Supreme Court: In an appeal against the judgment passed by the Kerala High Court, wherein the Court has set aside the judgment passed by the Trial Court decreeing the suit for specific performance, the division bench of M.R.Shah and B.V. Nagarathna, JJ. has delivered a split verdict. While Justice Shah held that the impugned judgment passed by the High Court is unsustainable, both on law as well as on facts, Justice Nagarathna affirmed the impugned judgment setting aside the suit for specific performance of an agreement of sale.
In the case at hand, the appellant and the respondents entered into an agreement to sell, under which the respondents agreed to sell a land. The appellant paid an advance amount towards the consideration amount. The balance consideration was agreed to be paid by the appellant within six months from the date, after measuring the property, provided the respondents make available the documents of title, including the purchase certificate under the Kerala Land Reforms Act.
Thereafter, the appellant served a legal notice upon the respondents to execute the sale deed, to which the respondents refused to execute and cancelled the agreement to sell. Therefore, the appellant instituted a suit before the Trial Court for specific performance of agreement to sell.
The Trial Court decreed the suit for specific performance of agreement to sell. However, to do complete justice the Trial Court directed the appellant to pay 25% more amount, over and above the agreed consideration. Thereafter, by the impugned judgment, the High Court, while relying upon Section 20 of the Specific Relief Act (‘the Act'), has partly allowed the appeal and has set aside the judgment and decree for specific performance, and has directed the respondents to pay Rs. 3,10,000/- to the appellant.
Justice MR Shah's opinion
Justice Shah said that by the impugned judgment, the High Court, as such, has not commented upon and/or set aside any of the findings recorded by the Trial Court while passing a decree for specific performance. The High Court had, straightway considered Section 20 of the Specific Relief Act and had held that by enhancing the amount of sale consideration, the Trial Court has wrongly exercised its discretion in favour of the appellant.
He said that the Trial Court was absolutely justified in compensating the respondents by paying some more amount while passing a decree for specific performance.Therefore, after finding that the part sale consideration was paid by the appellant which was accepted by the respondents and that the appellant was always ready and willing to perform his part of the contract, the Trial Court was absolutely justified in passing the decree for specific performance.
Thus, he held that the High Court has erred in interfering with the judgment and decree passed by the Trial Court, without setting aside the findings recorded by the Trial Court while passing the decree for specific performance. The impugned judgment and order passed by the High Court is unsustainable, both on law as well as on facts.
However, to do complete justice and in exercise of powers under Article 142 of the Constitution, he directed that over and above the sale consideration mentioned in the agreement to sell and the amount already deposited by the appellant, he must pay a further sum of Rs. 10 Lakhs to the respondents, within a period of six weeks from the date of this judgment.
Justice Nagarathna's opinion
Justice Nagarathna said that the High Court had relied on Section 20 of the Act, prior to the same being substituted by way of Specific Relief (Amendment) Act, 2018 (‘the Amendment Act'), to deny the relief of specific performance to the appellant. Section 20 of the Act prior to the Amendment Act of 2018 provided that the jurisdiction to decree specific performance is discretionary and the Court is not bound to grant such relief merely because it is lawful to do so. Such discretion, however, was not to be exercised arbitrarily, but ought to have been based on sound and reasonable judicial principles. Further, it was not an exhaustive provision, but merely illustrative as it was not possible to define the circumstances in which equitable relief could or could not be granted. If, therefore, on consideration of all the circumstances of the case, the Court thought that it would be inequitable to grant the relief prayed for, it should not do so. However, she said that in Shenbagam v. KK Rathinavel, 2022 SCC OnLine SC 71,it was reiterated that in deciding whether to grant the relief of specific performance, the Courts must be cognizant of the conduct of the parties, the escalation in the price of the suit property and consider whether one party will unfairly benefit from the decree.
She said that by way of the Amendment Act, Section 20 has been substituted, thereby rendering the relief of specific performance to be a statutory remedy, instead of a discretionary remedy. Previously, the unamended provision granted the courts the discretion to deny the relief of specific performance, based on judicially developed exceptions, even where it would otherwise be lawful to direct specific performance. The Amendment Act has eliminated the discretion of the courts in cases involving specific performance of contracts and grants a right to an aggrieved party to seek specific performance of a contract in certain cases, subject to the provisions contained in Sections 11(2), 14 and 16 of the Act.
However, she noted that notwithstanding substitution of Section 20 of the Act, the position of law on all material aspects, such as the essential elements of readiness and willingness and other aspects under the unamended Section 16 remains the same.
After placing reliance on B. Santoshamma v. D. Sarala, (2020) 19 SCC 80 , she said that even in the absence of discretionary power under Section 20 to deny the relief of specific performance, the appellant was not entitled to claim such relief as a matter of right. The position of law, even following the amendment of 2018 remains that the provisions of Section 16 of the Act must be mandatorily complied with by the party seeking the relief of specific performance. The relief of specific performance cannot be granted in favour of a party who has not performed his obligations under the contract. It is therefore necessary to ascertain whether the appellant had complied with the statutory prerequisites under Section 16 (c) of the Act, before claiming relief of specific performance.
She said that Clause (c) of Section 16 of the Act clearly states that unless the appellant establishes his readiness and willingness to perform his part of the contract, he would not be entitled to a decree of specific performance. Therefore, notwithstanding the amendment to Section 16 of the Act whereby the expression “who fails to aver and prove” has been substituted with the phrase “who fails to prove,” the law remains that no evidence can be let in on a plea that was never put forward in the plaint/pleadings. But it is necessary to sound a caveat. Even the absence of the words “ready and willing to perform the contract” in the plaint would now not have an adverse impact on the plaintiff's case, so long as plaintiff's readiness and willingness to perform the essential terms of the contract could be gathered on a holistic reading of the plaint. Thus, the amendment in Section 16 (c) of the Act does bring about any real change in the position of law as it stood prior to the amendment.
She said that readiness and willingness cannot be considered in a straitjacket formula; it must be inferred on a consideration of the entire facts and circumstances of each case and the intention and conduct of the parties concerned. Even if a party to the contract is ready and has the requisite funds, he may not be willing to perform his part of the contract and vice versa. Both readiness as well as willingness must be established by the plaintiff on whom the burden is cast in a suit for specific performance of an agreement.
She viewed that the conduct of the appellant was not reflective of his readiness as well as willingness on his part to pursue the agreement of sale of Kanam and Kuzhikoor rights, in terms of Section 16(c) of the Act.
The Court held that the time stipulated in the agreement was the essence of the contract. Further, the appellant having paid not more than 4% of the sale consideration and having not done even as much as getting the property measured within the period of six months stipulated under the agreement, cannot, at a belated date, claim specific performance of the agreement to the disadvantage and hardship of the respondents. Thus, she affirmed the impugned judgment of the Kerala High Court setting aside the suit for specific performance of an agreement of sale.
[C. Haridasan v. Anappath Parakkattu Vasudeva Kurup, 2023 SCC OnLine SC 36, decided on 13-01-2023]
*Apoorva Goel, Editorial Assistant has reported this brief.