Judgement Appeal (No. 44 of 1943) from a judgment and decree of the High Court (September 3, 1940), which reversed a judgment and decree of the First Class Subordinate Judge of Dhulia (October 31, 1938). The question to be determined in this appeal was whether there was a concluded contract made between the appellant and the first respondent company for the sale by the latter to the former of one of its pressing and ginning factories at Dhulia. The case for the appellant was that the agreement was finally concluded in Bombay on July 7, 1936, when as the result of a conversation between one Nandurdikar, a broker acting for the appellant, and Sir Shapurji Billimoria, one of the liquidators of the respondent company, and a further conversation between Nandurdikar and the companys solicitor, Manekshaw, the terms of the bargain were all settled and a draft agreement containing those terms was drawn up, which was engrossed on the following morning. Neither the draft agreement nor the engrossment was signed by either party, and after several more meetings between Nandurdikar and Manekshaw, the latter, acting under instructions from Sir Shapurji, declined to proceed further and said that the negotiations were at an end. On August 29, 1936, the appellant filed the present suit, claiming, inter alia, specific performance of an agreement in the terms of the draft agree ment and the engrossment thereof. The case for the respondents, on the merits, was that there was no concluded agreement and that the matter never went beyond the stage of negotiations. In the alternative, they said that if there had been a concluded agreement it had been re-opened by the appellant. The facts appear more fully from the judgment of the Judicial Committee. The trial court decreed the suit in favour of the appellant, holding that there had been a concluded agreement between the parties, and that it was not re-opened. On appeal the High Court (Broomfield and Divatia JJ.) in concurring judgments held against there ever having been a concluded agreement, and they allowed the appeal and dismissed the suit. 1946. Feb. 5, 6. Sir Thomas Strangman K.C., Khambatta and Jayakar for the appellant. On appeal the High Court (Broomfield and Divatia JJ.) in concurring judgments held against there ever having been a concluded agreement, and they allowed the appeal and dismissed the suit. 1946. Feb. 5, 6. Sir Thomas Strangman K.C., Khambatta and Jayakar for the appellant. After settling the main terms with Nandurdikar, Sir Shapurji left the completion of the terms to be settled between the companys solicitors and Nandurdikar, and they were so settled on the evening of July 7, 1936, in the form of the draft agreement then drawn up and subsequently engrossed. The onus of establishing that they had no notice of the agreement between the company and the appellant when they paid earnest money on July 13, 1936, in respect of their purchase of the same factory was on the companys co-respondents, and not only was such onus not discharged, but it was affirmatively established that they had such notice. The appellant brought the suit for specific performance of an agreement in the terms of the draft; there is no Statute of Frauds or any other law in British India which requires an agreement such as this to be in writing. The points for the defence- were (a) that the broker never agreed in terms of the draft, and (6) if he did, then he wanted to change the terms and negotiations were re-opened and never resulted in agreement. The trial court, on the oral and documentary evidence, held against both defences. In the memorandum of appeal to the High Court the defence put forward the contention that there was no concluded agreement because the parties contemplated a signed agreement, and none was signed, and the High Court erroneously, it is submitted, gave effect to that plea, although it was never pleaded, it did not form the subject of an issue, the evidence was never directed to it, nor did the evidence support it, and it was Law Rep. 73 Ind. App. 98 ( 1945- 1946) Shankarlal Narayandas Mundade v. New Mofussil Co. Limited 37 not argued in the trial court because it is not referred to in its judgment. 73 Ind. App. 98 ( 1945- 1946) Shankarlal Narayandas Mundade v. New Mofussil Co. Limited 37 not argued in the trial court because it is not referred to in its judgment. The execution of a formal agreement was not a condition or term of the agreement to sell the factory, and in any event the point taken by the respondents in their appeal to the High Court, and which the High Court decided in their favour, was not open to them. In India, apart from the receipt given for the deposit, there was a concluded binding agreement. In Von Hatzfeldt-Wildenburg v. Alexander ([ 1912] 1 Ch. 284, 288.), Parker J., as he then was, said " 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 recognize a contract to enter into a contract. In 11 the latter case there is a binding contract and the reference " to the more formal document may be ignored." That was approved by the Privy Council in two Indian cases Harichand Mancharam v. Govind Luxman Gokhale (( 1922) L. R. 50 I. A. 25.) and Currimbhoy & Co. v. Greet (( 1932) L. R. 60 I. A. 297.), but it has nothing to do with the present case, for the High Court said that the point was " whether, a draft agreement and engrossment being evidently " contemplated by the parties, the contract can be said to be " complete without the formal agreement being signed and "executed” If that is the respondents case it is a matter which mast be pleaded ; it is a question of evidence. There appears to be no case similar to this. There appears to be no case similar to this. The point on which the High Court decided was not open to the respondents, and the judgment of the Subordinate Judge was correct for the reasons given therein. Andrew Clark K.C. and J. M. Parikh for the respondents. The case now resolves itself into one clear-cut and comparatively simple issue, namely, was there or was there not a concluded contract between the appellant and the respondent company on July 7. There was not. It is no part of the respondents case now that if there was such a concluded contract it was ever re-opened. The law applicable is well-settled and clear, and there is no material dispute as to fact; the real difficulty is applying the law to the particular facts of this case, and the inference to be drawn from these facts is an inference of law and/or a question of construction. If ever there was a concluded contract it must have been made between Sir Shapurji and Nandurdikar, and could not have been made at any subsequent time. That is not the contract sued on by the appellant, and it is submitted that it is not open to the appellant at this stage of the case to set up such an oral contract. If there was not a binding contract when Nan durdikar left Sir Shapurjis office there never could have been one because the solcitor, in the absence of express authority, has no power to bind his client, and any such authority cannot be implied Lockett v. Norman-Wright ([ 1925] Ch. 56.). In this case it was proposed to put the terms into writing so that Sir Shapurji could see and approve that which Nandurdikar had agreed with Manekshaw. There was never any intention on Sir Shapurjis part that he should be bound at all until he had in fact signed and approved those terms. There was no point in having this agreement in writing in India, where no writing was required, unless the whole object was that he should see, before binding himself, what terms were agreed with Manekshaw. The onus is on the appellant to prove the existence of the contract he sets up. The facts in Locketts case ([ 1925] Ch. There was no point in having this agreement in writing in India, where no writing was required, unless the whole object was that he should see, before binding himself, what terms were agreed with Manekshaw. The onus is on the appellant to prove the existence of the contract he sets up. The facts in Locketts case ([ 1925] Ch. 56.) were very similar to these of the present case, and it is submitted that the general principles of law there laid down are directly applicable. Here there is an agreement subject to the usual terms being added by the solicitors to protect their client. There never was a concluded agreement between Sir Shapurji and Nandurdikar on July 7, because the only agreement between them was subject to an agreement to be prepared by the solicitors, and that agreement was never concluded and never signed. Further, if there was any concluded contract between Sir Shapurji and Nandurdikar other than one conditional on the further terms being added, then that contract has not been pleaded, and has never been, and cannot be, relied on in this case. Winn v. Bull (( 1877) 7 Ch. D. 29.) is not near this case, but the general principle of law was there first enunciated and has been approved in a long line of Law Rep. 73 Ind. App. 98 ( 1945- 1946) Shankarlal Narayandas Mundade v. New Mofussil Co. Limited 38 cases. It is always a question of construction whether what was said amounted on its true construction to some term like " subject " to contract/ or " all the terms have not been settled " ; that is very wide, has always been approved, and covers the present case. If in the present case all the terms had not been agreed, and some remained to be settled, then until those terms were finally settled it was still a contract to enter into a contract. It is submitted, first, that there never was a contract; secondly, that even if there was it was always a term of the contract that there was to be a contract in writing which was to be signed, and it never was signed. It is submitted, first, that there never was a contract; secondly, that even if there was it was always a term of the contract that there was to be a contract in writing which was to be signed, and it never was signed. Should the Board allow this appeal it is suggested that there would be a difficulty in directing specific performance when the sale to the companys co-respondents took place ten years ago, and it is submitted that damages would be adequate compensation. Sir Thomas Strangman K.C. replied. No one has suggested that Manekshaw exceeded his instructions, which were explicit and of the most limited character; he had to draw up an agreement similar to those the company had already entered into in selling other mills. This case is in no way similar to Locketts case ([ 1925] Ch. 56, 62.) where the terms were left in the air; here there were specific instructions on the lines of the agreement previously entered into. This case is far more similar to Harichand Mancharam v. Govind Luxman Gokhale (L. R. 50 I. A. 25.). March 13. The judgment of their Lordships was delivered by LORD DU PARCO. In the suit which has given rise to this appeal, the plaintiff (now the appellant) claimed against the defendant company (the first respondent) specific performance of an oral agreement made by the company through its liquidator, Sir Shapurji Bomanji Billimoria, for the sale to the appellant of a pressing and ginning factory at Dhulia. He claimed the like relief against the remaining defendants (respondents), in accordance with s. 27 of the Specific Relief Act, as persons claiming under the respondent company by a title arising subsequently to the contract. It may be said at once that if the appellant is entitled to the relief which he claims against the respondent company, no question arises as to the liability of the other respondents. It is common ground that a contract for the sale to them of the factory was entered into after the date of the contract alleged by the appellant, and they made no attempt at the trial to prove that they had paid the purchase money in good faith and without notice of the original contract. It is common ground that a contract for the sale to them of the factory was entered into after the date of the contract alleged by the appellant, and they made no attempt at the trial to prove that they had paid the purchase money in good faith and without notice of the original contract. Their Lordships have found it unnecessary to examine the evidence which was called on behalf of the appellant to show that these respondents in fact had notice of the earlier contract, since a decision of this Board is clear authority for the proposition that the burden of proving good faith and lack of notice lay on the respondents (Bhup Narain Singh v. Gokhul Chard Mahton (( 1933) L. R. 61 I. A. 115.)). The suit was tried before the First Class Subordinate Judge of Dhulia. An objection was taken to the jurisdiction of the court. Both the trial judge and the judges of the High Court overruled it, and the respondents have not persisted in it. Apart from that objection and from questions as to the relief to which the appellant was entitled, which are not now the subject of dispute, the case as it was presented to the learned judge was a simple one. It appeared that the appellant had authorized one Nandurdikar, a broker, to buy the factory on his behalf, and, if necessary, to pay as much as Rs.65,000 for it. The liquidators of the respondent company were Sir Shapurji Bomanji Billimoria and a Mr. A. M. Kajiji, since deceased, and it was with the former, who undoubtedly had authority to act for the company, that the negotiations were carried on. After some preliminary discussion the negotiations came to a head in a conversation between Sir Shapurji and Nandurdikar at Bombay on July 7, 1936. There was little difference between the accounts given by Sir Shapurji and Nandurdikar of what took place on that day. The trial judge summarizes Sir Shapurjis account of the interview as follows—He (Nandurdikar) " offered Rs.62,000 as price of " the suit factory. Sir Shapurji declined. Nandurdikar came " to his office again on July 7, 1936, at 4 p.m.; he offered " Rs.63,000 and Sir Shapurji accepted the offer. Sir Shapurji " told Nandurdikar that the earnest money was to be " Law Rep. 73 Ind. App. Sir Shapurji declined. Nandurdikar came " to his office again on July 7, 1936, at 4 p.m.; he offered " Rs.63,000 and Sir Shapurji accepted the offer. Sir Shapurji " told Nandurdikar that the earnest money was to be " Law Rep. 73 Ind. App. 98 ( 1945- 1946) Shankarlal Narayandas Mundade v. New Mofussil Co. Limited 39 Rs.10,000, that half the costs were to be borne by each " party, that the completion period was to be one month " and that there were to be other usual terms which are " incorporated in agreements by solicitors. He accepted " Nandurdikars suggestion to pay brokerage at z\ per cent. " Nandurdikar accepted the terms and went to fetch the " earnest money. Sir Shapurji called Antia, who is a clerk of " the defendant No. 1 company, and told him the terms " agreed upon between him arid Nandurdikar. He told Antia " to take Nandurdikar to Mr. Manekshaw to have the usual " agreement drawn up. He told Nandurdikar when he came " back to go with Antia. Sir Shapurji left his office at 5.30 p.m. " or thereabout. He got a telephone call at his bungalow " from Mr. Manekshaw to the effect that the party was offering " Rs.7,000 by way of deposit though he had agreed to pay " Rs.10,000 as earnest. Sir Shapurji agreed to accept " Rs.7,000 on the suggestion of Mr. Manekshaw." Sir Shapurjis reference to the " usual" agreement is explained by the fact, which is stated in his evidence, that fifteen or more pressing and ginning factories, owned by the company, had already been sold. The representative of Messrs. Wadia Ghandy & Co. who dealt with the companys affairs was a Mr. Manekshaw, a solicitor of long experience, and on receiving instructions from Sir Shapurji this gentleman, in the words of the respondent companys written statement, " got a draft agreement for sale of the said factory prepared on " the same lines on which the other factories belonging to these " defendants had been sold to other purchasers." According to Nandurdikar, whose evidence was accepted by the judge, he agreed to all the terms which Manekshaw inserted in the draft agreement. He said, indeed, that both he and Manekshaw initialled one copy of the draft, but this allegation was denied and the learned judge was left in doubt about it. It is certain, however, that an engrossment was made ready for signature, and that a document prepared by the solicitors, and dated July 7, was handed to Nandurdikar, which acknowledged the receipt of "Rs.7,000 as earnest and on " account of Rs.63,000 being the price for the sale of the " pressing and ginning factory of the New Mofussil Company, " Limited, at Dhulia with the land building machinery and " stores in the factory on the terms of the draft agreement " prepared this day/ Mr. Manekshaws attempts to explain away the receipt and the engrossment met with no success before the trial judge. The chief matter of dispute before him was an allegation by the respondent company that Nandurdikar had refused to accept the terms put before him by Manekshaw, and had re-opened the negotiations. It was said that, by reason of his attitude, either the business had never proceeded beyond the stage of negotiation, or that, alternatively, after a contract had been concluded it " was re-opened and the " parties entered into negotiations afresh, which negotiations "did not result in a concluded agreement." Sir Shapurji himself seems to have had no doubt that there was a concluded agreement. " When " he said " Mr. Manekshaw informed me that the party was haggling about the " agreed terms I felt that the party was resiling from the " agreement." The appellant had alleged an agreement "in " terms of the said draft agreement and the engrossment " thereof." The trial judge found that this agreement had been proved, and that " the agreement was not re-opened." In their Lordships opinion these findings of fact were amply supported by the evidence, and counsel for the respondents abandoned the contention that the agreement (if made) had been re-opened. Sir Shapurjis own evidence was to the effect that he offered to sell the factory on terms which, as to the more important of them, were stated by himself and, as to minor details, were left to be settled by Mi. Manekshaw. Sir Shapurjis own evidence was to the effect that he offered to sell the factory on terms which, as to the more important of them, were stated by himself and, as to minor details, were left to be settled by Mi. Manekshaw. The whole of these terms were orally accepted by Nandurdikar, who had full authority from his principal to accept them, and it is manifest from the documents which have already been mentioned that both parties were intending to make a contract. By the law of India such an oral contract is valid and enforceable. It was, however, natural enough that the parties should wish to have their agreement put in writing and drawn up in proper form. An Law Rep. 73 Ind. App. 98 ( 1945- 1946) Shankarlal Narayandas Mundade v. New Mofussil Co. Limited 40 offer by Nandurdikar himself to sign the engrossment which the solicitors had prepared was rejected on the ground that he had acted a$ broker in the transaction. Eventually, on July 10, Manekshaw, apparently after consultation with Sir Shapurji, said that the appellant himself must sign. On July n, Nandurdikar called on Manekshaw to inform him that the appellant would arrive in Bombay on the 13th, but Manekshaw then said that the negotiations were at an end. Nandurdikar protested against this and when, on the 13th, the appellant arrived in Bombay he accompanied Nandurdikar to the solicitors office and offered to sign. Manekshaw refused to allow him to do so, said that the agreement was broken, and offered to return the earnest money. Sir Shapurjis eagerness to be rid of what at first may have seemed to be a good bargain is, perhaps, explained by the fact that on the same day, as is now admitted, he had received Rs.30,000 as earnest money from the companys co-respondents, who had agreed to pay a purchase price of Rs.125,000 for the Dhulia factory and another pressing and ginning factory. It might well be supposed that on these facts, about which there was no serious difference of opinion between the trial judge and the High Court, no question of law could arise. By their memorandum of appeal, however, the respondents for the first time raised a point which, in the result, found favour with the learned judges of the High Court. By their memorandum of appeal, however, the respondents for the first time raised a point which, in the result, found favour with the learned judges of the High Court. " The " learned judge " it was submitted, " omitted to notice that it " was contemplated by the parties that the agreement was not " to be considered as complete and binding until it was signed " by the parties, and he ought to have held that there was no " complete agreement as no such agreement was signed by "the parties.1 In the High Court the long series of cases which deal with transactions in which the parties have contemplated the execution of a formal contract was reviewed at length. In such cases, as was said by Parker J. (as he then v/as), " 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 " (Von Hatzfeldt-Wildenburg v. Alexander ([ 1912] 1 Ch. 284, 289.)). The learned judges of the High Court (Broomfield and Divatia JJ.), though they were in substantial agreement with the findings of fact of the trial judge, came to the conclusion, in the words of Broomfield J., that " Sir " Shapurji accepted Nandurdikars offer subject to the "execution of a written agreement and that Nandurdikar " acquiesced " (I. L. R. [ 1941] B. 378.). " Every item in the plaintiffs case might " be conceded," said the learned judge, " and he would still " not be entitled to specific performance " (Ibid. 374.). The question to be decided was, in his opinion, " whether, a draft agreement " and engrossment being evidently contemplated by the " parties, the contract can be said to be complete without the " formal agreement being signed and executed " (I. L. R [ 1941] B. 376.). Divatia J., in a concurring judgment, held that " the further " contract was therefore a term of the bargain and not merely " an expression of desire " (Ibid. 381.). The conclusion come to by the High Court may be expressed in one or other of two ways. Divatia J., in a concurring judgment, held that " the further " contract was therefore a term of the bargain and not merely " an expression of desire " (Ibid. 381.). The conclusion come to by the High Court may be expressed in one or other of two ways. It may be said either that there was never a contract between the parties because they did not intend to be bound until an agreement had been drawn up in writing and executed, or alternatively, that there was a contract one term of which was that the parties should join in executing a written instrument embodying its terms and that until such an instrument had been executed the contract should not be enforceable. Both these alternative submissions were made to their Lordships in the very able argument of the respondents counsel. In whichever way the point is put, their Lordships regard it as open to the objection that it could not fairly be raised for the first time before an appellate tribunal. The submission was not made to the trial judge in either of its forms. There is no trace of it in the written statements of the respondents. It was not the subject of an issue. The judge does not refer to it in his judgment. No evidence was led with regard to it. If it is to be regarded as founded on the omission of the appellant to execute the written agreement, it is not surprising that it was not relied on Law Rep. 73 Ind. App. 98 ( 1945- 1946) Shankarlal Narayandas Mundade v. New Mofussil Co. Limited at the trial by a defendant who had refused to allow the plaintiff to sign although he was ready and willing to do so. But apart from the objection that the point was taken too late, their Lordships, with all due respect for the judges of the High Court, are satisfied that it is without substance. In their Lordships opinion, the facts do not support the inference that the parties intended to be bound only when a formal agreement had been executed. On the contrary, their Lordships consider that there was ample evidence to prove that both parties intended to make, and believed that they had made, a binding oral agreement. Their desire and intention to put that agreement into formal shape does not affect its validity. On the contrary, their Lordships consider that there was ample evidence to prove that both parties intended to make, and believed that they had made, a binding oral agreement. Their desire and intention to put that agreement into formal shape does not affect its validity. It was contended by counsel for the respondents that the agreement was necessarily incomplete because it had been left to the solicitors to settle some of its terms and because (as counsel rightly submitted) a solicitor has no implied authority to make a contract on his clients behalf. Their Lordships are of opinion, however, that no question as to a solicitors implied authority arises in this case. In their Lordships view, it is a fair inference from the evidence that Sir Shapurji authorized Mr. Manekshaw to put before the appellant for his acceptance the " usual" terms. In the circumstances which have already been explained, this seems to their Lordships to have been a very natural and businesslike i course for Sir Shapurji to take, and necessarily resulted, when the appellant accepted the terms, in the formation of a binding contract. For these reasons, their Lordships will humbly advise His Majesty that the appeal should be allowed, the decree of the High Court set aside, and the decree of the Subordinate Judge restored. The respondents must pay the appellants costs of the appeal and in the High Court.