ZAHID KURBAN ALAVI, J.-- By this order I shall dispose of CMA 3731 of 2000 which is an application under Order 30, rules 1 and 2 read with S. 151 CPC on the application the plaintiff has prayed that the defendants be restrained from selling/transferring or giving effect to any sale/transfer of any shares by defendant No. 2 in the defendant No. 1, to any person other than the plaintiff and also to restrain the defendant No. 2 from divesting itself of or relinquishing in any manner whatsoever the management and/or are control of the defendant No. 1 to any person or from inducting any person in the affairs of the said defendant other than the plaintiff. In support of the application the plaintiff has filed a detailed affidavit and the defendants in turn have filed their counter-affidavits. A rejoinder affidavit has also been filed by the plaintiff.
2. This application was moved and an interim order was passed on 29.5.2000. By this order a status quo was ordered to be maintained in connection with the shares of defendant No. 1. Thereafter an application under order 39 rule 4 was filed for modification of the order passed. This is CMA No. 4167 of 2000. This application is also supported by a detailed affidavit and against this application also counter-affidavit and rejoinders have been filed.
3. Briefly the facts of the case are that the defendant No. 1 is a public limited company engaged in the business of providing cellular (mobile phone service in Pakistan). The defendant has over a number of years established an extensive network throughout the country and it is fast expanding both in Pakistan and ,world were. The cellular telephone is part of the communication revolution world were and is also becoming very popular in Pakistan. Defendants Nos. 2 is a large multinational corporation that is providing information technology service world were. Defendant No. 2 was instrumental in promoting and setting up defendant No. 1 and in therefore 80% owner of the shares. The balance 20% share is held by defendant No. 3 and 4. Defendants Nos. 3 and 4 being minority share holders, for all practical purposes defendant No. 1 is being controlled and run by the defendant No. 2.
4. In September, 1999 the plaintiff was informed that defendant No. 2 was desirous of selling its shareholding in defendant No. 1 and was looking for purchasers. Petitioner No. 1 was intersected in acquiring a share-holding. With the objective of undertaking the acquisition of defendant No. 1, plaintiff No. 2 approached defendant No. 2. Separate confidentiality agreements were executed on 4.10.1999 and 18.10.1999. Before these agreements could be entered into defendant No. 2 provided the audited balance sheet and profit and loss account of defendant No. 1 as well as other information which would normally be given to a person who is interested in purchasing 100% equity of the share holding owned by defendant No. 2. Assurance was also given that the minority share holding would also be available. During the course of negotiations the transaction was valued at US $ 10 million with the condition that the foreign currency debt which was outstanding would be paid by defendant No. 2. It is claimed that such offer was orally accepted by defendant No. 2. It is further claimed that an oral agreement was entered into between the Director of defendant No. 2 Mr. Roger Mortimer and plaintiff No. 2. It is claimed that this oral agreement was to be reduced in writing through a letter and accordingly a letter dated 10.12.1999 was sent confirming the terms which was returned by defendant No. 2 with certain had made changes, plaintiff No. 2 did not make the changes as requested whereafter defendant No. 2 accepted the offer letter through its covering letter dated 15.12.1999. However, the letter contained a condition on its top, which read as follows--Subject to contract--It is claimed that the use of the phrase did not mean that the agreement has not been finalized.
5. Several meetings were held to finalize the agreement and after each subsequent meeting a demand was put forward to finalize the process of due diligence and to provide necessary answer which were required by the plaintiff. During the course of these negotiations a point came up where the question of settling the debt of defendant No. 1 was debated. On the other hand the due diligence was commenced with financial technical and legal advisors collecting such information as was made available to them. A shares sale and purchase agreement was also negotiated and a draft was presented for the purposes of vetting by the legal advisors. Both sides were eager to complete the transaction and yet delay due to a constant demand of more information occurred.
Thereafter defendant No. 2 took up the issue that its liability as guarantor for the local currency debt of defendant No. 1 be extinguished completely. According to the plaintiff this was not the condition precedent. This resulted in further correspondence and negotiations. Once again each side insisted that they were keen on closing the transaction.
6. Thereafter when the movement of the transaction did not take the desired turn the parties to the alleged agreement became more rigid and then apparently came the stand taken by defendant No. 2 that they were not bound by any agreement. The dispute seems also stemmed from the local currency loans and the alternate local financing which had to be arranged. Defendant No. 2 insisted that is exposure of the local currency debt be extinguished on completion of the transaction and they wanted written confirmation of the financial commitment by Al-Faisal Investment Bank Limited. According to the plaintiff for the first time on 4.5.2000 the defendant (s) took the stand that the agreement dated 10.12.1999 was subject to contract and therefore did not have legal affect. Once again correspondence took place and the plaintiff has accused defendant No. 3 of breach of legal obligations as it was come to the knowledge of the plaintiff that defendant was negotiating with a third party of the sale of his shares. This come about due to the higher offer made by the third party to defendant. According to the plaintiff the excuse of local currency financing and alternate arrangements was a ruse to mislead the plaintiff. The plaintiff has therefore sought the assistance of this Court and has filed this suit for specific performance for Us $ 10 million as per the terms contained in the letter of Pak Kuwait Investment (Pvt) Limited dated 10.12.1999. They have also sought a permanent injunction and damages in the sum of US $ 12 million and Rs. 10 million.
7. Both the counsels after putting forward their respective view points in the some what detailed pleading also our forward a case for the grant and refusal of the injunction. The counsel for the plaintiff drew this Courts attention to the contents of the plaint specifically Paragraphs 20 and 21 and paragraphs 19, 20 and 21 of the written statement. According to the counsel these paragraphs speak volumes of the intention of both the sides. I have gone through these paragraphs and the allegation on behalf of the plaintiff is that the defendant in violation of its legal obligation carrying out secret negotiations with the third party for the sale of defendant No. 1. He has further alleged that since the defendants controlled a sizeable portion of the market of cellular phones in Pakistan therefore the temptation to solicit bids from other quarters was .Too great. Especially when overtures were made by a third party to defendant No. 2. According to the plaintiff the reply given in the written statement where they have denied that they were in any way doing some thing that was illegal and that there was no binding obligation on defendant No. 2 to engage in negotiations reflects the intention of defendant which has necessitated the filing of the suit. The learned counsel has then drawn my attention to several documents with have been brought on record both by the plaintiff and the defendants but from the very outset he has drawn my attention to those documents where the parties have shown their interest in defendant No. 1 and who in turn has agreed through defendant No. 2 to allow "DUE DILIGENCE" and then settle on the price. He has further taken me through the official and un-official correspondence between the two sides were after agreeing to a detailed "DUE DILIGENCE" the question of the price for the shares has been taken up. The price obviously included the local and dollar debt of the company. My attention was drawn to letter dated 4th October, 1999 where a confidentiality agreement is sent for the first time to defendant No. 2's legal advisor. Thereafter this confidentiality agreement was signed and exchanged. The counsel has then drawn the Court's attention to the several correspondence where the price was negotiated. However according to the learned counsel the main document on which the entire suit hinges is the letter dated 10th December, 1999 sent to Mr. Roger F. Mortimer director Global Business of defendant No. 2. This document was a direct offer, which was supposed to be signed and returned ending in a binding contract between the two. The counsel has gone further to rely on a un-signed copy of the letter on which serval changes have been made which are more in the nature of grammatical changes .Rather than any thing tangible. According to the counsel for the plaintiff this was the only change made by the defendant but the same was returned with the stipulation that it was to be accepted as it was offered. Ultimately without any changes the document was singed and sent under cover of a letter dated 15th December load chagrin only additions made was the word "SUBJECT TO CONTRACT" even the covering letter contained that word.
8. The counsel in support of this contention for granting the injunction application has inspite that insisted of the word "SUBJECT TO CONTRACT" By signing the document the defendant had entered into a full-fledged contract there was no justification on part of the defendant to try and get out of it. He has laid great emphasis on the intention of an agreement and associated chain of events through the documents produced by him which according to him reflects the bona fides of the plaintiff and the ma/a fides of defendant. According to the counsel even if the word "SUBJECT TO CONTRACT" was written on the letter, it was still a valid and subsisting contract. The intention of the parties according to him is to be seen rather then what is written on a particular document. He has therefore filed several documents which are not only between the plaintiff an defendant but also their respective legal advisors. According to the counsel the documents reflect that change in the mood from October, 1999 till March, 2000 when serval types of objections were raised and it seemed that defendant was not interested in completing the transaction.
9. Whilst dwelling at length on the ' interpretation of a document and the concept of a concluded contract as well as the grant of injunction the counsel has relied upon the following case-laws:--
10. Major (Rtd.) Ahmed Khan Bhatti Vs. Mst. Masooda Fatmi PLD 1981 Karachi 398; Custodian of Enemy Property. Islamabad Vs. Hoshand M. Dastur and 6 others; PLD 1977 Karachi 377; Pakistan Industrial Development Corporation Vs. Aziz Qureshi PLD 1965 (W.P) Karachi 202; Harichand Mancharam Vs. Govind Luxman Gokhale A.I.R. 1923 Privy Council 47: Brance Vs. Cobarro 1947 (2) A.L.L. E.R. 101: Damon C.I.A. Naviera SA v. HapagLloyd International SA Vs. The Blankenstein.
The Bartenstein, The Birkenstein 1985 (1) A. L. L. E. R. 475; Ateni Martime Corporation vs. Great Marine Limited 1990 (2) Lloyd Rep 250: Perry Vs. Suffields. Limited 1916 (2) Ch. D 187; Voest Alpine Interlarding Vs. Chevron International Oil Co. 1987 (2) Lloyd Rep 547; Gloval Container Lines Ltd. Vs. State Black Sea Shipping Co. Amber Seatrade S.A. And Clifton Navigation S.A. 1999 (1) Llyods Rep. 127.
11. In the case of Major (Rtd) Ahmed Khan Bhatti, Justice Saeed-uz-Zaman Siddiqi (as he then was) observed:-- It appears to be well-settled by the authorities that if the documents or letter relied on as constituting a contract contemplate the execution of a further contract between the parties it is a question of construction wether the execution of the further contract is a condition of 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 the latter case there is a binding contract and the reference to the more formal document may be ignored."
12. In the case of Hoshang M. Dasture and 6 others, Justice I. Mahmud has observed:-- "In each of these cases, the agreement relied on constituting the completed contract was held to be inchoate, which provided either that the agreement was subject to "solicitors approving the lease on" the covenants to be contained in the lease or was subject to usual terms. The proposition of law laid down in these cases is, no doubt well-settled. But, the question whether the parties had reached a concluded contract or not, in a question of fact to be deduced from the correspondence and other documentary and oral evidence. The true test for deciding the question is to ascertain whether the parties were of one mind on all the material terms at the time it is said to have been finalized between them and whether they intended that the matter was closed and concluded between them."
Whether an agreement is a completed bargain or merely a provisional arrangement depends on the intention of the parties as deducible from the language used by the parties on the occasion when the negotiation take a concrete shape. As observed by the Lord Chancellor (Lord Croanworth) in Ridgway Vs. Walton (1) the fact of a subsequent agreement being prepared may be evidence that the previous negotiations did not amount to an agreement, but the mere fact that persons wish to have a formal agreement drawn up does not established the preposition that they cannot be bound by a previous agreement."
"The language of the final clause, and more especially the word "Until" implied that the agreement was intended to be immediately fully binding and to remain so unless also (sic) superseded by subsequent agreement of the same tenor but expressed in a more precise and formal language."
The company's appeal would be dismissed for the following reasons:-- The execution of a memorandum of agreement was not contemplated by the parties as being a prerequisite to the fact that the terms of the standard form memorandum of agreement were incorporated into the contract did not prevent a binding agreement being reached, notwithstanding the fact that it was anticipated that the concluded contract would be drawn up and the standard terms amended so as to reflect that specific that had been agreed between the parties. The alterations subsequently made were undertaken merely to give effect (by amendment of the form agreed to be used) to the specific terms agreed between the parties, and to give effect to minor variations agreed between them after the date of the recap telex message. The matter is not affected by the fact that the first obligation to the retirement was dependent on the signing of the memorandum of agreement because the against was not a condition precedent to the contract.
Nor was cl. 25 of the agreement, which required the sellers to furnish the buyers with specific documents in London in exchange for payment of the purchase price, a term upon the agreement of which the contract was conditional. The parties clearly envisaged that agreement on this term could be readily reached, as indeed it was; and the clause provided its on criteria for determining its precise content.
"Mere arrangements which in the ordinary course of business are left to the legal adviser to settle, such as the date for completion, are subsequent matters which do not prevent the two letters constituting a concluded agreement."
"This is a case where, having regard to my findings of fact, there Was constituted orally a contract containing important established terms; it is therefore wholly in appropriate to seek to categorize it as a mere agreement to negotiate, or, as Mr. Pollock rather incautiously suggested at one point, -a situation where 90 per cent of the terms remained to be settled. Here, on the contrary, everything was agreed other than the base price, and it seems to me fully consisted with Sykes' case, and the principles laid down in City, to conclude by saying that in default of agreement as to a base price, it should be given to the contract by saying that in default of agreement as to a base price, it should be such reasonable base price as might be ascertained by the appropriate (sic) added
(sic) Sykes case. I consider that any other view would be completely contrary to the intention of the parties. Mr. Pollock's main point of principle therefore fails."
That (1) the words to the be finalized" in the January and April agreements is the relevant paragraph i.e. Global has the exclusive right to proceed with the sale of the Blasco Ro/Ro-60 vessels under the MOA to be finalized as per terms and conditions stated herein above did not relate to leaving anything to be agreed but related to questions of formalization or performance of documents and transactions; the words" to be finalized as per terms and conditions stated herein above indicated that there had already been a definition of what was required as performs and conditions stated herein above it was merely a reference to the mechanics which were were involved in the implementation of this agreement along the same lines as former agreements which had been made with. Ocean; the words could not be read as carrying any indication or inference that this paragraph was not to be treated as a concluded agreement or was provisional (see p. 156, col. 1)".
The counsel has also relied on the case-laws where it was held that the Court had powers to imply a reasonable term in the contract.
Foley Vs. Classique Coaches Limited 1934 (2) K.B. 1; Sweet and Maxwell, Ltd. Vs. Universal News Services Ltd. 1964(3) ALL. E.R. 30; Finchbourne Ltd. Vs. Rodrigues 1976 (3) ALL.ER. 581: Beer Vs. Bowden 1981 (1) ALL.E.R. 1070; Greater London Council Vs. Connoly 1970 (1) ALL.E.R. 870; "By analogy to the case of a tied house there is to be implied in this contract a term that the petrol shall be supplied at a reasonable price and shall be reasonable quality. For these reasons It think the Lord Chief Justice was right in holding that there was an effective and enforceable contract, although as to the future no definite price had been agreed with regard to the petrol".
It is a quite true that one cannot and to a contract an implied? Contradicts the express terms of the contract, but a suitable case one can imply a term, and in my judgment to imply a term in this contract that the price of the petrol supplied by the respondent shall be reasonable is in no way inconsistent with the agreement."
"I say at once that I cannot accept that view. It seems to me that if A agrees with B to grant him a lease at such a rent on such and such terms beginning on such a day, and no more, that is a specifically enforceable agreement, and the Court will instal in it what she called usual" covenants.
Those were denied in a case before FIR GEORGE JESSEL, M.R. Being very usual indeed. In a later cases Maugham, J., said that what were usual covenants was a question of fact, and that the Court would accept evidence from surveyors or conveyance of the kind of covenants which were usual in lease of the kind of property which was the subject-matter of the agreement. Consequently, if this.
Agreement had been merely an agreement for usual covenants the Court could have completed it in ways that are well recognized. It is not that of course; cut it gives the lessors further rights. It gives them rights beyond that which the law would give them in the way of usual covenants in reasonably requiring further covenants. The only limit is that the requirements must be reasonable.
The Court is constantly required to suggest as between A and B what is or is not reasonable, and insofar as the lessors demand things which are unreasonable the Court will say you cannot have them insofar as they are reasonable the Court will say. Those are conditions which you may impose and which must be accepted by the lessors and the lessees are contractually bound to accept them". Therefore, in my judgment, there is nothing in this point that the agreement is not a specifically enforceable agreement." "it could not have been intended between the parties that the plaintiffs should have an unfettered discretion to adopt the highest conceivable standard of maintenance for the block of flats and to charge the tenant with the cost thereby incurred. Accordingly, in order to give business efficacy to the lease, a term was to be implied that the costs recoverable from the defendant should be fair and reasonable (see p. 578 a to d and b. Post)."
"Since there was a subsisting lease and it was conceded that some rent was payable in default of agreement, the Court could, despite the absence of an arbitration clause, imply a term to fill the gap in the lease where there was no agreement on the new rent, in order to give Business efficacy to the lease, and, since the parties clearly intended that a fair rent should be fixed by agreement on the rent reviews, the Court would imply a term that in the absence of agreement 'the rent payable during the second five years should be the fair market rent excluding tenant's improvements see p 1074 d e h.p 1975 a to j and P 1076 c to J, post;
(1) The rent increases had been validly made under condition 2 which was not void for uncertainty, because-
(a) it was possible to imply into the condition that reasonable notice of increase was required, and reasonable notice was given by the notice of June 1968 see p 874 a one S, P 876 and p 878 post):
(b) rent was sufficiently certain where it could be calculated with certainty at the time when it became payable, even though the increase was dependent on the whim of the landlord, and here the notice of June 1968 enable the rent to be calculated.
Lastly he has relied on the case of Muhammad Latif Vs. Province of West Pakistan (PLD 1970 SC 180) where it was held that for the purposes of granting of temporary injunction the plaintiff has be made out that he has a good prima facie case and that a serious question is to be tried.
"It is needless to mention that in a case, where temporary injunction is claimed, the plaintiff has only to make out that he has a good prima facie case meaning thereby the a serious question is to be tried in the suit and that in the event of success if the injunction is not issued he will suffered irreparable injury. The appellant has, in the present case, fulfilled all these conditions. Even the learned Additional Advocate General and Mr. Nathu Lal learned counsel for respondent No. 2 have not opposed the issue of injunction."
The counsel for defendant has in reply restricted his entire line of arguments to the fact that the so called contract which is the letter dated 10.12.1999 is not capable of specific enforcement.
According to him the entire document is a conditional document. To begin with the offer contained in the letter is conditional. The transaction was based on (1) Debt Repayment (2) No Further Debt
(3) Assets Not to be Diluted (4) Legal, Tax. Accounting and Technical Due Diligence, (5) Termination of Current Arrangements with Share Holders (6) Regulatory Issues (7) Documentation.
13. The learned counsel has been dwelt at length on the first point of Debt Repayment and has emphasized that the word used therein is MOST FISCALLY BENEFICIAL MANNER FOR THE COMPANY.
According to him right upto March, 2000 there was no agreement between the parties on how to address the issue of Paktels Foreign Currency indebtedness in the manner most beneficial to Paktel's. He has drawn the attention of this Court to several documents filed by the plaintiff and himself. According to him the first item of the so-called contract has still not been thrashed out and therefore, there was no question it being a valid and subsisting contract.
14. He has then drawn my attention to item 4 where the offer was subject to due diligence. Even after due diligence was completed the consideration agreed between the parties was to be taken .
Into consideration after looking at the modifications suggested in light of the due diligence report.
According to the learned counsel the common and plane implication would be that the offer could be withdrawn if the plaintiff was not satisfied with he due diligence report. The counsel has further urged that the consideration had also not been agreed to as it was subjective to the modifications.
In fact the 10 million US $ offer was not final but was a conditional offer depending on the happening of certain eventualities. The counsel has one again drawn my attention to the several correspondence which are reflective of the thoughts mentioned above. He has posed a question that the share sale and purchase agreement and the appendix attached to the same agreement could not be enforced. Appendix-5 is a comprehensive and detailed document where issues emanating from legal due diligence and financial due diligence have been addressed. According to him these issues have been raised by the plaintiff. The question would be if the consideration has not been agreed upon can a contract been forced.
15. The counsel has then dwelt at length on the other items of the letter and once against drawn the attention of this Court to the innumerable correspondence and the annexures which the plaintiff has filed and has insisted that there were certain conditions precedent in the letter/contract which have not been fulfilled and therefore, there was no question whosoever on its enforceability. The counsel has also raised the local debt issue and the documentation issue but for the purposes of this injunction application I would restrict myself to the words SUBJECT TO CONTRACT and its applicability to the document which the plaintiff claims is a contract and the defendant insists that it is only a letter.
16. The plaintiff has at the outset laid great stress on the document and has insisted that the document dated 10th December, 1999 is a full-fledged contract and the defendant are duty bound to comply with it. The 'defendants on the other hand have insisted that it was not by any remote possibility a contract. They have insisted that at the most it could be construed as an understanding between the two sides with the ultimate objective of entering into a lasting relationship. However it was SUBJECT TO CERTAIN conditions and even though it is not clearly stipulated it is clear that if the conditions were not made or did not fulfil the requirements then the parties had the option to all it a day.
17. The counsel for the plaintiff whilst arguing insisted that the word "SUBJECT TO CONTRACT" did not in any way reflect the intention of the defendant not to finalize the deal. In fact it was super imposed with an intention to get out of the whole situation if the when they found better offers. I am not inclined to accept this argument at the present moment as 'I have seen the documents from the earlier stage where both sides have repeatedly used the word "Subject to Contract" and "DUE DILIGENCE" these words also find place in the correspondence conducted earlier in April and May, 1999 and from time to time it has been re-emphasized. It have also noted that even in the confidentiality agreement there is a section-of no commitment.
18. It is therefore quite certain that in all business transaction such type of agreements entered into and they are subjective to certain reservation and -conditions.
19. The learned counsel for defendant No. 2 has relied on the following case-laws:--
20. The effect of the words "SUBJECT TO CONTRACT" is that the matter remains in negotiation until a formal contract is executed.
Tiverton Estates Limited v. Werwell Limited, (1974) 1 All ER 209 at pp. 217, 218 (per Lord Denning MR).
Cohen Vs. Nessda/e Limited. (1981) 3 All ER 118 at pp. 124128 (per Kilner Brown, J).
Raingold Vs. Bromley, (1931) ALL ER Rep 822 at pp. 822-824 (per Lawrence LJ).
21. This case involved an arrangement for the exchange of properties. The arrangement was agreed in principle and set out in a letter containing an offer from the appellant but stated to be "SUBJECT TO CONTRACT" and other provisions. Subsequently both parties acted on the arrangement. Latter the respondent sought to withdraw from the arrangement and the appellant sought an order that the agreement was enforceable on the ground that both parties were estopped from withdrawing.
22. Held: It is possible but unlikely in circumstances at present unforeseeable a party to negotiations set out in a document expressed to be "SUBJECT TO CONTRACT" would be able to satisfy the Court that the parties had subsequently agreed to convert the document into a contract or that some form of estoppel had arisen to prevent both parties from refusing . To proceed with the transactions envisaged by the document.
23. In order to found an estoppel, [a party has] to do more than show that [it] had acted to [its] detriment and to the knowledge of the (other party in the hope that the other party] would not withdraw from the agreement in principle. They had to show, in addition,. That (1) the [other party] had created or encouraged a belief or exception on the party of [the party seeking to found estoppel] that [it] would not withdraw; (2) [the party seeking to found estoppel} had relied on that belief or expectation.
Attorney General and another Vs. Humphreys Estate (Queen's Gardens) Ltd. (1987) LRC 9 (Comm)
567, at p. 576 and pp. 57275 (on appeal to the Privy Counsel from the Court of Appeal, Hong Kong.
Per Lord Templeman).
24. If the law does not recognize a contract to enter into a contract where there is a fundamental term yet to be agreed". It cannot recognize a contract to negotiate. The reason is because it is too uncertain to have any binding force a contract to negotiate, like a contract to enter into a contract, is not a contract known to the law--[the Court] must apply the general principle that when there is a fundamental matter ,left undecided and to be the subject of negotiation, there is no contract.
25. Courtney & Fair barin Ltd. Vs. Tolaini Bros (Hotels)
Ltd. (1975) 1 ALL ER 716 at p..720 (per Lord Denning MR)
25. This case involved an agreement to purchase business and land "SUBJECT TO CONTRACT" and a collateral contract, without anytime limit, to continue negotiations and to terminate negotiations with any third party. Upon considering whether the Collateral agreement was enforceable and whether it contained an implied term that the defendants would continue to negotiation good faith for a reasonable period, the Court held that a lock-out agreement (whereby one party for good consider action agreed for a specified period of time, not to negotiate with any one except the other party in relation to the sale of his property) could constitute an enforceable agreement.
However, an agreement to negotiate in good faith for an unpacified period was not enforceable and nor could a term to that effect be implied in a lock-out agreement for an unspecified period, since the vendor was not obliged under such an agreement to conclude accountant with the purchaser and he would not know when he was entitled to withdraw from the negotiations. The Court could not be expressed to decide whether, subjectively, a proper reason existed for the termination of the negotiations. In the circumstances the alleged collateral agreement was held to be unenforceable..
Watford and others Vs. Miles and another, [1993] 1 ALL ER 453 at PP. 459-462 (per Lord Ackner).
26. Whether the execution of a further contract is a condition or a term of the bargain is a question of construction. It it is a condition, then there is nb enforceable contract either because the condition is unfulfilled or because the law does not recognize a contact to enter into a contract.
Von Hatzfeldt-Widenourg Vs. Alexander, [1911-1913] All ER 148 at pp. 151-152 (sic) Parker J)
27. In order to convert a proposal into a binding contract the acceptance to the proposal must be absolute and unqualified. There must be shown to exist consensus ad idem between the parties with regard to all the terms of the contract. A qualified acceptance of proposal or acceptance of a proposal with a variation is no acceptance.
Shalsons Fisheries Limited, Karachi Vs. Lohmann & Co. And another (PLD 1982 Kar. 76 at p. 82) (per Saeeduzzaman Siddiqui, J).
28. The question whether the parties had reached a concluded contract or not, is a question of fat to be deduced from the correspondence, and other documentary or oral evidence. The true test for deciding this question is to ascertain whether the parties were of one mind on all the material terms at the time it said to have been finalised between them and whether they intended that the matter was closed and concluded between them.
Custodian of Enemy. Property, Islamabad Vs. Hoshand M. Dastur (PLD 1977 Kar 377 at p. 384) (DBO)
(per I. Mahmud, J).
Baijnath Vs. Ksetradhari Sarker and others (AIR 1955 Cal 210 at pp. 215, 216) (DB) (per Renupada Mukherjee, J).
29. In order to obtain a specific performance of contract, its terms should be so precise that neither can reasonably misunderstand and them. If the contract be vague and uncertain, or the evidence to establish it be insufficient, a Court of equity will not enforce it but will leave the party to his legal remedy. - Co/son Vs. ThOmpson, (US S.C.) 4L. Ed. 253 at p. 256 (per Washington, J).
30. If it be doubtful whether an agreement has been concluded, or is a mere negotiation, chancery will not decree a specific performance.
William a Carr Vs. Samuel H. Duval. (US S.C.) 10 L. Ed. 361 at p. 364 (per Catron J).
31. Specific performance is not an absolute right. It rests in judicial descretion, exercised according to the principles of equity, and with reference to the facts of the case. It should never regranted unless the terms of the agreement sought to be enforced are clearly proved, or where it is left in doubt whether the party against whom the relief is asked in fact made. Such agreement.
Ghulam Nabi and others Vs. Muhammad Yaqub and others (PLD 1983 SC 344 at 357-358) (per M.S.H. Qureshi J).
David J. Hennessey Vs. Clara Woolworth, (US S.C.) 128 US 500 at p. 502 (per Harlan J).
State of Texas Vs. State of New Mexico, (US S.C.) 96 L. Ed. 2d. 105 at pp. 114, 116 (per White J).
32. To resolve ambiguities and to ascertain the real intention of parties in a contract document, the Court can have resort to correspondent between the parties preceding and subsequent to the execution of the contract documents.
Sandoz Limited and another Vs. Federation of Pakistan and others (1995 SCMR 1431 at p. 1447) (per Ajmal Mian J). .33. A contract has to be construed strictly and literally without deviating or implying anything which is in consistent with its expressed terms.
House Building Finance Corporation Vs. Shahinshah Human Cooperative House Building Society and others (1992 SCMR 19 at p. 27) (per Saleem Akhtar J).
34. The Court cannot read into a contract a term which does not exist there.
Mst. Zeemun Nisa Begum Vs. Ali Muhammad (PLD 1990 SC 382 at p. 387 (per Zafar Hussain Mirza, J).
35. An unconcluded contract (which encompasses incomplete agreements dependant on acts of third parties) cannot be specifically enforced.
Shajar Ali Hoti Vs. Esmail Sobani, 1987 CLC 2307 at pp. 2311-12 (per Saeeduzzaman Siddiqui, J).
36. Agreements which are dependent on acts of third parties or execution of a formal document to become concluded contracts have generally been held to be incomplete contracts.
37. The relief of specific performance is discretionary. When a contract is abandoned, it cannot be enforced at the instance of the plaintiffs.
Ashrafi (Pvt.) Limited and another Vs. Karachi Transport Syndicate Limited, Karachi and another (PLD 1973 Note 119) (per Noorul Arfin J).
38. In order to obtain a relief of specific performance the plaintiff has first to allege and prove that he was ever ready and willing to perform his part of the contract as the contract really was and not in the way he thought the contract to be.
Narainjan and others Vs. Muhammad Yunus (AIR 1932 Lah 265 at 267) (per Hilton J).
Muhammad Yaqub Vs. Muhammad Nasrullah Khan and others. (1986 Law Notes (S.C.) 988 at p.
990) (per Ali Hussain Qazilbash, J) approving and relying upon the Narainjan case.
39. A mandatory injunction cannot be granted by way of interim relied as a grant of such relied would be tantamount to grat of final relief which would seriously prejudice the defendants.
Principles relating to the grant of temporary injunction.
Firozuddin Ahmed Vs. Trading Corporation of Pakistan Limited and another(1987 MLD 124 at p. 125)
(Per Mamoon Kazi, J).
Aboo Noor Muhammad Vs. General Iron and Steel Works Ltd. (PLD 1973 Kar 234 at 236 (per I, Muhammad, J).
40. The Principle underlying the case Law cited at the Bar is very clear, being, that it is possible for parties to signify their intention not to create legal relations without a formal contact being executed or at least until all terms are agreed between the parties. Though not cited by any of the counsels, the restatement of law contained in the Halsbury's Laws of England, Vol. 9(4th Edition) supports the aforesaid position in the following words: "....It has ben held that a condition was precedent to contract, so there was no contract at all until the condition was fulfilled in the following cases: on agreements made subject to contract"..."
(emphasis supplied)
"...Whilst in the case of commercial agreements there is a presumption that the parties intend to create legal relations, that presumption may be expressly negative; for instance the agreement may be made "subject to contract."
(emphasis supplied).
41. The law of contract by Cheshire & Fifoot (10th Edition at page 186) describes the phrase SUBJECT TO CONTRACT" as a suspensive condition. Any document or memorandum agreed to by the parties, subject to this condition does not become a legally binding contract, unless such condition is lifted by a subsequent act of the parties.
42. It is an admitted position that the letter dated 10.12.1999 (which according to the plaintiff contained the terms of oral agreement) was accepted by defendant No. 2 "SUBJECT TO CONTRACT".
The subsequent correspondence and conduct of the parties show that they were thrashing out various terms of the contract which may be potentially entered into between the parties. The plaintiff has been unable to show any act of the parties which would have the effect of lifting the so-called suspensive condition. Submission of the learned counsel for the plaintiff that addition of the term "SUBJECT TO CONTRACT" was immaterial does not appear to be supported by established principles of law, in view of the foregoing.
43. Defendant No. 2's letter dated 15.12.1999 can, at best, be described as a conditional acceptance of the offer of the plaintiff and since the condition precedent to such acceptance has admittedly not been fulfilled, it does not mature into a contract. It is by now established that the acceptance of an offer subject to additional conditions merely constitutes an expression of willingness to enter into a contract or a counter proposal but does to constitute a binding contract. Reliance for this proposition can be placed on Corpus Juris Secndum, Vol. 17.
44. It hardly needs to be emphasized that in order for there to be a binding contract the acceptance of an offer must be unqualified,. Absolute and unequivocal. The negotiations between the parties do not give rise to contractual obligations until at-least all the material terms have been agreed. The consensus obligations until the essential ingredient of a valid contract, must be reached before the negotiations graduate into a binding contract. There is no legal restriction on the parties to negotiate any deal without creating any legal obligations in 'the process until a specific condition is fulfilled. No doubt this will depend on the facts of each case. However, where the parties have expressed their intention of not entering into legal obligations without a formal contract, such term must be respected in order to allow the freedom to the parties to negotiate a deal without the fear of being trapped into obligations which they never intended to create.
45. In view of the foregoing it is not possible to hold at this-stage that there was a binding *contract between the parties. The plaintiff has therefore failed to establish a prima facie case in its favour for the grant of injunction. The application for interim injunction being CMA No. 3731 of 2000 is dismissed and ad-interim injunction granted earlier stands vacated.