL, J.]
residential zone from industrial zone. A
(f) Vide letter dated 05.12.1977, Mill Mazdoor Sabha-
Labour Union informed the respondents that they were not
agreeable to the sale of the said property.
B
(g) Respondent Nos. 1 & 2 informed this fact to the
appellant herein vide letter dated 15.12. 1977 stating that the
agreement stood cancelled and they would return the amount
of Rs. 11,50,000/- with interest and also withdrew the
application madetotheArbitrator, Town Planning Scheme for c
conversion of the property from industrial to residential zone.
(h) The appellant herein waived the stipulation/condition
of obtaining the consent of the labour but inspite of the efforts,
the agreement did not materialize.
D
(i) Being aggrieved, the appellant herein filed Suit No.
1414 of 1979 before the High Court of Bombay for specific
performance of the agreement dated 19.10.1977. Learned
single Judge of the High Court, vide order dated 12.12.2005,
decreed the suit in favour of the appellant herein. E
0) Being aggrieved by the order dated 12.12.2005,
Respondent Nos. 1 and 2 filed Appeal No. 245 of 2006 in Suit
No. 1414of1979 before the High Court. The Division Bench
of the High Court, by order dated 06.05.2008, allowed the F
appeal of the respondents herein setting aside the decree of
specific performance granted by learned single Judge of the
High Court.
(k) Against the said order, the appellant ha~· preferred G
this appeal by way of special leave before this Court.
Civil Appeal Nos.1131-1132 of2010
(I) The aforesaid appeals have been filed against the H
642 SUPREME COURT REPORTS [2015] 7 S.C.R.
A order dated 12 .12 .2008 passed by the Division Bench of the
Bombay High Court wherein the cross-objections filed by the
appellant herein were dismissed. These appeals were tagged
with the main appeal at the SLP stage vide order dated
02.04.2009, hence will be disposed of by this common
B judgment.
3) Heard Mr. P.H. Parikh, learned senior counsel
assisted by Mr. P.V. Yogeswaran, learned counsel for the
appellant and Mr. Vinod A. Bobde, learned senior counsel and
C Mr. Shivaji M. Jadhav, learned counsel forthe respondents.
Rival Submissions:
4) Learned senior counsel for the appellant submitted
that the Agreement for Sale dated 19.10.1977 executed by
0
the parties is not in dispute. The appellant had always been
ready and willing to discharge his obligations and the plea of
the respondents that there was no concluded agreement relying
upon Clause 10 of the agreement was neither raised in the
E written statement nor any issue was framed by learned single
Judge. Thus, it was not open to the defendants-respondents
herein to plead that there was no concluded agreement. It
was correctly negated by the learned single Judge. In fact, the
respondents were acting dishonestly as the agreement was
F terminated by them within two months of its execution. In fact,
the agreement itself contemplated a period of nine (9) months
and the plea taken by the respondents herein that the Mill
Mazdoor Sabha refused to agree to the sale vide letter dated
05.12.1977 was within a very short time and the respondents
G did not take sufficient steps to get the consent of the Mill
Mazdoor Sabha/labour/workmen. It appears that the
respondents were in dire financial position and required money
to perfect their title by making balance payment to the Zaveris
under the consent terms. The defendants-respondents herein
H paid a sum of Rs. 7.5 lakhs received from the appellant to the
NANDKISHORE LALBHAI MEHTA v. NEW ERA FABRICS 643
PVT. LTD. & ORS. [R. K. AGRAWAL, J.]
Zaveris to perfect their title and after getting the same done, A
they dishonestly terminated the agreement. Learned senior
counsel further submitted that the Division Bench had erred in
reversing the judgment of the learned single Judge on the basis
that was not even pleaded by the respondents. In fact, the
Division Bench had wrongly reversed the judgment on the B.
ground that the important facts including documentary evidence
that were relied upon by the appellant were not pleaded in the
plaint and the plaint was not even amended. Even though, an
objection was raised by the respondents before the court that C
certain evidence were outside the scope of the plaint but no
such objections were raised at the stage of final hearing. He
further submitted that as the parties had contested the matter
before the learned single Judge on the basis of the concluded
agreement, the Division Bench was not at all justified in holding D
the agreement in question to be contingent in nature. In support·
of his contention, learned senior counsel relied upon a decision
of this Court in Chandnee Widya Vati Maden vs. Dr. C.L.
Katia/ and Others ( 1964) 2 SCR 495 wherein it was held that
where all the terms are crystallized between the parties, the E
execution of a formal agreement is not a pre-requisite for the
grant of specific relief. He further submitted that in view of the
documents having been filed before the court and exhibited
as P-27 to P-42, the Division Bench had wrongly held that they
were outside the scope of evidence as these documents were · F
not pleaded in the plaint nor was any amendment preferred.
According to learned senior counsel, the only requirement
under the Code of Civil Procedure, 1908 is that the plaint must
contain essential pleas or contentions and it is not necessary
to plead evidence. In paragraph Nos. 33 and 35 of the plaint, G
a specific plea was taken by the appellant that the respondents
were on a false pretext seeking to wriggle out their contractual
obligations and in support of the plea of false pretext, the
appellant was entitled to adduce evidence to show that the
refusal on the part of the Mill Mazdoor Sabha/labour to permit H
644 SUPREME COURT REPORTS [2015] 7 S.C.R.
A the sale of the suit property was nothing but an eye wash by
the respondents. To establish this fact, the appellant had
produced documents and also led oral testimony through one
of the trade union office bearers, viz., Mr. Vasant Gupte,
President and this evidence could not be shut out as the
B respondents were aware about it.
5) He further submitted that the Division Bench has
wrongly held the agreement dated 19.10.1977 to be a
contingent contract. No specific plea was raised by the
C defendants-respondents herein regarding it to be a contingent
contract and further no specific issue was framed. According
to him, on a correct construction and interpretation of the
agreement, it cannot be termed as a contingent contract and
it is always open to the party in whose favour a specific term is
D inserted to waive the term and seek specific performance of
the remainder of the obligations. According to him, learned
single Judge had categorically recorded, on appreciation of
evidence on record that the labour union had actually consented
to the sale of the property on certain terms being fulfilled, as is
E clear from Exhibit Nos. 43 and 44. Further, the grant of relief
of specific performance is a matter of discretion and if it has
been granted by the learned single Judge, the Division Bench
ought not to have substituted its assessment where the court
F had perceived dishonest conduct on the part of the defendants-
respondents herein. Elaborating it further, learned senior
counsel submitted that the appellant had waived the express
term relating to the consent of the labour vide letter dated
19.04.1978 nearly six (6) months prior to the institution of the
G suit and, therefore, the respondents cannot take advantage of
a stipulatiarrwhich the party for whose benefit it was made
has expressly waived the same for performance of his other
obligations. This aspect has not been considered or dealt
with by the Division Bench. Further, the Division Bench wrongly
H held that the appellant did not really mean to purchase the suit
NANDKISHORE LALBHAI MEHTA v. NEW ERA FABRICS 645
PVT. LTD. & ORS. [R. K.AGRAWAL, J.]
property and that the agreement of purchase of the suit property A
was a financial transaction. This plea was not even raised by
the respondents herein in their written statement. As far as
permission under the ULCAct is concerned, learned senior
counsel relied upon a decision of this Court in The Maharao
Sahib Shri Bhim Singhjivs. Union oflndia and Ors. (1981) B
1 SCC 166 and submitted that sub-Section (1) of Section 27
of the Act is invalid insofar as it imposes a restriction on transfer
of any urban or urbanisable land with a building or a portion
only of such building, which is within the ceiling area. Such
property will therefore be transferable without the-6onstraints C
mentioned in sub-section (1) of Section 27 of the ULC Act.
6) Learned senior counsel further submitted that the
Annual Reports of Respondent No. 1 categorically demonstrate
that the workers were retrenched and as per Form-6, D
Respondent No. 1 had only 69 employees and if the workers
were provided their legal dues they were willing to consent to
the sale. of the suit property. The Annual Reports/Balance
Sheets of the Respondent No. 1 have been specifically
appreciated by learned single Judge whereas the Division E
Bench had not at all considered the same. According to
learned senior counsel, the appellant was justified in relying
upon the letters Exhibited at P-27 to P-42 and filing the same
before the Court which had material bearing on the issue and F
it could not have been excluded. In support of his submission,
he relied upon a decision of this Court in Pasupuleti
Venkateswarlu VS. Motor & General Traders (1975) 1 sec
770 wherein it was held as under:-
"4 ..... If a fact, arising after the lis has come to c;c;>urt and G
has a fundamental impact on the right to relief or the
manner of moulding it, is brought diligently to the notice
of the tribunal, it cannot blink at it or be blind to events
which stultify or render inept the decretal remedy ..... "
H
646 SUPREME COURT REPORTS [2015] 7 S.C.R.
A 7) Learned senior counsel for the appellant further
submitted that during the pendency of the present proceedings,
the respondents have earned by way of rental charges from
the suit premises a sum of Rs. 64,57,46,800/- for the period
23.10.1978 till September 2012 as principal amount and if
B interest is computed thereupon it comes to Rs. 160,87, 15,887/
- as on September 2012. However, as on june 2014, the
respondents have earned by way of rental charges upon the
said premises a sum of Rs. 87,42,65,200/-as principal amount
and if interest is computed thereupon @ 18% per annum, it
C comes to Rs. 226,89,85,346/-. It is further submitted that the
appellant at the time of entering the agreement was 54 years
and now he is 91 years. The suit was filed in the year 1979
and he had suffered all these years for no fault of his. He
believed in the agreement and complied with all the terms and
0
conditions. Learned senior counsel further submitted that the
judgment and order passed by the Division Bench of the High
Court dated 06.05.2008 should be set aside and that of the
learned single Judge dated 12.12.2005 be restored. Finally,
E in the alternative, he submitted that in case the suit for specific
performance is not decreed and the appellant is given
damages, it should be just, fair and equitable and not only Rs.
78 lakhs as given by the learned single Judge.
F 8) In reply, learned senior counsel for the respondents
submitted that in the plaint filed by the appellant, a specific
case of the labour union colluded with the present respondent
was pleaded. However, at the time of leading of evidence, a
completely new case vis., of two letters dated 05.12.1977 and·
G 10.01.1978 has been made out which are the documents
handed over to the appellant by one Mr. M.P. Agarwal. A specific
objection was raised that such evidence could not be allowed
to be led, or documents have been produced in the absence
of pleadings in the plaint whereupon learned single Judge while
H noting the aforesaid objection held that this issue would be
NANDKISHORE LALBHAI MEHTA v. NEW ERA FABRICS 647
PVT. LTD. &ORS. [R. K.AGRAWAL, J.]
decided while hearing the matter finally. Instead of checking A
as to whether those documents can be relied upon or not,
learned single Judge erroneously accepted the version
contained in the letters dated 05.12.1977 and 10.01.1978 as
produced by the appellant. According to him, no evidence can
be led in the absence of any pleading and if there is any new B
ground, new plea or allegation of fact inconsistent with the
previous pleadings of the parties, steps ought to have been
taken to amend the plaint which has not been done for reasons
best known.
c
9) Learned senior counsel further submitted that unless
and until there is an amendment of the pleadings, no evidence
with regard to the facts not pleaded can be looked into, for
which he relied upon a decision of this Court in Bachhaj Nahar
vs. Nilima Manda/ &Anr. (2008) 17 SCC 491 wherein it was D
held-as under:-
"7. Feeling aggrieved, the plaintiffs filed a second appeal
before the High Court. The High Court by judgment dated
14-5-2004 allowed the second appeal. The High Court E
held that the plaintiffs had failed to make out title to the
suit pr_operty. It however held that the plaintiffs had made
out a case for grant of relief based on easementary right
of passage, in respect of the suit property, as they had
claimed in the plaint that they and their vendor had been F
using the suit property and the first defendant and DW 6
had admitted such user. The High Court was of the view
that the case based on an easementary right could be
considered even in the absence of any pleading or issue
relating to an easementary right, as the evidence available G
was sufficient to make out easementary right over the
suit property. The High Court therefore granted a
permanent injunction restraining the first defendant from
interfering with the plaintiffs' use and enjoyment of the
H
648 SUPREME COURT REPORTS [2015] 7 S.C.R.
A "right of passage" over the suit property (as also of the
persons living on the northern side of the suit property).
10. The High Court, in this case, in its obvious zeal to cut
delay and hardship that may ensue by relegating the
B plaintiffs to one more round of litigation, has rendered a
judgment which violates several fundamental rules of civil
procedure. The rules breached are:
(1) No amount of evidence can be looked into, upon a
c plea which was never put forward in the pleadings. A
question which did arise from the pleadings and which
was not the subject-matter of an issue, cannot be
decided by the court.
(it) A court cannot make out a case not pleaded. The
D
court should confine its decision to the question raised
in pleadings. Nor can it grant a relief which is not
claimed and which does not flow from the facts and
the cause of action alleged in the plaint.
E (iit) A factual issue cannot be raised or considered for
the first time in a second appeal.
11. The Civil Procedure Code is an elaborate codification
of the principles of natural justice to be applied to civil
F litigation. The provisions are so elaborate that many a
time, fulfilment of the procedural requirements of the Code
may itself contribute to delay. But any anxiety to cut the
'~elay or further litigation should not be a ground to flout
the settled fundamental rules of civil procedure. Be that
G as it may. We will briefly set out the reasons for the
aforesaid conclusions.
12. The object and purpose of pleadings and issues is
to ensure that the litigants come to trial with all issues
H clearly defined and to prevent cases being expanded or
NANDKISHORE LALBHAI MEHTA v. NEW ERA FABRICS 649
PVT. LTD. & ORS. [R. K. AGRAWAL, J.]
grounds being shifted during trial. Its object is a!so to A
ensure that each side is fully alive to the questions that
are likely to be raised or considered so that they may
have an opportunity of placing the relevant evidence
appropriate to the issues before the court for its
consideration. This Court has repeatedly held that the B
pleadings are meant to give to each side intimation of
the case of the other so that it may be met, to enable
courts to determine what is really at issue between the
parties, and to prevent any deviation from the course
which litigation on particular causes must take. c
13. The object of issues is to identify' from the pleadings
1
the questions or points required to be decided by the
courts so as to enable parties to let in evidence thereon.
When the facts necessary to make out a particular claim, D
or to seek a particular relief, are not found in the plaint,
the court cannot focus the attention of the parties, or its
own attention on that claim or relief, by framing an
appropriate issue. As a result the defendant does not
get an opportunity to place the facts and contentions E
necessary to repudiate or challenge such a claim or relief.
Therefore, the court cannot, on finding that the plaintiff
has not made out the case put forth by him, grant some
other relief. The question before a court is not whether
F
there is some material on the basis of which some relief
can be granted. The question is whether any relief can
be granted, when the defendant had no opportunity to
show that the relief proposed by the court could not be
granted. When there is no prayer for a particular relief G
and no pleadings to support such a relief, and when the
defendant has no opportunity to resist or oppose such a
relief, if the court considers and grants such a relief, it
will lead to miscarriage of justice. Thus it is said that no
amount of evidence, on a plea that is not put forward in H
650 SUPREME COURT REPORTS (2015] 7 S.C.R.
A the pleadings, can be looked into to grant any relief.
14. The High Court has ignored the aforesaid principles
relating to the object and necessity of pleadings. Even
though right of easement was not pleaded or claimed by
B the plaintiffs, and even though parties were at issue only
in regard to title and possession, it made out for the first
time in second appeal, a case of easement and granted
relief based on an easementary right. For this purpose,
it relied upon the following observations of this Court in
C Nedunuri Kameswaramma v. Sampati Subba Rao:
"6 . ... No doubt, no issue was framed, and the one,
which was framed, could have been more elaborate;
but since the parties went to trial fully knowing the rival
o case and led all the evidence not only in support of
their contentions but in refutation of those of the other
side, it cannot be said that the absence of an issue
was fatal to the case, or that there was that mistrial
which vitiates proceedings. We are, therefore, of
E opinion that the suit could not be dismissed on this
narrow ground, and also that there is no need for a
remit, as the evidence which has been led in the case
is sufficient to reach the right conclusion."
F But the said observations were made in the context of
absence of an issue, and not absence of pleadings.
1_5. The relevant principle relating to circumstances in
which the deficiency in, or absence of, pleadings could
G be ignored, was stated by a Constitution Bench of this
Court in Bhagwati Prasadv. Chandramaul:
"10 . ... If a plea is not specifically made and yet it is
covered by an issue by implication, and the parties
knew that the said plea was involved in the trial, then
H
NANDKISHORE LALBHAI MEHTA v. NEW ERA FABRICS 651
PVT. LTD. & ORS. [R. K. AGRAWAL, J.]
the mere fact that the plea was not expressly taken in A
the pleadings would not necessarily disentitle a party
from relying upon it if it is satisfactorily proved by
evidence. The general rule no doubt is that the relief
should be founded on pleadings made by the parties.
But where the substantial matters relating to the title B
of both parties to the suit are touched, though indirectly
or even obscurely, in the issues, and evidence has
been led about them, then the argument that a particular
matter was not expressly taken in the pleadings would
be purely formal and technical and cannot succeed in c
every case. What the Court has to consider in dealing
with such an objection is: did the parties know that
the matter in question was involved in the trial, and
did they lead evidence about it? If it appears that the
D
parties did not know that the matter was in issue at
the trial and one of them has had no opportunity to
lead evidence in respect of it, that.undoubtedly would
be a different matter. To allow one party to rely upon
a matter in respect of which the other party did not E
lead evidence and has had no opportunity to lead
evidence, would introduce considerations of
prejudice, and in doing justice to one party, the Court
cannot do injustice to another." ·
F
(emphasis supplied)
16. The principle was reiterated by this Court in Ram
Sarup Gupta v. Bishun Narain Inter College:
"6. . . . It is well settled that in the absence of pleading, G
evidence, if any, produced by the parties cannot be
considered. It is also equally settled that no party
should be permitted to travel beyond its pleading and
that all necessary and material facts should be
pleaded by the party in support of the case set up by H
652 SUPREME COURT REPORTS [2015) 7 S.C.R.
A ,,,if. The object and purpose of pleading is to enable the
adversary party to know the case it has to meet. In
order to have a fair trial it is imperative that the party
should settle the essential material facts so that other
party may not be taken by surprise. The pleadings
8 however should receive a liberal construction; no
pedantic approach should be adopted to defeat justice
on hair-splitting technicalities. Sometimes, pleadings
are expressed in words which may not expressly make
out a case in accordance with strict interpretation of
c law. In such a case it is the duty of the court to ascertain
the substance of the pleadings to determine the
question. It is not desirable to place undue emphasis
on form, instead the substance of the pleadings should
be considered. Whenever the question about lack of
D
pleading is raised the enquiry should not be so much
about the form of the pleadings; instead the court must
find out whether in substance the parties knew the case
and the issues upon which they went to trial. Once it is
E found that in spite of deficiency in the pleadings
parties knew the case and they proceeded to trial on
those issues by producing evidence, in that event it
would not be open to a party to raise the question of
absence of pleadings in appeal."
F
(emphasis supplied) .
17. It is thus clear that a case not specifically pleaded
can be considered by the court only where the pleadings
in substance, though not in specific terms, contain the
G necessary averments to make out a particular case and
the issues framed also generally cover the question
involved and the parties proceed on the basis that such
case was at issue and had led evidence thereon. As the
very requirements indicate, this should be only in
H
NANDKISHORE LALBHAI MEHTA v. NEW ERA FABRICS 653
PVT. LTD. &ORS. [R. K.AGRAWAL, J.]
exceptional cases where the court is fully satisfied that A
the pleadings and issues generally cover the case
subsequently put forward and that the parties being
conscious of the issue, had led evidence on such issue.
But where the court is not satisfied that such case was at
issue, the question of resorting to the exception to the B
general rule does not arise. The principles laid down in
Bhagwati Prasad and Ram Sarup Gupta referred to
above and several other decisions of this Court following
the same cannot be construed as diluting the well-settled
principle that without pleadings and issues, evidence c
cannot be considered to make out a new case which is
not pleaded. Another aspect to,be noticed, is that the
court can consider such a case not specifically pleaded,
only when one of the parties raises the same at the stage
D
of arguments by contending that the pleadings and issues
are sufficient to make out a particular case and that the
parties proceeded on that basis and had led evidence
on that case. Where neither party puts forth such a
contention, the court cannot obviously make out such a E
case not pleaded, suo motu".
10) Learned senior counsel further submitted that merely
because the documents have been ' exhibited and also
because in some of the documents one of the witnesses had F
. identified the signature of the person who is alleged to have
signed the document, does not establish that the contents of
the documents have been proved. In suppgrt of this contentibn,
learned senior counsel placed reliance on the decision of this
Court in Shalimar Chemical Works Limited vs. Surendra G
Oil and Dal Mills (Refineries) and Others (2010) 8 SCC
423 wherein it was held as under:-
"3. In course of the trial, the appellant produced before
the court photocopies of registration certificates under
H
654 SUPREME COURT REPORTS [2015] 7 S.C.R.
A the Trade and Merchandise Marks Act, 1958 along with
the related documents attached to the certificates. The
photocopies submitted by the appellant were "marked"
by the trial court as Exts.A-1 toA-5, "subjectto objection
of proof and admissibility". At the conclusion of the trial,
B the court dismissed the suit of the appellant by the
. judgment and order dated 28-9-1998 inter alia holding
that the available evidence on record did not establish
the case of the plaintiff and there was no prima facie
case in favour of the plaintiff nor was the balance of
c convenience in favour of the plaintiff.
4. The trial court arrived at its findings mainly because
the appellant did not file the trade mark registration
certificates in their original. In that connection, the trial
D court made the following observations:
"All the above documents i.e. Exts. A-1 to A-5 are
marked subject to objection of proof and admissible
(sic admissibility) and also mention so in the
E deposition of PW 1. PW 1 in his cross-examination
has admitted that all the above documents are xerox
copies. He has also admittedly not filed legal
certificate for the same.
F Section 31 of the Trade and Merchandise Marks Act,
1958 specifically reads as follows:
'31. Registration to be "prima facie" evidence of
validity.-( 1) In all legal proceedings relating to a trade
G mark registered under this Act (including applications
under Section 56), the original registration of the trade
mark and of all subsequent assignments and
transmissions of the trade mark shall be "prim a facie"
evidence of the validity thereof.'
H
Therefore, the plaintiff has to file the originals of the
NANDKISHORE LALBHAI MEHTA v. NEW ERA FABRICS 655
PVT. LTD. & ORS. [R. K.AGRAWAL, J.]
registration (sic certificates) or the certified copies A
thereof. Exts. A-1 to A-4 are xerox copies. It is well-
settled law that xerox copies are not admissible in
evidence. Once those documents are not held
admissible, the plaintiff cannot be permitted to rely on
it. These documents Exts. A-1 to A-4 are basic B
documents of the Trade and Merchandise Marks Act."
9. Mr P.P. Rao, learned Senior Advocate, appearing for
the appellant assailed both, the procedure adopted by
the trial court and the view taken by the Division Bench c
of the High Court, on the basis of the provisions of Order
41 Rule 27. Mr Rao submitted that if the trial court was of
the view that the xerox copies of the documents in
question were not admissible in evidence, it ought to have
returned the copies at the time of their submission. In D
that event, the appellant would have substituted them by
the original registration certificates and that would have
been the end of the matter. But once the xerox copies
submitted by the appellant were marked as exhibits, it
had no means to know that while pronouncing the E
judgment, the court would keep those documents out of
consideration, thus, causing great prejudice to the
appellant.
10. Mr Rao submitted that the provision of Order 13 Rule F
4 CPC provides for every document admitted in evidence
in the suit being endorsed by or on behalf of the court,
and the endorsement signed or initialled by the Judge
amounts to admission of the document in evidence. An
objection to the admissibility of the document can be G
raised before such endorsement is made and the court
is obliged to form its opinion on the question of
admissibility and express the same on which opinion
would depend, the document being endorsed, admitted
H
or not admitted in evidence. In support of the submission
656 SUPREME COURT REPORTS (2015] 7 S.C.R.
A he relied. upon a decision of this Court in R. V.E.
Venkatacha/a Gounderv. Arulmigu Viswesaraswami &
V.P Temple.where it was observed as follows:
"20. .. ,.. Jhe objections as to admissibility of documents
B in evidence may be classified into two classes: (1) an
objection that the document which is sought to be
proved is itself inadmissible in evidence; and (it)
where the objection does not dispute the admissibility
of the document in evidence but is directed towards
c the mode ofproof alleging the same to be irregular or
insufficient. In the first case, merely because a
document has been marked as 'an exhibit', an
objection as to its admissibility is not excluded and is
avail~~le to be raised even at a later stage or even in
D appeal or revision. In the latter case, the objection
should be taken when the evidence is tendered and
once the document has been admitted in evidence
and·marked as an exhibit, the objection that it should
not have been admitted in evidence or that the mode
E adopted for proving the document is irregular cannot
be allowed to be raised at any stage subsequent to
the marking of the document as an exhibit. The latter
proposition is a rule of fair play. The crucial test is
whether an objection, if taken at the appropriate point
F
of tim'i, would have enabled the party tendering the
evidence to cure the defect and resort to such mode
~,..-:_
of proof as would be regular. The omission to object
becomes
1 ,.
1'~
fatal because by his failure the party entitled
G to object allows the party tendering the evidence to
act Oil an assumption that the opposite party is not
serious about the mode of proof. On the other hand, a
prompt objection does not prejudice the party·
tendering the evidence, for two reasons: firstly, it
H enables the court to apply its mind and pronounce its
NANDKISHORE LALBHAI MEHTA v. NEW ERA FABRICS 657
PVT. LTD. & ORS. [R. K.AGRAWAL, J.]
decision on the question of admissibility tben and A
there; and secondly, in the event of finding of the court
on the mode of proof sought to be adopted•going
against the party tendering the evidence, the
opportunity of seeking indulgence of the 'court for
permitting a regular mode or method of proof and B
thereby removing the objection raised by the opposite
party, is available to the party leading the evidence.
Such practice and procedure is fair to both the parties.
Out of the two types of objections, referred to
hereinabove, in the latter case, failure to raise a prompt c
and timely objection amounts to waiver of the necessity
for insisting on formal proof of a document, the
document itself which is sought to be proved.being
admissible in evidence. In the first case, acqui~cence
D
would be no bar to raising the objection in a superior
.,, ' bi~
court."
(emphasis in original)
'!;
15. On a careful consideration of the whole maJter, we E
feel that serious mistakes were committed in the'case at
all stages. The trial court should not have "mar~ed" as
exhibits the xerox copies of the certificates of registration
of trade mark in face of the objection raised by the
1:.:r1.
defendants. It should have declined to take them on record F
as evidence and left the plaintiff to support its case by
whatever means it proposed rather than leaving th~ issue
of admissibility of those copies open and hanging, by
marking them as exhibits subject to objection-ofproof
and admissibility. The appellant, therefore, had a G
legitimate grievance in appeal about the way the trial
proceeded.
16. The learned Single Judge rightly allowed the
appellant's plea for production of the original certificates H
658 SUPREME COURT REPORTS [2015] 7 S.C.R.
A of registration of trade mark as additional evidence
because that was simply in the interest of justice and
there was sufficient statutory basis for that under clause
(b) of Order 41 Rule 27. But then the Single Judge
seriously erred in proceeding simultaneously to allow the
B appeal and not giving the respondent-defendants an
opportunity to lead evidence in rebuttal of the documents
taken in as additional evidence.
18. The judgment and order dated 25-4-2003 passed
c by the Division Bench is set aside and the matter is
remitted to the learned Single Judge to proceed in the
appeal from the stage the originals of the registration
certificates were taken on record as additional evidence.
The learned Single Judge may allow the respondent-
D defendants to lead any rebuttal evidence or make a limited
remand as provided under Order 41 Rule 28.
19. In the result, the appeal is allowed, as indicated above
but with no order as to costs".
E
11) Further, learned senior counsel relied on H.
Siddiqui (Dead) By Lrs. vs. A. Ramalingam (2011) 4 SCC
240 which held as under:-
"12. The provisions of Section 65 of the 1872 Act provide
F
for permitting the parties to adduce secondary evidence.
However, such a course is subject to a large number of
limitations. In a case where the original documents are
not produced at any time, nor has any factual foundation
been laid for giving secondary evidence, it is not
G
permissible for the court to allow a party to adduce
secondary evidence. Thus, secondary evidence relating
to the contents of a document is inadmissible, until the
non-production of the original is accounted for, so as to
H bring it within one or other of the cases provided for in
.
NANDKISHORE LALBHAI MEHTA v. NEW ERA FABRICS 659
PVT. LTD. &ORS. [R. K.AGRAWAL, J.]
the section. The secondary evidence ~ust be A
authenticated by foundational evidence that the alleged
copy is in fact a true copy of the original. Mere admission
of a document in evidence does not amount to its proof.
Therefore, the documentary evidence is requi~ed to be
proved in accordance with law. The court has an B
obligation to decide the question of admissibility of a
document in secondary evidence before making
endorsement thereon. (Vide F~oman Catholic Mission
v. State of Madras, State of Rajasthan v. Khemraj, LIC
v. Ram Pal Singh Bisen and M. Chandra v. M. c
Thangamuthu.)
13. The trial court decreed the suit observing that as the
parties had deposed that the original power of attorney
was not in their possession, question of laying any further D
factual foundation could not arise. Further, the trial court
took note of the fact that the respondent herein has
specifically denied execution of power of attorney
authorising his brother, R. Viswanathan to alienate the
suit property, but brushed aside the same observing that E
it was not necessary for the appellant-plaintiff to call upon
the defendant to produce the original power of attorney
on the ground that the photocopy of the power of attorney
was shown to the respondent herein in his cross-
F
examination and he had admitted his signature. Thus, it
could be inferred that it is the copy of the power of attorney
executed by the respondent in favour of his brother (R.
Viswanathan, the second defendant in the suit) and
therefore, there was a specific admission by the G
respondent having executed such document. So it was
evident that the respondent had authorised the second
defendant to alienate the suit property.
14. In our humble opinion, the trial court could not proceed
H
660 SUPREME COURT REPORTS [2015] 7 S.C.R.
A in such an unwarranted manner for the reason that the
respondent had merely admitted his signature on the
• photocopy of the power of attorney and did not admit the
conteiitslhereof. More so, the court should have borne
in mind that admissibility of a document or contents
B thereof may not necessarily lead to drawing any inference
unless the contents thereof have some probative value.
15. In State of Biharv. Radha Krishna Singh this Court
considered the issue in respect of admissibility of
c documents or contents thereof and held as under:
"40 . ... Admissibility of a document is one thing and
its probative value quite another-these two aspects
cannot be combined. A document may be admissible
D and yet may not carry any conviction and weight or its
pi;obative value may be nil."
16. In Madan Mohan Singh v. Rajni Kant this Court
examined a case as a court of fifth instance. The statutory
E authorities and the High Court had determined the issues
taking into consideration a large number of documents
including electoral rolls and school leaving certificates
and held that such documents were admissible in
evidence. This Court examined the documents and
F contents thereof and reached the conclusion that if the
contents ·of the said documents are examined making
mere arithmetical exercise it would lead not only to
improbabilities and impossibilities but also to absurdity.
This Court examined the probative value of the contents
G of the salcf documents and came to the conclusion that
Smt Shakuntala, second wife of the father of the
contesting parties therein had given birth to the first child
two years prior to her own birth. The second child was
born when she was 6 years of age; the third child was
H born at the age of 8 years; the fourth child was born at
NANDKISHORE LALBHAI MEHTA v: NEW ERA FABRICS 661
PVT. LTD. &ORS. [R. K.AGRAWAL, J.]
the age of 1Oyears; and she gave birth to the fifth child A
when she was 12 years of age. -~ '
17. Therefore, it is the duty of the court to examine whether
the documents produced in the court or contei:it~ thereof
have any probative value". B
12) Further, in R. \I.E. Venkatachala Gounder vs.
Arulmigu Viswesaraswami & \l.P. Temple and Another
(2003) 8 sec 752 it was held as under:-
"19. Order 13 Rule 4 CPC provides for every document c
admitted iri evidence in the suit being endorsed by or on
behalf of the court, which endorsement signed or initialled
by the Judge amounts to admission of the document in
evidence. An objection to the admissibil~y .of the
D
document should be raised before such endorsement
,
made and the court is obliged to form its opinion on the
.
is
question of admissibility and express the same on which
opinion would depend the document being endorsed as·
admitted or not admitted in evidence. In the latter case, E
the document may be returned by the court to the person
from whose custody it was produced. b·"
... ·~01
20. The learned counsel for the defendant-respondent
has relied on Roman Catholic Mission v. State of Madras
•4 ......
F
in support of his submission that a document not
~·
admissible in evidence, though brought on record, has
to be excluded from consideration. We do not..haye any
dispute with the proposition of law so laid down in the
abovesaid case. However, the present onejl?· a case G
which calls for the correct position of law being made
precise. Ordinarily, an objection to the admissibility of
evidence should be taken when it is tendered and not
subsequently. The objections as to admissibility of
documents in evidence may be classified into two H
662 SUPREME COURT REPORTS [2015) 7 S.C.R.
A classes: (1) an objection that the document which is sought
to be proved is itself inadmissible in evidence; and (i1)
where the objection does not dispute the admissibility of
the document in evidence but is directed towards the
mode of proof alleging the same to be irregular or
B insufficient. In the first case, merely because a document
has been marked as "an exhibit", an objection as to its
admissibility is not excluded and is available to be raised
even at a later stage or even in appeal or revision. In the
latter case, the objection should be taken when the
c evidence is tendered and once the document has been
admitted in evidence and marked as an exhibit,. the
objection that it should not have been admitted in
evidence or that the mode adopted for proving the
document is irregular cannot be allowed to be raised at
D
any stage subsequent to the marking of the document
as an exhibit. The latter proposition is a rule of fair play.
The crucial test is whether an objection, if taken at the
appropriate point of time, would have enabled the party
E tendering the evidence to cure the defect and resort to
such mode of proof as would be regular. The omission
to object becomes fatal because by his failure the party
entitled to object allows the party tendering the evidence
to act on an assumption that the opposite party is not
F serious about the mode of proof. On the other hand, a
prompt objection, does not prejudice the party tendering
the evidence, for two reasons: firstly, it enables the court
to apply its mind and pronounce its decision on the
question of admissibility then and there; and secondly, in
G the event of finding of the court on the mode of proof
sought to be adopted going against the party tendering
the evidence, the opportunity of seeking indulgence of
the court for permitting a regular mode or method of proof
and thereby removing the objection raised by the opposite
H party, is available to the party leading the evidence. Such
NANDKISHORE LALBHAI MEHTA v. NEW ERA FABRICS 663
PVT. LTD. &ORS. [R. K.AGRAWAL, J.]
practice and procedure is fair to both the parties. Out of A
the two types of objections, referred to hereinabove, in
the latter case, failure to raise a prompt and timely
objection amounts to waiver of the necessity for insisting
on formal proof of a document, the document itself which
is sought to be proved being admissible in evidence. In B
the first case, acquiescence would be no bar to raising
the objection in a superior court".
13) Learned senior counsel further submitted that the
appellant has taken a case of collusion between the C
defendants-respondents herein with the labour union and in
the cross examination of Shri N.L. Mehta (PW-1), it has been
conceded by him that he had no material to show that the
refusal of permission by the workmen was instigated by the
defendants-respondents herein. In view of this admission D
alone, the appellant is not entitled to any relief as he has failed
to prove his own case. He further submitted that if a condition
of a contract is for mutual benefit of both the parties then such
a condition cannot be waived by a party unilaterally. According
to him, Clause 6 of the agreement provides that the vendor E
will not be bound to complete the sale, if the labour does not
consent to it. This clause was included as the subject matter
of sale was not a running business as a going concern but a
sale of land per se, meaning thereby, that the business which F
was being conducted would have to be shut down. In such a
situation, permission of the Labour Commissioner was
required under Section 25-0 of the Industrial Disputes Act,
1947 before closing down the unit. Further, Regulation
56(3)(c)(1) of the Development Control Regulations, 1991 also G
required permission of the Labour Commissioner in case of
conversion from industrial to residential use of the land is
purported. Therefore, these two conditions were not only for
the benefit of one party and in fact, it was for the benefit of both
the parties. Such a condition cannot be waived unilaterally. H
664 SUPREME COURT REPORTS [2015] 7 S.C.R.
A 14) lri support of this claim, reliance was placed on HPA
International vs. Bhagwandas Fatehchand Daswani and
Others (2004) 6 SCC 537 wherein it was held that:-
"99. The decision in Jiwan Lal (Dr.) v. Brij Mohan Mehra
B is also distinguishable on the facts of that case. There
clauses 5 and 6 of the agreement provided for execution
of sale deed within three months from the date the
premises agreed to be sold were vacated by the Income
TaxAuthorities. ltwas further provided that ifthe Income
c TaxAuthorities did not vacate the premises or they stood
requisitioned by the Government before registration of
sale deed - the vendor shall refund the consideration to
the purchaser. As the premises were requisitioned by
the Government, the stand taken by the vendor was that
D it was contingent contract and on requisition of the
premises,' the contract failed. On the evidence of the
parties, the finding reached was that the vendor had
manipulated requisition of the premises. This Court,
therefore, in appeal held that the contract did not provide
E that the sale would be effected only if the premises remain
non-requisitioned or that on requisition of the premises,
the contract would come to an end. The clause providing
for refund of consideration if the premises were not
vacated by the Income Tax Authorities or subsequently
F
requisitioned by the Government was held to be solely
for the benefit of the vendee. It was held that if the vendor
manipulated the requisition, the vendee could waive that
condition and insist on sale of premises in the condition
G of it having been requisitioned.
100. In the case before us, we have not found that the
vendor was guilty of rendering the suit for sanction
infructuous. It did terminate the contract pending the suit
for sanction but never withdrew that suit. The vendee
H
himself prosecuted it and rendered it infructuous by his
NANDKISHORE LALBHAI MEHTA v. NEW ERA FABRICS 665
PVT. LTD. &ORS. [R. K.AGRAWAL, J.]
own filing of an affidavit giving up his claim for the interest A
of reversioners. In such a situation where the vendor was
not in any manner guilty of not obtaining the sanction and
the clause of the contract requiring the Court's sanction
for conveyance of full interest, being for the benefit of
both the parties, the contract had been rendered B
unenforceable with the dismissal of the sanction suit.
101. Where the clause requiring obtaining of sanction
was to protect interest of both the parties and when the
sanction could not be obtained for reasons beyond the c
control of the parties, the contract cannot be directed to
be specifically enforced. The House of Lords in the case
of New Zealand Shipping Co. Ltd. v. Societe Des Ateliers
Et Chantiers De France in similar circumstances,
negati'led the claim of specific performance. It was held D
in that case that wh~re two parties are equally blameless
and none of them could be said to have brought about a
situation by their act or omission to frustrate the contract,
the contract cannot be directed to be specifically
enforced. E
102. On behalf of the vendee, support for his claim was
sought from the following observations of Lord Atkinson:
"The application to contracts such as these of the F
principle that a man shall not be permitted to take
advantage of his own wrong thus necessarily leaves
to the blameless party an option whether he will or will
not insist on the stipulation that the contract shall be
void on the happening of the named event. To deprive G
him of that option would be but to effectuate the
purpose of the blameable party. When this option is
left to the blameless party it is said that the contract is
voidable, but that is only another way of saying that
the blameable party cannot have the contract made H
666 SUPREME COURT REPORTS [2015] 7 S.C.R.
A void himself, cannot force the other party to do so, and
cannot deprive the latter of his right to do so. Of course
the parties may expressly or impliedly stipulate that
the contract shall be voidable at the option of any party
to it. I am not dealing with such a case as that. It may
B well be that the question whether the particular event
upon the happening of which the contract is to be
void was brought about by the act or omission of either
party to it may involve a determination of a question
offact." (emphasis supplied)
c
103.As has been observed by Lord Atkinson, it is always
a question of fact to be determined in each case as to
who is guilty of the act or omission to render the contract
void or unenforceable. In the case of New Zealand
D Shipping Co. Ltd on facts the ultimate conclusion reached
unanimously by Their Lordships was that the clause of
the contract in that case was a stipulation in favour of
both the parties and the situation was not brought about
by any of the parties to give rise to avoidance. It was
E found that the failure to fulfil the contract was not due to
any fault on the part of the respondents but was due to a
cause beyond their control.
104. In the present case also, we have come to the
F conclusion that the vendor waited for a reasonable period
for grant of sanction to the sale by the Court. There was
a pressing need for sale as the public dues and taxes
could have been recovered from the property by coercive
process at any time. The vendor, therefore, advisedly
.G withdrew from the contract, negotiated sale on different
terms with the subsequent vendee and ultimately entered
into the contract with the latter. The vendor did not actually
withdraw the suit for sanction. The vendee himself
became co-plaintiff to the suit and unsuccessfully tried to
H
prosecute it. The sanction suit was rendered infructuous
NANDKISHORE LALBHAI MEHTA v. NEW ERA FABRICS 667
PVT. LTD. & ORS. [R. K.AGRAWAL, J.]
by the vendee's own conduct of filing an affidavit A
restricting his claim to life interest. He suffered the
dismissal of sanction suit as infructuous and did not
question the correctness of the Court's order in appeal
before the Division Bench, although the subsequent
vendee, against grant of decree of specific performance B
of life interest, had preferred an appeal.
105. In this situation, even if we come to a conclusion
that the vendee had rightly tried his utmost to obtain the
Court's sanction and cannot be blamed for transposing c
himself as a co-plaintiff and prosecuting the sanction suit,
the sanction sought could not be obtained for reasons
beyond the control of the parties. The vendor cannot be
held guilty of the breach as to entitle the vendee to seek
specific performance of life interest of the vendor. The D
contract entered into between the parties was for
conveying full interest in the property, namely, life interest
of the vendor and chance of succession of reversioners.
The contract was one and indivisible for full interest. There
is no stipulation in the contract that if sanction was not E
obtained, the vendor would transfer only his life interest
for the same or lesser consideration. On the contrary,
the contract stipulated that if the sanction was not granted,
the contract shall stand cancelled and the advance money
F
would be refunded to the purchaser".
15) Further, in lrwinv Wi/son[2011] EWHC 326 (Ch),
it was held thus:-
"22. Beguilingly straightforward as the matter appeared G
to Judge Madge, I consider that the issues raised are far
from simple. They break down into four separate points.
(a) Benefit of condition
23. The test for determining whether a contract term is H
668 - SUPREME COURT REPORTS [2015] 7 S.C.R.
A forthe exclusive benefit of one party, failing which and in
the absence of any express power of waiver the term is
not capable of unilateral waiver by the party to the contract
who claims to have the benefit of it, is that stated by
Brightman J (as he then was) in Heron Garage at 426e -
B h'
'
"Without seeking to define the precise limits within
which a contracting party seeking specific
performance may waive a condition on the ground that
c it is intended only for his benefit, It seems to me that in
general the proposition only applies where the
stipulation is in terms for the exclusive benefit of the
plaintiff because it is a power or right vested by the
contract in him alone ... , or where the stipulation is by
D inevitable implication for the benefit of him alone ... If
it is not obvious on the face of the contract that the
stipulation is for the exclusive benefit of the party
seeking to eliminate it, then in my opinion it cannot be
struck out unilaterally. I do not think that the court should
E conduct an enquiry outside the terms of the contract
to ascertain where in all the circumstances the benefit
lies if the parties have not concluded the matter on the
face of the agreement they have signed."
F 24. In a decision of the New Zealand Court of Appeal, to
which Mr Carlisle referred me, namely Globe Holdings
Ltd v Floratos [1998) 3 NZLR 331 (and to which I shall
return later) there is (at page 334) a citation from an
earlier decision of the same court (Hawker v Vickers
G (1991) 1 NZLR 399 at 402-3) setting out the following
statement of the approach in law:
"A party may waive a condition or provision in a contract
which is solely for that party's own benefit and is
H severable. In such a case the other party is denied the
NANDKISHORE LALBHAI MEHTA v. NEW ERA1FABRICS 669
PVT. LTD. & ORS. [R. K. AGRAWAL, J.]
right to treat the condition as unsatisfied and is obliged A
to complete notwithstanding the loss of that
advantage. The question is one of construction of the
contract. It turns on whether the stipulation is in terms
or by necessary implication for the exclusive benefit
of the party, and the answer is derived from B
consideration of the contract as a whole in the light of
the surrounding circumstances ... "
That seems to me, with respect, to be an entirely
accurate summary of the relevant approach.. C
33. Whatthen of the presence in clause 25.2 of the. right,
conferred separately on both the buyer and the seller, to
terminate the contract in the event that, despite having
used all reasonable endeavours, the seller has not o
secured performance of the documents service term by
1 February 201 O? It was the presence of this right that
persuaded Judge Madge to conclude that clause 25.1
was not capable of waiver by the defendants.
E
34. In my judgment, the presence of that right is irrelevant
to whether the documents service term is for the exclusive
benefit of the seller. The principle is that a party may
waive a contract term if that term, if performed, is of
benefit to him but nottotheotherparty (or parties) to the F
contract. By contrast, the right to terminate the contract
conferred by clause 25.2 is exercisable if and only if the
term cannot be or is not performed.
35. This very point was discussed in Globe Holdings, G
the New Zealand decision referred to earlier. In that case
a condition of the contract for the sale of an apartment
block stipulated that, within 60 days of acceptance, the
purchaser would obtain planning consent from the local
council for the sub-division of the block. The contract H
670 SUPREME COURT REPORTS [2015) 7 S.C.R.
A contained a general condition that in relation to any
financial or other conditions either party could, at any time
before the condition was fulfilled or waived, avoid the
contract by giving notice. Within the 60 days the
purchaser's solicitors gave notice that the special
s· condition was waived and that, accordingly, the contract
could be regarded as unconditional. The question was
whether the notice was legally effective. In the course of
a judgment dealing with a number of points, the New
Zealand Court of Appeal (at 339) cited a passage from
c the earlier decision of Hawker v Vickers which stated
that
"... there is nothing inconsistent in providing expressly
or by necessary implication for unilateral waiver of a
D condition up to a certain date and thereafter for
allowi!"lg either party to avoid the contract for non
fulfilment of the condition. Such a provision simply
recognises the commercial reality that the nature and
significance to the parties of a condition in a contract
E may change over time or at a point in time. If the
contract [sic) is fulfilled or waived, the parties then have
the certainty of an unconditional contract. If not fulfilled
or waived by the nominated date, each is free to end
the contract by appropriate notice to the other."
F
The court then pointed out that: 'The argument against
waiver rests upon the desirability of certainty for a
vendor from being able immediately to bring the
contract to an end, or see it immediately collapse, once
G the given time has elapsed. But certainty is achieved
by a different rule, namely that any waiver must occur
on or before the condition date, or at least before the
contract is actually brought to an end (if it is not
automatically void). It has to be remembered that we
H
NANDKISHORE LALBHAI MEHTA v. NEW ERA FABRICS 671
PVT. LTD. &ORS. [R. K.AGRAWAL, J.]
are at this point concerned with a situation in which it A
is to be accepted that there is no substantive benefit
to [the vendors]. Therefore, their only legitimate interest
is in knowing whether the transaction is to proceed or
not. Once the time allowed for the fulfilment of the
condition expires they can forthwith give notice of B
cancellation if they have not already been informed
that the sale will go ahead. It matters not to them whether
it does so because of fulfilment or because the
purchaser elects to proceed anyway. The achieving
of certainty is in the vendors' own hands if there has c
been no action by the purchaser. If there has been a
waiver the transaction proceeds as it would have done
if the condition had been satisfied on the date of the
waiver. .. We conclude therefore that a distinction is
D
to be drawn between the benefit of the substance of
the condition and the benefit of the time limit ... "
36. The reasoning in that passage thus distinguishes
between the benefit of the condition - here the documents
service term contained in clause 25.1 - and the benefit E
of the right to terminate the contract if the condition has
not been fulfilled by the due date - here the right to
terminate the contract after 1 February if the information
in question has not been provided. These are two distinct
F
terms of the contract. The existence of the right in either
party to terminate the contract if a particular condition is
not performed by the due date is not inconsistent with
the condition in question being for the exclusive benefit
of the other party to the contract and with that other party G
having the right, if necessary by implication of law, to waive
the condition.
37. Heron Garage is not authority for a contrary view.
The condition in that case was that the purchaser would
H
672 SUPREME COURT REPORTS [2015) 7 S.C.R.
A obtain a particular planning consent. Obtaining that
consent was a condition precedent to the contract.
Brightman J putthe matter thus (at426b):
·t"
"The town planning consent is expressed in cl. 7 of the
B ·sale agreement as a condition fundamental to the
enforceability of the sale agreement as a whole. It is
not expressed as a condition which is precedent only
to the liability of Heron as purchaser. Clause 7 is not a
clausg which is expressed only to confer rights on
c Heron. It is expressed to confer a right also on the
vendors."
It is per~5ps the presence of the last sentence in that
passage which needs some elaboration. The right there
D referred to was a right in either party, if the stipulated
planning consent should not have been obtained within
6 months or within such extended period as the parties
might agree, to terminate the agreement by notice in
writing to the other. It was part and parcel of the very
E clause stating that the contract was conditional upon the
particular planning consent being obtained. The
purchaser, Heron, had shortly before the expiry of the 6
month period given notice in writing to the vendor's
solicitor purporting to waive what it described as the
F benefit of clause 7 of the contract. It is not surprising
therefore that Brightman J concluded that the condition
was not capable of waiver by the purchaser: it was a
cond it.ion precedent to the very existence of the contract
and, what is more, it contained a provision expressed to
G "l
be for tlie benefit of both parties.
49. In my judgment, the notice given under clause 25.2
enables the parties to bring an end to their relationship if
one of them chooses to do so and the relevant information
H has not been provided by 1 February. The more natural
NANDKISHORE LALBHAI MEHTA v. NEW ERAFABRICS 673
PVT. LTD. & ORS. [R. K. AGRAWAL, J.]
contruction of the clause is to read it as having that effect A
when it is given. It is inconsistent with that purpose to
allow an obligation to complete to arise (either because
the documents service term is performed or the term is
waived) after the notice has been given. The whole point
of the notice is that the time for completion has passed". B
.. ,,,
16) Learned senior counsel for the respondents further
submitted that as in the present case, the workmen had refused
to grant their consent for the sale, the contract stooolfrustrated
being contingent upon the said condition and, therefore, C
discretionary remedy of specific performance cannot be
granted. To substantiate this claim, he relied on a decision of
this Court in M. Meenakshi and Others vs. Metadin Agarwal
and0thers(2006) 7 SCC470wherein it was held as under:-
D
"9. It is not disputed that the parties to the agreement
were aware of the proceedings pending before the ceiling
authorities. It is also not in dispute that the Central
Government was the appropriate authority to deal with
the matter as the lands pertained to a cantonment area. E
The agreement envisaged that the defendant would obtain
necessary sanction from the competent authority. It was
made clear that he had not submitted any layout nor had
he got any sanction therefor.
F
23. It was, therefore, not a case where the trial court found
that the defendant had committed a fraud on the statutory
authorities or on the court. The expression "fraud" in our
opinion was improperly used. It must be noticed that
admittedly when the agreement was entered into, the G
proceedings under the 1976 Act were pending. The
parties might have proceeded under a misconception. It
is also possible that the defendant had made
misrepresentation to the plaintiff; but the question which
was relevant for the purpose of determination of the · H
674 SUPREME COURT REPORTS [2015)'7 S.C.R.
A dispute was as to whether having regard to the
proceedings pending before the competent authority
under the 1976 Act, the defendants could perform their
part of the contract. The answer thereto, having regard
to the order of the competent authority dated 8-8-1980,
B must be rendered in the negative.
25. It was, therefore, not a C§!Se where a notice under
Section 26 of the 1976 Act could have served the
purpose and in the event, the competent authority did
C not exercise its statutory right of perception (sic purchase)
within the period stipulated thereunder, the defendant was
free to execute a deed of sale in favour of any person he
liked.
o 26. Strong reliance has been placed by Mr Nageswara
Rao on a decision of this Court in HPA International v.
Bhagwandas Fateh Chand Daswani1. Our attention in
particular has been drawn to the following observations:
E "100. In the case before us, we have not found that the
vendor was guilty of rendering the suit for sanction
infructuous. It did terminate the contract pending the
suit for sanction but never withdrew that suit. The
vendee himself prosecuted it and rendered it
F infructuous by his own filing of an affidavit giving up
his claim for the interest of reversioners. In such a
situation where the vendor was not in any manner guilty
of not obtaining the sanction and the clause of the
contract requiring the Court's sanction for conveyance
G of full interest, being for the benefit of both the parties,
the contract had been rendered unenforceable with
the dismissal of the sanction suit."
27. The said observations were made in the fact situation
H obtaining therein.
NANDKISHORE LALBHAI MEHTA v. NEW ERA FABRICS 675
PVT. LTD. &ORS. [R. K.AGRAWAL, J.]
28. In this case, we are concerned with a situation where A
the sanction, it will bear repetition to state, has expressly
been refused.
29. Dharmadhikari, J. in that case itself has noticed a
judgment of the House of Lords in New Zealand Shipping B
Co., Ltd. v. Scoiete des Ateliers et Chantiers de France
wherein it was held that a man shall not be allowed to
take advantage of his own wrong, which he himself
brought about.
c
30. The parties were aware of the proceedings under
the 1976 Act. The plaintiff-respondents were also aware
that sanction under the said Act is necessary. The
consequence for non-grant of such sanction was
expressly stipulated. Even the parties were clear in their D
mind as regards the consequences of wilful non-
execution of a deed of sale or wilful refusal on their part
to perform their part of contract.
31. We may notice that Lord Atkinson in New Zealand E
Shipping took into consideration the inability or
impossibility on the part of a party to perform his part of
contract and opined the principle that man shall not be
permitted to take advantage of his own wrong, which he
himself brought about.
32. Our attention has rightly been drawn by Mr Gupta to
the deed of sale executed by the defendant in favour of
others. By the said deeds of sale all the six co-sharers
have sold portions of their house properties and lands G
appurtenant thereto. The total land sold to the purchasers
by all the six co-sharers was below 900 sq. m.
33. The comment made by the Division Bench that the
competent authority under the 1976 Act failed to take
676 . SUPREME COURT REPORTS [2015] 7 S.C.R.
A into consideration the Muslim law of inheritance and
succession is again besides the point. Each of the claim
petitions by the appellants and their co-sharers was
determined having regard to the 1976Act. The Muslim
law of inheritance and succession may not have any role
B to play. In any event, the same could not have been the
subject-matter of a decision at the hands of the Division
Bench.
34. We have noticed the reports of the Commissioner
c appointed both by the trial court and the learned Single
Judge of the High Court. The Commissioner appointed
by the trial Judge in his report stated:
"... I also found some numbers were painted in black
D on the compound wall inside the western compound
wall as 3-42-67 and I also found one small brick mound
nearthe middle unfinished room touching the western
compound wall. I also found some numbers on the gate
painted in black as 65-66-67-68-69. While I was
E proceeding with the execution of warrant, some
persons brought a board and tied it to the gate which
contained some letters painted as This land and
construction area Cantonment H. Nos. 3-42-65 to 3-
42-69 belong to Murthy Cooperative Housing Society
F -Trespassers will be prosecuted'."
35. It was, therefore, accepted that the plots mentioned
therein had already been sold to Murthy Cooperative
Housing Society. The said Cooperative Society, it is
G beyond any cavil of doubt, purchased the land from the
original 'owners pursuant to or in furtherance of the
exemption accorded in that behalf by the competent
authority in exercise of its power under Section 20 of the
1976Act. The land sold to the Cooperative Society which
.H might have included the vacant land and which was the
NANDKISHORE LALBHAI MEHTA v. NEW ERA FABRIC$ 67.7
PVT. LTD. & ORS. [R. K.AGRAWAL, J.]
subject-matter of the agreement but was not the subject- A
matter of the suit. They were not parties thereto. The
sanction accorded in their favour by the competent
authority had never been put in question.
36. The Advocate-Commissioner appointed by the trial B
court, observed: 1-- !.
"Opinion and observation.-Taking all the aforesaid
facts and circumstances I conclude that Plot No. 2 in
Survey No. 71 as mentioned in the agreemegt of sale c
Ext. A-2 in the trial court and House Nos. 3-~-51/A, B,
C and D situated in Survey No. 71/part, West
Marredpalli on which I conducted the local inspection
are the same." ?1c.
0
37. The learned Commissioner, therefore, only inspected
Plot No. 2 situated in Survey No. 71 and not the lands
which were the subject-matter of sale in favour of the
subsequent purchasers.
38. The High Court, in our considered view, also E
committed a manifest error in opining that the appellants
should have questioned the orders passed by the
competent authority. If they have not done so, the same
would not mean that the Division Bench could go thereinto
F
suomotu.
39. Furthermore, Section 20 of the Specific Relief Act
confers a discretionary jurisdiction upon the courts.
Undoubtedly such a jurisdiction cannot be refused to be
exercised on whims and caprice; but when with passage G
of time, the contract becomes frustrated or in some cases
increase in the price of land takes place, the same being
relevant factors can be taken into consideration for the
said purpose. While refusing to exercise their jurisdiction,
H
the courts are not precluded from taking into consideration
678 SUPREME COURT REPORTS [2015] 7 S.C.R.
A the subsequent events. Only because the plaintiff-
respondents are ready and willing to perform their part
of contract and even assuming that the defendant was
not entirely vigilant in protecting his rights in the
proceedings before the competent authority under the
B 1976 Act, the same by itself would not mean that a decree
for specific performance of contract would automatically
be granted. While considering the question as to whether
the discretionary jurisdiction should be exercised or not,
the orders of a competent authority must also be taken
c into consideration. While the court upon passing a decree
for specific performance of contract is entitled to direct
that the same shall be subject to the grant of sanction by
the authority concerned, as was the case in Chandnee
Widya Vati Madden v. Dr. C.L. Katia/ and Nirmala Anand
D
v. Advent Corpn. (P) Ltd.; the ratio laid down therein
cannot be extended to a case where prayer for such
sanction had been prayed for and expressly rejected.
On the face of such order, which, as noticed hereinbefore,
E is required to be set aside by a court in accordance with
law, a decree·for specific performance of contract could
not have been granted".
17) Learned single Judge decreed the suit for specific
F performance by directing the respondents herein to apply to
the concerned authorities for change of user of land from
industrial/commercial to residential use and also to apply for
the permission under the ULC Act and in the event the
permission is not granted by the authorities then a decree in
G terms of prayer b(i) to b(v) of the plaint shall be granted. In the
present case, permission was applied for and rejected by the
Labour Commissioner as well as the office of the Joint Director
of Industries on 02.03.2006 and 28.02.2006 respectively. The
permission under the ULC Act under Section 22 also came to
H be rejected on 06.03.2006. Thus, if at all, without admitting
NANDKISHORE LALBHAI MEHTA v. NEW ERA FABRICS 679
PVT. LTD. & ORS. [R. K.AGRAWAL, J.]
that the appellant had succeeded making out of case for a A
decree of specific performance, the ~ppellant would have only
become entitled for damages.
18) Learned senior counsel further submitted that the
respondents terminated the contract on 15.12.1977, that is, B
within two month. The question of waiver of a condition would
not at all arise so as to revive the contractual obligations into
existence and thereby claim his contractual rights under the
contract so revived. It is settled position of law that once a
contract has been terminated, either on the breach of the terms C
of the contract by one party and subsequent repudiation by
the other or by frustration of the contract due to circumstances
beyond the control of either of the parties, the contract legally
comes to an end between the parties. Then there is no question
of any contract/agreement subsisting between the parties, what D
follows is only the legal consequences which may have been
contemplated in the terms of the contract e.g. liquidated
damages, etc. However, the parties are at liberty to mutually
novate the contract by bringing into existence a new contract
altogether which would replace the old contract between the E
parties and the terms of the new contract take the place of the
old contractual terms. It will not only be illogical but also absurd
to contend that once the contract has been terminated by a
party, it will still subsist in the background and either of the F
parties may be able to waive a condition attached to that
contract so as to revive that contract from a period of slumber.
This will in fact amount to saying that even thou~gh a contract
has been terminated by putting it to an end but it is actually still
available, at the option of one of the parties, to be revived back G
to its original form and content through unilateral waiver of a
contractual condition. In order to-substantiate this claim,
learned senior counsel placed reliance on K. Narendra vs.
Riviera Apartments (P) Ltd. (1999) 5 SCC 77 which held
asunder:- H
680 SUPREME COURT REPORTS (2015) 7 S. C.R.
A "36 ..... We are clearly of the opinion that at one point of
time the contract had stood frustrated by reference to
Section 56 of the Contract Act. We do not think that the
subsequent events can be pressed into service for so
reviving the contract as to decree its specific
B performance".
19) According to learned senior counsel, Clause 6 of
the agreement which provides for a period of nine (9) months
was only for obtaining No Objection Certificate (NOC) from
C the Urban Land Ceiling authorities and from the authority for
conversion of land from commercial to residential use. There
was no time period provided for obtaining consent from the
labour union and once the Labour Union on 05.12.1977 and
again on 10.01.1978 declared their intention not to negotiate,
D the contract stood frustrated, ·and therefore, the question of
specific performance of the contract did not arise. He further
submitted that without prejudice to the aforesaid submissions,
the Division Bench, even after holding that the learned single
Judge erred in looking at evidence and documents which were
E filed beyond the stated case in the plaint, nevertheless
examined the case of the appellant on the strength of even
those documents, more specifically, letters dated 05.12.1977
and 10.01.1978.
F 20) Learned senior counsel further submitted that letter
dated 05.12.1977 as produced by the respondents is in line
with the same letter which has been obtained through RTI. On
the other hand, the letter on which the appellant is relying upon
does not match with the one obtained through the Labour
G Commissioner's Office. Moreover, the Division Bench has
found version of the appellant to be untrustworthy as according
to it the post-script as introduced by the plaintiff was found to
be inconsistent with the main body of the letter. Further, letter
H dated 10.01.1978, produced by the appellant is also an
interpolated document as Mr. Vasant Gupte (PW-2) in his
NANDKISHORE LALBHAI MEHTA v. NEW ERA FABRICS 681
Pvr. LTD. & ORS. [R. K.AGRAWAL, J.]
statement had said thai this letter must have been sent by the A
Mill Mazdoor Sabha and the post-script might have- been
written by Mr. Pathak as it bears his signature. The Division
Bench has therefore rightly held that it cannot be relied upon.
Moreover, two undisputed documents i.e., letter dated
08.11.1977 (Exh. P-4) and letter dated 10.02 ..1978 (Exh. P- B
15) make it clear that the respondent had offered the full amount
of dues to the workmen and not 60 per cent as is sought to be
suggested in the two letters filed by the appellant. Even letters
dated 14.12.1978 and 15.12.1978 (Exhibit Nos. P-39 and P-
40) have adversely been commented upon by the Division C
Bench. So far as letter dated 10.06.1978 is concerned, the
Division Bench has found that PW-2 had no personal
knowledge with regard to the facts stated in the letter and that
Mr. Pathak who is said to have written this letter was not alive.
0
21) It is further submitted that the respondents have
deposited a sum of Rs. 11,50,000/- along with interest thereon
which is lying with the Registry of the Bombay High Court in a
'Fixed Deposit which amount can be paid over to the appellant
and the Division Bench has rightly set aside the order of the E
learned single Judge.
22) In reply, it has been stated that the additional
documents which have been filed before this Court cannot be
taken into consideration as they were not part of the record F
before the learned single Judge or before the Division Bench
and no leave has been obtained from the court.
23) A reading of Clause 6 of the agreement stipulated
the period of nine (9) months for all the formalities to be G
observed. It also applied to obtaining consent of the labour.
According to learned senior counsel for the appellant, the
decree of specific performance or any decree cannot be set
aside vide an interim order, more so, when this Court, in its
order dated 11.02.2008 had directed that the order of status H
682 SUPREME COURT REPORTS [2015] 7 S.C.R.
A quo passed on 08.12.2006 shall continue till the disposal of
the appeal by the High Court. It was, therefore, submitted that
the appeal be allowed and respondents be directed to execute
the sale deed in favour of the appellant.
B Discussion:
24) From the rival submissions noted above, the only
question which is to be decided in the present appeals is as
to whether the termination of the agreement for sale dated
c 19.10.1977 by the respondents was justified or not especially
when the appellant claims that the respondents had colluded
with the labour for not making them agreeable to the sale.
25) In the plaint filed before the High Court of Bombay
being Suit No. 1414of1979, a specific case was set up by
0
the appellant in paragraph 33 that the defendants are wrongfully
seeking to back out of the agreement for sale on false and
wrong pretexts and at the instigation of the defendants and in
collusion with them, the said Mill Mazdoor Sabha has refused
E to give its permission to the sale of the mill premises. Relevant
portion of paragraph 33 of the plaint filed by the appellant in
Suit No. 1414of1979 is reproduced below:-
".... The Plaintiff says that the Defendants are however
wrongfully seeking to back out of the said agreement for
F sale on the false and wrongful pretexts. At the instigation
of the defendants and in collusion with them the said Mil
Mazdoor Sabha has also allegedly refused to give its
permission to the sale of the mill premises of Defendant
No. 1 to the plaintiff. The plaintiff says that the alleged
G
refusal of the said Mill Mazdoor Sabha to consent to the
sale of the said Mills property to the Plaintiff has been
instigated by the Defenda.nts and the same is collusive
and the same is made a false pretext to enable the
H
Defendants to back out of the said agreement for sale
dh.. honestly and wrongfully .... " (emphasis supplied)
NANDKISHORE LALBHAI MEHTA v. NEW ERA FABRICS 683
PVT. LTD. &ORS. [R. K.AGRAWAL, J.]
26) The Mill Mazdoor Sabha, which is a union of A
workmen of the respondents herein, vide letter dated
05.12.1977, informed the respondents that they are not
agreeable to the sale of the mill premises. This was reiterated
by the Mill Mazdoor Sabha vide letter dated 10.01.1978. The
appellant, however, relied upon the alleged letters dated B
05.12.1977 and 10.01.1978 which according to them have
been handed over by Shri M. P. Agrawal-a former Director of
the Respondent No. 1. The letters dated 05.12.1977 and
10.01.1978 which were sent by the respondents to the
appellant are re-produced below:- C
"Dear Sir
'
This has reference to the meeting held in your office on
29th November, 1997 when our representatives and your
Directors were present. D
In this connection we have to inform you that we have
been informed by your employees that they are not
agreeable to your selling the Mill premises. The
employees have given us a representation to the effect
that they are not agreeable to your selling of the Mill E
premises. In accordance with the workers representation
we have to inform you that we are not agreeable and
therefore we cannot give our consent to the sale of the
mill premises.
In the circumstance there is no question of your setting F
the payment of the workers' dues as proposed by you.
Please also note that we are also moving the labour
commissioner in the regard.
Yours faithfully, G
Sd/-
Asstt. General Secretary
Copy to
Commissioner of Labour"
H
684 SUPREME COURT REPORTS [2015] 7 S.C.R.
A "Dear Sir
'
At your instance the undersigned met your proposed
purchased on 9th January 1978.
We want to make it clear that our letter of 5th December
B 1977 is final and we do not agree to the proposed sale.
We hereby treat this matter as closed as far as we are
concerned and we will not meet you or any one else for
any discussion further, in respect thereof.
c Yours truly
for MILL MAZDOOR SABHA
Sd/-
Asst. General Secretary
D
The aforesaid letters were marked as Exhibit 0-10 and Exhibit
P-11 respectively.
The letters which the appellant had filed subsequently being
E marked as Exhibit Nos. P-27 and P-28 are also reproduced
below:-
"Dear Sir,
This has reference to the Meeting held in your office
on 29111 November, 1977 when our representatives
F and your directors were present.
In this connection we have to infonn you that we have
been informed by your employees that they are not
agreeable to your selling the Mill Premises. The
employees have given us a representation to the effect
G that they are not agreeable to your selling of the Mill
premises unless you provide alternate employment and
pay full compensation to those workers who do not want
alternate employment as per the law. In the circumstances
there is no question of your setting the payment of the
H
NAN OKI SHORE LALBHAI MEHTA v. NEW ERA FABRICS 685
PVT. LTD. &ORS. [R. K.AGRAWAL, J.]
workers' dues as proposed by you. Please also note that A
we are also moving the Labour Commissioner in this
regard. (emphasis
supplied)
Yours faithfully, B
Assistant General Secretary
Copy to
Commissioner of Labour
P.S.
Your proposal to pay 60% compensation only to the c
workers is not acceptable hence we object to the sale.
Signed
Assistant Secretary General"
D
"Dear Sir,
At your instance the undersigned met your proposed
purchaser on 9lh January 1978.
We want to make it clear that our letter of 5th E
December, 1977, is final and we do not agree to the
proposed sale. We hereby treat this matter as closed as
far as we are concerned and we will not meet you or any
one else for any discussion further, in respect thereof.
F
Yours truly
for MILL MAZDOOR SABHA
Sd/- G
Asst. General Secretary
P.S. : In the discussion you mentioned that in case we
agree you would shift the Factory to Andheri or Thane
are and provide alternate work to the workers on first H
686 SUPREME COURT REPORTS [2015) 7 S.C.R.
A priority basis arid those workers who do not agree to
this you would compensate fully. We are agreeable to
this proposal as stated in the presence of the workers
and as such we agree to your proposed sale.
(emphasis supplied)
B
Sd/-
Asstt. General Secretary"
27) It may be mentioned that in the plaint filed by the
c appellant, the plea set up was that at the instigation of the
defendants and in collusion with them, the Mill Mazdoor Sabha
has refused to give its permission to the sale of the mill
premises of Defendant No. 1 to the plaintiff. It was not a case
set up by the appellant that the Mill Mazdoor Sabha had agreed
D to the proposed sale on certain conditions offered by the
respondents. In view of the settled position of law, fresh
pleadings and evidence which is in variation to the original
pleadings cannot be taken unless the pleadings are
incorporated by way of amendment of the pleadings. In our
E considered opinion, the Division Bench of the High Court was
perfectly justified in holding that unless the plaint is amended
and a specific plea is taken that the Mill Mazdoor Sabha had
agreed for the proposed sale on certain terms and conditions
offered by the respondents herein, the two letters viz., Exh Nos.
F P-27 and P-28 could not have been taken into consideration
at all. Further, it is the case of the appellant that the aforesaid
two letters were given by one Shri M.P. Agrawal-a former
Director of the Respondent No. 1. Shri M.P.Agrawal has not
been produced as a witness so as to establish that these two
G letters were in fact given by the Mill Mazdoor Sabha. Further,
in the statement of Mr. Vasant Gupte (PW-2), he has only stated
that the letter must have ben sent by the Mill Mazdoor Sabha
and the post-script might have been written by Mr. Pathak as it
H .bears his signature. He had not stated that it was written in his
presence. Mere identifying the signature of Mr. Pathak does
NAN OKI SHORE LALBHAI MEHTA v. NEW ERA FABRICS 687
PVT. LTD. & ORS. [R. K.AGRAWAL, J.)
not prove the contents of the said letter which is being relied A
upon by the appellant. Even if the two letters viz., Exh. Nos. P-
27 and P-28 are taken into consideration, from a reading of
the said letters, it appears that the contents are contradictory
of one another. In the letter dated 05.12.1977 (Exh. P-27), in
the underlined portion reproduced above, we find that the Mill B
Mazdoor Sabha had demanded an option to provide alternate
employment and to pay full compensation to those workers
who do not want alternate employment as per the law. In the
note below the said letter, a mention has been made that a
proposal was given to pay 60 per cent compensation which C
was not acceptable.
28) In the earlier part of the letter dated 10.01.1978
(Exh. P-28), it has been specifically mentioned that they do
not agree to the proposed sale and the matter be treated as D
closed. However, in the note, it is mentioned that they are
agreeable to the proposal given in the discussion and to the
proposed sale. Letter dated 10.01.1978 is contradictory to
the earlier part of the letter, and therefore, in our considered
opinion, the Division Bench had rightly disbelieved these two E
letters viz., Exh. P-27 and Exh. P-28.
29) From the aforesaid discussion it is absolutely clear
that the Mill Mazdoor Sabha categorically refused to give their
consent to the sale of the mill premises. F
30) The submission that the appellant has waived the
condition regarding taking of consent from the labour for the
proposed sale and, therefore, this could not be a ground for
·cancelling the contract is misconceived. In the agreement dated G
19.10.1977, it was specifically mentioned that the sale also
be subject to your (defendants) being able to settle with your
labour and your labour agreeing to the sale contemplated
herein and if you are not able to settle with your labour and to
get them to agree to the sale herein contemplated you will not H
688 SUPREME COURT REPORTS [2015] 7 S.C.R.
A be bound to complete the sale. The moment labour do not
agree to the sale contemplated, under the terms of the contract,
the respondents were not bound to complete the sale. The
maximum period of nine (9) months does not mean that once
the labour had declined to give their consent for the proposed
B sale, the contract subsists for a period of nine (9) months and
it cannot be terminated before that period. The agreement for
sale is a contingent agreement depending upon obtaining
permission under Section 22 and Section 27 of the ULCAct,
property being converted from industrial zone to residential
c use and settlement with the labour and the labour agreeing to
the safe contemplated therein. ff any of the conditions are not
fulfilled, the respondents were not bou'nd to complete the safe
and the appellant was only entitled for return of the money with
interest@ 18% per annum from the date of refusal of any of
0
the permission or consent or agreement mentioned above.
As in the present case we find that the Miff Mazdoor Sabha
has not given its consent to the proposed sale, agreement for
sale could not have been performed and had ceased. The
E appellant is only entitled to refund of the amount along with
interest@ 18% per annum stipulated therein.
31) In view of the above, we are of the considered
opinion that the High Court was right in setting aside the decree
F passed by learned single Judge of the High Court. We do not
find any merit in these appeals, hence, the appeals fail and
are hereby dismissed with no order as to costs. Interlocutory
Applications, if any, are disposed of accordingly.
G Devika Gujral Appeals dismissed.
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