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       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

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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.

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4,00,000/-  (Rupees four lacs only)  on or before 24th 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  24th October  1977  you  will  be entitled  to  forfeit  the  amount  of Rs. 7,50,000/- paid by me till such default and  the  Agreement  herein  will  stand 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

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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)

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: 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,

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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:-

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“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.

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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:  

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“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)

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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

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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

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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

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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

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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.

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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

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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”.

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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

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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

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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.  

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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.

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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

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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:-

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“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…”  

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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

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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

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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

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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.

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26. Strong  reliance  has  been  placed  by  Mr  Nageswara Rao  on  a  decision  of  this  Court  in  HPA  International v. Bhagwandas  Fateh  Chand  Daswani1.  Our  attention  in particular has been drawn to the following observations:  

“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

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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:

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“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”.

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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

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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

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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

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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

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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

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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.

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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

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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.  

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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              9th January 1978.  

We want  to  make it  clear  that  our  letter  of  5th 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 29th 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

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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  9th January 1978.  

We want to make it  clear that our letter of  5th 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”

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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.

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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.

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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

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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

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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.  

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