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PETITIONER: BRIJ MOHAN AND ORS.

       Vs.

RESPONDENT: SMT. SUGRA BEGUM AND ORS.

DATE OF JUDGMENT19/07/1990

BENCH: KASLIWAL, N.M. (J) BENCH: KASLIWAL, N.M. (J) SHARMA, L.M. (J)

CITATION:  1990 SCR  (3) 413        1990 SCC  (4) 147  JT 1990 (3)   255        1990 SCALE  (2)125

ACT:     Specific  Relief Act --Specific performance of  contract of  sale  of immovable property on basis of  oral  agreement alone--Heavy burden lies on plaintiff to prove consensus ad- idem.     Transfer  of  Property  Act--Section  55--Provision  not applicable  where parties consciously negotiated but  failed in  respect of any term or condition resulting in  agreement not being concluded.

HEADNOTE:     The appellants-plaintiffs are’ four brothers. They filed a  suit against defendant No. 1, Smt. Mahboobunnisa.  Begum, (Since deceased and represented by legal heirs) for specific performance  of oral contract of sale of a building in  Hyd- erabad-  The  property was later sold by defendant  No.1  to defendants Nos. 3 and 4.     The  plaintiffs’ case was that plaintiffs Nos. 1 and  2, on  behalf of themselves and their younger brothers,  plain- tiffs  Nos.  3 and 4, had preliminary negotiations  for  the purchase  of the suit property through Shri Arif Ali,  advo- cate; that eventually on 3rd May, 1979 they met Arif Ali and offered  to pay Rs. 10,00,000, which was the price  demanded by the owner; that Arif Ali, after getting the  confirmation of  the said offer from the first defendant on  phone,  said that  the plaintiffs should meet the first defendant on  6th May,  1979 and that she would in the meanwhile purchase  the stamp papers for making the formal agreement of sale  incor- porating  the  oral agreement arrived at on 3rd  May,  1979; that on 6th May, 1979 the plaintiffs met the first defendant in the presence of Arif Ali and other, wherein the amount of earnest money to be paid, time for registration of the  sale deed etc. were decided; that at that meeting Shri Arif  Ali, prepared  first and the final drafts of the receipt  in  his own  handwriting and handed over these drafts to  the  first plaintiff  to  get the final draft typed and  duly  stamped; that  Arif Ali also delivered the stamp papers to the  first plaintiff  for typing the formal agreement of sale; that  at the meeting held on 6th May, 1979 the plaintiffs Nos. 1  and 2 were also permitted to proceed with the publication of the notices in the newspapers; that after the public notice  was published, the first defendant got a reply notice  published

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and got 414 issued  a  legal notice dated 8.5.79 through  her  advocate, alleging that there was no agreement for sale; that thereaf- ter,  the first and second plaintiffs made sincere  and  re- peated  attempts to convince the first defendant that  there was  in existence a concluded contract for sale of the  suit property,  and that the execution of the agreement  of  sale was  a mere formality. On these allegations, the  plaintiffs sought the relief of specific performance of the agreement.     The first defendant in her written statement stated that certain negotiations had taken place between her and  plain- tiffs Nos. 1 and 2, but the negotiations had failed. It  was further  stated that there was no concluded  or  enforceable contract  between the parties; that no price was settled  or agreed  upon and even the condition for advance payment  and other  terms  and conditions were not agreed upon;  that  no final  receipt or document had been prepared; and  that  the first  defendant never asked for the purchase of  stamp  pa- pers.     The  Trial  Court found that on the  facts  and  circum- stances of the case, it was established that the  plaintiffs had  entered  into an oral contract of sale with  the  first defendant on 3.5.79. The Trial Court accordingly decreed the plaintiffs’ suit for specific performance.     Two  separate  appeals were filed in the High  Court.  A Division Bench of the High Court allowed the appeals and set aside  the decree passed by the trial court. The High  Court held  that  in order to determine the binding  nature  of  a contract  between the parties, the mere acceptance  of  sale price  was not sufficient. The High Court  further  observed that  in the absence of evidence that the other  terms  also were  discussed  over the phone and settled  on  3.5.79,  it could cot be said that there was a concluded contract on 3rd May, 1979, and that it was obviously for that reason that  a further meeting was fixed at the house of the 1st  defendant on  6th  May,  1979.The High Court did not  agree  with  the contention of the plaintiffs that all the terms of contract, including  the  stipulation with regard to  the  payment  of advance amount and the vendor’s responsibility to obtain the permission  from the Urban Land Ceiling Authority, had  been settled  by 3.5.79 and what was left to be done on  6.5.1979 was merely to incorporate the terms already arrived at  into a formal document on stamp paper.     Before  this  Court lit was contended on behalf  of  the appellants that an agreement for sale of immovable  property could be made orally; that in the facts and circumstances of the case all the fundamental and vital terms of the contract were settled and concluded on 3.5.1979 itself and 415 even if the other details like mode of payment of considera- tion, obtaining of no objection certificate from Land  Ceil- ing  Authorities etc. remained unsealed, the same  could  be settled  subsequently or determined in accordance with  sec. 55  of  the Transfer of Property Act; that  the  only  vital terms for a valid agreement of sale of an immovable property were  the identity of the property and the price; that  both these vital terms were settled and concluded on 3.5.79;  and that the act of purchasing stamps on 3.5.79 by defendant No. 1 and the draft receipts, prepared by Shri Arif Ali, clearly lent support to the case of the plaintiffs.     Kollipara Sriramulu v. T. Aswathanarayana & Ors., [1968] 3  SCR  387 and Nathulal v. Phoolchand, [1970]  2  SCR  854, relied upon.     On  the  other hand, it was contended on behalf  of  the

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respondents  that no vital or fundamental terms of the  con- tract  were  discussed, agreed or settled  on  3.5.79;  that neither  any earnest/advance money to be paid  was  settled, nor,  any  time for the payment of such money  or  time  for execution  of agreement of sale or final sale deed  and  its registration,  was settled; that even if time may not be  an essence of a term of contract for sale of immovable  proper- ty, it was a vital term without which no concluded  contract could be arrived at; that any agreement in the third week of April,  1979 to the effect that defendant No. 1 would  bring the  no  objection certificate from the Urban  Land  Ceiling Authorities  was found not proved by the High Court  and  as such  there was no question of applying the principles  con- tained in section 55 of the Transfer of Property Act; that a no  objection certificate was necessary to be obtained  from Urban  Land Ceiling Authorities and the defendant No. 1  and her  husband being old persons had clearly taken  the  stand that they would not bring such certificate; and that  there- fore no final and concluded contract took place on any date. Dismissing the appeals, this Court,     HELD: (1) There is no requirement of law that an  agree- ment  or contract of sale of immovable property should  only be in writing. However, in a case where the plaintiffs  come forward  to seek a decree for specific performance  of  con- tract of sale of immovable property on the basis of an  oral agreement  along,  heavy burden lies on  the  plaintiffs  to prove  that there was consensus ad-idem between the  parties for a concluded oral agreement for sale of immovable proper- ty. Whether there was such a concluded oral contract or  not would  be a question of fact to be determined in  the  facts and circumstances of each individual case. It 416 has  to  be  established by the plaintiffs  that  vital  and fundamental  terms for sale of immovable property were  con- cluded between the parties orally and a written agreement if any  to  be  executed subsequently would only  be  a  formal agreement  incorporating such terms which had  already  been settled and concluded in the oral agreement. [429B-D]       (2)From  a perusal of the evidence it would  be  abun- dantly  clear that nothing was settled on 3.5.79 except  the fact  that the plaintiffs had conveyed their offer  to  pur- chase the suit property for Rs. 10,00,000 and Shri Arif Ali, after speaking to defendant No. 1 on phone conveyed that she was willing to sell the property for Rs. 10,00,000. [431B]     (3)  No averment was made in the plaint  that  defendant No.  1  had agreed to obtain the permission from  the  Urban Land Ceiling Authority in the meeting held in the third week of April, 1979. The High Court was right in concluding  that it  was unbelievable that in the third week of  April,  1979 when still there was a wide gap of Rs.2,00,000 in the  price payable for the suit building, the parties would have stipu- lated  about the condition as to who should obtain the  per- mission under the Urban Land Ceiling Act. [431C-F]     (4)  The High Court rightly believed the  contention  of defendant No. 1 that the agreement fell through because  the plaintiffs  insisted that defendant No. 1 should obtain  the permission  from  the  Urban Land  Ceiling  Authority  while defendant No. 1 did not agree for the same. [432C]     (5)  The general principles contained in section  55  of the  Transfer of Property Act regarding rights and  liabili- ties of buyer and seller can only apply in the absence of  a contract to the contrary and not in a case where the parties consciously negotiated but failed in respect of any term  or condition,  as a result of which the agreement itself  could not be settled or concluded. [432E]

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   (6) Once it is held/established in the present case that no agreement was finally concluded or settled on 6.5.79  and negotiations  failed, as before this date it was never  set- tled  that  defendant  No. 1 would bring  the  no  objection certificate from Urban Land Ceiling Authority, there was  no question of applying general principles contained in section 55 of the Transfer of Property Act. [432F]     Kollipara Sriramulu v. T. Aswathanarayana & Ors., [1968] 3 SCR 387, distinguished. 417

JUDGMENT:     CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1893 and 1894 of 1989.     From  the  Judgment and Order dated 24.9.  1987  of  the Andhra  Pradesh High Court in C.C.C.A. No. 152 of  1984  and C.C.C.A. No. 150 of 1984.     K.  Parasaran, Shanti Bhushan, A.D.N. Rao and  A.  Subba Rao for the Appellants.     M.C. Bhandare, K. Madhava Reddy, Subodh Markandeya, Mrs. Chitra  Markandeya, W.A. Nomani, G.S. Giri Rao,  A.K.  Raina and D. Prakash Reddy for the Respondents. The Judgment of the Court was delivered by     KASLIWAL, J. The Plaintiffs by Special Leave have  filed these  appeals against the Judgment of Andhra  Pradesh  High Court, Hyderabad, dated 24th September, 1987.     The  four plaintiffs who are brothers filed the  present suit  on  17th July, 1979 for specific performance  of  oral contract  for  sale of a building known as  "Roshan  Manzil" located  in an area of 4165 .sq. yards in Saifabad,  Hydera- bad. M/s. Gopi Hotel was the tenant in the premises. Accord- ing to the case as set up in the plaint the first  plaintiff Brij Mohan learnt some time in the first week of April, 1979 that  the  defendant No. 1 Smt. Mahboobunnisa  Begum  (since deceased)  was  contemplating the sale of  the  property  in question and that Shri Arif Ali, her Advocate and income tax practitioner was assisting her in finding a purchaser.  Shri Arif  Ali  had mentioned the above intention  of  the  first defendant  to Sh. Ibrahim Moosa of M/s. J. Moosa  &  Company who was known to the first plaintiff. On learning from  Shri Ibrahim Moosa the first and second plaintiffs, namely,  Brij Mohan and Jagmohan along with Sh. Ibrahim met Sh. Arif  Ali. Sh.  Arif  Ali  gave the details of the  property  and  also showed  the  plans  of the property to them.  Sh.  Arif  Ali stated  that  the defendant was expecting the price  of  Rs. 10,00,000. The plaintiffs Nos. 1 and 2 offered  Rs.7,00,000. Shri  Arif stated that he will ascertain from the  defendant her  reaction to the said offer. A fortnight later  i.e.  in the  third week of April, 1979 the plaintiffs Nos. 1  and  2 along  with Sh. Ibrahim Moosa and Sh. Arif Ali went  to  the residence of the defendant, who was insisting on the payment of Rs. 10,00,000 as the sale price. At the said meeting  the husband  of the defendant was also present.  The  plaintiffs Nos. 1 and 2 418 increased  their price from Rs.7,00,000 to Rs.8,00,000.  The first  defendant said that she would think over  and  inform the  plaintiffs  Nos. 1 and 2 through Sh. Arif Ali.  On  3rd May, 1979 the plaintiffs Nos. 1 and 2 along with Shri  Ibra- him Moosa met Sh. Arif Ali. Arif Ali stated that the defend- ant  was agreeable to sell the property to  plaintiffs  only for  Rs. 10,00,000 and not a pie less. Thereupon the  plain- tiffs  agreed to pay Rs. 10,00,000 as the sale  price.  Shri

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Arif Ali after getting the confirmation of acceptence of the said  offer  of the plaintiffs Nos. 1 and 2 from  the  first defendant said that the plaintiffs Nos. 1 and 2 should  meet the  defendants on 6th May, 1979 and that she would  in  the meanwhile  purchase the stamp papers for making  the  formal agreement for sale incorporating the oral agreement  arrived at.     It  was further alleged in the plaint that on  6th  May, 1979 the first and second plaintiffs along with Shri Ibrahim Moosa  met  the  first  defendant and  her  husband  in  the presence  of the said Sh. Arif Ali. In the said meeting  the amount of earnest money to be paid, time for registration of the  sale  deed etc., were decided. The said Shri  Arif  Ali prepared  in  his  own handwriting a draft  of  the  receipt incorporating  the terms of the orally  concluded  agreement for  sale. The draft was scrutinised by the husband  of  the first  defendant  who suggested some alterations.  The  said Shri Arif Ali thereupon prepared final draft of the  receipt in  his  own hand. He handed over the first  and  the  final draft to the first plaintiff to get the later typed and duly stamped.  He  also delivered the stamp papers to  the  first plaintiff for being used for typing of the formal  agreement of sale.     It was further stated in the plaint that during the said meeting  held on 6th May, 1979, the plaintiffs Nos. 1 and  2 were  permitted to proceed with the publication of  the  no- tices  in the newspapers. Accordingly, the contents  of  the publication were got prepared by them bonafidely  anticipat- ing that the first defendant will execute the receipt  after receiving the stipulated earnest money in the course of  the day,  ie. 6.5.79. However, for reasons known to herself  the first defendant deliberately and wantonly evaded meeting the first  and  second  plaintiffs to receive  the  advance  and execute the receipt.     It  was  further  stated in the plaint  that  after  the public notice was published in the newspapers taking  advan- tage of her wanton and deliberate act of evasion, the  first defendant got a reply notice published in the newspaper  and got issued a legal notice dated 8.5.79 through her Advocate, falsely  alleging  that  there was no  agreement  for  sale. Thereafter  the first and second plaintiff made sincere  and repeated attempts 419 to convince the first defendant that the false and  baseless pleas  taken by her were detrimental to the interest of  all concerned and there is inexistence a concluded contract  for sale  of  the suit property and that the  execution  of  the agreement  of sale was a mere formality as well the  receipt for the advance. Since the first defendant persisted in  her illegal  conduct. the plaintiffs got issued a  final  notice dated  27th June, 1979 calling upon the first  defendant  to execute the agreement, receive the earnest money and issue a valid receipt within three days of the receipt of the notice thus  giving the first defendant one more  opportunity.  The plaintiffs neither received any reply nor the first  defend- ant  complied  with the demands made in the notice.  It  was further alleged in the plaint that the plaintiffs Nos. 1 and 2 had negotiated for the purchase of the property on  behalf of  themselves  and plaintiffs Nos. 3 and 4 who  were  their younger  brothers. The concluded contract for  sale  entered into with the first defendant was for the benefit of all the four plaintiffs. Hence all the four plaintiffs had joined in the filing of the suit.     The  second  defendant was M/s Gopi Hotel  who  was  the tenant  of  the first defendant in the  suit  premises.  The

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plaintiffs further averred that they have been and are ready and willing to pay to the first defendant the sale consider- ation of Rs. 10,00,000. The plaintiffs undertake to  deposit the same in the court at any time during the pendency of the suit  or  within a time fixed by the Hon’ble Court  for  the deposit of the same after passing the decree or at the  time of  execution and registration of the sale deed. The  plain- tiffs on the above allegations sought the relief of specific performance of the agreement of sale in respect of the  suit property   after  payment  of  sale  consideration  of   Rs. 10,00,000     The  first defendant Smt. Mahaboobunnisa Begum  filed  a written statement on 21st January, 1980 stating that certain negotiations  took place between her and plaintiffs  Nos.  1 and  2,  but  no contract was finalised with  them  and  the negotiations failed. According to her, under an agreement of sale  dated 22nd June, 1979 she agreed to sell the  property in  question to defendants Nos. 3 and 4, namely, Smt.  Sugra Begum  and  Smt. Saira Banu. It was submitted in  the  reply that it was wholly incorrect to suggest of an oral  contract of  sale  on 3rd May, 1979 in respect of sale  of  the  suit property, in favour of the plaintiffs. There was a  proposal of sale of the suit property and plaintiffs did approach for negotiations.  However,  the allegation  of  the  plaintiffs approaching during first week of April, 1979 with Arif  Ali, Income  Tax  practitioner,  was wholly  erroneous.  In  fact plaintiff No. 1 approached 420 No. 1 with Arif Ali and Ibrahim Moosa for negotiations,  and plaintiffs  Nos.  1  and 2 came along  with  them  somewhere during the last week of April,  1979 and tried to negotiate, and thereafter, again they approached on 6th May, 1979,  but negotiations  could not be finalised and the  answering  de- fendant  did  not  agree to sell the suit  property  to  the plaintiffs  Nos.  1 and 2. In fact, details have  been  men- tioned  in the counter, filed in I.A. pertaining to  injunc- tion  bearing No. 679/79, which may be read as part  of  the written  statement.  There was no concluded  or  enforceable contract,  arrived at on 3rd May, 1979, as alleged and  con- tended.  It  was  further alleged that there  was  no  price settled  or agreed and even the payment for advance was  not settled and other terms and conditions were not agreed upon, even on 6th May, 1979 and the negotiations failed and  noth- ing  was  settled. There was no concluded contract  and  the plaintiffs  had no cause of action to file the present  suit for specific performance. The parties never intended to have an  oral agreement, and the negotiations if any,  never  re- sulted in a concluded contract, and even if the negotiations had  been  finalised, it had to be reduced  into  a  written agreement,  and the writing contemplated was not  formal  as alleged and contended by the plaintiffs, but was a condition and a term of contract. The plaintiffs with ulterior  motive had taken the plea of oral contract     It  was further submitted in the written statement  that it  was true that plaintiffs Nos. 1 and 2 did  approach  the answering defendant on 6th May, 1979 along with Ibrahim  and Arif,  and even in the said meeting negotiations failed  and the  parties  did not and could not arrive  at  a  concluded contract; and even in the said negotiations on 6th May, 1979 matters  remained unsettled and were not concluded.  It  was plaintiff  No.  1 who attempted to prepare receipt,  it  was wholly erroneous to suggest of any draft receipt or a  final receipt being prepared after scrutiny made by the husband of the  answering defendant. There was no final  document  pre- pared and there was no final settlement of terms and  condi-

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tions of contract. The answering defendant was not aware  of the  purchase  of stamp paper and she never  asked  for  the purchase  of  the stamp papers. The blank stamp  papers  and incomplete and unsigned draft receipts in no way spell out a concluded contract and the suit is untenable.     It  was also alleged in the reply that even on 6th  May, 1979 there was no completed or concluded contract and  nego- tiations failed. Consequently, the plaintiffs took away  the blank incomplete papers, and rushed with utmost haste to get it  published in the newspaper, making false allegations  of having paid Rs.50,000 as advance under the sale 421 agreement  etc.,  and immediately, the  answering  defendant sent  a suitable reply contradicting the  said  allegations. There  was  no bonafides in their action. It was  done  with ulterior  motive to cause loss and damage to the  defendant. When no earnest money had been paid or received, the  plain- tiffs  Nos. 1 and 2 had no right to make  false  allegations and  mislead the public and consequently the  answering  de- fendant suffered heavy loss.     The second defendant M/s. Gopi Hotel only took the  plea in the written statement that he was a tenant in the  build- ing. Defendants Nos. 3 and 4 supported the case of the first defendant  and  claimed ownership in the  suit  property  by virtue  of a registered sale deed dated 19th November,  1979 executed in their favour. It may be made clear at this stage that  according to defendant No. 1 an agreement to sell  the property  in  question was made by the  first  defendant  in favour  of  defendants Nos. 3 and 4 on  22.6.79.  After  the injunction being vacated by the High Court the first defend- ant  sold  the suit property for a sum of Rs.  10,00,000  in favour of defendants Nos. 3 and 4 by a registered sale  deed dated  19th  November,  1979. Defendant No. 1  died  on  3rd November,  1982  during  the pendency of the  suit  as  such defendants  Nos. 5 to 9 were impleaded as legal  representa- tives of defendant No. 1.     The  Learned  Trial Court recorded the  summary  of  the findings which are reproduced in its own words. 49. Summary of the findings: "On  the facts and circumstances of the case, it  is  estab- lished that the plaintiffs entered into an oral contract  of sale  with D. 1 on 3.5.79. The terms settled were that D.  1 should sell the suit property for a sum of Rs. 10,00,000 and D. 1 should obtain permissions from the authority under Land Ceiling Act and also income Tax Act. The sale deed should be executed  within six months from 6.5.79. It is also  settled that  vacant possession was not to be given on the  date  of contract of sale, and the parties are aware that the defend- ant No. 2 was only a tenant in the premises. The only aspect left open on 3.5.79 is that mode of payment should be  fixed on  6.5.79. On 6.5.79 it was agreed that D.1 should  receive Rs.50,000  as  advance  and these terms  were  reduced  into writing  in  Ems. A. 1 and A. 2, but, before the  ink  could dry, the defendant No. 1 on the evening of 422 6.5.79, refused to receive the amount. This resulted in  the breach  of contract on the part of D. 1. So  the  plaintiffs are  entitled  to specific performance of oral  contract  of sale  concluded on 3.5.79. Subsequent sale to  defendants  3 and  4  do not create any rights in favour of  them  and  in order  to prevent D. 3 and D. 4 from claiming any rights  in future,  they  should also be made to join D. 5 to D.  9  in executing  the  registered  sale deed. Defendant  No.  2  is admittedly  not  entitled to any proprietary rights  in  the property  and  he is only a tenant. As to whether  D.  2  is

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liable  to be evicted or not it is held that the  Plaintiffs are  entitled to seek eviction at an appropriate  time  when they become full owners of the property. Defendants 3 and  4 shall not be liable to contribute any thing towards expenses for the executing of the registered sale deed and defendants 5 to 9 as legal representatives of D. 1 are bound to perform their  part  of contract by  obtaining  permission  required under the Urban Land Ceiling Acts and Income Tax act and any other  Act required execute the sale deed and  register  the sale   upon  receiving  the  entire  consideration  of   Rs. 10,00,000.  The expenses for registration of the  sale  deed shall  be borne out in equal halls by defendants 5 to  9  on the one hand and the plaintiffs on the other hand".     As  a result of the above findings the trial  court  de- creed  the  plaintiffs suit for  specific  performance.  Two separate  appeals,  one by defendants Nos. 5 to  9  and  the other  by  defendants Nos. 3 and 4 were filed  in  the  High Court  challenging the decree passed by the trial  court.  A Division  Bench  of the High Court by  Judgment  dated  24th September,  1987 allowed both the appeals and set aside  the decree  passed by the trial court. As two  separate  appeals Nos.  150  and 152 of 1984 were disposed of  by  one  single order  the  plaintiffs  filed the above  two  civil  appeals before this Court by Special Leave.     The  High  Court observed that the only  question  which arose  for  consideration in both the  appeals  was  whether there  was  a concluded oral contract between  the  parties, namely, plaintiffs 1 and 2 on one side and the first defend- ant on the other, on 3rd May, 1979 as alleged by the  plain- tiffs? According to the High Court to decide this  question, the  only  available oral evidence was that of P.W.  1  Brij Mohan,  P.W. 3 Jagmohan and D.W. 2 Arif Ali. As  regard  the negotiations  which  took place between the parties  in  the third week of April, 1979, the High court observed that  the negotiations which took place between the 423 parties in the third week of April, 1979 were not in dispute and  which were to the effect that when the first  defendant was insisting on payment of Rs. 10,00,000, plaintiffs 1  and 2 increased their offer from Rs.7,00,000 to Rs.8,00,000  and the  first defendant promised them to think over and  inform the plaintiffs through Arif Ali. The High Court then consid- ered the bargain that took place between the parties on  3rd May, 1979. The plaintiffs apart from their own statements as P.W.  1 and P.W. 3 had also examined P.W. 2, the Income  Tax Inspector  B-Ward Circle No. 4, Hyderabad to show  that  de- fendant No. 1 was an income tax and wealth tax assessee  and Sh.  Arif Ali, Advocate and Income tax practitioner used  to look after her tax matters. The plaintiffs had also examined P.W.  4,  Mohd Yusuf a stamp vendor to  prove  Exhibit  X-25 sales  register of stamps and Exhibit X-26 an entry of  sale of Ex. A. 3 non judicial stamps for Rs.5 to defendant No.  1 Smt.  Mahboobnissa Begum. Similarly plaintiffs had  examined P.W. 5 Sheikh Ismail another stamp vendor for having sold  a stamp  Exhibit  A-4 to one Abdul Khalik on  behalf  of  Smt. Mehboobnissa  Begum vide entry Ex. X-27 in the  register  of stamps.  The plaintiffs by the aforesaid evidence wanted  to establish that one stamp was purchased by Smt.  Mehboobnissa Begum herself and another through Mohd. Khalik for executing the  agreement  for sale in favour of plaintiffs.  The  High Court  in this regard observed that it was not necessary  to discuss  the  evidence  of P.W. 4 as to  whether  the  first defendant  personally  went to him and purchased  the  stamp paper.  The first defendant who is a lady from  aristocratic family  would not have gone all the way to Chotta  Bazar  to

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purchase  a  non-judicial stamp worth Rs.5. P.W.  4  deposed that  he  cannot identify whether the person  who  came  for purchase  of the stamp paper was Smt. Mehboobnissa Begum  or not.  It may be that some person by name  Smt.  Mehboobnissa purchased  the  stamp papers. P.W. 5 simply stated  that  he sold  exhibit  A-4  to one Adbul Khalik on  behalf  of  Smt. Mehboobnissa  Begum.  D.W.  2, Arif Ali  however  said  that neither  any  transaction nor talks took place  between  the plaintiffs  1 and 2 and himself on 3rd May, 1979.  The  High Court  did  not  agree with the submission  of  the  Learned counsel  for the plaintiffs made before them that  the  pur- chased  of the stamps Exhibit A-3 and A-4 was a strong  cri- cumstance in favour of a concluded contract. The High  Court in this regard observed that first of all it was not  firmly established  that  the purchase of the stamps  was  for  the purpose of this transaction only. In view of the evidence of D.W. 2 much weight cannot be given to the evidence of  P.Ws. 4 and 5. The High Court further observed that even  assuming that  these two stamps were purchased pursuant to the  talks that  took place between D.W. 2 and P.Ws. 1 and 3  it  would not improve the case of the plaintiffs. The 424 stamps  were blank and nothing was engrossed on  them.  This circumstances,  at the most would show that meeting  on  6th May,  1979 was fixed between the plaintiffs 1 and 2 and  the first  defendant  for further negotiations. The  High  Court then  observed that as regards the meeting which took  place on  6th  May, 1979 and the fact that the  negotiations  fell through  was  admitted by both the parties.  Therefore,  the crucial question for determination was whether all the terms of  the oral contract were entered into between the  parties on  3rd  May, 1979  or any terms were left open to  be  dis- cussed and determined in the meeting to be held on 6th  May, 1979.     The  High  Court  then considered the  argument  of  the plaintiffs  according to whom Exhibit A-1 draft receipt  was written by D.W. 2 Sh. Arif Ali on 6th May, 1979 stating that the  suit premises was agreed to be sold for  Rs.  10,00,000 and the permission for Urban Land Ceiling Authority will  be obtained by the first defendant and the registration will be completed  within six months from that date. The  plaintiffs further case was that the first defendant’s husband who  was present  suggested some alterations basing on which  Exhibit A-2  fair  draft was prepared and that when  the  plaintiffs took the agreed advance amount of Rs.50,000 in the  evening, the first defendant refused to accept the advance amount and resiled from the contract. As against the above  contentions of the plaintiffs, D.W. 2 Sh. Arif Ali who is the  represen- tative  of the first defendant deposed that in  the  meeting between  the  parties which took place in  April,  1979  the vendor did not take the responsibility of obtaining  ,clear- ance under the Urban Land Ceiling Act. He denied the sugges- tion that in the third week of April, 1979 the first defend- ant offered to sell the suit property for Rs. 10,00,000  and that  she  would obtain the clearance under the  Urban  Land Ceiling  Act.  On the other hand he deposed  that  when  the plaintiffs offered Rs.8,00,000 the first defendant told them that  she  would consider and communicate her  view  through D.W. 2 some time later. The High Court in this regard clear- ly observed that the contention of the plaintiffs that  even in  the third week of April, 1979 before the  parties  could agree  upon the sale price for the suit building, there  was discussion about the obtaining of clearance under the  Urban Land  Ceiling Act and that the first defendant undertook  to obtain  that clearance certificate cannot be  believed.  The

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High Court further observed as under: "As seen from their own evidence, by the 3rd week of  April, 1979   plaintiffs  1  and  2  increased  theft  offer   from Rs.7,00.000 to Rs.8,00,000. At the time of the earlier 425 negotiations when the plaintiffs offered Rs.7,00,000  (seven lakhs) and the 1st defendant was not willing to accept  that offer, there was no stipulation as to who should obtain  the clearance  under  the Urban Land Ceiling Act. If so,  it  is unbelievable that in the 3rd week of April, 1979 when  still there was a wide gap of Rs.2,00.000 in the price payable for the  suit building, the parties would have stipulated  about the  condition as to who should obtain the permission  under the Urban Land Ceiling Act. Therefore, the evidence of P.Ws. 1  and 3 can be believed to the extent that they  approached Arif Ali on 3.5. 1979 and Arif Ali in his turn  communicated their willingness to pay the price of Rs. 10,00,000 for  the suit premises and the 1st defendant accepted that offer."     The  High Court on the basis of the above  finding  then held  that in order to determine the binding nature  of  the contract  between the parties, the mere acceptance  of  sale price  is not sufficient. It was not the case of the  plain- tiffs  that the other terms of the contract were  also  dis- cussed  by  D.W. 2 over the phone and their  acceptance  was communicated to them by the 1st defendant through D.W. 2. It was  obviously  for that reason that a further  meeting  was fixed  at the house of the 1st defendant in the  morning  of 6th May, 1979 which had admittedly taken place.     The  High Court further held that it must be  remembered that this agreement is in respect of a valuable property and the main intention was to reduce the terms of agreement into writing  and when the parties are very much relying  on  the alleged  oral  agreement dated 3rd May,  1979,  there  would definitely have been a reference in Exhibits A-1 and A-2  to the  oral  agreement said to have taken place  on  3rd  May, 1979.  The  absence  of the same in  Exhibits  A-1  and  A-2 against throws a serious doubt about the alleged  agreement, dated  3rd May, 1979. In any event the mere fact that  there was a meeting between the plaintiffs Nos. 1 and 2 and D.W. 2 on  3rd May, 1979 does not establish that there was  a  con- cluded  contract  between the parties on  that  day  because admittedly the first defendant was not present at that time. What  all  had happened according to P.Ws. 1 and 3  is  that they offered to pay Rs. 10,00,000 for the suit building  and D.W.  2  having contacted the 1st defendant over  the  phone conveyed  to them her acceptance of the price fixed. In  the absence of evidence that the other terms also were discussed over the phone and settled at that time and the 1st  defend- ant agreed for the terms, it cannot be said that there is  a con- 426 cluded  contract on 3rd May, 1979. The fixation of price  is only one of the terms of the contract and by mere acceptance of  the  price it cannot be said that there is  a  concluded contract  between  the parties in the absence  of  proof  of fixation  of other conditions mentioned in Exhibits A-1  and A-2,  viz., undertaking by the 1st defendant to obtain  per- mission from Urban Land Ceiling Authority and the amount  of advance  to be paid. It is not the case of the plaintiffs  1 and  2 that prior to 6.5.79 there was an  agreement  between the parties as to the amount of advance to be paid. The High Court  thus held that in the absence of any consensus  being arrived  at between the two contracting parties about  these important  aspects of the agreement it cannot be  said  that there  is a concluded oral contract between the  parties  on

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3.5.79.     It is important to note that even exhibit B-4 an  agree- ment of sale dated 22.6.79 executed between the 1st  defend- ant  and defendants Nos. 3 and 4 does not impose the  condi- tion  that the 1st defendant, the vendor, should obtain  the clearance  from the Urban Land Ceiling Authority within  the stipulated  period  of six months. The High  Court  in  this regard  observed that this evidence showed that the  conten- tion of the 1st defendant that the agreement fell through by reason  of  the plaintiffs insisting on  her  obtaining  the permission  from  the Urban Land Ceiling Authority  and  the expression  of  her  inability to comply  with  that  demand appeared  to  be correct. The High Court clearly  held  that there  was no clinching evidence to show that this  stipula- tion  was  thought  of by the parties on any  day  prior  to 6.5.79.  The High Court, therefore, did not agree  with  the contention  of the Learned Counsel for the  plaintiffs  that all  the  terms of contract including the  stipulation  with regard to the payment of advance amount and that the  vendor alone  should  obtain  the permission from  the  Urban  Land Ceiling  Authority were settled by 3.5.79 and what was  left to  be  done on 6.5.79 was merely to incorporate  the  terms already  arrived at into a formal document on Exhibits.  A-3 and A-4 stamp papers. It was further observed that had there been a meeting between plaintiffs Nos. 1 and 2 and the first defendant  on  3.5.79 and there was  a  direct  conversation between them, there may be a possibility for drawing such an inference.  But, as observed already, what all had  happened on  3.5.79 was that plaintiffs Nos. 1 and 2 expressed  their willingness to pay a consideration of Rs. 10,00,000 for  the suit building and the first defendant expressed her  accept- ance  of that offer through D .W. 2. The other  terms  could not have been settled between the parties in the third  week of  April, 1979 because by that time there was no  agreement between the parties with respect to the sale  consideration. Without  the price being settled, and especially when  there was a gap of Rs.2,00,000 427 in  the price accepted by the first defendant and the  price offered  by the first plaintiff, the parties would not  have discussed  the  other  terms of the agreement  such  as  the advance  money  to  be paid and the  responsibility  of  the vendor to obtain the permission from the Urban Land  Ceiling Authority.     It  was submitted by the learned counsel for the  appel- lants  that the High Court itself has arrived to  a  finding that D .W. 2 Sh. Arif Ali on 3.5.79 after having a talk with defendant No. 1 on phone had conveyed her acceptance to sell the  property for a sum of Rs. 10,00,000. It  was  submitted that  an agreement for sale of immovable property  could  be made  orally and so far as mode of payment of  consideration is concerned, can be settled subsequently. It was  submitted that in the facts and circumstances of the present case  all the fundamental and vital terms of the contract were settled and concluded on 3.5.79 itself and even if the other details like  mode  of  payment of consideration,  obtaining  of  no objection  certificate  from Land Ceiling  Authorities  etc. remained unsettled, the same could be determined in  accord- ance  with  Sec. 55 of the Transfer of  Property  Act.  Oral contract  is  permissible and so far as  other  terms  which remain unsettled, the same can be determined by operation of law. It was contended that the only vital terms for a  valid agreement of sale of an immovable property were the identity of  the property and the price. Both these vital terms  were settled and concluded on 3.5.79 and when the plaintiffs were

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always  ready and willing to perform their part of the  con- tract,  a decree for specific performance should  have  been passed  in their favour. It was further contended  that  the stand taken by the defendant No. 1 and tried to be supported by Sh. Arif Ali D.W. 2 that no meeting took place on  3.5.79 at all was held not believable by the High Court itself.  It was  further contended that the act of purchasing stamps  on 3.5.79  by defendant No. 1 and the draft  receipts  Exhibits A-1 and A-2 prepared by Sh. Arif Ali D.W. 2 himself  clearly lend  support  to the case of the  plaintiffs.  Reliance  in support  of  the above contention was  placed  on  Kollipara Sriramulu v. T. Aswathanarayana & Ors., [1968] 3 SCR 387 and Nathulal v. Phoolchand, [1970] 2 SCR 854.     On  the  other hand it was contended on  behalf  of  the respondents  that no vital or fundamental terms of the  con- tract  were discussed, agreed or settled on 3.5.79.  It  was contended  that  even if the case of the plaintiffs  is  be- lieved, all that happened on 3.5.79 was that plaintiffs  had agreed  to purchase the property for Rs. 10 lakhs  to  which the defendant N. 1 had conveyed her acceptance through  D.W. 2. Neither 428 any  earnest/advance money to be paid was settled, nor,  any time for the payment of such money or time for execution  of agreement  of sale or final sale deed and its  registration, was settled. It was argued that even if the time may not  be an  essence  of  a term of contract for  sale  of  immovable property,  it  is a vital term without  which  no  concluded contract  can be arrived at. Admittedly no meeting was  held on 3.5.79 in the presence of the defendant No. 1 and it  was agreed to have a meeting of the plaintiffs and defendant No. 1  on 6.5.79. It was also an admitted position that  neither any  consideration passed nor any documents were  signed  by the parties on 3.5.79. So far as 6.5.79 is concerned  admit- tedly  the negotiations failed between the parties  on  that day. It was further contended that if the terms had  already settled on 3.5.79 itself where was the necessity of  execut- ing  draft  receipts on 6.5.79 and in any case if it  was  a mere  formality  then the plaintiffs should have  brought  a typed  agreement on the stamps for formal signature  of  the parties.  It was also argued that the plaintiffs  failed  to examine  Ibrahim  Moosa who was an independent  and  a  very important  witness in the whole transaction and  an  adverse inference  should  be drawn against the plaintiffs  for  not examining Ibrahim Moosa. The defendant No. 1 had produced  a counter  affidavit  Exhibit C-1 dated 27.7.79  in  reply  to injunction  application filed by the plaintiffs and she  had taken a clear stand that no terms were settled or  concluded on 3.5.79. It was further argued that admittedly the  plain- tiffs had not paid any earnest/advance money to the  defend- ant  No.  1 towards the alleged transaction but  still  they malafidely  stated in the notice of 7.5.79 published in  the Newspaper  that  an  amount of Rs.50,000 had  been  paid  to defendant No. 1. The defendant No. 1 in these  circumstances had immediately got published a contradiction on 8.5.79  and this  clearly goes to show the malafide and ulterior  motive of the plaintiffs. It was also argued that any agreement  in the  third week of April, 1979 to the effect that  defendant No.  1  would bring the no objection  certificate  from  the Urban  Land Ceiling Authorities was found not proved by  the High Court and as such there is no question of applying  any principles contained in Sec. 55 of the Transfer of  Property Act. It was also contended that the findings recorded by the High  Court  are supported by evidence and this  Hon.  Court should not interfere against such finding in the exercise of

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its  jurisdiction under Article 136 of the  Constitution  of India. It was also argued that Sh. Arif Ali was not  holding general  power of attorney on behalf of defendant No. 1  and he  had  no  authority to settle or conclude  any  terms  in respect of a transaction of immovable property on behalf  of defendantlll  No. 1. No objection certificate was  necessary to  be obtained from Urban Land Ceiling Authorities and  the defendant No. 1 and her husband being old person 429 had  clearly taken the stand that they would not bring  such certificate  and no final and concluded contract took  place on any date.     We have given our careful consideration to the arguments advanced  by Learned Counsel for the parties and have  thor- oughly  perused the record. We agree with the contention  of the  Learned counsel for the appellants to the  extent  that there is no requirement of law that an agreement or contract of  sale  of immovable property should only be  in  writing. However, in a case where the plaintiffs come forward to seek a  decree  for specific performance of contract of  sale  of immovable property on the basis of an oral agreement  alone, heavy burden lies on the plaintiffs to prove that there  was consensus  ad-idem between the parties for a concluded  oral agreement for sale of immovable property. Whether there  was such a concluded oral contract or not would be a question of fact to be determined in the facts and circumstances of each individual case. It has to be established by the  plaintiffs that  vital  and  fundamental terms for  sale  of  immovable property  were  concluded between the parties orally  and  a written  agreement if any to be executed subsequently  would only  be a formal agreement incorporating such  terms  which had  already been settled and concluded in the  oral  agree- ment.     Now we shall examine the facts and circumstances of  the present  case in order to find whether the  plaintiffs  have been able to prove that there was a concluded oral agreement between  the parties on 3.5.79 in order to seek  decree  for specific  performance of contract in their favour.  Admitted facts  of  the  case are that the  transaction  in  question related to a sale of an immovable property for no less  than a  sum of Rs. 10,00,000 in May, 1979.3.5.79 is  the  crucial date  on  which the oral agreement is alleged to  have  been concluded.  Admittedly  on that  date  even  earnest/advance money  had not been settled. It was also not settled  as  to when  the earnest/advance amount and the balance  amount  of sale consideration would be paid. It was also not settled as to  when  the final sale deed would be executed  and  regis- tered.  No talk with regard to any terms of the oral  agree- ment took place in the presence of the vendor defendant  No. 1 on 3.5.79. It was also not decided whether actual  posses- sion or only symbolical possession of the premises in  ques- tion would be given by the vendor. No consideration actually passed  even on 6.5.79 and negotiations failed.  Apart  from the above admitted facts of the case we would consider as to what happened on 3.5.79. The plaintiffs have alleged in  the plaint that in the 3rd week of April, 1979 plaintiffs Nos. 1 and 2 along with Sh. Ibrahim Moosa and Sh. Arif Ali went  to the residence of the defendant who 430 was  insisting on the payment of Rs. 10,00,000 as  the  sale price. At the said meeting the husband of the defendant  was also  present. The plaintiffs Nos. 1 and 2  increased  their price  from Rs.7,00,000 to Rs.8,00,000. The first  defendant said  that  she would think over and inform  the  plaintiffs Nos. 1 and 2 through Sh. Arif Ali. On 3.5.79 the  plaintiffs

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1 and 2 along with Shri Ibrahim Moosa met Shri Arif Ali.  He stated  that  the defendant was agreeable to sell  the  plan schedule  property to plaintiffs only for Rs, 10,00,000  and not  a pie less. Thereupon the plaintiffs agreed to pay  Rs. 10,00,000 as the sale price. Shri Arif Ali after getting the confirmation  of acceptance of the said offer of the  plain- tiffs  No.  1 and 2 from the first defendant said  that  the plaintiffs Nos. 1 and 2 should meet the defendants on 6.5.79 and  that  she  would in the meanwhile  purchase  the  stamp papers for making the formal agreement for sale  incorporat- ing the oral agreement arrived at. Then there is an averment with  regard to the meeting of 6.5.79 between the first  and second  plaintiffs  along with Shri Ibrahim  Moosa  and  the first defendant and her husband in the presence of Sh.  Arif Ali. It has been alleged that in the said meeting of  6.5.79 the  amount of earnest money to be paid, time for  registra- tion of the sale deed etc. were decided. Now it is an admit- ted  case  of the plaintiffs  themselves  that  negotiations failed on 6.5.79 and the defendant No. 1 resiled to sign any of  the receipts nor accepted any earnest/advance money  nor any agreement was even typed on the stamp papers nor  signed by defendant No. 1.     In  the oral evidence P.W. 1 Shri Brij Mohan,  plaintiff No. 1 stated that in the meeting arranged in the 3rd week of April,  1979  Shri  Ibrahim and Shri Arif Ali  came  to  the plaintiff’s shop and then they all went to the residence  of defendant No. 1. The second plaintiff also accompanied them. The  husband of defendant No. 1 Shri Yunus was also  present at the meeting. He was introduced to them as the retired Law Secretary.  Defendant  No. 1 insisted for Rs.  10,00,000  as consideration  of the suit property and told the  plaintiffs that  she would obtain the permission from the  ceiling  au- thority. Shri Brij Mohan then stated that they raised  their offer  to  Rs.8,00,000 defendant No. 1 told  them  that  she would  think  over  for two or three days  and  inform  them through  Shri  Arif Ali, Thereafter Shri Brij  Mohan  states regarding  the bargain held on 3.5.79. According to  him  he himself, second plaintiff and Mr. Ibrahim Moosa went to Shri Arif  Ali on 3.5.79. Shri Arif Ali told them that  defendant No.  1  was not willing to sell the suit property  for  less than Rs. 10,00,000. And if they were willing to purchase for Rs.  10,00,000 then they were welcome to do so at any  time. Shri  Brij Mohan then said that they agreed to purchase  the suit  property for Rs. 10,00,000 and asked Shri Arif Ali  to get the confirmation from 431 defendant  No. 1. Shri Arif Ali spoke to defendant No. 1  on telephone and then informed that defendant No. 1 was willing to  sell the property to them for Rs. 10,00,000.  Shri  Arif Ali  then said that they would buy the stamps for  agreement and fixed 6.5.79 morning for a meeting with defendant No. 1. From a perusal of the above evidence it would be  abundantly clear  that  nothing was settled on 3.5.79 except  the  fact that the plaintiffs had conveyed their approval to  purchase the suit property for Rs. 10,00,000 and Shri Arif Ali  after speaking to defendant No. 1 was willing to sell the property for Rs. 10,00,000. Admittedly at the same time a meeting was fixed with defendant No. 1 on the morning of 6.5.79. Accord- ing  to  the case set up by defendant No. 1  she  had  never agreed to obtain the permission from the ceiling  Authority. It  would be important to note that no averment was made  in the  plaint  that defendant No. 1 had agreed to  obtain  the permission from the ceiling Authority in the meeting held in the  third  week of April, 1979. However,  Shri  Brij  Mohan plaintiff  has sought to introduce this fact for  the  first

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time in his statement in the Court that defendant No. 1  had told  them in the meeting held in the third week  of  April, 1979  that she would obtain the permission from the  ceiling Authority.  We are unable to accept the above  statement  of Shri  Brij Mohan that in the meeting held in the third  week of  April, 1979 itself the defendant No. 1 had  agreed  that she would obtain the permission from the ceiling  Authority. It is an admitted position that till the meeting held in the 3rd   week  of  April,  1979  the  plaintiffs  had   offered Rs.8,00,000  and the first defendant had told them that  she would  consider and communicate her views through Shri  Arif Ali  some  time later. We agree with the conclusion  of  the High Court in this regard that without first determining the sale  price,  it was quite unlikely that the  parties  would have  bargained as to who should obtain the clearance  under the  Urban  Land Ceiling Act. It was known. to  the  parties that  until the clearance under the Urban Land  Ceiling  Act and  the  Income  Tax clearance, the property  will  not  be registered.  The High Court was right in concluding that  it is  unbelievable that in the third week of April, 1979  when still  there  was a wide gap of Rs. 2,00,000  in  the  price payable for the suit building the parties would have  stipu- lated  about the condition as to who should obtain the  per- mission  under  the Urban Land Ceiling Act.  It  is  further pertinent to mention that even in Exhibits A-1 and A-2 which are drafts of agreement of sale there is no reference to the oral  agreement said to have taken place on 3.5.79. In  case all  the terms had already been concluded in the  oral  con- tract between the parties on 3.5.79 and only a formal agree- ment  was to be reduced in writing on 6.5.79, then  in  that case there ought to have been a mention in the draft  agree- ment exhibits A-1 and A-2 regarding the oral agreement of 432 3.5.79. According to the statement of Shri Brij Mohan plain- tiff  No. 1 ,himself, nothing was discussed  with  defendant ’No.  1  herself and for that reason a further  meeting  was fixed at the house of the first defendant in the morning  of 6.5.79.  Shri Arif Ali may have been an Income Tax  Advocate looking  after  the  income tax and wealth  tax  matters  of defendant  No. 1 but he was not a General Power of  Attorney holder  to negotiate or settle any terms with regard to  any transaction of immovable property belonging to defendant No. 1.  It is further important to note that even in the  agree- ment to sell exhibit B-4 dated 22.6.79 between defendent No. 1  and defendants Nos. 3 and 4, no responsibility  had  been taken  by the defendant No. 1 for obtaining  the   clearance from  the  Urban Land Ceiling Authority. The High  Court  in these  circumstances rightly believed the contention of  the defendant No. 1 that the agreement fell through because  the plaintiffs  insisted that defendant No. 1 should obtain  the permission  from  the  Urban Land  Ceiling  Authority  while defendant  No.  1 did not agree for the same. There  was  no clinching evidence to show that this stipulation was thought of  by the parties on any day prior to 6.5.79. Thus  in  the above circumstances when the parties were consciously  nego- tiating about the bringing of no objection certificate  from the Urban Land Ceiling Authority and the case put forward by defendant No. 1 in this regard has been believed there is no question  of applying the principle contained in Section  55 of  the  Transfer  of Property Act.  The  general  principle contained in Sec. 55 of the Transfer of Property Act regard- ing  rights  and liabilities of buyer and  seller  can  only apply  in the absence of a contract to the contrary and  not in  a  case  where the parties  consciously  negotiated  but failed  in respect of any term or condition, as a result  of

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which the agreement itself could not be settled or  conclud- ed. Once it is held, established in the present case that no agreement  was  finally concluded or settled on  6.5.79  and negotiations  failed and before this date it was never  set- tled  that  defendant  No. 1 would bring  the  no  objection certificate  from Urban Land Ceiling Authority, there is  no question of applying general principles contained in Sec. 55 of the Transfer of Property Act.     In  Kollipara  Sriramula v. T.  Aswathanarayana  &  Ors. (supra)  was a case where in 1953 respondent No. 1  filed  a suit  alleging that all the partners of the firm except  the appellant  had  entered into an oral agreement with  him  on July  6, 1952 to sell 137 shares in the site except  the  23 shares  belonging  to appellant No. 1, that  98  shares  had actually been sold to him, that 39 shares had not been  sold to  him  and had been instead sold to appellant No.  1.  Re- spondent  No.  1  in these  circumstances  claimed  specific performance of the agreement to sell the 433 aforesaid  39 shares by their owners and contended that  the sale  of those shares in favour of appellant No. 1  was  not binding upon him. The Trial Court decided against respondent No. 1 but the High Court decided in his favour. On the basis of above facts this Court held that the High Court was right in holding that there was an agreement to sell 137 shares in the  site to respondent No. 1. A mere reference to a  future formal contract does not prevent the existence of a  binding agreement  between  the parties unless the  reference  to  a future  contract is made in such terms as to show  that  the parties  did not intend to be bound until a formal  contract is  signed. The question depends upon the intention  of  the parties  and  the special circumstances of  each  particular case.  The  evidence did not show that the drawing up  of  a written  agreement  was a pre-requisite to the  coming  into effect  of  the  oral agreement, nor did the  absence  of  a specific  agreement  as to the mode of  payment  necessarily make the agreement ineffective, since the vital terms of the contract  like the price and area of the land and  the  time for completion of the sale were all fixed. The facts of  the above  case  clearly  show that it related to  sale  of  137 shares  and that in pursuance of the agreement partners  who owned 98 shares had already executed sale deeds in favour of the plaintiffs/respondents and the other partners owning  39 shares  did not do so. The High Court as well as this  Court believed  the evidence of the plaintiff/respondent for  con- veying the entire 137 shares by an oral agreement dated July 6,  1952. This Court also found that the plaintiff  respond- ents  had  built a valuable cinema theatre building  on  the disputed  site and yet very strong reasons to make  an  out- right purchase of the site otherwise he would be placed in a precarious  legal position- Negotiations for  purchase  were going  on  for  several years passed  and  considering  this background,  the case of the respondent with regard  to  the oral agreement appeared highly probable.     In the above background this Court on Page 394  observed as under: "It is, therefore, not possible to accept the contention  of the appellant that the oral agreement was ineffective in law because  there is no execution of any formal  written  docu- ment.  As regards the other point, it is true that there  is no specific agreement with regard to the mode of payment but this  does not necessarily make the  agreement  ineffective. The  mere  omission to settle the mode of payment  does  not affect  the completeness of the contract because  the  vital terms  of the contract like the price and area of  the  land

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and the time for completion of the sale were all fixed." 434     Thus  even in the above case the time for completion  of the  sale was considered as one of the vital terms’  of  the contract.  Further in the above case part of  the  agreement had  been performed i.e. partners having 98 shares  had  al- ready  executed sale deeds and this Court had  believed  the oral  agreement for sale of 137 shares. Thus the above  case is totally distinguishable and renders no assistance to  the appellants in the case before us.     Thus we find no force in these appeals and the same  are dismissed.  In  the facts and circumstances of the  case  we make no order as to costs. R.S.S.                                         Appeals  dis- missed. 435