Supreme Court: An appeal was filed by appellant-purchaser challenging the judgment passed by the Calcutta High Court (‘the High Court’), whereby the purchaser’s suit for a specific performance of sale agreement was dismissed. The three-judges bench of M.C. Mahajan, S.R. Das* and Ghulam Hasan, JJ., opined that if purchaser’s intention was only to punish and put pressure on the vendor to make out a good title and convey the property, then one would expect that immediately on the dismissal of the criminal proceedings, purchaser would go to the civil court to enforce his agreement. However, for over a year-and-a-half, the purchaser did nothing. The Supreme Court opined that purchaser could not be said to had been ready and willing to perform his part of the contract which he did not treat as subsisting. Since, the purchaser had not treated the contract as alive and did not fully perform his part, therefore, there was no breach of contract on vendor’s part who delivered whatever documents he had.
Further, the Supreme Court opined that undoubtedly, vendor had no other documents of title, so he could not satisfy the purchaser’s pleader regarding his title. Ordinarily, in that situation, the vendor should have refunded the earnest money and not purported to forfeit it. Therefore, the Supreme Court directed respondent to pay purchaser Rs. 1,001 with interest at four per cent per annum from the date of the agreement until payment.
Background
On 13-11-1937, an agreement for sale was made between purchaser and respondent’s father-vendor and the agreed price was Rs. 22,251 out of which Rs. 1,001 was paid as earnest money. It was also agreed that within fifteen days from the date of the agreement, vendor would deliver exact copies of his title deeds to the pleader appointed by purchaser after giving him inspection. If it was decided that vendor had a good saleable title then, within eighteen days from the date of delivery of the copies of the sale deeds, vendor would on receiving the balance of the consideration money have a sale deed of the said property free from encumbrances and defects written, signed, executed and registered in purchaser’s favour or his nominee. The agreement also provided that if it was found that vendor did not have a good saleable title to the property then vendor would be bound to refund the earnest money together with interest at the rate of four percent per annum.
However, in September 1938, purchaser through his agent instituted criminal proceedings against vendor on a charge of cheating under Section 420 of the Penal Code, 1860 (‘IPC’) stating that he had dishonestly induced the purchaser to pay Rs. 1,001 as earnest money on the false representation that the said property was free from encumbrances whereas, that property was already under a subsisting mortgage. However, Presidency Magistrate stated that there was no cheating on the part of the vendor and accordingly acquitted the vendor. Long after the dismissal of the criminal case, purchaser wrote a letter to the vendor for making immediate arrangements for inspection of title deeds and conveying the property to purchaser free from encumbrances. Further, the vendor passed away on 09-09-1942, leaving his son, the respondent.
Subsequently, on 12-11-1943, a day before the expiry of six years from the date of the agreement, purchaser filed the suit against respondent. The Trial Court decreed the suit. Further, respondent filed an appeal at the High Court, wherein the Trial Court’s decision was reversed and dismissed purchaser’s suit. Thus, purchaser filed the present appeal before the Supreme Court.
Analysis, Law, and Decision
The Supreme Court opined that strictly speaking the institution of the criminal proceedings might be laudable desire to vindicate justice by punishing the wrongdoer. However, that fact was certainly a circumstance, which was to be considered in determining the purchaser’s real mental attitude regarding the contract. Further, the Supreme Court opined that if purchaser’s intention was only to punish the vendor, while treating the contract alive and to put pressure on the vendor to make out a good title and convey the property, then one would expect that immediately on the dismissal of the criminal proceedings, purchaser would go to the civil court to enforce his agreement. However, for over a year-and-a-half, purchaser did nothing and then on 21-02-1941, he was content with writing a letter setting up a fresh agreement.
The Supreme Court observed that even after this letter no step was taken for nearly two years before the suit was filed and opined that it was clear that while the vendor produced copies of all documents he had in his possession, the purchaser was not satisfied with his title. However, on the other hand, vendor knowing that he had no other document of title, was not readily agreeable to return the earnest money. The Supreme Court opined that considering the vendor’s attitude, the purchaser evidently thought that it was simpler and quicker to go to the criminal court to induce the vendor to refund the earnest money.
The Supreme Court agreed with the High Court and opined that the purchaser could not be said to had been ready and willing to perform his part of the contract which obviously he did not treat as subsisting. Since, the purchaser had not treated the contract as alive and did not fully perform his part, there was no breach of contract on vendor’s part who delivered whatever documents he had. Thus, the Supreme Court opined that purchaser was not entitled to claim any damages for breach of contract.
Further, the Supreme Court opined that undoubtedly, vendor had no other documents of title, so he could not satisfy the purchaser’s pleader regarding his title. Ordinarily, in that situation, the vendor should have refunded the earnest money and not purported to forfeit it. Therefore, the Supreme Court directed respondent to pay purchaser Rs. 1,001 with interest at four per cent per annum from the date of the agreement until payment. Further, the Supreme Court opined that the fault lied with both the parties, and they should bear their own costs throughout in all courts.
[Ardhendu Sekhar Naskar v. Ramlal Dutta, (1953) 1 SCC 234, decided on 05-02-1953]
Note: Personal bars to relief in specific performance of contract
Section 16 of the Specific Relief Act, 1963 specifies personal bars to relief. As per the provision, specific performance of a contract could not be enforced in favor of a person— (a) who had obtained substituted performance of contract under section 20 of the Act; or (b) who had become incapable of performing, or violated any essential term of, the contract that on his part remains to be performed, or acted in fraud of the contract, or wilfully acted at variance with, or in subversion of, the relation intended to be established by the contract; or (c) who failed to prove that he had performed or had always been ready and willing to perform the essential terms of the contract which were to be performed by him, other than terms the performance of which had been prevented or waived by the defendant.
*Judgment authored by- Justice S.R. Das
Buy Penal Code, 1860 HERE
