Specific Performance – Specific performance of contract – Agreement to sell land between the appellant-vendor and respondent-vendee – Part payment towards the sale price paid by respondent but appellant failed to carry out their obligations of obtaining ‘no objection certificate’ from the appropriate authority – Suit for specific performance of the agreement by the respondent – Application also filed for injunction against alienation of the land in dispute – Grant of interim injunction subject to deposit of the balance sale consideration – However, balance sale consideration not deposited by the respondent – During pendency of the suit, appellant transferred the land to defendant – Thereafter, dismissal of the suit since respondent not ready and willing to perform his part of the contract – However, the High Court passed the decree for specific performance in favour of the respondent – On appeal, held: Material on record indicates that the respondent did not have the necessary funds to pay the balance consideration – Though respondent took loan but that was for his business and not for payment of balance consideration – Respondent could not pay the loan amount as also the balance consideration – Trial court rightly held that by necessary implication respondent was neither ready nor willing to perform his part of the agreement – Further, the nature and the purpose of no objection certificate that vendors were required to obtain and the authorities from whom it was to be obtained not clear – Also not clear about the nature of income tax clearance certificate required and for what purpose – Thus, the judgment and decree passed by the High Court is set aside.
Allowing the appeal, the Court
HELD: 1.1 In the instant appeal, the material on record clearly indicates that the respondent did not have the necessary funds available with him to pay the balance consideration. His low income and low bank balance indicated his incapacity to make the balance payment. As far as his capacity to arrange for funds is concerned, it has come on record that the respondent did take a loan from his cousin but that was only for his business and not for paying the balance consideration for the land in dispute. There is nothing on record to indicate that the respondent could have not only repaid the loan taken from his cousin, but additionally, could have arranged sufficient funds to pay the balance consideration. It is very doubtful, and it is easy and reasonable to infer this, that the respondent was incapable of meeting both liabilities. [Para 21][489-D-E]
1.2 On the facts the trial judge was right in coming to the conclusion that the respondent was not in a position to pay the balance consideration to the appellant and the other vendors, and by necessary implication, it must be held that he was neither ready nor willing to perform his part of the agreement. [Para 22][489-F]
1.3 The agreement to sell is seen and the relevant clause of the contract is remarkably vague, that the vendors would obtain the no objection certificate from the authorities concerned and would inform the vendee by registered post after getting the income tax clearance certificate. There is nothing to indicate the nature of the “no objection certificate” that the vendors were required to obtain and who were the authorities from whom the “no objection certificate” was required, nor is there any indication of the purpose for which the “no objection certificate” was required. Similarly, there is no indication about the nature of the income tax clearance certificate required and for what purpose. This clause appears to have been inserted in the agreement to sell without any application of mind and it is quite possible, as alleged by the vendors that the agreement to sell was ante-dated after the introduction of Section 260-UC in the Income Tax Act, 1961. However, it is not possibile in view of the vague nature of the clause. [Paras 23, 24][489-G-H; 490-B-C]
1.4 On an overall consideration of the facts and in the circumstances of the case, the High Court was in error in setting aside the judgment and decree of the trial judge. Thus, the judgment and decree passed by the High Court is set aside. [Para 25][490-D]
His Holiness Acharya Swami Ganesh Dassji v. Sita Ram Thapar (1996) 4 SCC 526 : [1996] 2 Suppl. SCR 111; I.S. Sikandar (Dead) by Lrs. v. K. Subramani &Ors. (2013) 15 SCC 27 : [2013] 17 SCR 24 – 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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