Time Limit Specified In Agreement Can't Be Ignored While Allowing Specific Performance : Supreme Court

The Supreme Court observed that time limit(s) specified in the agreement cannot be ignored altogether by the Court while excercising its discretition to grant specific performance.

In this case, the defendant executed an agreement of sale in favour of the plaintiff for sale of the suit property.  The agreement of sale provided that in the event the permission from the ULC Authorities was not obtained within 75 days, the purchaser shall be entitled to get back his advance money paid after 75 days but not later than 90 days under any circumstances. The defendant terminated the agreement on 12th April 1982 stating that since the permission could not be obtained, she had cancelled the agreement of sale. After ULC permission was granted on 7th February 1984, the plaintiff had issued a legal notice to the defendant on 19th February 1984 and thereafter filed a suit for specific performance. The Trial Court decreed the suit. Later, the Andhra Pradesh High Court set aside the decree by allowing defendant's appeal.

Before the Apex Court, Senior Advocate C. Nageswara Rao, who appeared for the appellant- plaintiff, contended that the High Court findings dismissing the suit are based upon misinterpretation of evidence. On the other hand, Advocate Sridhar Potaraju, who appeared for respondents- defendant, submitted that the conduct of the plaintiff was not such which entitled him for specific relief. 

Regarding the time stipulation in the agreement, the bench of Justices BR Gavai and CT Ravikumar said:

"In the case of K.S. Vidyanadam and Others v. Vairavan, this Court has held that the court should look at all the relevant circumstances including the time limit(s) specified in the agreement and determine whether its discretion to grant specific performance should be exercised. It has been held that in case of urban properties, the prices have been rising sharply. It has been held that while exercising its discretion, the court should bear in mind that when the parties prescribe certain time limit(s) for taking steps by one or the other party, it must have some significance and that the said time limit(s) cannot be ignored altogether on the ground that time is not the essence of the contract".

Though it refused to interfere with the High Court judgment, the bench issued the following direction:

Taking into consideration the facts and circumstances and an undisputed position that the defendant had, in fact, received an amount of Rs.15,000/- as early as 1978, we direct the respondents-defendants to pay an amount of Rs.15,00,000/- to the appellants-plaintiffs. The said amount shall be paid within a period of 3 months from the date of this judgment.

Case details

Kolli Satyanarayana (D) vs Valuripalli Kesava Rao Chowdary (D) | 2022 LiveLaw (SC) 807 | CA 1013 OF 2014 | 27 September 2022 | Justices BR Gavai and CT Ravikumar

Headnotes

Specific Relief Act, 1963 - Suit for specific performance - The court should look at all the relevant circumstances including the time limit(s) specified in the agreement and determine whether its discretion to grant specific performance should be exercised - While exercising its discretion, the court should bear in mind that when the parties prescribe certain time limit(s) for taking steps by one or the other party, it must have some significance and that the said time limit(s) cannot be ignored altogether on the ground that time is not the essence of the contract - Referred to K.S. Vidyanadam and Others v. Vairavan (1997) 3 SCC 1. (Para 12)

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