Specific Performance

Source: The Hitavada      Date: 24 Jul 2017 12:23:14


The HC has ignored the basic principles, while ordering specific performance. Excepting Earnest Money Deposit, the Supreme Court has ordered refund of remaining money paid in advance with simple interest at 6 pc per annum to the plaintiffs within 3 months.


IN THE judgement of the case – Jaswinder Kaur (now deceased) through her LRs and Others v. Gurmeet Singh and Others, delivered on April 18, 2017, Justice Arun Mishra and Justice Amitava Roy, at the Supreme Court, have ruled that in the face of finding of non-readiness and willingness of plaintiffs, it was not open to the High Court to direct specific performance of a part of contract.


The apex court has pointed out that Section 12 of the Specific Relief Act, 1963 does not apply where the inability to perform specific performance on part of contract arises because of plaintiff’s own conduct. The Punjab and Haryana High Court could not have decreed the suit without reversing the finding recorded by the trial court and affirmed by the First Appellate Court.


The Supreme Court has held that forfeiture of Rs. 50,000/- the earnest money was justified, but Rs. 14,50,000/- paid towards advance was liable to be refunded.
The defendants–appellants before the Supreme Court - approached it, after succeeding before the trial court and the first appellate court.


In this case, the HC “unfortunately invented a new method of decreeing the suit for specific performance in part only in respect to the payment of earnest money of Rs. 50,000/- and advance money of Rs. 14,50,000/- without reversing the findings of the trial court as well as that of the first appellate court” on the vital aspects that the plaintiffs (the respondents before the apex court) were not ready and willing to perform their part of the contract apart from that they did not have the balance consideration to purchase the disputed land within the time stipulated in the agreement.


The Supreme Court has pointed out that it has been “shocking to judicial conscience” that how the High Court could have decreed the suit without reversing the finding recorded by the trial court and affirmed by the first appellate court, after elaborately discussing the evidence and the deposition of the plaintiffs to the effect that plaintiffs were not ready and willing to purchase the property as projected from their conduct.


The defendants had got the property redeemed from the Bank and this fact of redemption in July, 1990 had been intimated to the plaintiffs by serving notices to two plaintiffs – 9 and 14. Plaintiff never asked the defendants to show document of redemption.
The HC did not advert to any of the findings and had not found any illegality or perversity in the finding that the plaintiffs were not having arrangement of the balance consideration so as to purchase the property within the stipulated time. The HC had also not gone into the question of the forfeiture of earnest money.


The method and manner in which the HC had decreed the suit for specific performance in part was wholly impermissible, unwarranted and it was not expected of the HC to do so ignoring the basic principles of law of Code of Civil Procedure, while dealing with the matter in a second appeal. The trite legal position is that reasons of trial court and first appellate court have to be considered including evidence actively without that judgement of reversal could not have been passed in second appeal.


It was incumbent upon the HC to consider legality of the finding of non-readiness and willingness of plaintiffs which is of sine qua non for passing decree in a suit for specific performance in part or as a whole. However, the HC could not have simplicitor inferred readiness and willingness by making passing observation that it has to be seen in the facts and circumstances of the case. No positive finding had been recorded by the HC with respect to readiness and willingness of the plaintiffs merely by making payment of part consideration, it could not have inferred.


In the apex court’s opinion, no readiness and willingness could have been inferred, even if it is assumed that the HC by that passing observation intended to hold that the plaintiffs were ready to perform their part by making payment of part consideration on January 31, 1990. Readiness and willingness has to be seen in the context of the entire agreement, not with respect to portion of contract.


Plaintiffs had stated that they had borrowed the amount but had failed to produce the accounts indicating that in fact money was borrowed as stated by the plaintiff for effecting the purchase. In this case it is apparent that the plaintiffs had no arrangement of balance of consideration. The finding, which had been recorded by the trial court and affirmed by the first appellate court were based on sound reasoning and on proper appreciation of the evidence. Thus, when the balance consideration was not available with the plaintiffs, obviously they were not entitled even in part, for the decree of specific performance of agreement to sale as ordered by the HC.


The HC acted in flagrant violation of the law while decreeing the suit in part for specific performance without reversing the said finding recorded by the trial court and affirmed by the first appellate court. It was not within the jurisdiction of the HC to decree the suit for specific performance on the basis of the elementary principles relating to specific performance as envisaged under the Act.


It is necessary under Section 16(c) of the Act not only to aver the readiness and willingness but also to prove it. The plaintiffs only pleaded it, but they have utterly failed to prove it as rightly held by the trial court as well as by the first appellate court. The defendants did everything which was possible for them to require the plaintiffs to get the sale deed executed. They got the property redeemed from the bank on July 2, 1990 and issued a note –”P-9” – to the plaintiffs intimating them the fact of redemption. They also informed that the permission under the urban Land Ceiling Act was not required, as the land was agricultural land.


The stand of the plaintiff is unsound and unworthy of credence and they had tried to take guise of defects of the title of the property in untenable manner. All plaintiffs’ absence from the Sub Registrar’s office on October 30, 1990, despite notice for execution of the sale deed, only shows that they were not ready and willing to purchase the property. Failing that earnest money deposit was to be forfeited.


A bare perusal of the provision in section 12 of the Act makes it clear that it is not open to the HC to direct specific performance of a part of contract, subject to exception provided in the section so as to decree the suit within purview of section 12.

This section does not apply, where the inability to perform specific performance on part of the contract arises because of the plaintiff’s own conduct. In this case, the HC has ignored the basic principles, while ordering specific performance. Excepting Earnest Money Deposit, the Supreme Court has ordered refund of remaining money paid in advance on January 31, 1990 with simple interest at 6 pc per annum to the plaintiffs within 3 months. The appeal was allowed in terms of this direction. The apex court has set aside the judgement and decree passed by the High Court.