Page 1 REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 1148 OF 2010

Nandkishore Lalbhai Mehta .... Appellant(s)

Versus

New Era Fabrics Pvt. Ltd. & Ors. .... Respondent(s)

WITH

CIVIL APPEAL NOs. 1131-1132 OF 2010

J U D G M E N T

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. 1414 of 1979 whereby the High Court allowed

the appeal filed by respondents herein while setting aside the

decree dated 12.12.2005 passed by the learned single Judge of

1

Page 2 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.

Brief facts:

2) (a) In October, 1977, Respondent Nos. 1 and 2 agreed to

sell their respective right, title and interest in the property

admeasuring approximately 13011 sq. yards or thereabouts of

Mahim T.P.S. III, 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.

(b)The relevant terms of the agreement are as under:-

1. Area of the Property : 13011 Square Yards.

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 whatsoever including any

legislation or otherwise;

5. Payment : Rs. 11,50,000/- (Rupees Eleven lacs fifty

thousand only) to be paid as earnest to

your Solicitor Mr. D.H. 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.

2

Page 3 4,00,000/- (Rupees four lacs only) on or

before 24

th

October 1997 time being of the

essence. Provide further that the sums of

Rs.7,50,000/- (Rupees Seven lacs fifty

thousand 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 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

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 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 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/- (Rupees four lacs only) on

or before 24

th

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

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 confirmation by you of the

terms contained herein, if the terms are

not confirmed you will return the said

cheque to me;

(b) : Half of the balance of the consideration

money mentioned in the paragraph 2

above will be paid by me on receipt of the

permissions under Sections 22 and 27 of

the Urban Land (Ceiling & Regulation) Act

3

Page 4 being obtained as also the permission for

conversion into residential user being

obtained as well as your settling with 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

quarterly installments to be paid within

one year from the date of possession of the

plot being handed over to me as herein

provided;

6. Sale : The sale shall be subject to permission

being obtained under Sections 22 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 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 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 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 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, 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 provided in my favour will be

affected or jeopardize in any manner

whatsoever…... (emphasis supplied)

4

Page 5 : 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 sanction of plans etc. for new

construction on the said property and any

other permission from Town Planning or

any other Department;

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

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

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

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.

(e)In order to materialize the agreement, further steps were

taken. Respondent No. 1, vide letter dated 08.11.1977,

5

Page 6 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 Planning Scheme to have the said property converted

into residential zone from industrial zone.

(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.

(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

made to the Arbitrator, Town Planning Scheme for 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.

(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

6

Page 7 single Judge of the High Court, vide order dated 12.12.2005,

decreed the suit in favour of the appellant herein.

(j)Being aggrieved by the order dated 12.12.2005,

Respondent Nos. 1 and 2 filed Appeal No. 245 of 2006 in Suit

No. 1414 of 1979 before the High Court. The Division Bench

of the High Court, by order dated 06.05.2008, allowed the

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 has preferred this

appeal by way of special leave before this Court.

Civil Appeal Nos. 1131-1132 of 2010

(l) The aforesaid appeals have been filed against the 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 judgment.

3)Heard Mr. P.H. Parikh, learned senior counsel assisted

by Mr. P.V. Yogeswaran, learned counsel for the appellant and

7

Page 8 Mr. Vinod A. Bobde, learned senior counsel and Mr. Shivaji M.

Jadhav, learned counsel for the respondents.

Rival Submissions:

4)Learned senior counsel for the appellant submitted that

the Agreement for Sale dated 19.10.1977 executed by 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

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

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 did not take sufficient steps to get the consent of

8

Page 9 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 paid a sum of Rs. 7.5 lakhs received from the appellant

to the Zaveris to perfect their title and after getting the same

done, 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 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 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

9

Page 10 at all justified in holding 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. Katial and

Others (1964) 2 SCR 495 wherein it was held that where all

the terms are crystallized between the parties, the 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

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, 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

10

Page 11 that the refusal on the part of the Mill Mazdoor Sabha/labour

to permit 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

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

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

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

11

Page 12 fulfilled, as is 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 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 suit and, therefore, the respondents cannot

take advantage of a stipulation which 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 held that the appellant did not really

mean to purchase the suit property and that the agreement of

purchase of the suit property was a financial transaction.

This plea was not even raised by the respondents herein in

their written statement. As far as permission under the ULC

Act is concerned, learned senior counsel relied upon a decision

12

Page 13 of this Court in The Maharao Sahib Shri Bhim Singhji vs.

Union of India and Ors. (1981) 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 constraints 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,

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

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

13

Page 14 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 SCC 770 wherein it was held as under:-

“4 …..If a fact, arising after the lis has come to court and 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…..”

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 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 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

14

Page 15 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 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, 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.

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

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

15

Page 16 absence of pleadings in the plaint whereupon learned single

Judge while noting the aforesaid objection held that this issue

would be decided while hearing the matter finally. Instead of

checking 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

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.

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 Mandal & Anr. (2008) 17 SCC 491 wherein

it was held as under:-

16

Page 17 “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 held

that the plaintiffs had failed to make out title to the suit

property. 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 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 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 “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

plaintiffs to one more round of litigation, has rendered a

judgment which violates several fundamental rules of civil

procedure. The rules breached are:

(i) No amount of evidence can be looked into, upon a 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.

(ii) A court cannot make out a case not pleaded. The 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.

(iii) 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

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 delay or

further litigation should not be a ground to flout the settled

fundamental rules of civil procedure. Be that as it may. We

will briefly set out the reasons for the aforesaid conclusions.

17

Page 18 12. The object and purpose of pleadings and issues is to

ensure that the litigants come to trial with all issues clearly

defined and to prevent cases being expanded or grounds

being shifted during trial. Its object is also to 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 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.

13. The object of issues is to identify from the pleadings 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, 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 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 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 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 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 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 Nedunuri

Kameswaramma v. Sampati Subba Rao:

18

Page 19 “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 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 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.”

But the said observations were made in the context of

absence of an issue, and not absence of pleadings.

15. The relevant principle relating to circumstances in which

the deficiency in, or absence of, pleadings could be ignored,

was stated by a Constitution Bench of this Court in

Bhagwati Prasad v. 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 the mere

fact that the plea was not expressly taken in 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 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 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 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 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.”

(emphasis supplied)

19

Page 20 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,

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 it. 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 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 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 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

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.”

(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

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 exceptional cases where the

court is fully satisfied that 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

20

Page 21 to the 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 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 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 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 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 support of this contention,

learned senior counsel placed reliance on the decision of this

Court in Shalimar Chemical Works Limited vs. Surendra

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 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 to A-5, “subject to objection of proof and

admissibility”. At the conclusion of the trial, the court

21

Page 22 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 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 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 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.

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 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 “prima facie” evidence of the

validity thereof.’

Therefore, the plaintiff has to file the originals of the

registration (sic certificates) or the certified copies 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 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 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 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 judgment, the court would keep those

22

Page 23 documents out of consideration, thus, causing great

prejudice to the appellant.

10. Mr Rao submitted that the provision of Order 13 Rule 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 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 or not admitted in evidence. In support

of the submission he relied upon a decision of this Court in

R.V.E. Venkatachala Gounder v. Arulmigu Viswesaraswami &

V.P. Temple where it was observed as follows:

“20. … The objections as to admissibility of documents in

evidence may be classified into two classes: ( i) an

objection that the document which is sought to be proved

is itself inadmissible in evidence; and (ii) 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 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 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 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 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 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

23

Page 24 question of admissibility then and 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 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 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, acquiescence would be no bar to raising the

objection in a superior court.”

(emphasis in original)

15. On a careful consideration of the whole matter, we feel

that serious mistakes were committed in the case at all

stages. The trial court should not have “marked” as exhibits

the xerox copies of the certificates of registration of trade

mark in face of the objection raised by the defendants. It

should have declined to take them on record as evidence and

left the plaintiff to support its case by whatever means it

proposed rather than leaving the issue of admissibility of

those copies open and hanging, by marking them as exhibits

subject to objection of proof and admissibility. The appellant,

therefore, had a 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 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 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 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-defendants to lead any rebuttal

evidence or make a limited remand as provided under Order

41 Rule 28.

24

Page 25 19. In the result, the appeal is allowed, as indicated above

but with no order as to costs”.

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 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 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 bring it within one or other

of the cases provided for in the section. The secondary

evidence must be 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 required

to be proved in accordance with law. The court has an

obligation to decide the question of admissibility of a

document in secondary evidence before making endorsement

thereon. (Vide Roman Catholic Mission v. State of Madras,

State of Rajasthan v. Khemraj, LIC v. Ram Pal Singh Bisen

and M. Chandra v. M. 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 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 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-examination and he had admitted his signature.

Thus, it could be inferred that it is the copy of the power of

25

Page 26 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 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

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

contents thereof. More so, the court should have borne in

mind that admissibility of a document or contents thereof

may not necessarily lead to drawing any inference unless the

contents thereof have some probative value.

15. In State of Bihar v. Radha Krishna Singh this Court

considered the issue in respect of admissibility of 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 and yet may

not carry any conviction and weight or its probative 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

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 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 of the said 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 born

at the age of 8 years; the fourth child was born at the age of

10 years; and she gave birth to the fifth child 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 contents thereof have

any probative value”.

26

Page 27 12)Further, in R.V.E. Venkatachala Gounder vs.

Arulmigu Viswesaraswami & V.P. Temple and Another

(2003) 8 SCC 752 it was held as under:-

“19. Order 13 Rule 4 CPC provides for every document

admitted in 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 admissibility of the document

should be 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 as admitted or not

admitted in evidence. In the latter case, the document may

be returned by the court to the person from whose custody it

was produced.

20. The learned counsel for the defendant-respondent has

relied on Roman Catholic Mission v. State of Madras 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 have any dispute with the

proposition of law so laid down in the abovesaid case.

However, the present one is a case 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 classes: (i) an objection that the document which is

sought to be proved is itself inadmissible in evidence; and (ii)

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 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 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 any

stage subsequent to the marking of the document as an

27

Page 28 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

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 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 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 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 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, 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

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

alone, the appellant is not entitled to any relief as he has failed

28

Page 29 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 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 was being conducted would

have to be shut down. In such a situation, permission of the

Labour Commissioner was required under Section 25-O of the

Industrial Disputes Act, 1947 before closing down the unit.

Further, Regulation 56(3)(c)(1) of the Development Control

Regulations, 1991 also 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.

29

Page 30 14)In 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 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 Tax Authorities. It was

further provided that if the Income Tax Authorities 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 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 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

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 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

himself prosecuted it and rendered it 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 of full interest, being for the benefit of both the

parties, the contract had been rendered unenforceable with

the dismissal of the sanction suit.

30

Page 31 101. 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

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, negatived the claim of

specific performance. It was held in that case that where 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.

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

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

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

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 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 of

fact.” (emphasis supplied)

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 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 found that the failure to fulfil the

31

Page 32 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

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 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 prosecute it. The sanction

suit was rendered infructuous by the vendee’s own conduct

of filing an affidavit 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 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

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 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 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 would be refunded to the

purchaser”.

15)Further, in Irwin v Wilson [2011] EWHC 326 (Ch), it was

held thus:-

32

Page 33 “22. Beguilingly straightforward as the matter appeared 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 for

the 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 - h;

“Without seeking to define the precise limits within

which a contracting party seeking specific performance

may waive a condition on the ground that 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

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 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.”

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 [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 severable. In such a case the other party is

denied the right to treat the condition as unsatisfied

and is obliged 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

consideration of the contract as a whole in the light of

the surrounding circumstances…”

33

Page 34 That seems to me, with respect, to be an entirely accurate

summary of the relevant approach..

33. What then 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 secured

performance of the documents service term by 1 February

2010? 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.

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 not to the other party (or parties) to the 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, 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 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 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 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

condition up to a certain date and thereafter for

allowing 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

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

34

Page 35 fulfilled or waived by the nominated date, each is free

to end the contract by appropriate notice to the other.”

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

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

are at this point concerned with a situation in which it

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

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

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 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 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 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 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 obtain a

particular planning consent. Obtaining that consent was a

35

Page 36 condition precedent to the contract. Brightman J put the

matter thus (at 426b):

“The town planning consent is expressed in cl.7 of the

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

clause which is expressed only to confer rights on

Heron. It is expressed to confer a right also on the

vendors.”

It is perhaps the presence of the last sentence in that

passage which needs some elaboration. The right there

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 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 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 condition precedent to the very existence of the contract

and, what is more, it contained a provision expressed to be

for the 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

has not been provided by 1 February. The more natural

contruction of the clause is to read it as having that effect

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”.

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 stood

36

Page 37 frustrated being contingent upon the said condition and,

therefore, 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 and Others (2006) 7 SCC 470 wherein it was held

as under:-

“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. 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.

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

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 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, must be rendered in the negative.

25. It was, therefore, not a case where a notice under

Section 26 of the 1976 Act could have served the purpose

and in the event, the competent authority did 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.

37

Page 38 26. Strong reliance has been placed by Mr Nageswara

Rao on a decision of this Court in HPA International v.

Bhagwandas Fateh Chand Daswani

1

. Our attention in

particular has been drawn to the following observations:

“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 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 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

obtaining therein.

28. In this case, we are concerned with a situation where

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

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.

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 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

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

38

Page 39 sold portions of their house properties and lands

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 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 1976 Act. The Muslim law of inheritance and

succession may not have any role 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

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

on the compound wall inside the western compound wall

as 3-42-67 and I also found one small brick mound near

the 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

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 — 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 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 1976 Act. The

land sold to the Cooperative Society which might have

included the vacant land and which was the subject-matter

of the agreement but was not the subject-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

court, observed:

39

Page 40 “Opinion and observation.—Taking all the aforesaid facts

and circumstances I conclude that Plot No. 2 in Survey

No. 71 as mentioned in the agreement of sale Ext. A-2 in

the trial court and House Nos. 3-9-51/A, B, C and D

situated in Survey No. 71/part, West Marredpalli on

which I conducted the local inspection are the same.”

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

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 suo motu.

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 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, the

courts are not precluded from taking into consideration 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 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 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. Katial and Nirmala

Anand 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, 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”.

40

Page 41 17)Learned single Judge decreed the suit for specific

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

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 be rejected on 06.03.2006. Thus, if at all,

without admitting that the appellant had succeeded making

out of case for a decree of specific performance, the appellant

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,

within two month. The question of waiver of a condition would

not at all arise so as to revive the contractual obligations into

41

Page 42 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 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 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 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 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

42

Page 43 amount to saying that even though 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

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 as

under:-

“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 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 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,

the contract stood frustrated, and therefore, the question of

43

Page 44 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 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.

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 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 dated 10.01.1978, produced by the appellant is

also an interpolated document as Mr. Vasant Gupte (PW-2) in

his statement had said that this letter must have been sent by

44

Page 45 the 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-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

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.

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

45

Page 46 appellant and the Division Bench has rightly set aside the

order of the 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 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 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 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.

46

Page 47 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

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. 1414 of 1979, a specific case was set up by 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

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. 1414 of 1979 is reproduced below:-

“… .The Plaintiff says that the Defendants are however

wrongfully seeking to back out of the said agreement for 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

47

Page 48 sale of the mill premises of Defendant No. 1 to the plaintiff.

The plaintiff says that the alleged 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

Defendants and the same is collusive and the same is made

a false pretext to enable the Defendants to back out of the

said agreement for sale dishonestly and wrongfully….”

(emphasis supplied)

26)The Mill Mazdoor Sabha, which is a union of 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 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:-

“Dear Sir,

This has reference to the meeting held in your office on 29

th

November, 1997 when our representatives and your

Directors were present.

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 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.

48

Page 49 In the circumstance there is no question of your setting 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,

Sd/-

Asstt. General Secretary

Copy to

Commissioner of Labour”

“Dear Sir,

At your instance the undersigned met your proposed

purchased on 9

th

January 1978.

We want to make it clear that our letter of 5

th

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.

Yours truly

for MILL MAZDOOR SABHA

Sd/-

Asst. General Secretary

The aforesaid letters were marked as Exhibit D-10 and Exhibit

P-11 respectively.

The letters which the appellant had filed subsequently being

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

29

th

November, 1977 when our representatives and your

directors were present.

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

49

Page 50 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 workers’ dues as proposed by you. Please

also note that we are also moving the Labour Commissioner

in this regard. (emphasis supplied)

Yours faithfully,

Assistant General Secretary

Copy to

Commissioner of Labour

P.S.

Your proposal to pay 60% compensation only to the workers

is not acceptable hence we object to the sale.

Signed

Assistant Secretary General”

“Dear Sir,

At your instance the undersigned met your proposed

purchaser on 9

th

January 1978.

We want to make it clear that our letter of 5

th

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.

Yours truly

for MILL MAZDOOR SABHA

Sd/-

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 priority basis

and 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)

Sd/-

Asstt. General Secretary”

50

Page 51 27)It may be mentioned that 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 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 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

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. 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.

51

Page 52 Agrawal has not been produced as a witness so as to establish

that these two 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 bears his signature. He had not

stated that it was written in his presence. Mere identifying the

signature of Mr. Pathak does not prove the contents of the said

letter which is 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 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 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 was not

acceptable.

52

Page 53 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 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 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.

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 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

53

Page 54 get them to agree to the sale herein contemplated you 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 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 agreement depending upon

obtaining permission under Section 22 and Section 27 of the

ULC Act, 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 are not fulfilled, 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. As in the present case we find

that the Mill Mazdoor Sabha has not given its consent to the

proposed sale, agreement for sale could not have been

54

Page 55 performed and had ceased. The 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

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.

...…………….………………………J.

(RANJAN GOGOI)

.…....…………………………………J.

(R.K. AGRAWAL)

NEW DELHI;

JULY 8, 2015.

55