Escalation Of Prices Cannot Be The Sole Ground To Deny Specific Performance: Supreme Court

Escalation of prices cannot be the sole ground to deny specific performance, the Supreme Court observed.

The bench comprising Justices L. Nageswara Rao and S. Ravindra Bhat also observed that, 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.

The court was considering appeal against the judgment of Division Bench of Madras High Court which set aside decree for specific performance passed by the Single Judge.

The appellant, in the year 2000, had filed four suits for specific performance of the agreements of sale dated 20.03.1991 and Memoranda of Understanding (MOU) dated 24.01.1994. (Suits were filed two years after the High Court allowed Writ Petitions filed against the compulsory acquisition of thy e subject property by the Income Tax authorities) These suits were decreed by the Single Bench. The Division Bench reversed the judgment of single bench citing factors such as delay in deposit of the balance consideration etc.

In appeal before the Apex Court, it was argued on behalf of the Respondents that the escalation in prices of properties in Chennai and the delay caused by appellants are relevant factors to deny specific performance. 

Taking note of the pleadings, the bench observed that the finding of the Division Bench of the High Court that the Appellants were not ready and willing to perform their part of the contract by not paying the balance consideration immediately after disposal of the Writ Petition is erroneous. 

"A suit for specific performance cannot be dismissed on the sole ground of delay or laches. However, an exception to this rule is where an immovable property is to be sold within a certain period, time being of the essence, and it is not 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 . We are in agreement with the Appellants that they did not file the civil suits immediately after the disposal of the Writ Petition in 1998 due to the pendency of Writ Appeals. Escalation of prices cannot be the sole ground to deny specific performance . We are of the considered view that the Respondents are not entitled for any additional amount as 90 per cent of the sale consideration was paid by the Appellants before 1994. ", the court said while allowing appeals.

Case: A.R. Madana Gopal Vs. Ramnath Publications Pvt. Ltd.
Coram: Justices L. Nageswara Rao and S. Ravindra Bhat
Counsel: Adv Raghavendra S. Srivatsa, Sr. Adv P.S. Narasimha
Citation: LL 2021 SC 206

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