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Civil · Reportable judgment

Janardan Das & Ors. vs Durga Prasad Agarwalla & Ors.

Court
Supreme Court of India
Date
26 September 2024
Case No.
Civil Appeal No. 613 of 2017
Result
Allowed
Bench
Vikram Nath, Pankaj Mithal, Prasanna Bhalachandra Varale
Citation
[2024] 9 S.C.R. 947 : 2024 INSC 778
Acts & Sections
Specific Relief Act, 1963
Supreme Court Reports [2024] 9 S.C.R. 947 : 2024 INSC 778
Issue for consideration
Issue arose as to whether the plaintiffs proved their continuous readiness and willingness to perform their part of the contract as mandated u/s.16(c) of the Specific Relief Act, 1963; whether the agreement to sell was valid and enforceable against three co-owners-sisters, considering that defendant no. 1-co-owner lacked the authority to act on their behalf without a valid and subsisting General Power of Attorney; and whether the relief of specific performance, being discretionary, having been denied by the trial court was rightly granted by the High Court.
Headnote

Specific Relief Act, 1963 – s.16(c) – Specific performance of contract – Enforcement – Readiness and willingness of the plaintiffs to perform the contract – Devolution of suit property among five heirs-two brothers and three sisters equally – Plaintiffs operating a petrol pump on the suit land allegedly entered into an agreement to sell with defendant No. 1 and his brother for the purchase of the suit property for consideration – Agreement stipulated that the sisters-co-owners would execute the sale deed within three months as they had not joined the agreement – Plaintiffs filed suit for specific performance of the agreement – Said agreement was executed solely by the brothers-two co-owners without any signatures, written consent, or explicit authorization from the sisters-three co-owners – Meanwhile, all the co-owners of the property transferred the suit property in favour of the appellants by virtue of a sale deed for consideration – Suit dismissed by the trial court, however, the High Court decreed the suit in favour of the plaintiffs – Correctness:

Read the full headnote (6 more paragraphs)

Held: Plaintiffs’ failure to comply with the essential terms of the agreement and to take necessary steps within the stipulated time demonstrates a lack of readiness and willingness to perform their part of the contract as mandated u/s.16(c), which is fatal to their claim for specific performance – High Court erred in overlooking the plaintiffs’ inaction and lack of diligence – Further, defendant No. 1-co-owner lacked the authority to bind other three co-ownerssisters in the agreement to sell – General Power of Attorney did not confer upon him the power to sell the property on behalf of his sisters at the time of the agreement, having been impliedly revoked by the partition deed – Plaintiffs’ knowledge of the necessity of obtaining the sisters’ consent, coupled with their failure to secure such consent, renders the agreement ineffective against the sisters, and cannot be specifically enforced against them, and the plaintiffs cannot claim any right over their shares in the property based on the said agreement – Appellants are the bona fide purchasers in good faith of the suit property for valuable consideration – Once they have acquired the rights in the property way back, no justification to disturb the said sale deed by decreeing the suit for specific performance of the agreement – Thus, considering the discretionary nature of the relief and the principles governing its exercise, granting specific performance would be neither just nor equitable – Plaintiffs’ failure to fulfil essential contractual terms, coupled with the lack of authority to bind all co-owners, renders the grant of specific performance inappropriate – Equitable remedy sought by the plaintiffs cannot be granted in light of their conduct and the circumstances of the case – Given the incomplete and unenforceable nature of the agreement, it is neither just nor equitable to grant the relief sought by the plaintiffs – Thus, the judgment and decree passed by the High Court set aside and that of the trial court dismissing the suit for specific performance restored. [Paras 9-25]

Specific Relief Act, 1963 – s.16(c) – Specific performance of contract – Enforcement – Readiness and willingness of the plaintiffs to perform the contract:

Held: s.16(c) mandates that a plaintiff seeking specific performance of a contract must aver and prove that they have performed or have always been ready and willing to perform the essential terms of the contract which are to be performed by them – This requirement is a condition precedent and must be established by the plaintiff throughout the proceedings – Readiness and willingness of the plaintiff are to be determined from their conduct prior to and subsequent to the filing of the suit, as well as from the terms of the agreement and surrounding circumstances – Rationale behind this provision is to ensure that a party seeking equitable relief has acted equitably themselves – Specific performance is a discretionary relief, and the plaintiff must come to the court with clean hands, demonstrating sincerity and earnestness in fulfilling their contractual obligations – Any laxity, indifference, or failure to perform their part of the contract can be a ground to deny such relief. [Para 8]

Power of Attorney – General Power of Attorney – When can agent bind the principals to contract of sale: Held: In contracts involving multiple owners of property, it is imperative that all co-owners either personally execute the agreement to sell or duly authorize an agent to act on their behalf through a valid and subsisting power of attorney – Agent’s authority must be clear and unambiguous, and any limitations or revocations of such authority must be duly considered – Without proper authority, an agent cannot bind the principals to a contract of sale. [Para 14]

Specific Relief Act, 1963 – s.20 – Relief of specific performance under – Nature of:

Held: Relief of specific performance is discretionary in nature – s.20 explicitly states that the court is not bound to grant such relief merely because it is lawful to do so – But the discretion of the court has to be on sound and reasonable principles – Discretion must be exercised judiciously and based on sound principles, ensuring that granting specific performance is just and equitable in the circumstances of the case. [Paras 19, 21]

Keywords: Continuous readiness and willingness to perform part of contract · Agreement to sell · General Power of Attorney · Specific performance · Sale deed · Consideration · Multiple parties · Distinct interests · Bona fide purchasers in good faith · Equitable relief · Contractual obligations · Contracts · Agent binding principals to contract of sale · Judicious exercise of discretion · Grant of specific performance

As published in the Supreme Court Reports, Supreme Court of India. Headnotes prepared by: Nidhi Jain. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.

Full Judgment Text

Order 1. The present appeal arises from the judgment and order dated 25.10.2013 passed by the High Court of Orissa at Cuttack in First Appeal No. 185 of 1997, wherein the High Court reversed the judgment of the Civil Judge (Senior Division), Baripada, dated 17.05.1997 in T.S. No. 103 of 1994. The High Court decreed the suit for specific performance filed by the plaintiffs (Respondent Nos. 1 & 2 herein), directing the defendants, including the present appellants (Defendant Nos. 9 to 11), to execute a sale deed in favour of the plaintiffs. Aggrieved by this decision, the defendant nos. 9 to 11
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