'Specific Performance No Longer A Discretionary Relief': Supreme Court Says 2018 Amendment May Not Have Retrospective Application But Can Be A 'Guide'

The specific performance is no longer a discretionary relief, the Supreme Court observed in a judgment delivered on Tuesday.

The bench of Justice MR Shah and Aniruddha Bose observed that the 2018 amendment to the Specific Relief Act, 1963 by which section 10(a) has been inserted, though may not be applicable retrospectively but can be a guide on the discretionary relief. The court, however, did not decide the question whether the said provision would be applicable retrospectively or not and/or should be made applicable to all pending proceedings.

Not to grant the decree of specific performance despite the execution of the agreement to sell is proved; part sale consideration is proved and the plaintiff is always ready and willing to perform his part of the contract would encourage the dishonesty, the court added.

In this case, the Allahabad High Court allowed the Second Appeal and set aside the decree for specific performance of the Agreement passed by the Trial Court. Thus the plaintiff approached the Apex Court in appeal.

The bench, at the outset, disagreed with the High Court observation that there is non-compliance of the provision of Section 16(c) of the Act. 

"The overall circumstances and the conduct on the part of the parties are relevant consideration for the purpose of deciding the aforesaid issues and the prayer of the plaintiff in whose favour the execution of the agreement to sell has been held to be proved. The High Court has given unnecessary stress on the word "still"." , the court said.

The court added that even while proving the readiness and willingness the plaintiff is not required to make any averment that the plaintiff required executant of the agreement to sell to attend the office of the Sub-Registrar to execute the sale deed within the time agreed. It is also not necessary for the plaintiff to produce ready money but it is mandatory on his part to prove that he has means to generate consideration amount. 

The High Court had further observed that even if the agreement is found to be duly executed and the plaintiff is found to be ready and willing to perform his part of the Agreement, grant of decree of specific performance is not automatic and it is a discretionary relief. 

"In such a case, many a times it would be giving a premium to the dishonest conduct on the part of the defendant / executant of the agreement to sell. Even the discretion under Section 20 of the Act is required to be exercised judiciously, soundly and reasonably. The plaintiff cannot be punished by refusing the relief of specific performance despite the fact that the execution of the agreement to sell in his favour has been established and proved and that he is found to be always ready and willing to perform his part of the contract. Not to grant the decree of specific performance despite the execution of the agreement to sell is proved; part sale consideration is proved and the plaintiff is always ready and willing to perform his part of the contract would encourage the dishonesty. In such a situation, the balance should tilt in favour of the plaintiff rather than in favour of the defendant – executant of the agreement to sell, while exercising the discretion judiciously."

In this context, the court noticed the 2018 amendment of the Act. The substituted Section 10 reads as follows: Specific performance of a contract shall be enforced by the court subject to the provisions contained in sub-section (2) of section 11, section 14 and section 16. The court observed:

For the aforesaid, even amendment to the Specific Relief Act, 1963 by which section 10(a) has been inserted, though may not be applicable retrospectively but can be a guide on the discretionary relief. Now the legislature has also thought it to insert Section 10(a) and now the specific performance is no longer a discretionary relief. As such the question whether the said provision would be applicable retrospectively or not and/or should be made applicable to all pending proceedings including appeals is kept open. However, at the same time, as observed hereinabove, the same can be a guide.

Taking note of other factual aspects, the court restored the decree for specific performance.

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