JUDGMENT
Srinivasan, J.
1. The main question which arises for consideration in this appeal is whether there is a concluded contract for sale in favour of the plaintiff with reference to the suit properties.
2. The plaintiff, who is the first respondent herein, filed the suit for specific performance of an agreement dated 26-3-1975 on the basis of the following averments:- Respondents 2 and 3 herein, who are defendants 1 and 2 in the suit were admittedly the owners of the suit properties. The first defendant for himself and on behalf of the second defendant agreed to sell the suit properties for a total consideration of Rs. 70,000 and executed an agreement on 26-3-1975. As per the agreement, he received a sum of Rs. 2,000 by way of advance. Itwas agreed that another agreement was to be executed by defendants 1 and 2 for the same consideration of Rs. 70,000. The first defendant agreed to bring the second defendant and that both would execute the agreement before 30-4-1975. It was agreed that a sum of Rs. 18,000 was to be paid at the time of execution of the second agreement and the time for the completion of the transaction should be fixed at the time of the second agreement. The balance of consideration of Rs. 50,000 should be paid at the time of execution and registration of the sale deed. The agreement was written by one Sambandam Pillai, Karnam of the village, and attested by A.Rathnavel, VA.Doraiswamy (examined as P.W.2), H.K.Kannappa Mudaliar, Rasamanickam, Nagarajan, Arunachalam and another. The first defendant apprised the second defendant of the agreement and the latter accepted the same and agreed to execute an agreement in favour of the plaintiff. The first defendant informed the plaintiff about the same by a letter dated 7-4-1975. On 8-4-1975, defendants 3 to 8 along with some others attempted to trespass on the properties. The first defendant filed a suit O.S.No.99 of 1975 on the file of the District Munsif, Chengalpattu for declaration and injunction. Interim injunction was also obtained. At the request of the first defendant, the plaintiff was finding the said litigation. It was agreed that the second agreement could be executed after the disposal of the suit. The suit was decreed on 24-12-1976. Thereafter the plaintiff defendants 1 and 2 and some other people met on 19-1-1977 at Madras in a relative’s house. The plaintiff wrote a draft agreement in Tamil and the second defendant, stating that he was not well acquainted with Tamil, wrote a draft in English on the same paper agreeing to sell the properties for a sum of Rs. 70,000. It was agreed that the transaction should be completed on or before 30-5-1977. The necessary stamp papers were purchased on 19-1-1977 itself. It was suggested that the first defendant’s counsel at Chengalpattu should be consulted for approving the draft agreement and hence the parties returned to their place. They came to know that an appeal had been filed by defendants 3 to 8 against the decree in O.S.No.99 of 1975. That was pending on the file of the District Court, Chengalpattu in A.S.No.24 of 1977. There was also an injunction restraining defendants 1 and 2 from alienating the properties till the disposal of the appeal. It, was therefore, agreed that the sale deed could be executed after the completion of the appeal and in the meanwhile, no formal agreement need be executed between the parties. Subsequently, defendants 1 and 2 colluded with defendants 3 to 8 and executed a sale deed in favour of defendants 3 to 9 on 24-7-1977. Based on the sale deed, the appeal filed by defendants 3 to 8 was withdrawn on 26-7-1977. Coming to know of the same, the plaintiff issued a notice on 2-8-1977 to which a reply was sent by the defendants. The plaintiff filed the suit for specific performance on 9-9-1977. The plaintiff prayed for the reliefs of specific performance and delivery of possession.
3. The first defendant contested the suit on the ground that the agreement dated 26-3-1975 was not a contract for a sale but it was only an agreement to enter into a contract. He stated, that he was not authorised by the second defendant to enter into any agreement. As there was no subsequent agreement of sale, the suit for specific performance is not maintainable. The drafting of an agreement on 19-1-1977 in English and Tamil was denied. It was stated that the sale in favour of defendants 3 to 9 was for a sum of Rs. 70,000 on 24-7-1977 and that it was a true and valid sale which cannot be questioned by the plaintiff. The plaintiff was never ready and willing to perform his part of the contract. The first defendant filed an additional written statement after the agreement dated 26-3-1975 was shown to him when he was in the witness box. He denied the genuineness of the agreement on the ground that the signature found therein was not his. The second defendant filed a separate written statement. According to him, he never agreed to execute any sale deed in favour of the plaintiff and that the first defendant was not authorised by him to enter into any agreement on his behalf. He contended that even if there was any agreement, he was not bound there by. Defendants 3 to 9 filed a separate written statement claiming to be bona fide purchasers for value in good faith without notice of the alleged agreement in favour of the plaintiff. They also contended that there was no concluded contract in favour of the plaintiff.
4. The trial court recorded findings to the effect that there was a concluded contract in favour of the plaintiff, but the second defendant was not bound by the same as the first defendant was not authorised to represent him. The trial Court also found that defendants 3 to 9 were not bona fide purchasers for value without notice. Consequently, the trial Court granted a decree in favour of the plaintiff for specific performance as against defendants 1 and 3 to 9 in respect of one half of the suit properties with proportionate costs. The trial Court directed the plaintiff to deposit a sum of Rs. 33,000 being the balance of sale consideration towards the value of one half of the suit properties. Aggrieved by the said decree, defendants 3 to 9 have preferred to above appeal. The plaintiff has preferred a Memorandum of cross objections challenging the dismissal of the suit in so far as it relates to the second defendant’s half share of the suit properties.
5. Learned Counsel for the appellant raised the following contentions. (1) There is no concluded contract for sale in favour of the plaintiff. The only contract made out in the evidence is an agreement to enter into a contract and that there cannot be a specific performance of the same. (2) The trial Court is in error in splitting up the contract and granting a decree with reference to one half of suit properties, which would amount to making a new contract for the purchaser. Even if there was a contract of sale, there could not be a decree for one half of the suit properties in favour of the plaintiff. (3) The plaintiff was never ready and willing to perform his part of the contract, and, therefore, not entitled to a decree for specific performance. (4) ExA.l is not an agreement which was signed by the first defendant. It is not a genuine document. No decree can be passed on the basis thereof. (5) The appellants are bona fide purchasers for value without notice of any agreement in favour of the plaintiff. Hence, they are not bound by the agreement even if it is found to be true and valid.
6. As against the above contentions, learned Counsel for the plaintiff contended as follows: (1) The evidence on record makes out a concluded contract in favour of the plaintiff. The contract was entered into by the first defendant both on his behalf and on behalf of the second defendant and that he was authorised to represent the second defendant. Consequently, the contract will bind both defendants 1 and 2. (2) Even assuming that the second defendant was not bound by the contract, the decree passed by the trial Court with reference to one half of the properties owned by the first defendant is certainly sustainable and a valid one. The intention of the parties is to have a sale deed in any event with reference to the first defendant’s half share of the properties. (3) The plaintiff has always been ready and willing to perform his part of the contract, but on account of the litigation in O.S.No.99 of 1975, District Munsifs Court, Chengalpattu and the appeal therefrom, the plaintiff could not proceed further with the transaction. When the title of defendants 1 and 2 was in dispute in that proceeding, the plaintiff could not be expected to perform his part of the contract. (4) The genuineness of Ex.A.l has been amply proved by the evidence on record. One of the attestors has given evidence and the scribe has joined the defendants and has examined himself as D.W.5. Even his evidence would make out that the document was written by him and not D.W.3 as alleged by the defendants. (5) defendants 3 to 9 are not bona fide purchasers as they had knowledge of the agreement in favour of the plaintiff even at the time of the suit O.S.No.99 of 1975 as is evident from their written statement filed in that suit. Hence, they are also bound by the agreement.
7. The question whether a document constitutes a concluded contract has to be decided on the facts of each case. Where the parties contemplate a further agreement in writing, the question would be whether the execution of a further agreement is a term of the bargain or whether it is a mere expression of the desire of the parties as to the manner in which the original agreement is to be performed. In Ridgway v. Wharton (1854)6 H.L.C.238, Lord Cranworth expressed the view that the circumstances the t the parties do intend a subsequent agreement to be made is strong evidence to show that they did not intend the previous negotiations to amount to an agreement and there was dealing with the supersession of written negotiation by formal writing. While Lord Wen-sleydale in the same case said, “These cases often occur in Courts of Law, and the question there always is, whether the parties mean to embody the contract, made by parol, in writing? If they do, nothing binds them till it is written. If they enter into a contract with a view to a written agreement, nothing will bind them but that written agreement”.
8. The off-quoted statement of Lord Parker in Von Hatzfeldt Wildembury v. Alexander (1912)1 Ch.D.284, is the best exposition of the law and it reads thus:
It appears to be well settled by the authorities that if the documents or letters relied on as constituting a contract contemplate the execution of a further contract between the parties, it is a question of construction whether the execution of the further contract is a condition or term of the bargain or whether it is a mere expression of the desire of the parties as to the manner in which the transaction already agreed to will in fact go through. In the former case there is no enforceable contract either because the condition is unfulfilled or because the law does not recognise a contract to enter into a contract. In the latter case there is a binding contract and the reference to the more formal document may be ignored.
The rule of Lord Parker was followed by a Full Bench of Calcutta High Court in Hyam v. M.E.Gubbay A.I.R.19l6 Call. After referring to the enunciation of the proposition by Lord Parker, it was observed thus:
Here it is expressly pleaded in the plaint that it was a matter of actual agreement, not merely the expression of a desire, that the terms should be embodied in a written agreement. And there is the further fact that this written agreement was to take the place not of previous writing, but of previous conservations of the uncertain character disclosed by the evidence.
I am aware of no case where a provision for a written agreement in place of oral conservations has been treated as negligence; none has been cited to us….
On the facts of that case the Full Bench held that there was no enforceable contract.
9. In Coope v. Ridout (1921)1 Chancery 291:17 L.W.572. Lord Sterndale, Master of Rolls, had to deal with the same question. In that case, a draft was prepared and approved by the vendor. The question was whether the approval of the draft satisfied the condition “subject to contract” which was agreed to by the parties earlier, The trial Judge answered the question in the negative and held that in the absence of a written contract formally entered into by the parties, there was no enforceable contract. That was affirmed by the Court of Appeal. The Master of Rolls observed that the condition required that a written contract should be fprmally entered into between the parties and as no such contract was ever entered into in that case, there was no enforceable contract. He quoted the dictum of Lord Parker extracted earlier.
10. In Harichand Mancharam v. Govind Luxman Gokale, 44 M.L.J.608, the parties agreed that an agreement should be prepared by a vakil. The contention raised was that unless an agreement was prepared by a vakil, there was no completed contract. That contention was rejected by the Privy Council, which found on the facts that all the terms of the contract had already been agreed. The Privy Council held that when a contract of sale contained all the necessary terms and provided that the “Bargain paper” shall be prepared by a vakil, the latter provision cannot be construed as a condition precedent and the purchaser had a right of specific performance of contract.
11. In Spottiswoode, Ballantyne and Company v. Doreen Appliances, Limited (1942)2 Kings Bench 32, Lord Greene M.R.dealt with the question in the following manner:
The question for our determination is very short, and one, which, to my mind, with all respect to the learned Judge, has a clear answer. It turns on the meaning of the letter of August 1,1941, the crucial “Words being those which refer to a formal agreement being entered into. It is said by the defendants that the words in the letter mean nothing more than that, as soon as the solicitors for the, plaintiffs had put into formal shape the matters on which the parties were in agreement, a binding, unconditional contract would come into existence, notwithstanding that the formal document in Which those terms were to be set out was never signed and exchanged by the parties. On the other hand, the plaintiffs contend that the language means that no contract was to exist between the parties unless and until a formal agreement had been entered into. In my opinion, the second construction is unquestionably right. I am quite unable to construe the words. “Subject to the terms of a formal agreement to be prepared by their solicitors’ as meaning that the formal agreement’ referred to is not one which is to be executed by the parties in the usual way. An unexecuted document would not be a formal agreement. If any doubt could remain as to the. true construction of the phrase, the matter is entirety settled, in my judgment, by the words referring to the undertaking to vacate when palled on if no agreement is entered into. It is manifest that the agreement there referred to is the same as the formal agreement mentioned in the earlier passage, and how a formal agreement is to be entered into unless it is executed and exchanged in the usual way. I am unable to discover. The real fact of the matter is that the language used here is equivalent to the common and more concise pharse “subject to contract” and it is well settled that pharse makes it clear that the intention of the parties is that neither of them is to be contractually bound until a contract is signed in the usual way.
12. A Division Bench of this Court considered the matter in detail in H.G.Krishna Reddy and Company v. M.N.Thimmiah and Anr. . After referring to the entire case law on the subject, starting from the decision in Ridgway v. Wharton (1857)6 R.L.C.238, the Bench found on the facts of the case that there was no concluded contract. The following passage in the judgment of the Bench would be helpful in this case:
20. It is, therefore, clear that in this case in the light of the contentions of the parties it is open to us to refer to the entire correspondence that followed Ex.P.l to find out whether Ex.P.l constituted contract or not Ex.P.-l receipt itself is given subject to the terms and conditions mentioned therein. It states that the sale shall be completed within 45 days from the date of the Advocate for the first respondent passing the title. The second respondent has to produce the encumbrance certificate for a period of 15 years prior to the date of Ex.P.l and also contain a certificate of satisfaction of the claim of his brother. The second respondent has also to produce receipts for payment of all taxes and other demands. Clause 6 of Ex.P.l clearly states that if the transaction is not or could not be completed within the said 45 days or the extended time for any reason, the second respondent shall return the amount of advance with interest thereon 12 per cent, per annum from the date of Ex.P.l. Clause 7 of Ex.P.l states that the second respondent shall execute a regular agreement of sale on stamp paper within 15 days from the date of Ex.P.l Though no doubt, Ex.P.l has specified the consideration amount and the property to be sold, a perusal of Ex.P.l leaves the impression that a regular agreement of sale on a stamp paper has to be executed within 15 days from the date of Ex.P.l and that the said recital is a condition of the bargain between the parties under Ex.P.l. Further, Clause 6 of Ex.P.1 gives an option to the second respondent to return the advance amount with interest at 12 per cent, if the transaction could not be completed within 45 days as stipulated therein. It is not disputed that the second respondent refunded the amount of advance and started that he could not complete the transaction within a reasonable time. This clause itiself would show that Ex.P.l was not intended to be a concluded contract.
13. Bearing the above principles in mind, the facts of the present case have to be looked into. ExA.-1 is dated 26.3.1975. It recites that the signatory viz., the first defendant is executing the agreement on receipt of Rs. 2,000 by way of advance. It states that the property belongs to him and that it is in his possession and the agreed consideration is Rs. 70,000. It proceeds to state that before 30-4-1975, the first defendant and the other viz., S.R.M.S.T., Narayanan Chettiar (Second defendant) would join and execute an agreement and at that time, the plaintiff should pay a sum of Rs. 18,000. It is provided that time for completion of the transaction should be fixed at the time of the later agreement. It is also recited that there is no encumbrance over the property and if any encumbrance is found, the first defendant will discharge the same at his own cost. The document is attested by six witnesses. The scribe has also signed the document. It has to be mentioned at this stage that the first defendant is normally residing at Chidambaram whereas the second defendant is a resident of Coimbatore. The plaintiff is residing in Thirukkazhukundram. The suit properties are situated in Thirukkazhukundram. ExA.2 is a letter dated 7-4-1975 written by the first defendant to the plaintiff. In that letter, he has stated that the other partner viz., S.R.M.S.T., Narayanan Chettiar has agreed and that he is desirous of having the execution of the document at Karaikkudi. It is stated that the agreement could be executed on 17-4-1975 at Karaikudi. The plaintiff is requested to send his reply regarding his convenience immediately.
x x x
(The discussion of the evidence is Omitted - Ed.).
x x x
22. I have no hesitation to hold that there was no concluded contract in favour of the plaintiff. As pointed out by me already, the evidence makes out that the plaintiff is not the only person who was a party to the agreement. There are sufficient indications on record to show that other parties are involved and all the facts have not been placed before the court.
23. It is not necessary for me to deal with the other contentions raised by the parties. But, for the sake of compeltion, I will briefly refer to the decisions cited on both sides on the second question whether there can be a decree for one half of the properties in favour of the plaintiff. Learned Counsel for the plaintiff/first respondent referred to the decision of Ismail, J., in S.Parvathy Ammcal v. B.K.S.Chettiar . After referring to all the earlier cases on the subject, the learned judge has set out the principles in lucid terms as follows:
I Where a document is proposed to be executed by several parties and only some of them execute and others do not, whether the document is binding on those at least who have executed it depends uponl the intention of the parties; and
The intention that the document would be incomplete and would not be enforceable against the executing parties has to be established by the executing parties by showing that they would not have executed the agreement if the other party had not joined in the agreement or that they did not intend to be bound by the agreement until and unless the others who were proposed to be parties to the agreement joined in the execution.
24. Learned Counsel also invited my attention to the judgment of a Division Bench of this Court in K.Venkatasubramainam v.Arthanariswaim Chettiar, 1980 T.L.N.J.417. Reliance is placed upon the following passage:
The principle is clear that if an agreement is entered into on the basis thai A, B and C would be parties to it and that ultimately if ‘C backs out, when there is no concluded contract between the parties. One of the fundamental postulates behind the agreement viz., the participation by ‘C’ in the contract would have disappeared and, therefore, the contract cannot be specifically enforced. The point to be considered here is whether the Ex.A.1 proceeds on the basis that the third defendant was also a party to the contract and that he, for the reasons of his own, did not agree to join the execution of the contract. The parties of Ex.A.1 are the plaintiff on the one side and defendants 1 and 2 on the other. The plaintiff being a near relation living in the same place cannot justifiably plead ignorance of the affairs of this family. It refers to the third defendant being away from station and his joining the execution. Defendants 1 and 2 could not bind the third defendant by any agreement. They were not constituted as his agents to agree to any such term. Thus, the third defendant could not have been intended to be bound by any such term, as such. Apparently the plaintiff required the third defendant also to join in the transaction and the agreement refers to the third defendant being away and his signing in the sale deed. The document is in Tamil and having read the passage in the document, we are not at all satisfied that the parties to Ex.A.1 conceived the third defendant as an inevitable party to the transaction. There is no provision in the agreement as to what would happen in case the third defendant, for reasons of his own, did not join in the execution, if it mark intended to be the essential ingredient of the agreement, then one would have found some provision for the contingency of the third defendant not actually joining the execution of the sale deed. There is no such terms in the agreement. In these circumstances, we consider that the agreement, before us cannot be considered to be a contingent agreement in the sense that its validity was contingent on the third defendant joining in the execution of the sale deed. The result is that defendants 1 and 2 are the only persons who entered into the agreement and they would be bound by it. The third defendant is a complete stranger to the agreement. Section 19 of the Specific Relief Act provides that specific performance of the contract may be enforced against either party thereto. It does not contemplate specific performance being bad against a person who had not even entered into the contract. The fundamental concept behind the law of specific performance is to enforce an agreement which was entered into between the parties. Thus, the parties who entered into the agreement, would be bound by it and any failure to implement the agreement would involve the consequence of specific performance being enforced against the party, who failed to implement the agreement. The third defendant is clearly outside the scope of the relief of specific performance.
25. Applying the tests laid down by Ismail, J., and the principles enunciated by the Division Bench on the facts of this case, there can be no doubt that the plaintiff is not entitled to a decree as against the first defendant’s half share alone. As pointed out by me, in the evidence, the plaintiff has admitted that there. Was no arrangement for having a sale from the first defendant alone. The evidence goes to show that the agreement was only to have another agreement from both defendants 1 and 2 and the parties never intended to proceed on the basis of Ex.A.-l to a sale deed.
26. Learned Counsel for the appellants drew my attention to the decision of the Privy Council in William Grhatn v. Krishna Chandra Dey, 48 M.L.J.172:21 L.W.390. In that case, a contract for the sale of two plots of land for the specified sum required the vendor to make out a market title, and, in case of failure to do so, bound him to refund the deposit on demand. The price fixed was a price for both plots together. In a suit brought by the purchaser to enforce the contract under the Specific Relief Act the vendor proved to be unable to make good title to the second plot. The trial Court offered the plaintiff a decree for the conveyance of the other plot on the terms of Section 115 of Specific Relief Act and as the plaintiff refused that offer, the suit was dismissed with costs. Oh appeal, the High Court held that the case fell within the terms of Section 16 of the Specific Relief Act and allowed the appeal, but, as there was no evidence of the value or character of the plots beyond the particulars given in the contract, remitted the matter to the trial Court in order that he might take evidence and assess the abatement of price to be allowed in respect of the failure to make title to one of the plots. The Privy Council reversed the judgment of the High Court and affirmed that of the trial court. The Privy Council held that Sections 14 to 17 of the Specific Relief Act are both positive and negative in their form and taken together, they constitute a complete code within the terms of which relief by way of specific performance must be brought if it is to be granted at all. If the principle laid down by the Privy Council is to be applied to the present case, it is not possible to apportion the-Consideration as between the defendants 1 and 2. The agreement is only for one sum of Rs. 70;000 for the entire land and admittedly there was no division between the defendants 1 and 2. Neither of the defendants could claim title to any particular portion of the land as such there cannot be any decree for specific performance for half share.
27. To a similar effect is the decision of Venkatas-ubba RaoJ., in Abdul Azizsahib v. M.Abdul Sammad Sahib and Anr. A.I.R. 1937 Mad 596: 45 L.W.693. In that case, the defendant agreed to sell to the plaintiff certain plot of land in which he had only one-third share and the remaining two third share belonged to his children. Out of the agreed con-sideration, a certain sum was paid as advance by the plaintiff to the defendant. Subsequently, the contract became incapable of performance as the two sons were unwilling to fulfill it. The plaintiff therefore brought a suit for specific performance of the contract. It was held that as the contract was not divisible into two parts, one relating to a third of the plot and other relating to the remaining two-thirds, the court could not substitute a new bargain and force a new contract on the parties by decreeing the plaintiff’s claim with respect to one-third share of the defendant, on payment of the price in proportion to that share. In the present case, the appellate court has really substituted a new contract in the place of Ex.A.l by directing the plaintiff to deposit Rs. 33,000 and got a sale deed for one half share from the first defendant. That is not possible in law.
It is not necessary to consider the question whether the plaintiff was ready and willing to perform his part of the contract, as I have held that there is no enforceable contract. On the question of genuineness of Ex.A.l, I have proceeded on the footing that Ex.A.l is genuine. Of course, I must point out that the signature.in Ex.A.l gives rise to some suspicion. But, the document has been attested by several witnesses and there is no explanation on the part of the defendants as to why the plaintiff should prepare another agreement similar to the original with forged signature when admittedly, the first defendant had executed an agreement on 26-3-1975.
As regards the claim of good faith on the part of the appellants/defendants 3 to 9, the written statement filed by them in O.S.No.99 of 1975 marked as Ex A.3 proves that they had knowledge of agreement between the plaintiff and defendants. In paragraph 6 of the said written statement, it is stated as follows:
6. It is submitted that certain speculative persons i.e. (1) Kanniappa Mudaliar, son of Rathinavelu Mudaliar his workman (2) Kan-nappa Mudaliar, (3) A. Rathinavelu Mudaliar, son of Arumugha Mudaliar and Rajamanicka Mudaliar and also (4) Doraiswamy Mudaliar have concluded with a view to cause loss to ‘Pasu Madam’ Trust and to purchase the suit lands and houses from the plaintiff and make a wrongful gain for themselves, then hit upon the idea of grabbing at this Trust properties and appeared to have taken an infructuous agreement from the plaintiff and have started this litigation, using plaintiff with ulterior purposes to the determent of the Trust….
This shows that the appellants had knowledge of the negotiations between the plaintiff and defendants 1 and 2. Hence, they cannot claim to be bona fide purchasers for value with notice. 29. In view of my finding that there is no concluded contract between the plaintiff and defendants 1 and 2, the suit for specific performance has to fail. The appeal is allowed with costs. The judgment and decree in O.S.No.201 of 1977 on the file of Sub Court, Chengalpattu are set aside. The Memorandum of cross-objections is dismissed; but without costs.