Ordinarily Specific performance of an agreement of immovable property should not be refused.

 We find that the learned Single Judge did not judiciously exercise the discretion under section 20 of the Specific Relief Act, 1963. It is well settled that ordinarily the Specific performance of an agreement of immovable property should not be refused. In our opinion, the learned Single Judge did not properly consider the unfair conduct of the defendants, tenacious and straight forward conduct of the plaintiff(appellant) and also root cause of his delayed civil action. With the result, the relief of Specific performance was wrongly denied to the plaintiff. In our opinion, the impugned Judgment is unsustainable and that the plaintiff is legally entitled to the relief of the Specific performance of the agreement of sale.

Bombay High Court

Shri Shriram Gangaram Gupta Alias vs M/S. Veekay Builders Associates on 25 March, 2010

Bench: D.K. Deshmukh, Shri V.R. Kingaonkar

Citation;2011(1)BomCR771 ;2011(1)AIR BOM257

1. This appeal arises out of Judgment rendered by learned Single Judge of this Court in Suit No.590 of 1980. By that Judgment, the Suit is partly decreed for refund of the consideration amount alongwith interest, though main relief for specific performance of the agreement of sale of suit shop has been dismissed.

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2. The Appellant is original Plaintiff. He challenges dismissal of his suit for specific performance of agreement of sale.

3. The dispute relates to Shop No.21 situated on ground floor of building called "Sahyadari Apartments and Shopping Centre", situated at Lokmanya Tilak Road, Borivali(West), Mumbai. The Respondent Nos. 1 to 3 are the original Defendant Nos. 1 to 3 and Respondent No.4 is original Defendant No.4. For the sake of convenience, they may be referred by their nomenclature in the Suit before the Trial Court.

4. The facts necessary for the purpose of Appeal are that the Plaintiff claims to have entered into an oral agreement with the Defendant Nos. 1 to 3 to purchase the suit shop. The agreed consideration was Rs. 18,000/-. He had paid the entire consideration amount to the Defendant Nos. 1 to 3 under two cheques issued in November, 1973 and March, 1974. He intended to purchase the suit shop for running a floor mill. The Defendant Nos. 1 to 3 assured him to give the suit shop, as indicated in Ast

4 judgment.sxw the pamphlet(Exh.A) after obtaining due approval from the Municipal Corporation of Greater Bombay. Though he applied for permission to allow establishment of floor mill, yet the BMC had not granted such th

permission. The Defendant Nos. 1 to 3 gave him a letter dated 20 November, 1975 addressed to the BMC for allowing him to start the floor th

mill in the suit shop. The BMC called upon him vide letter dated 5 April, 1979 to produce written agreement for purchase of the suit shop. He therefore, requested the Defendant Nos. 1 to 3 to execute a written agreement of sale. In the meanwhile, he noticed that pooja was being performed in the premises of the suit shop by some strangers. He found that the suit shop was sold by the Defendant Nos. 1 to 3 in favour of the Defendant No.4. He alleged that he was dispossessed by breaking open the lock of the suit shop.

5. The Defendant No.1 to 3 resisted the Suit on the ground that the agreement of sale was not for permanent alienation of the suit shop, but it was only to give a floor mill on basis of conducting the business. The Ast

5 judgment.sxw Defendants alleged that the Plaintiff deposited Rs.8,000/- in pursuance of confirmation of the conducting agreement. It was for such reason that th

letter dated 20 November, 1975 was given to him for pursuing the matter with the Bombay Municipal Corporation to obtain necessary permission for establishment of the floor mill. He asserted that amount of Rs. 10,000/- was subsequently deposited by him on his own. The Defendant No.4 resisted the Suit on the ground that he is a bonafide purchaser of the suit shop for valuable consideration. He further contended that he purchased the suit shop without any notice of the suit agreement between the Plaintiff and the Defendant Nos. 1 to 3. Thus, he claimed protection and sought dismissal of the Suit.

6. The learned Single Judge framed several issues. The parties adduced oral and documentary evidence in support of the rival contentions. The learned Single Judge held that the Suit was maintainable and that the Plaintiff duly proved the alleged agreement of sale of the suit shop. A specific finding is recorded that the Plaintiff paid Ast

6 judgment.sxw the entire consideration amount of Rs.18,000/- in pursuance to the agreement of sale. The learned Single Judge further came to the conclusion that the Plaintiff did not prove the averments regarding loss of his articles on the basis of which he has claimed damages. The learned Single Judge further recorded finding to the effect that the Defendant No. 4 is not a bonafide purchaser without notice and for valuable consideration. The learned Single Judge declined to grant relief for specific performance of the agreement of sale on the ground that the permission was not granted by the BMC to the Plaintiff for running floor mill. The learned Single Judge also considered the conduct of the Plaintiff while rejecting the claim for specific performance of the agreement of sale.

7. A short question, which needs determination in the present appeal is : Whether in the facts and circumstances of the present case, the learned Single Judge was justified in denying the decree for specific performance of the agreement of sale in the teeth of the findings Ast

7 judgment.sxw recorded on the material issues and particularly, when it is found that the Defendant No.4 is not entitled to any protection available under section 19(1) (b) of the Specific Relief Act, 1963?

8. We have heard learned Counsel for the parties. Though served, Respondent No.4(Defendant No.4) did not appear.

9. The reasons ascribed by the learned Single Judge for denial of the relief for specific performance of the agreement of sale are : (a) that, the BMC did not accord permission to run floor mill in the suit shop and (b)that more than 25 years' period has elapsed, which would not make it clear as to what is the present situation with regard to the grant of permission for establishment of floor mill in the suit shop. The learned Single Judge was, it appears to us, under the impression that grant of permission by the BMC was a condition precedent for due performance of the agreement of the sale. It is pertinent to note that the agreement of sale was oral. There is absolutely nothing on record to show that if the Ast

8 judgment.sxw suit shop could not be used for running a floor mill then the plaintiff was disentitled to claim specific performance of the agreement of sale. It is pertinent to note that the Defendant Nos. 1 to 3, in fact, had denied that there was an agreement of sale between themselves and the Plaintiff(Appellant). The conduct of the Defendant Nos. 1 to 3 is not properly appreciated by the learned Single Judge. Their denial regarding nature of the agreement was found to be untrue. They had no compunction in alienating the suit shop to the Defendant No.4. Needless to say, the Defendant Nos. 1 to 4 joined hands to defeat the rightful claim of the Plaintiff.

10. The learned Single Judge has recorded following reasons in support of his finding that the Plaintiff was not capable to seek specific performance of the agreement of sale:

"... However, when today he is claiming specific performance of the said agreement, the plaintiff should have led evidence to indicate that even today such permission could be obtained by Ast

9 judgment.sxw him in that area. In that regard, he should have examined some witness from B.M.C. Authorities that even today such permission can be given for establishment of the floor mill in the said building. Needless to say that the flour mill permission is granted on certain conditions and on verification of certain facts i.e.with regard to the requirement of flour mill in that area. Therefore, there is no evidence to show that there is probability of granting of such permission in favour of the Plaintiff in respect of the suit shop. Since after the suit agreement more than 25 yrs. Have elapsed and it is not clear as to what is the present situation with regard to the granting of permission for establishment of flour mill in the suit shop."

11. We have examined the above reasons and the attending circumstances. In our opinion, when it is not proved that the performance of the contract entirely depended on grant of permission by the BMC, then the Plaintiff could not be denied the relief of specific performance of the agreement. The issue is not whether he will be able to get the permission for establishment of the floor mill. The issue is whether he was ready and willing to purchase the suit shop even though such permission for running of the floor mill could be denied to him. He categorically stated that the BMC intimated him vide letter (Exh.P-6) th

dated 5 April, 1979 to produce written agreement of sale in order to Ast

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enable him to get the permission to run the floor mill. It was due to failure of the Defendant Nos. 1 to 3 to perform their part of the agreement of sale that he could not comply the letter issued by the BMC. Obviously, he was not at fault. It cannot be said that he is responsible for the lack of permission and moreover, due performance of the agreement of sale, in any case, does not depend on grant of such permission by the BMC. The Plaintiffs may have utilised the suit shop for any other business, or even taking the worst case, would have kept it unused until he could get permission of the BMC for the proposed business of running a floor mill. Still, however, it was none of the business of the Defendant Nos. 1 to 3 to refuse performance of their part of the agreement of sale. The specific performance could not have been denied to the Plaintiff, when he had paid entire consideration amount in advance, was very much willing and ready to obtain agreement of sale in writing and to do necessary acts for the specific performance of the terms of the oral agreement.

12. It appears that the defendant Nos. 1 to 3 have no regard for the Ast

11 judgment.sxw truth. They alleged that the agreement was only for conducting business of the Floor Mill and that the amount paid by the plaintiff was by way of deposit. The learned Single Judge, on appreciation of evidence, found that such a plea was untrue and afterthought. He has observed : "The theory put forth by the Defendants that this amount was paid by the plaintiff as deposit hardly has any merit. The theory put forth by the Defendants is totally an afterthought and unbelievable." If this is the finding about conduct of the defendant Nos. 1 to 3 then it ought to be held that they do not deserve any equity. The delay in due performance of the agreement of sale was on account of defaults of the defendant Nos. 1 to 3. They had put off execution of the agreement of sale. They were actuated with greed when they sold the suit shop to the defendant No.4, simultaneously retaining the amount of the plaintiff. In the background of such proved facts, the judicial discretion ought to have been exercised in favour of the Plaintiff. The act of the Court should not twart rightful claim of a litigant who has been duped by the developers i.e. the defendant Nos. 1 to 3.

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13. Counsel for the defendant Nos. 1 to 3 contended that after such a long drawn period the discretion exercised by the learned Single Judge may not be interfered with by this Court. He pointed out that the suit was filed in the year 1986. Reliance is placed on Manjunath Anandappa Urf Shivappa Hansi v/s. Tammanasa and others(AIR 2003 S.C. 1391). The Apex Court observed :

"30. There is another aspect of the matter which cannot be lost sight of. The plaintiff filed the suit almost after six years from the date of entering into the agreement to sell. He did not bring any material on records to show that he had ever asked defendant No.1, the owner of the property, to execute a deed of sale. He filed a suit only after he came to know that the suit land had already been sold by her in favour of the appellant herein. Furthermore, it was obligatory on the part of the plaintiff for obtaining a discretionary relief having regard to Section 20 of the Act to approach the Court within a reasonable time. Having regard to his conduct, the plaintiff was not entitled to discretionary relief.

31. In Veerayee Ammal v. Seeni Ammal reported in (2002) 1 SCC 134 the law is stated in the following terms: "11. When, concededly, the time was not of the essence of the contract, the appellant-plaintiff was required to approach the Court of law within a reasonable time. A Constitution Bench of this Hon'ble Court in Chand Rani v. Kamal Rani (1993) 1 SCC 519 held that in Ast

13 judgment.sxw case of sale of immovable property there is no presumption as to time being of the essence of the contract. Even if it is not of the essence of contract, the Court may infer that it is to be performed in a reasonable time if the conditions are (i) from the express terms of the contract; (ii) from the nature of the property; and (iii) from the surrounding circumstances, for example, the object of making the contract. For the purposes of granting relief, the reasonable time has to be ascertained from all the facts and circumstances of the case.

12. In K.S.Vidyanadam v. Vairavan (1997) 3 SCC 1 this Court held: (SCC P.11. Para 14)

"Even where time is not of the essence of the contract, the plaintiff must perform his part of the contract within a reasonable time and reasonable time should be determined by looking at all the surrounding circumstances including the express terms of the contract and the nature of the property."

13. The word "reasonable" has in law prima facie meaning of reasonable in regard to those circumstances of which the person concerned is called upon to act reasonably knows or ought to know as to what was reasonable. It may be unreasonable to give an exact definition of the word "reasonable". The reason varies in its conclusion according to idiosyncrasy of the individual and the time and circumstances in which he thinks. The dictionary meaning of the "reasonable time" is to be so much time as is necessary, under the circumstances, to do conveniently what the contract or duty requires should be done in a particular case. In other words it means, as soon as circumstances permit. In P. Ramanatha Aiyar's The Law Lexicon it is defined to mean :

"A reasonable time, looking at all the circumstances of the case; a reasonable time under ordinary circumstances; as soon as circumstances will permit; so much time as is necessary under the circumstances, conveniently to do what the contract requires should be done; some more protracted space than 'directly'; such length of time as may fairly, and Ast

14 judgment.sxw properly, and reasonably be allowed or required, having regarding to the nature of the act or duty and to the attending circumstances; all these convey more or less the same idea."

14. The above observations can not be read isolatedly. In that case the Apex Court had noticed that the Plaintiff failed to aver and prove readiness and willingness as contemplated U/sec. 16(c) of the Specific Relief Act, 1963. So also the peculiar conduct of the Plaintiff disentitled him to get the discretionary relief of the Specific Performance. It need not be reiterated that in the present case the plaintiff had performed his part of the agreement of sale within a short spell of time after the settlement of the terms thereof. Whatever had remained to be done was the part of the defendant Nos. 1 to 3.

15. The expression "judicial discretion" necessarily connotes exercise of "discretion" which assumes an act of judicial character. In Aero Traders Pvt.Ltd. v/s. Ravinder Kumar Suri,(AIR 2005 SC 15), the Apex Court propounded the concept of "judicial discretion". It is held that when Ast

15 judgment.sxw something is to be done within the discretion of the authorities that something is to be done according to the rules of reasons and justice and not according to the private opinion; according to law and not humour. It only gives certain latitude or liberty accorded by statute or rules, to a judge as distinguished from a ministerial or administrative official, in adjudicating on matters brought before him. The import of sub- section (3) of section 20 of the Specific Relief Act, 1963, in our opinion, is not properly appreciated by the learned Single Judge. Section 20(3) reads as follows:

"20. Discretion as to decreeing specific performance.- (1)**** (2)****

(3) The Court may properly exercise discretion to decree specific performance in any case where the plaintiff has done substantial acts or suffered losses in consequence of a contract capable of specific performance."

In our opinion, the discretion ought to have been exercised in favour of the Plaintiff, when it is found that he has done substantial acts in pursuance of the agreement of sale and moreover, conduct of the Ast

16 judgment.sxw contesting defendants is quite unfair.

16. We find that the learned Single Judge did not judiciously exercise the discretion under section 20 of the Specific Relief Act, 1963. It is well settled that ordinarily the Specific performance of an agreement of immovable property should not be refused. In our opinion, the learned Single Judge did not properly consider the unfair conduct of the defendants, tenacious and straight forward conduct of the plaintiff(appellant) and also root cause of his delayed civil action. With the result, the relief of Specific performance was wrongly denied to the plaintiff. In our opinion, the impugned Judgment is unsustainable and that the plaintiff is legally entitled to the relief of the Specific performance of the agreement of sale. The defendant No.4 did not resist the appeal nor is found entitled to any protection. Consequently, all the defendants are held jointly liable to execute required document of transfer of the suit shop in favour of the plaintiff.

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17. For the reasons aforestated, we allow the appeal and set aside final order in the impugned Judgment. Instead, the following final order in paragraph No.21 of impugned Judgment shall be substituted. "(i) The Suit is decreed in terms of prayer clause (a) of the plaint.

(ii) The defendant Nos. 1 to 4 shall specifically perform the remaining part of the agreement of Sale. They shall jointly execute a registered sale deed of the suit shop in favour of the plaintiff or his nominee and transfer the suit shop in his favour on ownership basis, and further shall deliver possession thereof to him.

(iii) The plaintiff do recover mesne profits from the defendants as may be determined after due inquiry under order 20 Rule 12 of the C.P.Code from date of the suit till delivery of Ast

18 judgment.sxw possession of the suit shop.

(iv) The defendants shall pay costs of the Suit and the Appeal to the plaintiff and shall bear their own. [ D.K.DESHMUKH, J]

[ V.R.KINGAONKAR, J ]