Specific performance of an oral contract
Anil Kr Garg
(Querist) 14 September 2012
This query is : Resolved
In a suit, plaintiff is seeking specific performance of an alleged oral contract (for construction of building on defendant's land) and seeking relief from court as a decree to force defendant to sign the written agreement and get it registered.
The drat of written agreement was altered by defendant which itself was not accepted by plaintiff but he now avers to court that all changes made by defendant are acceptable to them. Obviously, there never was an acceptance and no communication u/s 4 & 7 of contract act. I am not worried about that but I am curious to know if there is any precedence in India where a court directs a party to sign a written agreement. I do not find any such case law.
Besides, such direction will defeat sec 17/49 of registration act because anybody not having a registered agreement, will claim a verbal contract and demand execution of registered agreement.
Pls advise.
ajay sethi
(Expert) 14 September 2012
Hon'ble Supreme Court in Brij Mohan and others Versus Sugra Begum and other, (1990) 4 Supreme Court Cases 147
"We have given our careful consideration to the arguments advanced by learned counsel for the parties and have thoroughly perused the record. We agree with the contention of the learned counsel for the appellants to the extent that there is no requirement of law that an agreement or contract of sale of immovable property should only be in writing. However, in a case where the plaintiffs come forward to seek a decree for specific performance of contract of sale of immovable property on the basis of an oral agreement alone, heavy burden lies on the plaintiffs to prove that there was consensus ad idem between the parties for a concluded oral agreement for sale of immovable property. Whether there was such a concluded oral contract or not would be a question of act to be determined in the facts and circumstances of each individual case. It has to be established by the plaintiffs that vital and fundamental terms for sale of immovable property were concluded between the parties orally and a written agreement if any to be executed subsequently would only be a formal agreement incorporating such terms which had already been settled and concluded in the oral agreement
ajay sethi
(Expert) 14 September 2012
the courts generally do not grant any injunction based on mere oral contract .it is issue to be decided after considering evience on record
Jiwan Dass Rawal Versus Narain Dass and other, AIR 1981 DELHI 291 wherein the following opinion has been recorded.
"Adverting, therefore, to the merits of the controversy, it may at the outset be taken note that unlike the law in England where an agreement of sale creates an equitable estate in the purchaser, the law in India does not recognise any such estate. Section 54 of the Transfer of Property Act in specific terms provides that a contract for sale does not, of itself, create any interest in or charge on such property. Such contract is merely a document creating a right to obtain another document in the form of sale deed to be registered in accordance with law. In other words, a contract for sale is a right created in personam and not in estate. No privity in estate can be deduced therefrom which can bind the estate, as is the position in cases of mortgage, charge of lease. Of course, such personal right created against the vendor to obtain specific performance can ultimately bind any subsequent transferee who obtains transfer of the property with notice of the agreement of sale. (See in this respect AIR 1967 SC 744, Ram Baran Prasad v. Ram Mohit Hazra.
c n vittal rao
(Expert) 14 September 2012
A suit for specific performance lies only when the subject of contract is immovable property or property having a charecter which in equity can be redressed only by specific performance the natural and legal remedy remedy for all oter contractrs is liquidated damages therefore it is moot if a suit as you say is maintainable under the specific reliefs act much less probabale will be a direction to engross an oral contract from an court under its equity jurisdiction
Anil Kr Garg
(Querist) 14 September 2012
Thank you very much for such details.I know that a direct decree for specific performance of the developers contract is dicy (already hit by sec 14(3)(C)of the Specific Relief Act, as well as sec 17/49 of Registration Act), and hence, he is demanding that defendant be ordered to execute a written agreement and cooperate in its registration. I think it is weird that a court that ask parties to create a contract for indirectly defeating sec 49 of registration act. Also, court will not be able to decide asto whether both the parties were agreeable to terms and conditions stated in the written agreement which was modified by defendant and then, modified by plaintiff, and no final draft incorporating such modification is on record.
Finally, unless plaintiff claims that there was an oral contract to enter into a written contract and he is seeking specific performance of such an oral contract, such decree for signing written agreement should be impossible. Afterall, oral contract is claimed for construction of bldg and not for entering into an agreement. Pls advise.
