Supreme Court: In an appeal filed by the appellants against the judgment of the Bombay High Court (‘the High Court’), the three-judges bench of Mehr Chand Mahajan, S.R. Das and N.H. Bhagwati*, JJ., opined that a specific performance decree would involve an order on the appellants to carry out their obligations under the agreement and if the appellants failed to do so, the Court would in execution carry out these obligations through its own officers. However, this could not be done if the terms were vague. The Supreme Court opined that the respondents who received the specific performance decree in their favour might communicate their wishes to the court’s officer but that would certainly not be an execution of the work by mutual consultation between the parties. The vagueness and uncertainty of the terms of agreement would, therefore, not be cured by this mode of execution, and that is why the legislature enacted that such a contract could not be specifically enforced. Therefore, the Supreme Court opined that the agreements were vague and uncertain in their terms and were not capable of specific performance. Thus, the Supreme Court opined that the High Court erred in granting to the respondents the decree for specific performance, and accordingly set aside the decree passed by the High Court and restored the decree of the Trial Court.
Background
On 18-04-1942, the respondents entered into an agreement with the appellants, to take on lease the building of the Vijayanand Theatre at Dhulia together on certain terms and conditions recorded therein. It was also agreed that the appellants should repair the theatre in such a way that it would be suitable for a cinema, including electric fitting and to obtain necessary permission from the authorities. It was agreed that all the above building work should be executed by mutual consultation and the said building work should be completed within six months and during that period Defendants 1 to 4 should obtain the necessary lawful permission from the Executive Engineer, the District Magistrate, the Electrical Inspector and the municipality for starting the theatre and should defray all the required expenses.
The agreement for rent was to take effect from the date on which the theatre was duly certified and was given into the respondent’s possession and his brother in favour of the appellants. However, due to non-availability of electricity because of the war conditions, the parties entered into supplementary agreement, which substantially reserved the appellants’ right to seek performance of original contract after availability of electricity. Subsequently, in 1946 the electricity company stated that it might be able to give electric connection in due course. Thus, the respondents asked the appellants to perform their part of the agreement. However, on failure in doing so, the respondents filed a suit for specific performance of the agreements before the Trial Court.
The Trial Court negatived the respondents’ claim for specific performance but awarded the respondents, damages of Rs. 3000. Thus, the respondents filed an appeal to the High Court, and the High Court held that the appellants had committed a breach of the agreements by failing to carry out their obligations to get the electric connection in 1947 when it could have been given by the electric company, and the appellants had also committed a breach of the agreement by failing to hand over possession of the premises to the respondents. Accordingly, the High Court decreed the respondents’ claim for specific performance.
Thus, the appellants filed the present appeal before the Supreme Court.
Analysis, Law, and Decision
The Supreme Court opined that a specific performance decree would involve an order on the appellants to carry out their obligations under the agreement and if the appellants failed to do so, the Court would in execution carry out these obligations through its own officers. However, this could not be done if the terms were vague and uncertain, and it would be even more difficult if the alterations and repairs had to be executed by mutual consultation between the parties. The Supreme Court opined that the respondents who received the specific performance decree in their favour might communicate their wishes to the court’s officer but that would certainly not be an execution of the work by mutual consultation between the parties. The Supreme Court opined that it would not be specific performance of the agreement, rather it would be the substitution of the new agreement between the parties. The vagueness and uncertainty of the terms of agreement would therefore not be cured by this mode of execution, and that is why the legislature enacted that such a contract could not be specifically enforced. Thus, the Supreme Court opined that the agreements were vague and uncertain in their terms and were not capable of specific performance.
The Supreme Court noted that the terms of agreement had very minute, numerous details and also imported the volition of the parties to the extent that the building work was to be executed by mutual consultation between the parties. Therefore, the agreements were such that the court could not enforce specific performance of their material terms and thus, the nature of these terms the agreements could certainly not be specifically enforced.
The Supreme Court opined that the Trial Court had rightly came to the conclusion that the respondents were not entitled to specific performance, however when the appeal was filed before the High Court, the respondents offered to the Court that they were prepared to take the premises on lease as existed and they themselves would carry out repairs and other works as might be necessary at their own expense. The Supreme Court opined that no such offer was made by the respondents, when the suit was heard by the Trial Court. Further, what repairs and works were necessary to be carried out was left to be determined by the respondents and what might be considered necessary by the respondents might not be considered so by the appellants. The appellants were certainly eliminated from the scene altogether in this offer which was made by the respondents to the High Court. The Supreme Court opined that the volition of the respondent was substituted for the mutual consultation between the parties and this offer certainly could not be said to be a fulfilment of the terms of the agreements.
The Supreme Court opined that it was no doubt that as per Section 63 of the Contract Act, 1872 (‘ICA’), the respondents were open to dispense with or remit wholly or in part the performance of the promise made by the appellants to them, but it was not open to the respondents to dispense with the performance of the promise which they in their turn had made to the appellants. The offer made by the respondents to the Court was unilateral and worked only in favour of the respondents, ignoring the appellants and their volition altogether. Thus, there was no question of the applicability of Section 63 of the ICA in the present case, as it applied where a promise was for the benefit of one party only.
The Supreme Court further noted that when the appeal came before the High Court, the electric company was not able to supply the electric energy even then and the only thing which the electric company stated was that it would supply the electric energy “in due course”. The Supreme Court opined that the expression “in due course” was again vague. There was no knowing that whether the generating set would be received and installed by the electric company within a measurable distance of time or at all. Further, the Supreme Court opined that it failed to understand what would happen to the specific performance decree granted by the High Court, if circumstances supervened which made it impossible for the electric company to receive and install the generating set as expected.
Thus, the Supreme Court opined that the High Court erred in granting to the respondents the decree for specific performance, and accordingly set aside the decree passed by the High Court and restored the decree of the Trial Court.
[Hiralal Motilal Shet v. Rameshwar Ballabram Bhatwal, (1952) 2 SCC 547, decided on 03-02-1952]
Note: Specific Performance of Contract
Specific performance is an equitable remedy in the law of contract, wherein if the contract is breached by one party, the other party has the option to file a suit for specific performance compelling him to perform his part of contract. Section 14 of the Specific Relief Act, 1963 provides the contracts, that are not specifically enforceable. As per the provision, the following contracts cannot be specifically enforced, namely:— (a) where a party to the contract has obtained substituted performance of contract in accordance with section 20 of the Specific Relief Act, 1963; (b) a contract, the performance of which involves the performance of a continuous duty which the court cannot supervise; (c) a contract which is so dependent on the personal qualifications of the parties that the court cannot enforce specific performance of its material terms; and (d) a contract which is in its nature determinable.
*Judgment authored by- Justice N.H. Bhagwati
Advocates who appeared in this case :
For the Appellants: C.K. Daphtary, Solicitor General for India (J.B. Dadachanji, Advocate, with him);
For the Respondents: M.C. Setalvad, Attorney General for India and N.C Chatterjee, Senior Advocate (K.B. Asthana with M.G. Chitlay, Advocates, with them).
