Back
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
S.J. KATHAWALLA, J.
Rohit A. Kapadia & Another - Petitioners
Versus
Perviz J. Modi - Respondent
Suit No. 603 of 2005
Decided On : 09-06-2015
SUIT FOR SPECIFIC PERFORMANCE OF CONTRACT - SALE OF FLAT - EXCHANGE OF EMAILS - NO CONCLUDED CONTRACT - EXECUTION OF MOU INTENDED TO BE A CONDITION PRECEDENT - SUIT DISMISSED.
Fact of the Case:
Plaintiffs filed a suit for specific performance of a contract for the sale of a flat. The parties had exchanged emails in which they discussed the price, identity of the property, and the date of possession. A draft Memorandum of Understanding (MOU) was prepared by the Plaintiffs and forwarded to the Defendant, who in turn sought comments from her tax advisor. A meeting was held between the parties at the Plaintiffs' residence, where the terms of the MOU were discussed and finalized. However, the MOU was not signed by the parties.
Finding of the Court:
The Court held that there was no concluded contract between the parties. The intention of the parties was to be bound only when the MOU was actually signed between them. The purchaser was anxious that the same is signed even before the parties met in Mumbai for a more formal actual agreement. The vendor ensured that both the parties would be bound when the MOU was signed by the vendor, by satisfying himself that only the signed document (signed by the purchaser) would be sent to him for signature. The MOU having not been finally signed between the parties, there is no concluded contract.
Issues: 1. Whether the Plaintiffs prove that at the Meeting held on 1st February 2005, the draft MOU (Exhibit-O to the Plaint) was discussed and the term thereof finalized, agreed and accepted by the parties as set out in Para 5 of the Plaint? 2. If the Issue No. 1 is answered in the affirmative, whether the Plaintiffs prove that the contract entered into between the Plaintiffs and the Defendant is capable of specific performance? 3. Whether the Plaintiffs prove that they were and are ready and willing to perform their part of the contract for the purchase of the suit property? 4. What reliefs?
Ratio Decidendi: The Court relied on the following principles: * Whether the execution of a formal contract is a condition precedent to the existence of a binding bargain or whether it is merely a term of a binding bargain already arrived at, is essentially a question of fact to be determined in the facts and circumstances of each individual case. * What is important is to gather the intention of the parties from the evidence on record. * If the parties intend that the final mutual assent of the parties would conclude the contract so that a formal document is merely ancillary to the bargain, reference to such formal contract notwithstanding, the contract is concluded upon such final mutual assent. * If on the other hand, the parties intend that the contract would come into being only when they sign a formal contract and not at any time before, it is immaterial that the terms of the contract are finalized. There is no contract unless and until the document is signed.
Final Decision: The Court dismissed the suit.
1. The above Suit is filed by the Plaintiffs against the Defendant for the following reliefs:
“(a) this Hon'ble Court be pleased to declare that the concluded contract in terms of the unsigned MOU being Exhibit 'O' to the Plaint, arrived at between the Plaintiffs and the Defendant is valid and subsisting and binding on the Defendant;
(b) the Defendant be ordered and decreed to specifically perform the said concluded contract contained in terms of the unsigned MOU being Exhibit 'O' to the Plaint and for the said purpose to do all acts, deeds and things and execute all necessary documents, papers, applications etc. ;
(c) this Hon'ble Court be pleased to grant a permanent injunction restraining the Defendant by herself and or through her servants and or agents from in any manner selling, alienating, encumbering, transferring, disposing off, parting with possession and/or creating any third party rights in respect of the suit property more particularly described in Exhibit A to the Plaint in favour of any person or persons other than the Plaintiffs;
(c1) without prejudice to the aforesaid, in the event of this Hon'ble Court holding that the Plaintiffs are entitled to specific performance, but in exercise of its discretion, declining to grant the same, the Defendant be ordered and decreed to pay to the Plaintiffs such compensation in lieu of specific performance, as may be determined by this Hon'ble Court.”
2. The facts as narrated by the Plaintiffs, are briefly set out hereunder:
2.1 In or about August 2004, the Plaintiffs had a meeting at Hotel President in Mumbai, where they met Mr. Jayesh Shah, the Plaintiffs' Broker, Mrs. Villoo Kapadia, the Defendant's sister and Mr. Salim Merchant the Defendant's Broker. At the said Meeting the Plaintiffs expressed their desire to purchase the suit property viz. Flat No. C-32, on the third floor, Darshan Apartments, Malabar Hill Co-operative Housing Society, Mount Pleasant Road, Mumbai (“the suit flat”). Mrs. Villoo Kapadia furnished the email address of the Defendant and her husband, to the Plaintiffs.
2.2 After this meeting, the Plaintiffs started communicating via email with the Defendant through her husband Mr. Jamshed Modi, for purchase of the the suit flat.
2.3 Negotiations with respect to price continued between the parties by e-mail, wherein the Defendant demanded a price of Rs. 3.42 crores whereas the Plaintiffs offered a price of Rs. 3.25 crores. The parties subsequently arrived at a mutually agreed price of Rs. 3.33 crores. The Plaintiff No. 1 by his email dated 19th December 2004 (Exh. P1) offered to buy the suit flat for a price of Rs. 3.33 crores. The said email was acknowledged by the Defendant by an email dated 20th December, 2004 (Exh. P2), wherein it was stated by the Defendant through her husband that “I am, indeed, happy that we have reached agreement on the price.” By the said e-mail the Defendant also agreed to give possession of the suit flat to the Plaintiffs by the end of February 2005 as requested by the Plaintiffs in the email dated 19th December 2004 referred to earlier. Thus an agreement in writing, by exchange of emails, was arrived at qua the price, identity of the property and the date of possession.
2.4 There were further emails exchanged between the parties with respect to the modalities of completing the said transaction and the Plaintiffs emailed a draft Memorandum of Understanding (“MOU”) to the Defendant in terms of the above mentioned concluded agreement of sale between the Plaintiffs and the Defendant.
2.5 On 1st February, 2005, there was a meeting at the residence of the Plaintiffs. This was attended by the Defendant, her husband Mr. Jamshed Modi, Mr. Rakesh Sirsalewala (Tax Advisor of the Defendant and her husband and DW2 herein) and the Plaintiffs, members of their family and their Solicitor Mr. Shriraj Dhruv. At this meeting, the Defendant and her husband had brought a copy of the draft MOU (earlier emailed by the Plaintiffs) and which h
AI
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
