Specific Relief Act, 1963 : ss. 10, 16(c), 20 – Discretion as to decreeing specific performance – On facts execution of the agreement to sell land between the parties and receipt of consideration by the appellant-buyer – Balance amount to be paid within six months provided the respondent-seller made available the document of title and purchase certificate after measuring the property – Thereafter notice served by the appellant to the respondent to execute the sale deed – Refusal of the respondent to execute the sale deed and cancelled the agreement – Suit for specific performance of the agreement to sell by the appellant – Trial court allowed the suit and also directed the appellant to pay 25% more amount, over and above the agreed consideration – High Court while considering s. 20, set aside the decree for specific performance and directed the respondent to pay the consideration amount to the appellant – On appeal held: In view of difference of opinion, matter referred to the larger bench – Reference to larger Bench. Referring *the matter to larger Bench, the Court HELD :
PER M. R. SHAH, J.
1.1. It was never the case on behalf of the defendants in the written statement and/or even before the trial court that the agreement to sell was inequitable and/or was a forced agreement to sell. Even the trial court also did not frame the issue, “whether agreement to sell was a forced agreement to sell/contract or not”.
Ed. Note : Hon'ble Mr. Justice M.R. Shah and Hon’ble Mrs. Justice B.V. Nagarathna pronounced separate reportable judgments of the Bench comprising Their Lordships. In view of difference of opinion in the matter it was directed to place the papers before Hon’ble the Chief Justice of India for appropriate orders for constituting a larger Bench to decide the controversy.
On appreciation of entire evidence on record, the trial court after recording the findings on the execution of the agreement to sell by the defendants and receipt of part sale consideration and that the plaintiff was always ready and willing to perform his part of the contract, decreed the suit for specific performance. The High Court, as such, has not commented upon and/or set aside any of the findings recorded by the trial court, recorded while passing a decree for specific performance. Straightway, the High Court considered Section 20 of the Specific Relief Act and observed and held that by enhancing the amount of sale consideration, the trial court has wrongly exercised the discretion in favour of the plaintiff. The High Court commented upon the order passed by the trial court enhancing the amount of sale consideration and directing the plaintiff to pay more amount than the sale consideration mentioned in the agreement to sell. [Para 6][257A-E]
1.2 The trial court directed the plaintiff to pay some more amount than the amount mentioned in the agreement to sell, at the most, the plaintiff can be said to be aggrieved. Still, the High Court considered such an order passed by the trial court against the defendants. As such, the trial court was absolutely justified in compensating the defendants by paying some more amount while passing a decree for specific performance. Therefore, in the facts and circumstances of the case and more particularly when the trial court exercised the discretion in favour of the plaintiff after having observed and recorded the findings on the execution of the agreement to sell by the defendants and that the part sale consideration was paid by the plaintiff which was accepted by the defendants and thereafter the finding that the plaintiff was always ready and willing to perform his part of the contract, the trial court was absolutely justified in passing the decree for specific performance. The High Court has erred in interfering with the judgment and decree passed by the trial court, without setting aside the findings recorded by the trial court recorded while passing the decree for specific performance. The impugned judgment and order passed by the High Court is unsustainable, both, on law as well as on facts, and is quashed and set aside and the judgment and decree passed by the trial court for specific performance of agreement to sell is restored. However, to do complete justice and in exercise of powers under Article 142 of the Constitution of India, it is directed that over and above the sale consideration mentioned in the agreement to sell and the amount already deposited by the plaintiff, the plaintiff to pay a further sum of Rs. 10,00,000/- (Rupees Ten Lakhs only) to the original defendants, to be paid within the stipulated period. The amount which might have been deposited by the original defendants, deposited pursuant to the impugned judgment and order passed by the High Court, i.e., Rs. 3,10,000/- be also returned/paid to the original defendants. [Para 7, 8][257-F-H; 258A-E] Pratap Lakshman Muchandi v. Shamlal Uddavadas Wadhwa, (2008) 12 SCC 67 : [2008] 1 SCR 854 – relied on.
PER B. V. NAGARATHNA, J. (Dissenting) :
1.1 The High Court relied on Section 20 of the Specific Relief Act, prior to the same being substituted by way of Act No.
18 of 2018, to deny the relief of specific performance to the plaintiff. Section 20 of the Act as it stood prior to the Amendment Act of 2018 provided that the jurisdiction to decree specific performance is discretionary. It said that the Court is not bound to grant such relief merely because it is lawful to do so. Such a discretion, however, was not to be exercised arbitrarily, but ought to have been based on sound and reasonable judicial principles. Even in the absence of discretionary power under Section 20 to deny the relief of specific performance, the plaintiff was not entitled to claim such relief as a matter of right. The position of law, even following the amendment of 2018 remains that the provisions of Section 16 of the Act have to be mandatorily complied with by the party seeking the relief of specific performance. The relief of specific performance cannot be granted in favour of a party who has not performed his obligations under the contract. It is therefore necessary to ascertain whether, the plaintiff had complied with the statutory prerequisites under Section 16 (c), before claiming the relief of specific performance. [Para 12,18][268-B-C; 270-H; 271-A-B]
1.2 Clause (c) of Section 16 of the Act, which is relevant in the instant case, though amended w.e.f. 01st October, 2018 clearly states that unless the plaintiff establishes his readiness and willingness to perform his part of the contract, he would not be entitled to a decree of specific performance. Prior to the amendment, the expression “who fails to aver and prove” was on the statute book and its substitution by the words “who fails to prove” does not bring about any drastic change to the object and intent of the clause. This is because failing to prove readiness and willingness to perform the essential terms of the contract would first require averments to that effect to be made in the plaint by the plaintiff. The absence of such averments regarding readiness and willingness to perform the essential terms of the contract by the plaintiff would not permit him to let in any evidence on that aspect. It is a settled principle of law that no evidence can be permitted to be let in in the absence of averments in the plaint / pleadings. [Para 19][271-G-H; 272-A-C]
1.3 Notwithstanding the amendment to Section 16 of the Act whereby the expression “who fails to aver and prove” has been substituted with the phrase “who fails to prove,” the law remains that no evidence can be let in on a plea that was never put forward in the plaint/pleadings. But, it is necessary to sound a caveat. Even the absence of the words “ready and willing to perform the contract” in the plaint would now not have an adverse impact on the plaintiff’s case, so long as plaintiff’s readiness and willingness to perform the essential terms of the contract could be gathered on a holistic reading of the plaint. In fact, even in relation to the earlier scheme of Section 16 of the Act which required a plaintiff seeking the remedy of specific performance to ‘aver and prove’ that he was ready and willing to perform his obligations under an agreement, it was sufficient if the averments in substance indicate continuous readiness and willingness on the part of the person suing, to perform his part of the contract language in Section 16 (c), as it stood prior to the Amendment Act of 2018, did not require any specific phraseology to be followed in relation to the averments as to readiness and willingness. That the compliance of requirements of readiness and willingness have to be in spirt and substance and not in letter and form. That is why the deletion of the words “who fails to aver” in Section 16
(c) of the Act does bring about any real change in the position of law as it stood prior to the amendment. [Para 20, 21][272-E-H; 273-A-B]
1.4 Readiness and willingness cannot be considered in a straitjacket formula; it has to be inferred on a consideration of the entire facts and circumstances of each case and the intention and conduct of the parties concerned. Even if a party to the contract is ready and has the requisite funds he may not be willing to perform his part of the contract and vice versa. Thus, both readiness as well as willingness have to be established by the plaintiff on whom the burden is cast in a suit for specific performance of an agreement. [Para 22, 23][273-C-D; 274-B]
1.5 Nothing was brought on record by the plaintiff to demonstrate that positive steps were taken by him in pursuance of the agreement of sale of Kanam and Kuzhikoor rights. It is trite that the relief of specific performance cannot be granted in favour of a party who has not performed his obligations under the contract. The only exception to such rule is that a party is not required to perform those obligations, as are prevented or waived by the other party to the contract. [Para 26][275-G-H]
1.6 It is an admitted fact that the plaintiff had paid an amount, which constituted merely 4% of the consideration. The trial court itself recorded findings to the effect that neither party had initiated timely steps to perform their respective obligations under the contract. Although the defendants did not make available the title deeds of the schedule property to the plaintiff, it could not be said that the conduct of the defendants had prevented the plaintiff from tendering the balance sale consideration, within the stipulated date, or at any time before filing the suit for specific performance as the whole object of the intended sale was to garner funds for discharging a debt which was ultimately done by the defendants by selling family jewellery. Further, there was no delay on the part of the defendant in acting in pursuance of the agreement. The fact that the purchase certificate was granted by the concerned authority only on 31st May, 2007, was beyond the control of the defendants and such delay could not be attributed to the defendants. The defendants had duly initiated the process of obtaining a purchase certificate soon after entering into the agreement. [Para 27, 28][276-A-E]
1.7 While the counsel for the appellant-plaintiff has contended that since the transaction in question involved the transfer of rights in immovable property, a prudent purchaser would have to satisfy himself as to the genuineness and validity of the documents of title, and therefore, owing to the nonavailability of documents of title, the plaintiff was unable to proceed with his obligations, no explanation has been provided as to why ancillary steps such as measurement of the property was not proceeded with. Delay in securing relevant documents from the concerned authorities could not absolve the plaintiff of his obligations under the agreement of sale of Kanam and Kuzhikoor rights. Further, this aspect of the matter is to be appreciated in light of the fact that there is nothing on record which would demonstrate any step taken by the plaintiff to pursue the agreement, until, 2 nd November, 2006, on which date, the legal notice was served on the defendants calling upon them to execute the sale deed in respect of the Kanam and Kuzhikoor rights over the suit property. No explanation has been provided as to why the legal notice was not served earlier, particularly when the six–month period stipulated under the agreement had expired on 7th February, 2006. Such conduct of the plaintiff is certainly not reflective of willingness, in terms of Section 16(c) of the Act. Further, the Court has to be mindful of circumstances which compelled the defendants to enter into the agreement of sale of Kanam and Kuzhikoor rights dated 7th February, 2006. The time limit stipulated in the agreement is of significance in the instant case when this aspect is viewed in light of the fact that the defendants were debt-ridden and sought to sell their Kanam and Kuzhikoor rights over suit property with the sole intention of clearing off such debts which were incurred to support the cardiac treatment of defendant no. 1. It was therefore necessary that the plaintiff paid a significant portion of the consideration, if not the entire sale consideration, within the period of six months as stipulated in the agreement. But the plaintiff refused to do so even on being repeatedly requested by the defendants. [Para 29, 30][276-E-H; 277-A-C]
1.8 The period of six months which was stipulated in the agreement of sale of Kanam and Kuzhikoor rights, in the present case, has to be accorded its due significance while deciding the suit for specific performance. Having regard to the urgency of the financial need of the defendants, which need had prompted them to sell their Kanam and Kuzhikoor rights over the suit property, it must be held that time stipulated in the agreement was the essence of the contract. The plaintiff in the present case served a legal notice only on 02nd November, 2006 while the six month period stipulated in the agreement had elapsed on 07th February, 2006. There is no explanation as to what occasioned the delay in serving the legal notice on the defendants and why such steps were not adopted soon after the expiry of the six month period stipulated in the agreement of sale of Kanam and Kuzhikoor rights. Therefore, it is held that the plaintiff, having paid no more than 4% of the sale consideration, and having not done even as much as getting the property measured within the period of six months stipulated under the agreement, cannot, at a belated date, claim specific performance of the agreement dated 7th August, 2005 to the disadvantage and hardship of the defendants. [Para 32-34][279-B-F]
1.9 The Courts may grant additional amount of consideration, a relief to balance equities, such a decree would be warranted only in cases where the plaintiff satisfactorily establishes compliance with Section 16 of the Act. That the measure of enhancement of compensation may be awarded at the discretion of the Court only if insufficiency of compensation is the only impediment to ensuring equity and preventing undue gain to one party. In the absence of compliance with the elementary requirements of Section 16 of the Act, enhancement of compensation cannot be employed as a device to allow specific performance in cases where the plaintiff has not performed his obligations under the contract as in the instant case. [Para 35][280A-C]
1.10 The appeal fails on the sole ground that the conduct of the plaintiff was not reflective of his readiness as well as willingness on his part to pursue the agreement of sale of Kanam and Kuzhikoor rights, in terms of Section 16(c) of the Act. [Para 36][280-C-D]
1.11 The impugned judgment of the High Court whereby the High Court set-aside the judgment and decree passed by the trial court, (by which the suit for specific performance of an agreement of sale of Kanam and Kuzhikoor rights, filed by the plaintiff was decreed), is affirmed. [Para 38][280-H; 281-A] Pratap Lakshman Muchandi and Ors. vs. Shamlal Uddavadas Wadhwa and Ors., (2008) 1 SCC 67;
Shenbagam vs. K.K. Rathinavel, 2022 SCC OnLine SC 71; Mehboob-Ur-Rehman (Dead) through LRs vs.
Ahsanul Ghani (2019) 19 SCC 415; Sughar Singh vs. Hari Singh (Dead) through LRs and Ors., A.I.R. 2021 SC 5581; B. Santoshamma vs. D. Sarala and Anr., (2020) 19 SCC 80; Bachhaj Nahar vs. Nilima Mandal and Ors., (2008) 17 SCC 491; Motilal Jain vs. Ramdasi Devi, A.I.R. 2000 SC 2408 : [2000] 1 Suppl. SCR 615; Syed Dastagir vs. T.R. Gopalakrishna Shetty, (1999) 6 SCC 337 : [1999] 1 Suppl. SCR 351; His Holiness Acharya Swami Ganesh Dassji vs. Sita Ram Thapar, (1996) 4 SCC 526 : [1996] 2 Suppl. SCR 111; J.P. Builders vs. A. Ramdas Rao, (2011) 1 SCC 429 : [2010]
15 SCR 538; Saradamani Kandappan vs. S.
Rajalakshmi, (2011) 12 SCC 18 : [2011] 8 SCR 874; K.S. Vidyanadam vs. Vairavan (1997) 3 SCC 1 : [1997]
1 SCR 993 – referred to.
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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