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TMI Blog1949 (5) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... , the plaintiff's gave up their claim against him before the hearing of the suit was concluded in the trial Court; and he has been made only a pro forma respondent in this appeal. The controversy in this Court, therefore, lies entirely between the two plaintiffs on the one hand and defendants Nos. 3 and 4 on the other, and to appreciate the contentions that had been raised on behalf of the appellants, a short resume of the material facts would be necessary. 2. On February 29, 1936, a partnership firm, known as Marwari Brothers, was brought into existence on the basis of a partnership agreement, executed on thai-date by and between a number of parties. The parties were (1) Lakshmi Devi Sugar Mills, (of which Kedar Nath Khaitan, plaintiff No. 2 was the Managing Agent), (2) Kedar Nath Khaitan, (3) Bholi Ram, (4) Gobordhan Das and his brother Badri Prosad, (5) Jainarain Ham Lundia and (6) Biseswar Nath. Under the terms of the partnership deed, the first, second, third and fifth parties had each a three annas' share in the business, while the fourth and the sixth parties were each of them given a two annas' share. The main object of the partnership was to promote a privat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out their interest to the Pedronas, but no final agreement was arrived at. It is clear from the evidence, and not disputed before us, that towards the end of December, 1940, Kedar Nath Khaitan (plaintiff No. 2) instructed Bhuramull, his head Gomostha, to go to Calcutta and negotiate, on behalf of the holders of 450 shares in the sugar mill, the purchase of the shares and interests of the Bettia group in the mill as well as in the partnership business. It is not disputed that on December 28, 1940, Gobordhan Das, Jainarain Ram and Madan Lai (defendants Nos. 1, Sand 4) wrote a letter to Mr. Probhu Dayal Himatsingka, a well known Solicitor of Calcutta, authorising the latter to sell to the Khaitans or anybody else the 350 shares held by them at a price not less than Us. 700 per share, the purchaser to get by his purchase also the interest of the vendors in the partnership firm of Marwari Brothers. Badri Prosad, the brother of Gobordhan Das, admittedly did not sign this letter. Bhuramull met Himatsingka in Calcutta on December 30, 1940, and the case of the plaintiffs, as made in the original plaint, was that on January 1, 1941, there was an agreement come to between Bhuramull, repres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erted that the shares of the Ganga Devi Sugar Mills could not be sold except in the manner laid down in the articles of association of the company. Gobordhan Das, defendant No. 1, took the further plea that he was not the owner of 100 shares which were purchased by him out of the funds of a joint Mitakshara family. The family had separated since then and as a result of the partition, only 19 shares were allotted to him. Badri Prosad adopted the same defence and alleged further that so far as he was concerned, there was no authority given to Himatsingka or anybody else to enter into a contract on his behalf, and as he had separated from his brother Gobordhan Das long before, there was no authority left in the latter to bind him by any agreement. All these facts, it was said, were fully known to the plaintiffs. 7. The suit was heard by Sen J. On the second day of hearing, counsel for the plaintiffs stated to the Court that he would not proceed against Badri Prosad, defendant No. 2. Upon this, the Court made an order directing that the suit would stand dismissed as against defendant No. 2. Four witnesses were examined on behalf of the plaintiffs and their evidence was closed on Feb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was allowed and the decree of Sen J., so far as it affected defendant No. 1, was set aside. The appeal of defendants Nos. 3 and 4 was heard fully on its merits and the learned Judges, by their judgment dated June 18, 1946, dismissed the appeal and affirmed the judgment of Sen J., with this modification that agreeably to the decision in the other appeal, the decree for specific performance was to be confined to 250 shares belonging to defendants Nos. 3 and 4 and their five annas' share in the firm of Marwari Brothers and these shares and interests were ordered to be transferred to the plaintiffs on payment of the full consideration money stipulated in the original agreement. Against this decision, defendants Nos. 3 and 4 applied for and obtained leave to appeal to the Privy Council, but as before the records could be transmitted to England the jurisdiction of this Court was enlarged by Act I of 1948, the appeal has come up for hearing before us. It may be noted that Madanlal, defendant No. 4, died after this appeal was admitted and his mother and heiress Dhupeswari Debi has been substituted in his place. 8. Sir Tek Chand, who appeared in support of the appeal, has contended b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erty to be sold was specified and the price to be paid as well as the names of the vendor and purchaser were mentioned. It transpired from the evidence that in the previous negotiations there was a verbal suggestion by one of the parties which was acquiesced in by the other that the purchase money should be paid by instalments. What these instalments would be were left to be settled later on. There was subsequent correspondence between the parties in the matter of fixing the instalments, but before any final decision could be reached, one of the parties died. It was held that, in these circumstances, there was no completed agreement between the parties which could be specifically enforced. Lord Cairns in the course of his judgment observed as follows (p. 320) : We have here the Appellant himself telling us that the two original letters, which, if you took them alone without any knowledge supplied to you of the other facts of the ease, night lead you to think that they represented and amounted to a complete and concluded agreement, yet really were not a complete and concluded agreement, that there were to be other terms which at that time had not been agreed upon, that efforts we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansfer deeds. Regarding the claims against Mirless Watson Co., it appears from a letter of Himatsingka, dated January 8, 1941, that although there was no express reference to this matter in any previous negotiation, it was implied in the agreement that the purchasers would get all the benefits of the vendors appertaining to the shares and interests transferred by them and consequently the benefits of this claim also would go to the purchasers. This point, therefore, is of no importance and it cannot be said that the parties were not ad idem on this point. As regards stamp duty, it is not disputed that there was no previous talk between the parties on this point, though ordinarily and as a matter of law in case of transfer of shares it is the vendor by whom the stamp duty is payable. It must be held on the evidence adduced in this case that on the question of stamp duty there was no agreement between the parties on January 1, 1941, and they did not intend to make it a term of the bargain at all. Khaitan Co. were apparently labouring under a mistake when they stated in the letter mentioned above that it was already arranged that the stamp duty was payable by the clients of M/s. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law the seller would be liable to pay the stamp duty on transfer deeds, and as the matter was not discussed with the purchasers at any previous stage, it would be difficult to realise the cost from the latter. The subsequent refusal of defendant No. 1 to comply with the agreement was not on the ground that the agreement had terminated by reason of any new term being sought to be introduced by the purchaser, and there is clear evidence to show that in spite of the letter of Messrs. Khaitan Co. defendants Nos. 3 and 4 strongly insisted upon the contract being carried out. 12. An attempt was made by. Sir Tek Chand to raise a contention on the authority of the English decision in Bristol, Cardiff, and Swansea Aerated Bread Co. v. Maggs (1890) 44 Ch. D. 616 where Kay J. went to the length of saying that if after a contract is concluded, one of the parties starts fresh negotiations with a view to introduce new terms, then even if the subsequent negotiations fail, it would be inequitable to allow the party, who attempted to re-open the contract, to enforce it specifically. This view seems manifestly unsound and has been expressly dissented from in later cases; vide Bellamy v. Debenh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any service. It is to be noted that Sir George Jessel in this passage speaks of an equitable principle. When parties enter into an agreement on the clear understanding that some other person should be a party to it, obviously no perfected contract is possible so long as this other person does not join the agreement. This would be the position in law apart from any rule of equity. The proposition laid down by Sir George Jessel goes much further than this. He speaks of two persons executing a deed on the faith that a third will do so, and if this is known to the other party, equity will refuse to fasten any liability on the executing parties if the third party does not join in the act. It has been pointed out in the judgment of the various Law Lords who decided the case of Naas v. Westminster Bank, Ld., that there is much that is indefinite and vague in the words of the learned Master of Molls. The word faith cannot be taken to refer to a mere subjective expectation or intention in the mind of a particular party. It must be a matter not of conjecture but of positive proof; and in order that a relief might be claimed in equity, it is necessary to prove that substantial injustice wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he promise to sell their shares and interests in the business was not in any way dependent upon anybody else's joining with them in the transaction. Thus there was no intention on the part of the defendants that the contract would not be binding unless Badri Prosad became a party to it and there has been no suggestion made on behalf of the appellants either here or in the Courts below that any injustice would be done to them if they are compelled to perform the agreement which they made. On the other hand, as the trial Judge has rightly observed, it would be doing very great injustice to the plaintiffs if the defendants are allowed to resile from the contract. The second contention of the appellants must, therefore, fail. 19. The third point raised by the appellants does not appear to us to be at all sound. The argument is that the contract being joint and indivisible, it was not open to the plaintiffs to give up one of the defendants and proceed against the other two. In our opinion, Section 48 of the Indian Contract Act is a complete answer to this contention. Unlike English law the Indian law makes all joint liability, joint and several, in the absence of any agreement to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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