Case 1: Plaintiff Seeking Temporary Injunction in Specific Performance Suit Has To Show Strong Prima Facie Case on Undisputed Facts:
Ambalal Sarabhai Enterprise Ltd vs KS Infraspace LLP and another & Haryana Containers Ltd vs KS Infraspace LLP and another (Civil Appeals No 9346, 9347, 9348-49 of 2019).
The Court was hearing an appeal filed by defendants in a specific performance suit against the interim order passed by the trial court (and affirmed by High Court) restraining them from executing sale deed or any other documents creating charge with respect to the property. The defendants contended that there was no concluded contract for sale, and that the agreement was only in the negotiation stage. When the talks fell out, the advance amount was also refunded to the plaintiff, submitted the defendants.
JUDGEMENT: The Supreme Court held that-
"Chapter VII, Section 36 of the Specific Relief Act, 1963 (hereinafter referred to as 'the Act') provides for grant of preventive relief. Section 37 provides that temporary injunction in a suit shall be regulated by the Code of Civil Procedure. The grant of relief in a suit for specific performance is itself a discretionary remedy. A plaintiff seeking temporary injunction in a suit for specific performance will therefore have to establish a strong primafacie case on basis of undisputed facts. The conduct of the plaintiff will also be a very relevant consideration for purposes of injunction. The discretion at this stage has to be exercised judiciously and not arbitrarily"- Ashok Bhushan & Navin Sinha. JJ
Case 2: Conduct Of A Plaintiff Is Very Crucial In A Suit For Specific Performance:
Atma Ram vs. Charanjit Singh (SLP (C) No.27598 of 2016)
The plaintiff in this case was a party to agreement for sale dated 12.10.1994. The date for performance of the contract was fixed under the agreement as 07.10.1996. After more than three years, the plaintiff filed a suit only for the relief of mandatory injunction, which he valued only at Rs.250 and paid a fixed court fee of Rs.25. On an application filed by defendant challenging the maintainability of the suit, the Trial Court held that the suit was in fact one for specific performance of an agreement of sale and that the technical objection regarding the maintainability could be overcome by directing the petitioner/plaintiff to pay the requisite court fee. Thereafter plaintiff paid the deficit court fee and the trial court chose to treat the suit as one for specific performance, which was ultimately decreed by it. This decree was later set aside by the First Appellate Court. The High Court, upholding the First Appellate Court judgment held the suit as time barred.
"A shortcut was found by the petitioner/plaintiff to retain the plaint as such, but to seek permission to pay deficit court fee, as though what was filed in the first instance was actually a suit for specific performance. Such a dubious approach should not be allowed especially in a suit for specific performance, as the relief of specific performance is discretionary under Section 20 of the Specific Relief Act, 1963".
"The conduct of a plaintiff is very crucial in a suit for specific performance. A person who issues a legal notice on 12.11.1996 claiming readiness and willingness, but who institutes a suit only on 13.10.1999 and that too only with a prayer for a mandatory injunction carrying a fixed court fee relatable only to the said relief, will not be entitled to the discretionary relief of specific performance. "- Justice NV Ramana and Justice V. Ramasubramanian.
CASE 3: Delay To File Suit for Specific Performance Not A Ground To Deny Relief If It Was Filed Within Limitation Period
R Lakshmikantham vs. Devaraji (CA No 2420 of 2018).
In this case, the date of the agreement i.e. 22.09.2002 and suit was filed on 11.02.2005. There the Madras high court dismissed the suit observing that "it has not been explained by the plaintiff as to why she should wait till 11.02.2005 to lay the suit for specific performance, after coming to know that the defendant had not responded to the notice sent by her. This would only go to show that in as much as the plaintiff had not been ready and willing to perform her part of the contract".
"The High Court was incorrect in putting a short delay in filing the Suit against the plaintiff to state that he was not ready and willing. In India, it is well settled that the rule of equity that exists in England, does not apply, and so long as a Suit for specific performance is filed within the period of limitation, delay cannot be put against the plaintiff" -See Mademsetty Satyanarayana v. G. Yelloji Rao and others AIR 1965 Supreme Court 1405 (paragraph 7) which reads as under: "(7) Mr. Lakshmaiah cited a long catena of English decisoins to define the scope of a Court's discretion. Before referring to them, it is necessary to know the fundamental difference between the two systems-English and Indian-qua the relief of specific performance". – Justice R. F. Nariman, Justice Surya kant.
CASE 4: Specific Performance- Illegal Agreement To Sell Can't Be Enforced In Favor Of Plaintiff
SMT. Narayamma & ANR. Etc. Etc. vs. SRI Govindappa & ORS. Etc. Etc (CA Nos 7630-7631 of 2019).
The issue in the suit for specific performance was whether the agreement to sell dated 15.05.1990 executed by defendant in favor of the plaintiff would be enforceable in law or not. It was found that the agreement to sell dated 15.05.1990, was clearly hit by Section 61 of the Reforms Act. On this ground, the suit was dismissed
If both the parties are equally guilty and the fraud intended by them had been carried out, the position would be that, the party raising the defence is not asking the Court's assistance in any active manner. It has been held, that all the defence suggested is that a confederate in fraud shall not be permitted to obtain a decree from the Court because the documents of title, on which the claim is based really conveys no title at all. In the facts of the said case, it was held, that though the result thereof would be assisting the defence therein to retain their possession, for such an assistance would be purely of passive character and all that the Court would do in effect is that on the facts proved, it proposes to allow possession to rest where it lies. It has been held that, latter course appears to be less injurious to public interest than the former one. It could thus be seen that, although illegality is not pleaded by the defendant nor is relied upon by him by way of defense, yet the court itself, upon the illegality appearing upon the evidence, will take notice of it, and will dismiss the action ex turpi causa non oritur actio. It has been held, that no polluted hand shall touch the pure fountain of justice. It has further been held, that where parties are concerned in illegal agreements or other transactions, courts of equity following the rule of law as to participators in common crime will not interpose to grant any relief, acting upon the maxim in pari delicto potior est conditio defendetis et possidentis. – Justice Arun Mishra, Justice M. R. Shah.
CASE 5: Plaintiff Can't Seek Specific Performance of agreement against defendant on a cause of action on which he has claimed permanent injunction
Sucha Singh Sodhi v Baldev Raj Walia (CA No.3777 of 2018).
In this case, first suit seeking an injunction against the defendant was withdrawn with leave of the court. Later, when a suit for specific performance was filed, the defendant objected to it, invoking Order 2 Rule 2, which states that the relief of specific performance ought to have claimed along with the relief of injunction in the earlier suit, which was withdrawn. The Trial Court and the High Court found favor with the defendant on this contention.
On appeal filed by the plaintiff, a bench of Justice RK Agrawal and Justice AM Sapre, found that such a relief of specific performance could not have claimed along with the suit for injunction, for the following reasons:
CASE 6: Relief Of Specific Performance Can Be Refused For Non Performance Of An Essential Promise In Contract:
Surinder Kaur (D) vs. Bahadur Singh (D) (CA No. 74247425 of 2011)
FACTS: The vendee Bahadur Singh by not paying the rent for 13 long years to the vendor Mohinder Kaur, even when he had been put in possession of the land on payment of less than 18% of the market value, caused undue hardship to her. The land was agricultural land. Bahadur Singh was cultivating the same. He must have been earning a fairly large amount from this land which measured about 9½ acres. He by not paying the rent did not act fairly
"In our opinion, he did not act in a proper manner. Equity is totally against him.
In our considered view, he was not entitled to claim the discretionary relief of specific performance of the agreement having not performed his part of the contract even if that part is held to be a distinct part of the agreement to sell." – Justice Deepak Gupta, Justice Aniruddha Bose.
CASE 7: Specific Performance Decree Not To Be Rescinded Merely Because Plaintiff Deposited Balance Sale Consideration After Appeal:
Surinder Pal Soni vs. Sohan Lal (Special Leave Petition (C) No 26508 of 2018)
The plaintiff deposited the balance sale consideration soon after the appeal against the trial court decree was dismissed by the High Court. The defendant objected to the execution on the ground that the deposit by plaintiff was belated as the trial court had directed the execution of sale deed within two months. The plaintiff pointed out that the appeal against trial court judgment was pending in the High Court for three years, and it was dismissed only in 2015. The execution court rejected the objections of the defendant. Against this, the defendant filed revision in the High Court, The High Court allowed the revision, Aggrieved, the plaintiff approach the Supreme Court.
"In the present case, once the Appellate Court confirmed the judgment and decree of the Trial Court, there was evidently a merger of the judgment of the Trial Court with the decision of the Appellate Court. Once the Appellate Court renders its judgment, it is the decree of the Appellate Court which becomes executable. Hence, the entitlement of the decree holder to execute the decree of the Appellate Court cannot be defeated".
The SC added that the HC could not have modified the decree in a civil revision petition arising out of execution proceedings.
"The High Court impermissibly substituted the decree for specific performance with an order for refund of the sale consideration, beyond the earnest money of Rs. 2, 00,000/- to the decree holder. The reasons which weighed with the High Court in doing so as well as its ultimate directions are unsustainable. In a Civil Revision arising out of an execution proceeding, the High Court has modified the decree. Such a course was not open in law".
CASE 8: Sec.14(3)(c) Specific Relief Act Does Not Bar Developer From Seeking Specific Performance Of Development Agreement :
Sushil Kumar Agarwal vs Meenakshi Sadhu and others (CA No. 1129 OF 2012).
The appellant before the Supreme Court was a developer, who had entered into a development agreement with the respondent to make constructions in the respondent's plot. On disputes arising between them, the appellant instituted suit for specific performance of the agreement. However, the suit was dismissed by the trial court on ground that Section 14(3)(c) of the Specific Relief Act barred such suit. The Calcutta High Court upheld the dismissal in appeal, and the matter reached the Supreme Court at the instance of the developer.
The SC observed that "If the rule of literal interpretation is adopted to interpret Section 14(3)(c)(iii), it would lead to a situation where a suit for specific performance can only be instituted at the behest of the owner against a developer, denying the benefit of the provision to the developer despite an interest in the property having been created".
By giving a purposive interpretation to Section 14(3)(c)(iii), the anomaly and absurdity created by the third condition will have no applicability in a situation where the developer who has an interest in the property, brings a suit for specific performance against the owner. The developer will have to satisfy the two conditions laid out in sub clause (i) and (ii) of Section 14(3)(c), for the suit for specific performance to be maintainable against the owner. This will ensure that both owners and developers can avail of the remedy of specific performance under the Act. A suit for specific performance filed by the developer would then be maintainable. Whether specific performance should in the facts of a case be granted is a separate matter, bearing on the discretion of the court". – Justice Chandrachud.
CASE 9: Suit For Specific Performance: Plaintiff Has To Prove And Establish His Readiness And Willingness To Perform His Part Of Contract Throughout:
Vijay Kumar vs. Om Prakash (CA No 10191 OF 2018).
The trial court, in this case, had dismissed the suit for specific performance holding that the plaintiff failed to prove his readiness and willingness to perform the contract. The first appellate court allowed the appeal and decreed the suit, which the high court upheld.
"In order to obtain a decree for specific performance, the plaintiff has to prove his readiness and willingness to perform his part of the contract and the readiness and willingness has to be shown throughout and has to be established by the plaintiff, As rightly pointed out by the Trial Court, the respondent-plaintiff could not produce any document to show that he had the amount of Rs.22,00,000 (Rupees Twenty Two Lakhs) with him on the relevant date; nor was he able to name the friends from whom he raised money or was able to raise the money. Furthermore, as rightly pointed out by the Trial Court, the respondent-plaintiff could have placed on record his Accounts Book, Pass Book or the Statement of Accounts or any other negotiable instrument to establish that he had the money with him at the relevant point of time to perform his part of the contract."- Justice R. Bhanumathi.
CASE 10: Plaintiff Can Implead Proposed Purchasers Of Property In Suit For Specific Performance:
Robin Ramjibhai Patel vs. Anandibai Rama
In the instant case, the plaintiff had filed a suit for the specific performance of an agreement for sale of property. His application to implead the proposed purchasers having registered agreement of sale in their favour as defendants was rejected by the trial court and the order was confirmed by the high court. An appeal was made to Apex court.
When the plaintiff wants to implead certain persons as defendants in a suit for specific performance on the ground that they may be adversely affected by the outcome of the suit, then interest of justice also requires allowing such a prayer for impleadment so that the persons likely to be affected are aware of the proceedings and may take appropriate defence as suited to their vendors, the necessary parties in a suit for specific performance of a contract for sale are not only parties to the contract or their legal representatives, but also a person who had purchased the contracted property from the vendor.- Justice Shiva Kirti Singh and Justice R Banumathi.
CASE 11: Arbitration Award fixing price of land cant be executed like a decree for specific performance of sale agreement:
Firm Rajasthan Udyog & ors vs Hindustan Engineering & Industries Ltd. (CIVIL APPEAL NO. 2376 OF 2020)
JUDGEMENT: Applying the principle that an executing Court cannot travel beyond the relief granted in a decree, the Supreme Court held that an arbitration award fixing the price of the land cannot be executed like a decree for specific performance of sale agreement, when the reference to arbitrator was only for determining the compensation under the sale agreement. Although, in the present case, the Award did not relate to right, title or interest in an immovable property and was only for determination of the price of land, yet if the execution court was to treat the same for execution of sale deed of land (immovable property), it ought to have considered the impact of non-registration of such Award, which has not been done in the present case - Justices Uday Umesh Lalit & Vineet Saran
CASE 12: [Specific Performance] Plaintiff Has To Prove That He Has Means To Generate Consideration Amount
C.S. VENKATESH vs. A.S.C. MURTHY (D) (CIVIL APPEAL NO. 8425 OF 2009)
Taking note of the evidence on record, the bench said that there is absolutely no evidence to show that the plaintiff has the means to make arrangements for payment of consideration under the re conveyance agreement. Mere plea that he is ready to pay the consideration, without any material to substantiate this plea, cannot be accepted. It is not necessary for the plaintiff to produce ready money, but it is mandatory on his part to prove that he has the means to generate the consideration amount. - Justices Abdul Nazeer and Deepak Gupta.
CASE 13: Specific Performance: Self-Serving Statements On Income Without Any Proof Of Financial Resources Won't Suffice To Prove Readiness & Willingness
Ritu Saxena v. J.S. Grover (CIVIL APPEAL NOS. 7268-7269 OF 2019)
Self-serving statements on income without any proof of financial resources is not sufficient to prove that plaintiff in a suit for specific performance was ready and willing to perform her part of the contract. Such self-serving statements without any proof of financial resources cannot be relied upon to return a finding that the appellant was ready and willing to perform her part of the contract. The appellant has not produced any income tax record or the bank statement in support of her plea of financial capacity so as to be ready and willing to perform the contract. Therefore, mere fact that the bank has assessed the financial capacity of the appellant while granting loan earlier in respect of another property is not sufficient to discharge of proof of financial capacity in the facts of the present case to hold that the appellant was ready and willing to perform her part of the contract- Justice L. Nageswara Rao and Justice Hemant Gupta
CASE 14: Specific Performance: Plea Of Hardship Cannot Be Raised If Not Pleaded In Written Statement:
Beemaneni Maha Lakshmi vs. Gangumalla Appa Rao
The vendor sought to raise the plea of hardship for the first time before this Court and this Court did not permit the vendor to raise such a plea of hardship by observing that as no plea as to hardship if relief for specific performance is granted was raised by the defendant – vendor in written statement nor any issue was framed that the plaintiff – purchaser could be compensated in terms of the money in lieu of decree for specific performance, such plea cannot be entertained for the first time in appeal by way of SLP, more so, when there are concurrent findings that the plaintiff was ready and willing to perform his part of the contract has been recorded by the lower courts. Therefore, the plea raised on behalf of the vendor on hardship cannot be permitted to be raised now, more particularly when no such plea was raised/taken in the written statement- Justice L. Nageswara Rao and Justice MR Shah.
CASE 15: SC Explains Five Material Questions To Be Answered In Specific Performance Suit
Kamal Kumar vs. Premlata Joshi (Civil Appeal No : 4453/2009)
Reiterating that the grant of relief of specific performance is a discretionary and equitable relief, the bench listed out the requirements to be answered in a specific performance suit. Those are:
1. Whether there exists a valid and concluded contract between the parties for sale/purchase of the suit property?
2. Whether the plaintiff has been ready and willing to perform his part of contract and whether he is still ready and willing to perform his part as mentioned in the contract?
3. Whether the plaintiff has, in fact, performed his part of the contract and, if so, how and to what extent and in what manner he has performed and whether such performance was in conformity with the terms of the contract?
4. Whether it will be equitable to grant the relief of specific performance to the plaintiff against the defendant in relation to suit property or it will cause any kind of hardship to the defendant and, if so, how and in what manner and the extent if such relief is eventually granted to the plaintiff?
5. Whether the plaintiff is entitled to grant of any other alternative relief, namely, refund of earnest money etc. and, if so, on what grounds?
CASE 16: Relief of specific performance of agreement cannot be denied on ground of efflux of time and escalation of price of property
Satya Jain v. Anis Ahmed Rushdie, (2013) 8 SCC 131
Relief of specific performance of agreement cannot be denied on ground of efflux of time and escalation of price of property meanwhile - However, in order to balance both the issues, based on plaintiff's offer Supreme Court awarded additional compensation to vendor by granting market value than what had been stipulated in agreement.
CASE 17: While exercising discretion in suits for specific performance, Court should bear in mind that when the parties prescribe a time/period, for taking certain steps or for completion of the transaction, that must have relevance
Saradamani Kandappan and Ors. vs. S. Rajalakshmi and Ors. (04.07.2011 - SC)
Courts, while exercising discretion in suits for specific performance, should bear in mind that when the parties prescribe a time/period, for taking certain steps or for completion of the transaction, that must have some significance and therefore time/period prescribed cannot be ignored. Every suit for specific performance need not be decreed merely because it is filed within the period of limitation by ignoring the time-limits stipulated in the agreement. Courts will also 'frown' upon suits which are not filed immediately after the breach/refusal. The fact that limitation is three years does not mean a purchaser can wait for 1 or 2 years to file a suit and obtain specific performance. The three year period is intended to assist purchasers in special cases, as for example, where the major part of the consideration has been paid to the vendor and possession has been delivered in part performance, where equity shifts in favour of the purchaser – Justice R.V Raveendran.
CASE 18: Specific performance of contract by Minor Not enforceable:
Sri Kakulam Subrahmanyam and another vs. Kurra Subba Rao, AIR 1948 PC 95
A minor's agreement being now decided to be void, it is clear that there is no agreement to be specifically enforced; and it is unnecessary to refer to former decisions and distinctions, following English authorities which were applicable only on the view now overruled by the Privy Council.
CASE 19: Suit for specific performance of contract by one of joint promises is maintainable:
Smt. Nirmala Bala Dasi and Anr. Vs. Sudarsan Jana and Ors ,AIR 1980 Cal258
It has long been recognized that one or more of several persons jointly interested can bring an action in respect of joint property and if their right to sue is challenged can amend by joining their co-contractors as plaintiffs if they will consent or as co-defendants if they will not, Once all the parties are before the Court, it can make the appropriate order and should give judgment in favour of all the persons interested whether they be joined as plaintiffs or defendants.
CASE 20: An amendment application shall be permitted relating to compensation in a suit for specific performance:
Jagdish Singh vs Nathu Singh, AIR 1992 SC 1604:
Where an amendment relates to relief of compensation in lieu of or in addition to specific performance where the plaintiff has not abandoned his relief of specific performance the Court will allow the amendment at any stage of the proceeding.
CASE 21: A purchaser from a co-parcener can enforce specific performance of his contract against the other co-parceners:
T. Rangayya Reddy vs V.S. Subramanya Aiyar and Ors
That a purchaser from a co-parcener can enforce specific performance of his contract against the other co-parceners, which is undoubtedly covered by the terms of the section 15 of the Specific relief Act.
CASE 22: Even if there is no provision in the contract for specific performance, the court can direct specific performance by the vendor:
Man Kaur (dead) by LRS. Vs. Hartar Singh Sangha, (2010)10 SCC512
Even if there is no provision in the contract for specific performance, the court can direct specific performance by the vendor, if breach is established. But the court has the option, as per Section 21 of the Act, to award damages, if it comes to the conclusion that it is not a fit case for granting specific performance.
CASE 23: Court can direct that specific performance of contract is subject to sanction by statutory authorities
Nandkishore Lalbhai Mehta vs. New Era Fabrics Pvt. Ltd. and Ors. (08.07.2015 - SC)
Section 20 of the Specific Relief Act confers a discretionary jurisdiction upon the courts. Undoubtedly such a jurisdiction cannot be refused to be exercised on whims and caprice; but when with passage of time, the contract becomes frustrated or in some cases increase in the price of land takes place, the same being relevant factors can be taken into consideration for the said purpose. While refusing to exercise their jurisdiction, the courts are not precluded from taking into consideration the subsequent events. Only because the Plaintiff-Respondents are ready and willing to perform their part of contract and even assuming that the Defendant was not entirely vigilant in protecting his rights in the proceedings before the competent authority under the 1976 Act, the same by itself would not mean that a decree for specific performance of contract would automatically be granted. While considering the question as to whether the discretionary jurisdiction should be exercised or not, the orders of a competent authority must also be taken into consideration. While the court upon passing a decree for specific performance of contract is entitled to direct that the same shall be subject to the grant of sanction by the authority concerned.
CASE 24: Merely because an agreement mentions a particular sum payable by the defaulting party to the other, that shall not be a ground for refusing the specific performance
CASE 25: Defendant cannot take advantage of his own wrong and then plead that decree for specific performance would be an unfair advantage to the plaintiff:
(The author is a student of ICFAI School of Law, Hyderabad and may be reached at firstname.lastname@example.org)