Back
2016 Supreme(SC) 428
SUPREME COURT OF INDIA
KURIAN JOSEPH, ROHINTON FALI NARIMAN, JJ.
Mukul Sharma – Appellant
Versus
Orion India (P.) Ltd. Through Its Managing Director – Respondents
Civil Appeal No. 4997 of 2016 (Arising out of SLP(C) No. 32544 of 2015)
Decided On : 10-05-2016
IMPORTANT POINTS
When one party raises some dispute on definition in the agreement and puts his view, and the other party accepts the same; the first party cannot be alleged to be resiling from the concluded contract.
In case of doubt as to true meaning of an instrument use of extrinsic evidence for its determination is permissible.
Headnote:(a) Indian Contract Act, 1872 – Section 5 – Instrument of agreement drawn on basis of certain understanding between the parties as to definition of built up area – Plaintiff raising dispute as to concept of built up area – Defendant accepting the same – Cannot be said that plaintiff resiled from agreement. (Para 9)
(b) Interpretation of Instruments – Determination of true meaning – Use of extrinsic evidence – Permissible in case of doubt – Conduct of the parties shortly after date of instrument – Relevant. (Para 10)
AIR 1950 SC 15; AIR 1975 SC 32 – Relied upon
Facts of the case:
As per paragraph (1) of the agreement between the appellant and the respondent, half of the built up area on the ground floor of the proposed North Block of the complex as per the drawing No.GBA/891/03A dated 14.12.1990 and half of the built up area on the mezzanine floor of the same building and complete built up area on the first floor in the same building, were liable to be handed over to the appellant. On a dispute as to what is the built up area, the appellant filed the civil suit. The suit was decreed.
The High Court has taken the view that the built up area includes the common area as understood by the parties.
Finding of the Court:
High Court failed to take subsequent events into consideration.
Result: Appeal allowed.
JUDGMENT :
Leave granted.
2. The appellant filed Title Suit No.195 of 1998 before the Civil Judge (Senior Division) No.1 at Guwahati praying for specific performance of the instrument dated 25.8.1992 between the appellant and the respondent.
3. The dispute is only on a narrow compass. As per paragraph (1) of the aforesaid agreement, half of the built up area on the ground floor of the proposed North Block of the complex as per the drawing No.GBA/891/03A dated 14.12.1990 and half of the built up area on the mezzanine floor of the same building and complete built up area on the first floor in the same building, were liable to be handed over to the appellant. On a dispute as to what is the built up area, the appellant filed the civil suit. The suit was decreed. Aggrieved by the same, the respondent-defendant filed first appeal before the High Court. The following points for determination were found to arise in the first appeal :
(i) Whether the parties had entered into agreement knowing that 'built up area' as mentioned in Ext.1 agreement includes the common area?
(ii) Whether the plaintiff is entitled to specific performance as claimed?
(iii) Whether plaintiff is entitled to a money decree as prayed for?
4. As per the impugned order, the High Court has taken the view that the built up area includes the common area as understood by the parties. Reliance is placed on Ex.-'H' letter dated 15.9.1997 written by the appellant-plaintiff to the respondent-defendant. As per the said letter, indisputably, the built up area has been understood to include the common area.
5. However, the High Court has failed to appreciate Ex.3 letter dated 9.3.1998 and Ex.4 letter dated 16.3.1998 in the correct perspective. The relevant portion of annexure Ex.3 letter dated 9.3.1998 reads as follows :
“(1) That the “built-up area” as in clause 1(i), (ii) & (iii) of the Agreement between yourself and the Company (Deed No. 5581 dated 25/8/98) should be defined as “the area within the four walls excluding the common area as lift well, lobby, corridor, etc.
(2) That our method of calculation and the area so calculated is not acceptable to you. Since we wish to resolve this long outstanding issue as early as possible, we agree to your definition of “built-up area” and shall recalculate the area to be allotted to you and shall inform you shortly.”
6. This was followed by Ex.4 letter dated 16.3.1998 wherein it is stated in the very opening paragraph of the said letter as follows :
“Further to our letter No.ORION/44-1/98/028 dt.9/3/98, we furnish below the built-up areas calculated for drg. Nos.GBA/891/03A, GBA/891/04A and GBA/891/05A using our accepted definition of “built-up area”. Please note that all common area such as lift well, corridor, lobby, duct, etc., have been excluded as suggested by you.” (All emphasis supplied)
7. It is unfortunate that the High Court has gone by the earlier understanding of the plaintiff on the concept of built-up area and wholly ignoring the understanding mutually entered into between the plaintiff and the defendant on a later date. According to the High Court, since the plaintiff had once accepted the position that built-up area included common areas, he is always bound by the same. If plaintiff had once accepted the position in regard to the concept of 'built-up area' he cannot resile subsequently in view of bar under section 5 of the Indian Contract Act, 1872, once offer and acceptance is complete, it is held.
8. The relevant consideration by the High Court at para 26 of the impugned judgment reads as follows :
“If Ext.3 and Ext.4 are studied and compared it would appear that prima facie, defendant undertook to accept the definition of 'built up area' given by the plaintiff and thereafter deferred the matter for recalculation of the entitlement on the light of such definition. But in the subsequent communication, the defendant made recalculation as to entitlement of the plaintiff by applying his own definition of the 'built up area' and thus
