Summary
Equal joint venture partners in a Mumbai hospital agreed by email of 28 March 2019 that one group would buy the other's 50 per cent shareholding for Rs. 36.75 crores, and a decree for specific performance was passed on admission in the buyers' suit; in execution the Bombay High Court, finding the decree ambiguous because it did not mention the sellers' Rs. 10.29 crore interest-free loan to the company, looked into the plaint and later emails and held the price inclusive of the loan. The Supreme Court allowed the sellers' appeals: an executing court must take the decree as it stands and, though it may construe an ambiguous decree from the pleadings, it cannot add terms the parties never agreed; the buyers' break-up including the loan was sent a day after the agreement and expressly rejected, and the 2017 joint venture agreement itself provided for separate repayment of loans.
Issues
- Whether an executing court, construing a consent decree for specific performance of an agreement recorded in an email, could read the agreed consideration as inclusive of a separate loan amount on the strength of the plaintiffs' pleadings and later correspondence not accepted by the defendants.
Provisions considered
- Order XII Rule 6 and the jurisdiction of the executing court, Code of Civil Procedure, 1908The decree was passed on admission in terms of prayers (a) to (d), which track the email of 28.03.2019 and say nothing about the loan; following Topanmal Chhotamal, Meenakshi Saxena and Rajinder Kumar, an executing court may look into the pleadings to resolve a genuine ambiguity but cannot go behind the decree or draw a new one. (¶¶ 4, 13, 15, 19)
Held
- The Single Judge treated the decree as ambiguous merely because it did not engage with the loan and, relying on the phrase 'free of all claims', enlarged it; the Division Bench relied on the buyers' email of 29.03.2019 setting out a break-up for the first time, which the sellers rejected on 11.04.2019, so reading the sellers' consent into it was an exercise in overreach. (¶¶ 14, 16)
- The 2017 joint venture agreement in clauses 4 and 5 distinguished the bidding for shares from repayment of the seller's loans and advances within fifteen days, and the parties' discussions concerned only the valuation of the shareholding; the words 'consolidated price' do not ipso facto include the loan. S. Satnam Singh and Rajinder Kumar are distinguishable, and the sellers' failure to file a written statement, though worthy of adverse inference, cannot justify expansion of a consent decree. (¶¶ 16, 17, 18, 19)
Result
Appeals allowed without costs; Bombay High Court Division Bench judgment dated 14.06.2022 in Appeal (L) Nos. 3075 and 3079 of 2021, affirming the Single Judge's order dated 04.01.2021 in the execution applications in Commercial Suit No. 844 of 2019, set aside.