Specific Performance:
Agreement for sale of suit land (300 sq. yards) – Between appellant-vendor and respondent-vendee – For a total consideration of Rs. 75,000/- – Rs. 45000/- out of the total consideration paid to the vendor – Total consideration was required to be paid within 45 days from the date of agreement – Subsequent to the agreement vendor executed a registered deed of conveyance in favour of ‘P’ in respect of 100 sq. yards out of the suit land – Suit for specific performance by vendee – Plea of vendor that the agreement was subject to the condition that the vendor would negotiate with ‘P’ to get his earlier agreement with the vendor cancelled – ‘P’ was initially not impleaded in the suit for specific performance – However, was impleaded after expiry of limitation period – Another suit by vendee against ‘P’ seeking declaration of agreement between vendor and ‘P’ as null and void, without impleading the vendor – Suit by ‘P’ seeking perpetual injunction against the vendee – Trial court decreed the suit for specific performance in part, holding that the vendee was entitled to only 200 sq. yards of the suit land and not to the 100 sq. yards which was covered by the sale deed in favour of ‘P’ – Vendee’s suit against ‘P’ was dismissed for non-joinder of the vendor – Ascertaining the sale consideration for 200 sq. yards to be Rs. 50,000/- and in view that Rs. 45000/- had already been paid to the vendor, the Court directed the vendee to pay the balance Rs. 5000/- within a stipulated time and in default, the suit was to be dismissed – Appeal by vendor as well as the vendee – High Court confirmed the judgment of trial court – Appeal to Supreme Court – Held: Vendee was always ready and willing to perform and had performed the obligations under the agreement – The vendor failed to discharge the onus to prove that the agreement was subject to the condition that the vendee would negotiate with ‘P’ – Vendor having accepted major part of consideration, cannot contend that the agreement could not have been enforced in respect of 200 sq. yards in favour of the vendee – The suit for specific performance against ‘P’ having been barred by limitation and the suit for declaration having been dismissed for non-joinder of vendor, rights of ‘P’ over
100 sq. yard cannot be nullified – The orders of courts below do not call for any interference.
Specific Relief Act, 1963:
s.10 (as amended w.e.f. 01-10-2018) and ss. 11(2), 14 and
16 – Specific performance in respect of contracts – Nature of – Held: After amendment of s. 10, relief of specific performance of a contract is no longer discretionary – The Court is obliged to enforce the same, subject to the provisions of ss. 11(2), 14 and 16. s.12 – Specific performance of part of contract – Permissibility – Held: Ordinarily the Court enforces a contract in its entirety – But, the Court may, u/s. 12 direct the defaulting party to perform so much part of the contract as can be performed. Party:
Necessary party – A transferee, to whom the subject matter of a sale agreement or part thereof is transferred, is a necessary party to a suit for specific performance – In a suit for declaring a document as null and void, the executant of the document in question is a necessary party.
Pleading:
Plea of bar under Order II rule 2 CPC – Held: Is a technical plea, which has to be pleaded and satisfactorily established – On failure to raise such plea, court not to decide the plea suo moto – Code of Civil Procedure, 1908 – Order II rule 2. Suit:
Clubbing of suits – Purpose and effect of – Held: Clubbing of suits is for the sake of convenience i.e. to save time, costs, repetition of procedures and to avoid conflicting judgments – Such clubbing does not convert the suits into one action – The suits retain their separate identity.
Dismissing the appeals, the Court
HELD: 1.1 The finding of the trial court, affirmed by the High Court that the vendee was ready and willing to perform her obligations under the agreement dated 21.3.1984, which is based on evidence and supported by cogent reasons, is unexceptionable. [Para 57][20-D-E]
1.2 The vendee paid Rs.40,000/- out of the total consideration of Rs.75,000/- on the date of execution of the agreement dated 21.3.1984 itself. It is not disputed that the Vendee paid a further Rs.5,000/- to the Vendor’s husband against a receipt. It is the vendor’s own case that in terms of the agreement dated 21.3.1984, the full consideration was to be paid within 45 days. The vendee’s claim that she tendered Rs.30,000/- on 30.4.1984 was not disputed by the vendor in her legal notice/letter dated 20.6.1984. In any case the vendee obtained Demand Draft dated 4.5.1984 for Rs.30,000/- in favour of the vendor towards balance consideration, within 47 days from the execution of the agreement dated 21.3.1984. Time is not of essence to agreements for sale of immovable property, unless the agreement specifically and expressly incorporates the consequence of cancellation of the agreement, upon failure to comply with a term within the stipulated date. The concurrent findings of the High Court and the trial court that the vendee was ready and willing to perform and had performed her obligations under the agreement dated 21.3.1984, are based on evidence and sound reasons and hence do not call for interference of this Court. [Paras 60 and 61][21-E-H; 22-A-C]
2.1 The plea of the vendor, that the agreement dated 21.3.1984 was subject to the condition that the vendee would get the earlier agreement between the vendor and ‘P’ cancelled, cannot be accepted for the reasons that (i) the agreement dated 21.3.1984, which is in writing does not incorporate any such condition; (ii) that it is incredible that the vendor, who knew ‘P’ to whom she had agreed to sell 100 square yards of land, should proceed on the basis of an alleged assurance of the vendee, that ‘P’ would relinquish his rights under the earlier agreement between the vendor and ‘P’, without ascertaining from ‘P’ whether he was actually ready to relinquish his rights under the said earlier agreement with her; (iii) that ‘P’ had denied knowledge of the agreement between the vendor and the vendee; and that (iv) within a month and a few days from the date of execution of the agreement between the vendor and the vendee, after the vendee tendered full consideration, the vendor executed a registered deed of conveyance in favour of ‘P’ without any prior intimation to the vendee, and without giving the vendee any opportunity to persuade ‘P’ to abrogate his earlier agreement with the vendor. [Para 58][20-E-G; 21-A-B]
2.2 The onus of proof lies on the party who makes an allegation. It was for the vendor to establish that the agreement dated 21.3.1984 was subject to the condition as alleged by the vendor, that the vendee and/or her husband would negotiate with ‘P’ to get his earlier agreement with the vendor cancelled. The vendor failed to discharge her onus of proving that there was such a condition in the agreement dated 21.3.1984. The trial court and the High Court rightly did not believe the vendor. [Para 59][21-C-D]
3. It is true that the trial court had directed the vendee to pay the balance of Rs.5,000/- on or before 15.4.1994, failing which the suit for specific performance would stand dismissed. However, any time granted by the Court at its discretion, can always be extended by the Court. In any case, the vendor had filed an appeal against the decree in the suit for specific performance. The vendee, who had been litigating for about 10 years by April, 1994 and had already paid Rs.45,000/- over 10 years ago, but not got the suit land, could not be expected to put in more money, until the decree assumed finality. Since there was an appeal of the vendor pending, the failure of the vendee to put in Rs.5,000/within the time stipulated by Court, wold not, in itself, disentitle the vendee to the relief of specific performance. It was for the Court to decide whether or not to extend the time for payment of Rs.5,000/-. The appellate court rightly expressed its discretion in favour of the vendee. [Paras 62, 63 and 64][22-C-F]
4.1 The relief of specific performance of an agreement, was at all material times, equitable, discretionary relief, governed by the provisions of the Specific Relief Act 1963. Even though the power of the Court to direct specific performance of an agreement may have been discretionary, such power could not be arbitrary. The discretion had necessarily to be exercised in accordance with sound and reasonable judicial principles. [Para 67][23-B-C]
4.2 Relief of specific performance of a contract is no longer discretionary, after the amendment of s. 10 of Specific Relief Act. After the amendment of Section 10, the Court is obliged to enforce the specific performance of a contract, subject to the provisions of sub-section (2) of Section 11, Section 14 and Section 16 of the Act. [Para 70][24-B-C]
5.1 An agreement to sell immovable property, generally creates a right in personam in favour of the vendee. The vendee acquires a legitimate right to enforce specific performance of the agreement. The Court ordinarily enforces a contract in its entirety by passing a decree for its specific performance. However, Section
12 of the Specific Relief Act carves out exceptions, where the Court might direct specific performance of a contract in part. [Paras 71 and 72][24-D-E]
5.2 Where a party to the contract is unable to perform the whole of his part of the contract, the Court may, in the circumstances mentioned in Section 12 of the S.R.A., direct the specific performance of so much of the contract, as can be performed, particularly where the value of the part of the contract left unperformed would be small in proportion to the total value of the contract and admits of compensation. [Para 73][25-G-H; 26-A]
5.3 Section 12 of the Specific Relief Act is to be construed and interpreted in a purposive and meaningful manner to empower the Court to direct specific performance by the defaulting party, of so much of the contract, as can be performed. To hold otherwise would permit a party to a contract for sale of land, to deliberately frustrate the entire contract by transferring a part of the suit property and creating third party interests over the same. A contractee who frustrates a contract deliberately by his own wrongful acts cannot be permitted to escape scot free. [Paras 87 and 88][28-F-H]
5.4 In the present case the vendee had apparently tendered the full consideration within the time stipulated in the agreement dated 21.3.1984, that is, within 45 days or if not 45, within 47/48 days from the date of its execution. However, the vendor purported to sell 100 square yards of the suit land to ‘P’ by executing a registered deed of conveyance in his favour. Since title in respect of 100 square yards had passed to ‘P’ and the suit for specific performance was barred by limitation, the trial court was constrained to decree the suit for specific performance in part, and direct that a Deed of Conveyance be executed in respect of the balance 200 square yards of the suit land, under the ownership and control of the vendor. [Paras 74, 76 and 86][26-B, E; 28-E]
6.1 After having entered into an agreement for sale of 300 Sq. yards of land, with her eyes open, and accepted a major part of the consideration (Rs.45,000/- out of Rs.75,000/-) it does not lie in the mouth of the vendor to contend that the contract should not have specifically been enforced in part, in respect of the balance 200 sq. yards of the suit land which the vendor still owned. It is patently obvious that the vendor did not disclose any earlier agreement to the vendee, as the agreement in writing dated 21.3.1984, does not bear reference to any earlier agreement. [Para 89][29-A-B]
6.2 Instead of awarding damages in respect of the part of the contract which could not be enforced and/or in other words damages for breach of agreement to sell the entire suit land, the trial court had reduced the total consideration by 1/3rd of the agreed amount, in lieu of damages, as one third of the area agreed to be sold to the vendee could not be sold to her. The total price agreed upon being Rs.75,000/- for the entire suit land, comprising
300 square yards, the agreed price works out to Rs.25,000/- for
100 square yards and/or Rs.2,500/- per square yard. The trial court very fairly reduced the consideration by Rs.25,000/-, being the price of 100 square yards of land computed proportionally, in lieu of damages. The vendor can have no legitimate reason to complain. [Para 90][29-C-D]
7.1 A transferee to whom the subject matter of a sale agreement or part thereof is transferred, is a necessary party to a suit for specific performance. The vendee omitted to implead ‘P’. By the time she filed an application to implead ‘P’ in 1989, the suit for specific performance of the agreement dated 21.3.1984 had become barred by limitation as against ‘P’. [Para 79] [26-H; 27-A]
7.2 Under the Limitation Act 1963 the period of limitation for filing a suit for specific performance is three years from the date fixed for performance of the contract, or if no date is fixed, then three years from the date on which the vendee is put to notice of refusal to perform the agreement (Item No.54 in Part II of the Schedule to the Limitation Act 1963). [Para 80][27-B]
7.3 The vendee was put to notice of the refusal of the vendor to execute the agreement dated 21.3.1984, by the vendor’s letter/legal notice dated 20.6.1984. Any suit for specific performance would be time barred by June/July 1987. Moreover, it is a matter of record that the vendee knew of the registered deed of conveyance in favour of ‘P’, when she instituted the suit in 1984. The vendee neither amended her pleadings in the plaint nor amended the prayers. ‘P’ was simply added defendant. The Court adding ‘P’ as defendant in the suit for specific performance, did not make any direction in terms of the proviso to Section 21(1) of the Limitation Act, that the suit against him be deemed to be instituted at any earlier date. There could therefore be no question of any relief against ‘P’ in the suit for specific performance. [Paras 82, 83][27-F-H; 28-A]
7.4 The suit for specific performance being time barred against ‘P’ and the suit against ‘P’ also having been dismissed for non-joinder of the vendor, there could be no question of nullifying the rights that had accrued to ‘P’ pursuant to the Deed of Conveyance dated 25.4.1984 executed by the vendor transferring 100 sq. yards of the suit land to ‘P’. Moreover, there was apparently an agreement in writing executed between the vendor and ‘P’ on or about 25.01.1984 before execution of the agreement between the vendor and the vendee. [Para 85] [28-C-D]
Durga Prasad and Anr. v. Deep Chand and Ors. AIR 1954 SC 75 : [1954] SCR 360 – referred to.
7.5 The vendee did not implead the vendor as defendant in her later suit inter alia for a declaration that the Deed of conveyance executed by the vendor in favour of ‘P’ was null and void. The suit has rightly been dismissed for non-joinder of the vendor as defendant. There could be no question of a document being adjudged null and void without impleading the executant of the document, as defendant. [Para 84][28-B]
8.1 Clubbing of suits for hearing them together and disposal thereof by a common judgment and order is for practical reasons. Such clubbing together of the suits do not convert the suits into one action. The suits retain their separate identity. The clubbing together is done for convenience, inter alia, to save time, costs, repetition of procedures and to avoid conflicting judgments. [Para 91][29-E-F]
Mahalaxmi Coop. Housing Society Ltd. and Ors. v. Ashabhai Atmaram Patel (D) thr. Lrs. and Ors. (2013)
4 SCC 404 : [2013] 6 SCR 1 – relied on.
8.2 It is not correct to say that the Court is under an obligation to reject the subsequent suit, irrespective of whether objection of bar under Order II Rule 2 of the CPC was raised or not. The plea of bar under Order II Rule 2 of the CPC is a technical plea which has to be pleaded and satisfactorily established. If the plea of bar under Order II Rule 2 is not taken, the Court should not suo motu decide the plea. The plea cannot be raised before this Court if not raised in the High Court. [Paras 92, 93][29-H; 30-A-B]
R. A. Oswal v. Deepak Jewellers and Ors. (1999) 6 SCC 40; Dalip Singh v. Mehar Singh Rathee and Ors. (2004)
7 SCC 650 – relied on.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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