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A case on Present consideration of contracts

A case on Present consideration of contracts

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  • 1. Civil Revision Petition No. 89 of 2005 Decided On: 04.05.2006 Appellants: Sultana Safiana Tohsin and Ors. Vs. Respondent: Manoj Jajodia and Ors.Honble Judges:H.N. Sarma, J.Counsels:For Appellant/Petitioner/Plaintiff: S. Ali, A. Bhattacharya, R. Rahman and P. Upadhaya,Advs.For Respondents/Defendant: R.L. Yadav, K. Yadav and S. Kejriwal, Advs.Subject: CivilCatch WordsMentioned INActs/Rules/Orders:Code of Civil Procedure (CPC), 1908 - Sections 115 and 151 - Order 7, Rule (11) -Order 14, Rule 2(2); Indian Contract Act - Sections 2 and 25;Code of Civil Procedure(Amendment) Act, 1976Cases Referred:Regional Provident Fund Commissioner v. Shiv Kumar Joshi (2000) 1 SCC 98; FoodCorporation of India v. Surana Commercial Co. and Ors. (2003) 8 SCC 636; Ku. SoniaBhatia v. State of Uttar Pradesh Ors. AW 1981 SC 1247; Union of India v. Chaman LalLoona and Co. AIR 1957 SC 652Disposition:Appeal dismissedCase Note:Contract — Oral agreement — Section 25 of the Contract Act, 1872 —Petitioners filed an application before trial court under Order 14, rule 2, Sub-rule (2)(b), CPC, read with Order 7, Rule 11 (b), CPC and Section 25 of theContract Act read with Section 151, CPC praying to frame a preliminary issuewhether the instant suit is not maintainable in view of provision of Section 25of the Contract Act — The trial court after hearing the parties rejected theprayer of Petitioners to frame a preliminary issue — Hence, the presentrevision petition — Held, The trial court is well within its jurisdiction incoming to the finding that the question raised being mixed question of lawand facts cannot be decided in a preliminary issue — The trial court has alsonot left untouched any of the relevant provisions of law in passing the order— Hence, the present revision petition against an Order refusing to framepreliminary issue is also barred under proviso to Section 115, CPC —Accordingly, revision petition dismissed. JUDGMENTH.N. Sharma, J.1. The revisional jurisdiction under Section 115, CPC, is sought to be invoked in thispetition challenging the impugned Order dated 6.6.2005 passed by the learned CivilJudge (Senior Division) No. 2, Guwahati, in TS No. 175/99, by the defendant-petitioners. By the aforesaid Order the prayer for framing of preliminary issue relatingto maintainability ° of the suit filed on 28.1.2005 by the defendant-petitioners hasbeen rejected by the learned trial court.2. I have heard Mr. S. Ali, learned Counsel for the defendant-petitioners and Mr. R.L.Yadav, learned Counsel for the plaintiff-respondents.3. The brief panorama of facts leading to disposal of this revision petition may bestated as follows.4. The plaintiff-respondents filed the aforesaid Title Suit for specific performance of thecontract of sale of properties described in the Schedule of the plaint with the following
  • 2. prayer.(a) that a decree for specific performance of contract, directing the defendants toexecute and register the sale deed and otherwise complete the sale of land andhouses as described in the schedule below.(b) that if the defendants fails or omit to execute or register the sale deed and confirmthe delivery of possession of suit property to the Plaintiffs within the time fixed by thecourt, the court may be pleased to execute and register the sale deed in favour of theplaintiffs and to confirm the delivery of possession of the suit property to the plaintiffs.5. The plaintiff-respondents at paragraphs - 5, 6 and 7 of the plaint has pleaded asfollows :5. That the defendants being in need of money proposed to sell the land and housesstanding thereon and the tenant late Murlidhar Jajodia was given the option topurchase but he expressed his unwillingness to purchase the same. However, theplaintiffs came forward to purchase the said property, i.e., the houses standingthereon and Late Murlidhar Jajodia gave the undertaking that if the plaintiffs purchasethe property, he would surrender his leasehold right over the houses to the plaintiffs/purchasers.6. That thereafter there was an oral agreement between the plaintiff on the one sideand the defendants on the other side sometimes in the month of May 1996. Thedefendants agreed to sell the land described in the schedule below together with thehouses standing thereon to the plaintiffs and the price of the same was fixed at Rs.4,00,000 (Rs. 3,00,000 for land and Rs. 1,00,000 for the houses). As for transfer ofany immovable property within Guwahati, permission from the competent authority/Deputy Commissioner, Kamrup and GMDA are necessary, it was agreed that thedefendants would file necessary application for obtaining such permission from thesaid authorities. It was further agreed that the sale deed would be executed within 9(nine) months from the date of obtaining permission from the GMDA. It was agreed byboth the parties that the price of the land, i.e., Rs. 3,00,000 would be paid equally tothe defendant Nos. 1 and 2 separately and the price of the houses, i.e., Rs. 1,00,000separately to the defendant No. 3 Asiya Rasul. The defendants assured that theywould apply for permissions as early as possible. It was further agreed between theparties that the expenses for stamp and registration fee would be borne byplaintiffs/purchasers.7. That accordingly the defendants applied for sale permission before the CompetentAuthority/Deputy Commissioner, Kamrup and obtained permission vide Permission No.KRM. 1/94/1187 dated 11 plaintiff-respondents 11.6.1996 and thereafter thedefendants filed application on 18.7.1996 before the GMDA in the names of thedefendants as vendor and the plaintiff No. 1 Manoj Kumar Jajodia and others aspurchasers. Along with the application for permission before the GMDA certified copyof the sketch map of the land proposed to be sold as approved by the DeputyCommissioner, Kamrup was required to be filed. The Defendant Nos. 1 and 2accordingly submitted the certified copy of the map of the land to the GMDA. TheGMDA granted permission vide Permission No. GMDA/DSP/3120/96/16 dated19.8.1996 and while granting permission on 19.8.96 approved the map.6. The summons of the suit having been served, the defendant-petitioners dulyappeared in the court and contested the suit by filing joint written statements. Theaforesaid averments made in paragraphs 5, 6 and 7 of the plaint have been denied bythe defendant-petitioners in their written statements. Although the defendant-petitioners denied in their written statements each and every allegations made in theplaint no specific case as such has been pleaded by them.7. Upon consideration of the pleadings, the learned trial court has framed the issue to
  • 3. the effect that whether there was any oral agreement between the parties to sell thesuit land at a total consideration of Rs. 4,00,000 and the plaintiffs in pursuance of thealleged Oral Agreement had purchased bank draft in the name of the defendant Nos.1,2 and 3. These are questions to be determined only after taking evidence. And suchquestions apparently are not questions of pure questions of law but are mostlyquestions of fact, including the additional issue, namely "whether the Suit ismaintainable in law as well as on fact" framed in the suit.8. At that stage, defendant-petitioners filed an application before the learned trialcourt under Order 14, rule 2, Sub-rule (2)(b), CPC, read with Order 7, Rule 11 (b),CPC and Section 25 of the Contract Act read with Section 151, CPC. In the aforesaidapplication a prayer has been made to frame a preliminary issue as follows :Whether the instant suit is not maintainable in view of provision of Section 25 of theContract Act, as there is no passing of consideration in respect of the alleged oralagreement, as admitted by the plaintiff. In the said application, it is asserted by thedefendant-petitioners that from g the reading of the paragraph 6 of the plaint it cannotbe said that there was no any consideration in execution of the agreement between theparties and as such the alleged agreement/contract is void ab initio and the same is notenforceable as contemplated under Section 25 of the Contract Act. It is further pleadedthat in view of the factual and legal position stated in the petition issues are barredunder Order 7, rule n ll(d), CPC, which appears from the statement of the plaint to bebarred under Section 25 of the Contract Act. An objection to the aforesaid petition wasalso filed by the plaintiff-respondents on 17.12.2005. In the said objection, it isspecifically denied that there was no consideration while entering into the agreementbetween the parties and that there was consideration which can be established by way ofevidence. The plaintiff-respondents while denying the contentions of the defendant-petitioners have also prayed for dismissal of the said prayer of the plaintiff-respondents.9. The learned trial court after hearing the parties disposed of the aforesaid applicationon 6.6.2005 and rejecting the prayer of the defendant-petitioners to frame apreliminary issue, as prayed for, which is the subject-matter of the present revisionpetition.10. Mr. S. Ali, learned Counsel for the petitioner, has submitted that the definition ofthe consideration as provided in Section 2(b) of the Contract Act is very specific andthe plaint not having contained passing of any such consideration for entering intoalleged contract between the parties, the suit is barred under Section 25 of the IndianContract Act and accordingly, this being purely a question of law, can be decided byframing a preliminary issue, that the learned trial court committed error in refusingthe prayer of the plaintiff-respondents. In support of his argument, Mr. Ali, hasreferred to the decision of the Apex Court reported inMANU/SC/0774/1999 :(2000)ILLJ552SC (Regional Provident Fund Commissioner v. Shiv Kumar JoshiMANU/SC/0738/2003 : (2003)8SCC636 (Food Corporation of India v. SuranaCommercial Co. and Ors.) and AIR 1981 SC1247 (Ku. Sonia Bhatia v. State of UttarPradesh Ors.). Relying on the aforesaid decisions, Mr. Ali has strenuously submittedthat the learned trial court completely misconstrued the meaning of the word"consideration" in passing the impugned Order by not considering the true purport ofthe word as defined in the Indian Contract Act.11. Mr. R.L. Yadav, learned Counsel appearing on behalf of the plaintiff respondents,on the other hand, has raised an objection relating to the maintainability of therevision petition under the provisions of the proviso to Section 115, CPC. It issubmitted that proviso to Section 115, CPC, is squarely attracted against theimpugned Order and, as such, this revision petition is not maintainable. It is furthersubmitted by Mr. g Yadav that the issue raised by the learned Counsel for thepetitioner regarding passing of "consideration" cannot be decided without takingevidence of the parties and it is not a pure question of law in terms of Order 14, rule2(2) CPC. Further submission of Mr. Yadav is that paragraphs 5, 6 and 7 of the plaintspecifically disclose that there was "consideration" at the time of entering into the
  • 4. agreement between the parties as contemplated in Section 2(e) of the Indian ContractAct.12. I have considered the rival submissions made by the learned Counsel for theparties. Framing of a preliminary issue is the discretionary power vested upon thelearned trial court under Order 14, rule 2(2) CPC, in a suit where issues both of lawand of fact arise in the same suit, and the court is of opinion that the case or any partthereof may be disposed of on an issue of law only, it may try that issue first if thatissue relates to a (a) the jurisdiction of the court, or (b) a bar to the suit created byany law for the time being in force.13. By the Civil Procedure Code (Amendment) Act, 1976, the earlier existing word"shall" was replaced by the word "may" in whether to frame a preliminary issue or notin the facts and circumstances of a particular case. There should not be any peacemeal trial in a single suit and accordingly, when any evidence is required to berecorded or gone through in support or against such a prayer, in that event the refusalof the learned trial court to frame such preliminary issue cannot be said to be unjustor improper or illegal exercise of power. Section 2(d) and (e) of the Indian ContractAct defining the word "consideration" and "agreement" are quoted herein below :2(d) When, at the desire of the promisor, the promisee or any other person has doneor abstained from doing, or does or abstains from doing, or promises to do or toabstain from doing, something, such act or abstinence or promise is called aconsideration for the promise ;(e) Every promise and every set of promises, forming the consideration for each other,is an agreement.14. In the instant case, there is no written agreement. The alleged agreement is onlyan oral one. Section 25 of the Indian Contract Act, inter alia, provides that anagreement without consideration is void unless it falls within the exceptions asprovided therein. In Order to be a contract enforceable in law there must be aconsideration paid or promised. Contract may be of two classes where theconsideration is either executed or executory. It is executed where it consists of an actfor a promise. It is the act which forms the consideration. In an executedconsideration the liability is outstanding on one side only. In an executoryconsideration the liability is outstanding on both sides. It is in fact a promise for apromise. There is no bar for the parties to make a contract to carry out the promise byone party at once, i.e., performing his part of the contract, whereas the other partywho provides the consideration for the out of the first may not carry out his part of thebargain simultaneously with the first party. Where promise is made by one party tothe other party to the contract, in such case, each promise is consideration to theother party such as a case for agreement of sale. The aforesaid principle can be foundin the case reported in MANU/SC/0021/1957 : [1957]1SCR1039 (Union of India v.Chaman Lal Loona and Co.).15. Adverting to the specific averments made in paragraphs 5,6 and 7 of the plaint, itcannot be said that there is no consideration between the parties for the allegedagreement. That apart, in their objection, the plaintiff-respondents have specificallydenied the allegation and asserted that such consideration would be explained at thetime of adducing evidence during the course of the trial.The learned trial court is well within its jurisdiction in coming to the finding that thequestion raised being mixed question of law and facts, cannot be decided in apreliminary issue. The learned trial court has also not left untouched any of therelevant provisions of law in passing the impugned order. That apart, the presentrevision petition against an Order refusing to frame preliminary issue is also barredunder proviso to Section 115, CPC, even in unamended Section 115, CPC, as it existedprior to Civil Procedure Court (Amendment) Act, 1999, a catena of decisions of variouscourts would go to show that a revision petition would not lie against an Orderrefusing to frame preliminary issue. On all these considerations, I do not find any
  • 5. jurisdictional error committed by the learned trial court in passing the impugned Orderapart from its non-maintainability. Hence this revision petition stands dismissed.16. No costs.Earlier interim Order dated 22.8.2005 stands vacated. © Manupatra Information Solutions Pvt. Ltd.