Specific Relief Act, 1963 – Agreement to sell entered into between appellant and defendants (represented by respondents) in 1980 – Necessary permissions from the competent authority under the 1978 Act (later repealed by 1999 Repeal Act) not obtained by the defendants – Appellant filed suit for specific performance – Decreed by Single Judge – In first appeal, Division Bench referred the matter to a Full Bench on various questions – Full Bench inter alia holding that s.6, 1978 Act prohibited even agreements to sell, declared law inter-parties and the matter went back to Division Bench – Division Bench remanded the matter to Single Judge who inter alia recorded a finding that the suit property stood as excess lands within the meaning of the 1978 Act before it was repealed – Matter returned to the Division Bench, which by applying the Full Bench decision relating to the matter inter-parties vide the impugned judgment has reversed the judgment of the Single Judge – On appeal, held: Agreement contained a specific clause in which it was for the vendor to obtain permission from the competent authority under the 1978 Act – Thus, the agreement cannot be said to be hit by the decision of Full Bench judgment as the Full Bench itself recognised that there may be agreements with such clauses, in which case it is the Court’s duty to enforce such clause – Agreement to sell cannot be said to be void ab initio, as a result of which the basis of the Division Bench judgment under appeal goes – Further, on the date on which the appellate decree was passed, the 1978 Act having been repealed would not stand in the way of a decree for specific performance – There is no vested right under the 1978 Act in favour of the respondents – Division Bench incorrect in stating that since the court process took 27 years to decide the specific performance suit, it being a discretionary relief ought not to be granted – A suit for specific performance filed within limitation cannot be dismissed on the sole ground of delay or laches – Appellant was ready and willing throughout to perform its part of the bargain – Defendants took up dishonest pleas and were in breach of a solemn agreement in which they were to obtain the Urban Land Ceiling permission which, if not obtained, would, under the agreement itself, not stand in the way of specific performance of the agreement between the parties – Division Bench judgment set aside – Decree passed by Single Judge restored – Tamil Nadu Urban Land (Ceiling & Regulation) Act, 1978 – ss.4, 5(3), 6 – Tamil Nadu Urban Land (Ceiling & Regulation) Repeal Act, 1999.
Specific Relief Act, 1963 – s.20 – Scope of – Held: s.20 prior to its substitution by the 2018 Amendment Act makes it clear that the jurisdiction to decree specific performance is discretionary – This discretion is not arbitrary but has to be exercised soundly and reasonably, guided by judicial principles, and capable of correction by a court of appeal – Specific Relief (Amendment) Act, 2018. Allowing the appeal, the Court
HELD: 1.1 It is not open to the appellant to go behind the Full Bench judgment as it is inter-parties, as a result of which the law laid down by the Full Bench judgment must apply to the parties, res judicata clearly attaching even to issues of law based on the same cause of action. This being the case, it is important now to analyse what was held by the Full Bench. The Full Bench judgment, while stating that section 6 of the Tamil Nadu Urban Land Ceiling Act prohibited even agreements to sell, as a result of which there would be no transaction at all in the eyes of law, , was careful thereafter to point out:
“40. …… While considering suit for specific performance, Court is only concerned whether purchaser has come to Court for enforcing the agreement in terms thereof. Asking vendor to get exemption and then to execute the agreement will be deviating from the terms of contract and the Court will not enforce such a contract. That will mean that purchaser is not willing to purchase the land as per agreement, but only with deviation, i.e., vendor must get exemption and execute the sale deed.”
In paragraph 41, the Full Bench also went on to state that it is possible to obtain exemption under the Tamil Nadu Urban Land Ceiling Act, over which the Court has no control, but despite that, the relief of specific performance is not usually granted as it would be going beyond the contract. Equally, after holding that section 6 prohibits a proposed transfer, the Full Bench went on to hold that a decree for specific performance cannot be granted conditionally upon the vendor satisfying certain conditions if it is not part of the agreement. [Paras 14-16][696-A-F]
Mathura Prasad Bajoo Jaiswal v. Dossibai N.B. Jeejeebhoy (1970) 3 SCR 830 – relied on.
1.2 When these portions of the Full Bench judgment are applied to the agreement in question, it is clear that the agreement itself contains a specific clause, namely, clause 4, in which it is for the vendor to obtain permission from the competent authority under the Tamil Nadu Urban Land Ceiling Act. This agreement, therefore, cannot be said to be hit by the decision of the Full Bench judgment as the Full Bench itself recognises that there may be agreements with such clauses, in which case it is the Court’s duty to enforce such clause. That is all that the learned Single Judge has done in the facts of this case – he has correctly held that it was for the defendants to obtain exemption from the authorities under the Tamil Nadu Urban Land Ceiling Act which they did not, as a result of which they were in breach of the agreement. Viewed slightly differently, it is clear that the Full Bench judgment cannot stand in the way of the appellant for another reason. There can be no doubt that the suit property, admeasuring roughly 2002 sq. metres, was part of a larger property of 30 grounds, and that the defendants, being four in number, were entitled to retain 2000 sq. metres of the land owned by them. It was for this reason that it was incumbent upon the defendants to have obtained the Urban Land Ceiling permission to sell the land that was within their ceiling limit, which they failed to do. It is clear, therefore, that the agreement to sell cannot be said to be void ab initio, as a result of which the basis of the Division Bench judgment under appeal goes. Resultantly, the judgments in Jacques v. Withy, 1 H. Bl. 65, Hitchcock v. Way, (1837) 6 A & E 943 : 112 ER 360, and Ram Kristo Mandal v. Dhankisto Mandal, (1969) 1 SCR 342 (at p. 349) cited in support of the proposition that the repeal of a statute which makes void an agreement cannot revive such void agreement have no application on the facts of this case. In view of this, it is unnecessary to go into whether section 5(3) of the Tamil Nadu Urban Land Ceiling Act, together with its proviso, applies to the facts of this case. [Paras 17-19][696-F-H; 697-A-C; 698-G-H] Jacques v. Withy 1 H. Bl. 65; Hitchcock v. Way (1837)
6 A & E 943 : 112 ER 360; Ram Kristo Mandal v. Dhankisto Mandal (1969) 1 SCR 342 - held
inapplicable.
1.3 However, the other contention on behalf of the respondents is that even if this were so, the appellant was not entitled to more than 500 sq. metres, which was the ceiling limit so far as the appellant was concerned. This being the case, no decree for specific performance could be made in favour of the appellant. That conditional decrees for specific performance have been passed and upheld by this Court cannot be denied. [Paras 20, 21][699-B-C]
1.4 Even otherwise, the Repeal Act makes it clear that the Tamil Nadu Urban Land Ceiling Act is repealed. As no steps whatsoever were taken under the Tamil Nadu Urban Land Ceiling Act, the savings clause will not apply. [Para 22][701-F; 702-C-D]
1.5 It is settled law that an appeal is a continuation of a suit, as a result of which a change in law will become applicable on the date of the appellate decree, provided that no vested right is taken away thereby. This being the case, on the date on which the appellate decree was passed, in any case, the Tamil Nadu Urban Land Ceiling Act having been repealed would not stand in the way of a decree for specific performance. It must be remembered that there is no vested right under the Tamil Nadu Urban Land Ceiling Act in favour of the respondents. Any right, if at all, is in favour of the State Government, which, like Pontius Pilate, has washed its hands off this matter by a report submitted to this Court on 17.08.2015. The Division Bench judgment is also wholly incorrect in stating that for no fault of the appellant, since the court process has taken 27 years to decide the specific performance suit, specific performance being a discretionary relief ought not to be granted. Section 20 of the Specific Relief Act, 1963, prior to its substitution by the Specific Relief (Amendment) Act, 2018, as it then stood, makes it clear that the jurisdiction to decree specific performance is discretionary; but that this discretion is not arbitrary but has to be exercised soundly and reasonably, guided by judicial principles, and capable of correction by a court of appeal – see section 20(1). Section 20(2) speaks of cases in which the court may properly exercise discretion not to decree specific performance. Significantly, under clause (a) of subsection (2), what is to be seen is the terms of the contract or the conduct of the parties at the time of entering into the contract. Even “other circumstances under which the contract was entered into” refers only to circumstances that prevailed at the time of entering into the contract. It is only then that this exception kicks in – and this is when the plaintiff gets an unfair advantage over the defendant. Equally, under clause (b) of sub-section (2), the hardship involved is again at the time of entering into the contract which is clear from the expression “which he did not foresee”. This is made clear beyond doubt by Explanation II of section 20 which states that the only exception to the hardship principle contained in clause (b) of sub-section (2) is where hardship results from an act of the plaintiff subsequent to the contract. In this case also, the act cannot be an act of a third party or of the court – the act must only be the act of the plaintiff. Clause (c) of subsection (2) again refers to the defendant entering into the contract under circumstances which makes it inequitable to enforce specific performance. Here again, the point of time at which this is to be judged is the time of entering into the contract. [Paras 24, 27, 28][703-G-H; 710-D-F; 711-G-H; 712-A-D]
1.6 Given section 20, the courts have uniformly held that the mere escalation of land prices after the date of the filing of the suit cannot be the sole ground to deny specific performance. It is settled law that mere delay by itself, without more, cannot be the sole factor to deny specific performance – See Mademsetty Satyanarayana v. G. Yelloji Rao, (1965) 2 SCR 221 at pp. 229-230. Thus, in K.S. Vidyanadam v. Vairavan, (1997) 3 SCC 1, this Court made it clear that if property prices have risen dramatically within a period of two and a half years before filing of the suit for specific performance, and it is coupled with violation of the agreement by the plaintiff, specific performance will not be decreed. Likewise, this Court, in Saradamani Kandappan v. S. Rajalakshmi, (2011)
12 SCC 18, made it clear that given the steep rise in urban land prices, it may not be correct now to say that time is not of essence in performance of a contract of sale of immovable property. Thus, where time can be said to be of the essence in the facts of a given case, and the purchaser does not take steps to complete the sale within the stipulated period and the vendor is not responsible for any delay, the steep rise in price within the stipulated time would be a circumstance which would make it inequitable to grant the relief of specific performance. [Paras 29, 30][712-D-E; 722-G; 725-F-H]
Nirmala Anand v. Advent Corporation (P) Ltd. (2002)
8 SCC 146: [2002] 2 Suppl. SCR 706; Mademsetty Satyanarayana v. G. Yelloji Rao (1965) 2 SCR 221; K.S. Vidyanadam v. Vairavan (1997) 3 SCC 1: [ 1997]
1 SCR 993; Saradamani Kandappan v. S. Rajalakshmi (2011) 12 SCC 18: [2011] 8 SCR 874 – relied on.
1.7 The resultant position in law is that a suit for specific performance filed within limitation cannot be dismissed on the sole ground of delay or laches. However, an exception to this rule is where immovable property is to be sold within a certain period, time being of the essence, and it is found that owing to some default on the part of the plaintiff, the sale could not take place within the stipulated time. Once a suit for specific performance has been filed, any delay as a result of the court process cannot be put against the plaintiff as a matter of law in decreeing specific performance. However, it is within the discretion of the Court, regard being had to the facts of each case, as to whether some additional amount ought or ought not to be paid by the plaintiff once a decree of specific performance is passed in its favour, even at the appellate stage. Fervent appeal on behalf of the respondents that this Court should not exercise its discretionary jurisdiction under Article 136, given the fact that Rs.2 crores plus interest is to be paid almost by way of solatium to the appellant, has also to be rejected. As has been found earlier in this judgment, the defendants were held to have taken up dishonest pleas and also held to have been in breach of a solemn agreement in which they were to obtain the Urban Land Ceiling permission which, if not obtained, would, under the agreement itself, not stand in the way of the specific performance of the agreement between the parties. He who asks for equity must do equity. Given the conduct of the defendants in this case, as contrasted with the conduct of the appellant who is ready and willing throughout to perform its part of the bargain, this is a fit case in which the Division Bench judgment should be set aside. As a result, the decree passed by the Single Judge is restored. Since the appellant itself offered a sum of Rs.1.25 crores to the Division Bench, it must be made to pay this amount to the respondents within a period of eight weeks from the date of this judgment. [Paras 31, 32][730-E-H; 731-A-C]
Keshavan Madhava Menon v. State of Bombay 1951 SCR 228 – distinguished.
Immani Appa Rao v. Gollapalli Ramalingamurthi (1962)
3 SCR 739; Narayanamma v. Govindappa 2019 SCC OnLine SC 1260 – held inapplicable.
Vishwa Nath Sharma v. Shyam Shanker Goela (2007)
10 SCC 595: [2007] 3 SCR 268; Van Vibhag
Karamchari Griha Nirman Sahkari Sanstha Maryadit v. Ramesh Chander (2010) 14 SCC 596: [2010 12 SCR 1045; Gajraj Singh v. State Transport Appellate Tribunal (1997) 1 SCC 650; Rameshwar v. Jot Ram (1976) 1 SCR 847; Dayawati v. Inderjit (1966) 3 SCR 275; Amarjit Kaur v. Pritam Singh (1974) 2 SCC 363; Lakshmi Narayan Guin v. Niranjan Modak (1985) 1 SCC 270; P. D’Souza v. Shondrilo Naidu (2004) 6 SCC 649:[2004] 3 Suppl. SCR 186; P.S. Ranakrishna Reddy v. M.K. Bhagyalakshmi (2007) 10 SCC 231: [2007] 2 SCR 876; Narinderjit Singh v. North Star Estate Promoters Ltd. (2012) 5 SCC 712; Satya Jain v. Anis Ahmed Rushdie (2013) 8 SCC 131:[ 2013] 3 SCR 319; K. Prakash v. B.R. Sampath Kumar (2015) 1 SCC 597: [2014] 13 SCR 702; Zarina Siddiqui v. A. Ramalingam (2015) 1 SCC 705: [2014] 14 SCR 456; Ramathal v. Maruthathal (2018) 18 SCC 303: [2017] 8 SCR 613; Sunkara Lakshminarasamma v. Sagi Subba Raju (2019)
11 SCC 787: [2018] 14 SCR 222; Nanjappan v.
Ramasamy (2015) 14 SCC 341: [2015] 2 SCR 606 – relied on.
Sushila v. Nihalchand Nahata AIR 2004 Mad 18 – referred to.
Lachmeshwar Prasad Shukul v. Keshwar Lal Chaudhuri AIR 1941 FC 5; John Lemm v. Thomas Alexander
Mitchell [1912] A.C. 400; Kay v. Goodwin 130 E.R. 1403 [1830] – 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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