The principles which can be enunciated is that where
the plaintiff brings a suit for specific performance of contract
for sale, the law insists a condition precedent to the grant of
decree for specific performance that the plaintiff must show
his continued readiness and willingness to perform his part
of the contract in accordance with its terms from the date of
contract to the date of hearing. Normally, when the trial
court exercises its discretion in one way or other after
appreciation of entire evidence and materials on record, the
appellate court should not interfere unless it is established
that the discretion has been exercised perversely, arbitrarily
or against judicial principles. The appellate court should also
not exercise its discretion against the grant of specific
performance on extraneous considerations or sympathetic
considerations. It is true, as contemplated under Section 20
of the Specific Relief Act, that a party is not entitled to get a
decree for specific performance merely because it is lawful
to do so. Nevertheless once an agreement to sell is legal
and validly proved and further requirements for getting such
a decree is established then the Court has to exercise its
discretion in favour of granting relief for specific
performance.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.9047 OF 2014
(Arising out of Special Leave Petition (Civil) No.2271 of 2012)
K. Prakash …Appellant (s)
Versus
B.R. Sampath Kumar …
M.Y. Eqbal, J.:
Dated;September 22, 2014
Read original Judgment;click here
Leave granted.
2. This appeal by special leave is directed against the
judgment and order dated 23.8.2011 passed by the High
Court of Karnataka whereby Regular First Appeal No.396 of
2007 of the respondent was allowed, reversing the judgment
of the trial court and dismissing the suit for specific
performance of the agreement filed by the plaintiff appellant.
2. The facts of the case lie in a narrow compass.
3. All disputes pertain to a self acquired property of the
father of the respondent. The respondent’s father had four
sons and three daughters. On 31.7.1988, transfer of Khata
was executed by all brothers and sisters in the name of the
respondent. After the demise of their parents, partition
seems to have taken place on 14.12.2000 among brothers
and sisters and the property in question is said to have fallen
to the share of defendant, who was required to pay a sum of
Rs.1,25,000/- to each of the brothers and sisters in lieu of
their shares in the suit house. The plaintiff had paid
Rs.1,25,000/- to all his brothers and sisters except brother
Selva Pillai.
4. The respondent herein executed an Agreement for Sale
in favour of the appellant on 15.12.2003 agreeing to sell the
schedule property for a total sale consideration of
2
Page 3
Rs.16,10,000/-. The schedule property is located at
Bangalore, admeasuring 30 x 45 feet with built up area of
1700 sq.ft., consisting of ground floor and first floor including
out house. The ground floor is occupied by the respondent
and the first floor is occupied by the appellant. as a
mortgagee. The out-house is occupied by the brother of the
defendant-respondent namely Sheshadri (as mortgagee). It
is relevant to note that an amount of Rs.3,75,000/- was paid
by the appellant to the respondent as requested by the
respondent and Sheshadri, who is occupying the out-house
portion, has paid Rs.1,65,000/- as a mortgage consideration
to the respondent while occupying the house. Agreement
further reveals that the aforesaid amounts shall be treated
as advance amount received by the respondent under the
agreement of sale. The understanding between the parties
is that the mortgage consideration need not be repaid by the
respondent to the mortgagees including Sheshadri and his
mortgage consideration will be repaid by the prospective
vendee i.e. the appellant. However, on the date of execution
3
Page 4
of sale agreement, only a sum of Rs.5,000/- was paid by the
appellant to the respondent. Thus, in all a sum of
Rs.5,45,000/- is said to have been paid by the appellant.
The plaintiff could raise loan of Rs.3 lakh by securing
property. The remaining sale consideration of Rs.7,65,000/-
was payable to the respondent within one year from the date
of the agreement, and in case respondent fails to comply
with any of the conditions in the agreement, he would repay
double the amount i.e. Rs.10,90,000/- to the appellant.
5. Although prescribed time was one year, litigation
seems to have started between the parties within three
months. Repeated complaints were filed by the appellant
against the respondent before the police authorities. At
last, appellant-plaintiff moved a suit on 9.7.2004 praying for
a decree of specific performance on the ground that the
respondent-defendant has denied the execution of the sale
deed. The sum and substance of the appellant-plaintiff’s
case is that the defendant-respondent has failed to perform
his part of the contract though the appellant-plaintiff was
ready and willing to perform his part of the contract.
6. The defendant-respondent denying Agreement Ex.P1
pleaded in his written statement that there being difference
of opinion between himself and his brothers, he was in highly
disturbed state of mind and when he approached the
appellant for suggestion and help, appellant took his
signature on the alleged agreement of sale and he signed it
since he had implicit faith in the appellant. The appellantplaintiff
had assured that B.R. Sheshadri - brother of the
respondent-defendant, who was living in the out-house,
would be made to vacate the premises in the guise of
interest being created in favour of appellant in the property.
It has also been contended that the respondent had no
intention to execute the agreement of sale or to sell the
property and the agreement was entered into only for the
purpose of securing the loan and the property was
mortgaged as a security for the loan.
hearing argument on both sides, the trial court
decreed the suit in favour of the plaintiff-appellant with a
direction to the defendant-respondent to execute the
absolute sale deed in favour of the plaintiff, free from all
claims and encumbrances, by receiving the balance
consideration of Rs.10,65,000/- and to hand over the vacant
and peaceful possession of the suit Schedule Property to the
plaintiff. Aggrieved by the decision, the defendantrespondent
preferred an appeal before the High Court, which
passed the impugned order setting aside the decree of the
trial court and dismissing the suit for specific performance.
Hence, this appeal by special leave by the plaintiff.
8. Mr. Sanjay Parikh, learned counsel appearing on behalf
of the appellant contended that instead of adverting to and
re-appreciating the evidence on record, the High Court erred
in arriving at the findings based on conjectures and
surmises. The appellant-plaintiff has complied with the
6
Page 7
provisions of Section 16(c) of the Specific Relief Act by
establishing his willingness to perform his part of the
contract whereas the respondent-defendant failed to do so.
It is further contended that the respondent has admitted by
way of affidavit dated 10.10.2006 that he executed the
Agreement of sale dated 15.12.2003 and also by letter dated
21.1.2004 further admitted that he has executed aforesaid
agreement and he had already received a sum of
Rs.5,45,000/- as part payment of the total sale
consideration. At the instance of appellant, on 16.2.2004
Syndicate Bank issued two cheques one for Rs.10,65,000/- in
favour of the respondent towards balance amount of sale
consideration and another for Rs.1,19,840/- in favour of Sub-
Registrar, Rajajinagar, Bangalore for payment of the
registration charges of the said sale deed. As contended, on
failure of the respondent to reply legal notice of the
appellant and execute the sale deed in favour of the
appellant, the appellant had to move a suit for relief of
specific performance directing the respondent to receive the
7
Page 8
balance sale consideration to execute an absolute sale deed
in favour of the appellant. Learned counsel drew our
attention to the exhibits and the evidence of the defendantrespondent
and submitted that the appellate court has
committed serious illegality in ignoring these materials and
reversed the finding of the trial court.
9. Per contra, Mr. Vishwanath Shetty, learned senior
counsel appearing on behalf of respondent, submitted that
taking advantage of financial crises and disturbed state of
mind of the respondent, the appellant suggested him to
execute an agreement of sale and without revealing its
contents took his signature on the agreement, which was
made only for nominal purpose and he had no intention to
sell the property. It is further contended that the appellant
had concocted and fabricated the agreement. It is alleged by
the respondent that since appellant did not perform his part
of the contract, the entire alleged agreement stood
cancelled. Prevailing circumstances had forced respondent
8
Page 9
to write aforesaid letter dated 21.1.2004 calling appellant to
pay the entire amount. Alleged agreement and letter were
created by the appellant under suspicious circumstances and
mental pressure of the defendant-respondent, and as such,
they are not legally enforceable for a decree under Section
16(c) read with Section 20 of the Specific Relief Act, 1963.
The High Court has held that there was payment of only
Rs.5000/- to the defendant as against the claim of the
plaintiff that he has paid a sum of Rs.5,45,000/- under Ex.P1
and P2. It has been further contended on behalf of the
respondent that the market value of the property in the year
2003 in Bangalore was much more to the consideration
amount contained in Ex. P1 and P2. The whole transaction
was nothing but farce. Respondent contends that taking into
consideration all aspects of the matter, the High Court is
right in reversing the judgment of the trial court, which had
ignored the material evidence on record with regard to the
conduct of the plaintiff-appellant.
9
Page 10
10. While deciding the issue as to whether the agreement
dated 15.12.2003 was executed by the defendant in favour
of the plaintiff-appellant, the trial court has gone through the
pleading and evidence and discussed the matter in detail.
The trial court found that after the agreement executed
between the parties on 15.12.2003 the defendantrespondent
issued letter dated 21.1.2004 calling upon the
plaintiff to get ready with the entire balance amount on or
before 15.4.2004 and also mentioned that in default, the
agreement dated 15.12.2003 will stand cancelled and the
advance amount shall be forfeited. The trial court further
found that the plaintiff had paid an amount of Rs. 3,75,000/-
to the defendant for the property in occupation of the
plaintiff taken on lease and the defendant in cross
examination had admitted that the plaintiff occupied the first
floor as mortgagee and that the plaintiff has paid the
amount of Rs. 3,75,000/- (exhibit P-3). The trial court further
10
Page 11
found that the defendant was examined as DW-1 and he
admitted the signature of himself, his wife and signature of
plaintiff. He further admitted in cross examination that he
had read the papers and signed the same. The defendant
also handed over copies of the title deeds and the
encumbrance certificate to the plaintiff on lease basis and
also Exhibit P-1 and P-2, the trial court came to the
conclusion that the defendant entered into an agreement of
sale with the plaintiff for a consideration of Rs. 16,10,000/-
and that the amount of Rs. 5,45,000/- was paid as an
advance towards the sale of the said property. Further the
defendant (DW-1) admitted the receipt of the legal notice
dated 12.3.2004 (exhibit P-3) but he did not reply the said
notice.
11. The trial court also discussed the defence taken by the
defendant during cross examination that the suit property
has fallen to the share of the defendant and that all his
brothers and sisters are residing separately. The trial court,
therefore, came to the conclusion that there is a valid
agreement to sell the suit property executed by the
defendant in favour of the plaintiff on receipt of the advance
consideration.
12. The High Court has taken a very peculiar view that the
plaintiff-appellant filed the suit which was premature. For
better appreciation, the relevant portion of para 8 of the
judgment passed by the High Court is extracted
hereinbelow:-
“It is not in dispute that the agreement is
dated 15.12.2003. Under the agreement, both
the parties have agreed that the sale deed
should be executed within one year from that
day, that is on or before 15.12.2004. But the
suit is filed on 9.7.2004, that is within about 7
months from the date of the agreement.
Absolutely, no reasons are forthcoming as to
why the suit was filed prematurely. In the
meanwhile, the plaintiff approached the Police
for enforcement of the contract. The same is
clear in the matter on record Ex.P.11 dated
08.2.2004 is the complaint lodged by the
plaintiff before the Deputy Police
Commissioner. In the said complaint, he has
clearly stated that though the defendant
agreed for selling his property on 15.12.2003,
the plaintiff has not come forward to execute
the sale deed and that the plaintiff has been
delaying the execution of sale deed since four
days prior to the filing of the complaint. The
plaintiff requested the Deputy Police
Commissioner to call the defendant and to take
action by directing him to execute the sale
deed as agreed. He also sought for protection
by filing the said complaint.
Ex.P.12 is the complaint dated 3.3.2004
filed by the plaintiff before the Police
Commissioner, Bangalore city. In the said
complaint also, the plaintiff has alleged that
defendant is refusing to execute the sale deed
in his favour and that therefore, the
Commissioner should intervene in the manner
for getting the sale deed executed in favour of
the plaintiff.
Ex.P.13 is the complaint dated 11.4.2004
filed by the plaintiff before the Police Inspector,
Subramanyanagar Police Station, Bangalore
(subsequently police station). In the said
complaint, he has stated that defendant and
his family members have threatened to kill the
plaintiff and his family members and therefore,
action should be taken against the4 defendant.
However, Inspector of Police has issued an
endorsement on 11.3.2004, as per Ex.P.14 to
the effect that dispute between the parties is of
civil nature and the complainant was directed
to get his grievances redressed before the
jurisdictional Civil Court. Ex.P.15 is another
complaint of similar nature. Ex.P.16 is an
endorsement issued by the Police officer to the
wife of the complainant intimating her that the
complaint lodged by her on 12.3.2004, is
received and for any grievance, she can
approach the Subramanyanagar Police Station.
Further, in Ex.P.17, the Inspector of Police has
intimated the plaintiff that the defendant has
denied the agreement of sale and that he had
signed the sale agreement under mental
pressure. Again by issuing such an
endorsement, the Inspector has directed the
13
Page 14
plaintiff to get his grievances redressed before
the Civil Court. Cr.P.C.107 proceedings were
initiated before the Tehsildar, Bangalore,
against the parties as is clear from Ex.P.18.
based on the complaints, two charge sheets
were lodged against the defendant as per
Ex.P.19 and 21; the same are pending
consideration before the Criminal Court. These
facts clearly go to show that the plaintiff has
approached the police repeatedly by making
one or the other allegations that too within the
span of 2 to 4 months of the agreement. He
has approached the Commissioner of Police
and Deputy Commissioner of police seeking
their interference in the matter for getting the
sale deed executed in his favour.”
13. The High Court further held that in the agreement
(Exhibit P-1) the parties have agreed that if the sale deed
could not be executed by the defendant, he will repay a sum
of Rs,. 10,90,000/-, According to the High Court, the recital in
the agreement shows that it was not executed by the
defendant with free mind and volition rather he was under
pressure while executing those documents.
14. We have given our thoughtful consideration in the
matter and perused the pleading and evidence. We are of
14
Page 15
the view that the High Court has not approached the issue in
its right perspective and has committed serious error of law
in holding that the agreement was executed by the
defendant without free mind and volition and under some
pressure. The agreement was executed on 15.12.2003
wherein it has been mentioned that the total consideration
amount was 16,10,000/- and out of that part consideration of
sum of Rs. 5,45,000/- was paid. The said agreement was
followed by another letter dated 21.1.2004, executed by the
respondent, the contents whereof are reproduced hereinbelow:-
“21.01.2004
“That on this 22nd day of January, 2004, I have
executed the agreement of sale in favour of
Sri K.Prakash, in respect of the House bearing
No.2558, 11th Main Road, Subramanyanagara,
Bangalore-560 010, to sell the same for a total
sale consideration of Rs.16,10,000/- (Rupees
Sixteen Lakhs Ten thousand only). In all I have
received a sum of Rs.5,45,000/- (Rupees Five
Lakhs Forty Five Thousand only) from K.
Prakash and the balance sale consideration to
be paid on or before 15.04.2004 evening,
failing to pay the balance sale consideration as
per the agreement dated 15.12.2004. This
Agreement stands cancel. I agree for the same.
15
Page 16
Sd/- Sd/-
(Sampath Kumar)
Vendor (K.Prakash)
(Purchaser)
Sd/-
(Kanthamani)
WITNESSES: WITNESSES
Sd/- 1) Sd/-
Sd/- 2) Sd/-
Sd/- 3) Sd/-”
15. Indisputably, remedy for specific performance is an
equitable remedy. The Court while granting relief for
specific performance exercise discretionary jurisdiction.
Section 20 of the Act specifically provides that the court’s
jurisdiction to grant decree of specific performance is
discretionary but not arbitrary. Discretion must be exercised
in accordance with the sound and reasonable judicial
principles.
16. The King’s Bench in Rookey’s Case [77 ER 209; (1597)
5 Co.Rep.99] it is said :
“Discretion is a science, not to act arbitrarily
according to men’s will and private affection:
so the discretion which is exercised here, is to
16
Page 17
be governed by rules of law and equity, which
are to oppose, but each, in its turn, to be
subservient to the other. This discretion, in
some cases follows the law implicitly, in others
or allays the rigour of it, but in no case does it
contradict or overturn the grounds or principles
thereof, as has been sometimes ignorantly
imputed to this Court. That is a discretionary
power, which neither this nor any other Court,
not even the highest, acting in a judicial
capacity is by the constitution entrusted with”
The Court of Chancery in Attorney General vs.
Wheat [(1759) 1 Eden 177; 28 ER 652] followed the Rooke’s
case and observed :
“the law is clear and courts of equity ought to
follow it in their judgments concerning titles to
equitable estates; otherwise great uncertainty
and confusion would ensue. And though
proceedings in equity are said to be secundum
discretionem boni vin, yet when it is asked, vir
bonus est quis? The answer is, qui consulta
partum, qui leges juraq servat. And as it is said
in Rooke’s case, 5 Rep. 99 b, that discretion is a
science not to act arbitrarily according to men’s
will and private affection: so the discretion
which is exercised here, is to be governed by
rules of law and equity, which are to oppose,
but each, in its turn, to be subservient to the
other. This discretion, in some cases follows
the law implicitly, in others or allays the rigour
of it, but in no case does it contradict or
overturn the grounds or principles thereof, as
has been sometimes ignorantly imputed to this
Court. That is a discretionary power, which
neither this nor any other Court, not even the
highest, acting in a judicial capacity is by the
constitution entrusted with. This description is
full and judicious, and what ought to be
imprinted on the mind of every judge.”
17. The principles which can be enunciated is that where
the plaintiff brings a suit for specific performance of contract
for sale, the law insists a condition precedent to the grant of
decree for specific performance that the plaintiff must show
his continued readiness and willingness to perform his part
of the contract in accordance with its terms from the date of
contract to the date of hearing. Normally, when the trial
court exercises its discretion in one way or other after
appreciation of entire evidence and materials on record, the
appellate court should not interfere unless it is established
that the discretion has been exercised perversely, arbitrarily
or against judicial principles. The appellate court should also
not exercise its discretion against the grant of specific
performance on extraneous considerations or sympathetic
considerations. It is true, as contemplated under Section 20
of the Specific Relief Act, that a party is not entitled to get a
decree for specific performance merely because it is lawful
to do so. Nevertheless once an agreement to sell is legal
and validly proved and further requirements for getting such
a decree is established then the Court has to exercise its
discretion in favour of granting relief for specific
performance.
18. Mr. Shetty, lastly submitted that grant of decree for
specific performance in favour of the appellant will cause a
great hardship for the reason not only because of the lesser
price shown in the agreement but also because of the rise in
price which have been increased ten times the price agreed
between the parties.
19. Subsequent rise in price will not be treated as a
hardship entailing refusal of the decree for specific
performance. Rise in price is a normal change of
circumstances and, therefore, on that ground a decree for
specific performance cannot be reversed.
19
Page 20
20. However, the court may take notice of the fact that
there has been an increase in the price of the property and
considering the other facts and circumstances of the case,
this Court while granting decree for specific performance can
impose such condition which may to some extent
compensate the defendant-owner of the property. This
aspect of the matter is considered by a three Judge Bench of
this Court in Nirmala Anand vs. Advent Corporation
(P) Ltd. and Others, (2002) 8 SCC 146, where this Court
held :-
“6. It is true that grant of decree of specific
performance lies in the discretion of the court and it is
also well settled that it is not always necessary to
grant specific performance simply for the reason that
it is legal to do so. It is further well settled that the
court in its discretion can impose any reasonable
condition including payment of an additional amount
by one party to the other while granting or refusing
decree of specific performance. Whether the
purchaser shall be directed to pay an additional
amount to the seller or converse would depend upon
the facts and circumstances of a case. Ordinarily, the
plaintiff is not to be denied the relief of specific
performance only on account of the phenomenal
increase of price during the pendency of litigation.
That may be, in a given case, one of the
considerations besides many others to be taken into
consideration for refusing the decree of specific
performance. As a general rule, it cannot be held that
ordinarily the plaintiff cannot be allowed to have, for
her alone, the entire benefit of phenomenal increase
of the value of the property during the pendency of
the litigation. While balancing the equities, one of the
considerations to be kept in view is as to who is the
defaulting party. It is also to be borne in mind
whether a party is trying to take undue advantage
over the other as also the hardship that may be
caused to the defendant by directing specific
performance. There may be other circumstances on
which parties may not have any control. The totality
of the circumstances is required to be seen.”
21. As discussed above the agreement was entered into
between the parties in 2003 for sale of the property for a
total consideration of Rs.16,10,000/-. Ten years have
passed by and now the price of the property in that area
where it situates has increased by not less than five times.
Keeping in mind the factual position we are of the view that
the appellant should pay a total consideration of Rs.25
lakhs, being the price for the said property.
22. We, therefore, allow this appeal and set aside the
judgment and order passed by the High Court and restore
the judgment and decree of the trial court with the
modification that on payment of Rs.25 lakhs, less already
21
Page 22
paid by the plaintiff, the defendant-owner shall execute a
registered sale deed within a period of three months from
today.
………………………….J.
[ M.Y. Eqbal ]
…………………………….J
[Pinaki Chandra Ghose]
New Delhi
September 22, 2014
Print Page
the plaintiff brings a suit for specific performance of contract
for sale, the law insists a condition precedent to the grant of
decree for specific performance that the plaintiff must show
his continued readiness and willingness to perform his part
of the contract in accordance with its terms from the date of
contract to the date of hearing. Normally, when the trial
court exercises its discretion in one way or other after
appreciation of entire evidence and materials on record, the
appellate court should not interfere unless it is established
that the discretion has been exercised perversely, arbitrarily
or against judicial principles. The appellate court should also
not exercise its discretion against the grant of specific
performance on extraneous considerations or sympathetic
considerations. It is true, as contemplated under Section 20
of the Specific Relief Act, that a party is not entitled to get a
decree for specific performance merely because it is lawful
to do so. Nevertheless once an agreement to sell is legal
and validly proved and further requirements for getting such
a decree is established then the Court has to exercise its
discretion in favour of granting relief for specific
performance.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.9047 OF 2014
(Arising out of Special Leave Petition (Civil) No.2271 of 2012)
K. Prakash …Appellant (s)
Versus
B.R. Sampath Kumar …
M.Y. Eqbal, J.:
Dated;September 22, 2014
Read original Judgment;click here
Leave granted.
2. This appeal by special leave is directed against the
judgment and order dated 23.8.2011 passed by the High
Court of Karnataka whereby Regular First Appeal No.396 of
2007 of the respondent was allowed, reversing the judgment
of the trial court and dismissing the suit for specific
performance of the agreement filed by the plaintiff appellant.
2. The facts of the case lie in a narrow compass.
3. All disputes pertain to a self acquired property of the
father of the respondent. The respondent’s father had four
sons and three daughters. On 31.7.1988, transfer of Khata
was executed by all brothers and sisters in the name of the
respondent. After the demise of their parents, partition
seems to have taken place on 14.12.2000 among brothers
and sisters and the property in question is said to have fallen
to the share of defendant, who was required to pay a sum of
Rs.1,25,000/- to each of the brothers and sisters in lieu of
their shares in the suit house. The plaintiff had paid
Rs.1,25,000/- to all his brothers and sisters except brother
Selva Pillai.
4. The respondent herein executed an Agreement for Sale
in favour of the appellant on 15.12.2003 agreeing to sell the
schedule property for a total sale consideration of
2
Page 3
Rs.16,10,000/-. The schedule property is located at
Bangalore, admeasuring 30 x 45 feet with built up area of
1700 sq.ft., consisting of ground floor and first floor including
out house. The ground floor is occupied by the respondent
and the first floor is occupied by the appellant. as a
mortgagee. The out-house is occupied by the brother of the
defendant-respondent namely Sheshadri (as mortgagee). It
is relevant to note that an amount of Rs.3,75,000/- was paid
by the appellant to the respondent as requested by the
respondent and Sheshadri, who is occupying the out-house
portion, has paid Rs.1,65,000/- as a mortgage consideration
to the respondent while occupying the house. Agreement
further reveals that the aforesaid amounts shall be treated
as advance amount received by the respondent under the
agreement of sale. The understanding between the parties
is that the mortgage consideration need not be repaid by the
respondent to the mortgagees including Sheshadri and his
mortgage consideration will be repaid by the prospective
vendee i.e. the appellant. However, on the date of execution
3
Page 4
of sale agreement, only a sum of Rs.5,000/- was paid by the
appellant to the respondent. Thus, in all a sum of
Rs.5,45,000/- is said to have been paid by the appellant.
The plaintiff could raise loan of Rs.3 lakh by securing
property. The remaining sale consideration of Rs.7,65,000/-
was payable to the respondent within one year from the date
of the agreement, and in case respondent fails to comply
with any of the conditions in the agreement, he would repay
double the amount i.e. Rs.10,90,000/- to the appellant.
5. Although prescribed time was one year, litigation
seems to have started between the parties within three
months. Repeated complaints were filed by the appellant
against the respondent before the police authorities. At
last, appellant-plaintiff moved a suit on 9.7.2004 praying for
a decree of specific performance on the ground that the
respondent-defendant has denied the execution of the sale
deed. The sum and substance of the appellant-plaintiff’s
case is that the defendant-respondent has failed to perform
his part of the contract though the appellant-plaintiff was
ready and willing to perform his part of the contract.
6. The defendant-respondent denying Agreement Ex.P1
pleaded in his written statement that there being difference
of opinion between himself and his brothers, he was in highly
disturbed state of mind and when he approached the
appellant for suggestion and help, appellant took his
signature on the alleged agreement of sale and he signed it
since he had implicit faith in the appellant. The appellantplaintiff
had assured that B.R. Sheshadri - brother of the
respondent-defendant, who was living in the out-house,
would be made to vacate the premises in the guise of
interest being created in favour of appellant in the property.
It has also been contended that the respondent had no
intention to execute the agreement of sale or to sell the
property and the agreement was entered into only for the
purpose of securing the loan and the property was
mortgaged as a security for the loan.
hearing argument on both sides, the trial court
decreed the suit in favour of the plaintiff-appellant with a
direction to the defendant-respondent to execute the
absolute sale deed in favour of the plaintiff, free from all
claims and encumbrances, by receiving the balance
consideration of Rs.10,65,000/- and to hand over the vacant
and peaceful possession of the suit Schedule Property to the
plaintiff. Aggrieved by the decision, the defendantrespondent
preferred an appeal before the High Court, which
passed the impugned order setting aside the decree of the
trial court and dismissing the suit for specific performance.
Hence, this appeal by special leave by the plaintiff.
8. Mr. Sanjay Parikh, learned counsel appearing on behalf
of the appellant contended that instead of adverting to and
re-appreciating the evidence on record, the High Court erred
in arriving at the findings based on conjectures and
surmises. The appellant-plaintiff has complied with the
6
Page 7
provisions of Section 16(c) of the Specific Relief Act by
establishing his willingness to perform his part of the
contract whereas the respondent-defendant failed to do so.
It is further contended that the respondent has admitted by
way of affidavit dated 10.10.2006 that he executed the
Agreement of sale dated 15.12.2003 and also by letter dated
21.1.2004 further admitted that he has executed aforesaid
agreement and he had already received a sum of
Rs.5,45,000/- as part payment of the total sale
consideration. At the instance of appellant, on 16.2.2004
Syndicate Bank issued two cheques one for Rs.10,65,000/- in
favour of the respondent towards balance amount of sale
consideration and another for Rs.1,19,840/- in favour of Sub-
Registrar, Rajajinagar, Bangalore for payment of the
registration charges of the said sale deed. As contended, on
failure of the respondent to reply legal notice of the
appellant and execute the sale deed in favour of the
appellant, the appellant had to move a suit for relief of
specific performance directing the respondent to receive the
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balance sale consideration to execute an absolute sale deed
in favour of the appellant. Learned counsel drew our
attention to the exhibits and the evidence of the defendantrespondent
and submitted that the appellate court has
committed serious illegality in ignoring these materials and
reversed the finding of the trial court.
9. Per contra, Mr. Vishwanath Shetty, learned senior
counsel appearing on behalf of respondent, submitted that
taking advantage of financial crises and disturbed state of
mind of the respondent, the appellant suggested him to
execute an agreement of sale and without revealing its
contents took his signature on the agreement, which was
made only for nominal purpose and he had no intention to
sell the property. It is further contended that the appellant
had concocted and fabricated the agreement. It is alleged by
the respondent that since appellant did not perform his part
of the contract, the entire alleged agreement stood
cancelled. Prevailing circumstances had forced respondent
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to write aforesaid letter dated 21.1.2004 calling appellant to
pay the entire amount. Alleged agreement and letter were
created by the appellant under suspicious circumstances and
mental pressure of the defendant-respondent, and as such,
they are not legally enforceable for a decree under Section
16(c) read with Section 20 of the Specific Relief Act, 1963.
The High Court has held that there was payment of only
Rs.5000/- to the defendant as against the claim of the
plaintiff that he has paid a sum of Rs.5,45,000/- under Ex.P1
and P2. It has been further contended on behalf of the
respondent that the market value of the property in the year
2003 in Bangalore was much more to the consideration
amount contained in Ex. P1 and P2. The whole transaction
was nothing but farce. Respondent contends that taking into
consideration all aspects of the matter, the High Court is
right in reversing the judgment of the trial court, which had
ignored the material evidence on record with regard to the
conduct of the plaintiff-appellant.
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10. While deciding the issue as to whether the agreement
dated 15.12.2003 was executed by the defendant in favour
of the plaintiff-appellant, the trial court has gone through the
pleading and evidence and discussed the matter in detail.
The trial court found that after the agreement executed
between the parties on 15.12.2003 the defendantrespondent
issued letter dated 21.1.2004 calling upon the
plaintiff to get ready with the entire balance amount on or
before 15.4.2004 and also mentioned that in default, the
agreement dated 15.12.2003 will stand cancelled and the
advance amount shall be forfeited. The trial court further
found that the plaintiff had paid an amount of Rs. 3,75,000/-
to the defendant for the property in occupation of the
plaintiff taken on lease and the defendant in cross
examination had admitted that the plaintiff occupied the first
floor as mortgagee and that the plaintiff has paid the
amount of Rs. 3,75,000/- (exhibit P-3). The trial court further
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found that the defendant was examined as DW-1 and he
admitted the signature of himself, his wife and signature of
plaintiff. He further admitted in cross examination that he
had read the papers and signed the same. The defendant
also handed over copies of the title deeds and the
encumbrance certificate to the plaintiff on lease basis and
also Exhibit P-1 and P-2, the trial court came to the
conclusion that the defendant entered into an agreement of
sale with the plaintiff for a consideration of Rs. 16,10,000/-
and that the amount of Rs. 5,45,000/- was paid as an
advance towards the sale of the said property. Further the
defendant (DW-1) admitted the receipt of the legal notice
dated 12.3.2004 (exhibit P-3) but he did not reply the said
notice.
11. The trial court also discussed the defence taken by the
defendant during cross examination that the suit property
has fallen to the share of the defendant and that all his
brothers and sisters are residing separately. The trial court,
therefore, came to the conclusion that there is a valid
agreement to sell the suit property executed by the
defendant in favour of the plaintiff on receipt of the advance
consideration.
12. The High Court has taken a very peculiar view that the
plaintiff-appellant filed the suit which was premature. For
better appreciation, the relevant portion of para 8 of the
judgment passed by the High Court is extracted
hereinbelow:-
“It is not in dispute that the agreement is
dated 15.12.2003. Under the agreement, both
the parties have agreed that the sale deed
should be executed within one year from that
day, that is on or before 15.12.2004. But the
suit is filed on 9.7.2004, that is within about 7
months from the date of the agreement.
Absolutely, no reasons are forthcoming as to
why the suit was filed prematurely. In the
meanwhile, the plaintiff approached the Police
for enforcement of the contract. The same is
clear in the matter on record Ex.P.11 dated
08.2.2004 is the complaint lodged by the
plaintiff before the Deputy Police
Commissioner. In the said complaint, he has
clearly stated that though the defendant
agreed for selling his property on 15.12.2003,
the plaintiff has not come forward to execute
the sale deed and that the plaintiff has been
delaying the execution of sale deed since four
days prior to the filing of the complaint. The
plaintiff requested the Deputy Police
Commissioner to call the defendant and to take
action by directing him to execute the sale
deed as agreed. He also sought for protection
by filing the said complaint.
Ex.P.12 is the complaint dated 3.3.2004
filed by the plaintiff before the Police
Commissioner, Bangalore city. In the said
complaint also, the plaintiff has alleged that
defendant is refusing to execute the sale deed
in his favour and that therefore, the
Commissioner should intervene in the manner
for getting the sale deed executed in favour of
the plaintiff.
Ex.P.13 is the complaint dated 11.4.2004
filed by the plaintiff before the Police Inspector,
Subramanyanagar Police Station, Bangalore
(subsequently police station). In the said
complaint, he has stated that defendant and
his family members have threatened to kill the
plaintiff and his family members and therefore,
action should be taken against the4 defendant.
However, Inspector of Police has issued an
endorsement on 11.3.2004, as per Ex.P.14 to
the effect that dispute between the parties is of
civil nature and the complainant was directed
to get his grievances redressed before the
jurisdictional Civil Court. Ex.P.15 is another
complaint of similar nature. Ex.P.16 is an
endorsement issued by the Police officer to the
wife of the complainant intimating her that the
complaint lodged by her on 12.3.2004, is
received and for any grievance, she can
approach the Subramanyanagar Police Station.
Further, in Ex.P.17, the Inspector of Police has
intimated the plaintiff that the defendant has
denied the agreement of sale and that he had
signed the sale agreement under mental
pressure. Again by issuing such an
endorsement, the Inspector has directed the
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plaintiff to get his grievances redressed before
the Civil Court. Cr.P.C.107 proceedings were
initiated before the Tehsildar, Bangalore,
against the parties as is clear from Ex.P.18.
based on the complaints, two charge sheets
were lodged against the defendant as per
Ex.P.19 and 21; the same are pending
consideration before the Criminal Court. These
facts clearly go to show that the plaintiff has
approached the police repeatedly by making
one or the other allegations that too within the
span of 2 to 4 months of the agreement. He
has approached the Commissioner of Police
and Deputy Commissioner of police seeking
their interference in the matter for getting the
sale deed executed in his favour.”
13. The High Court further held that in the agreement
(Exhibit P-1) the parties have agreed that if the sale deed
could not be executed by the defendant, he will repay a sum
of Rs,. 10,90,000/-, According to the High Court, the recital in
the agreement shows that it was not executed by the
defendant with free mind and volition rather he was under
pressure while executing those documents.
14. We have given our thoughtful consideration in the
matter and perused the pleading and evidence. We are of
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the view that the High Court has not approached the issue in
its right perspective and has committed serious error of law
in holding that the agreement was executed by the
defendant without free mind and volition and under some
pressure. The agreement was executed on 15.12.2003
wherein it has been mentioned that the total consideration
amount was 16,10,000/- and out of that part consideration of
sum of Rs. 5,45,000/- was paid. The said agreement was
followed by another letter dated 21.1.2004, executed by the
respondent, the contents whereof are reproduced hereinbelow:-
“21.01.2004
“That on this 22nd day of January, 2004, I have
executed the agreement of sale in favour of
Sri K.Prakash, in respect of the House bearing
No.2558, 11th Main Road, Subramanyanagara,
Bangalore-560 010, to sell the same for a total
sale consideration of Rs.16,10,000/- (Rupees
Sixteen Lakhs Ten thousand only). In all I have
received a sum of Rs.5,45,000/- (Rupees Five
Lakhs Forty Five Thousand only) from K.
Prakash and the balance sale consideration to
be paid on or before 15.04.2004 evening,
failing to pay the balance sale consideration as
per the agreement dated 15.12.2004. This
Agreement stands cancel. I agree for the same.
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Sd/- Sd/-
(Sampath Kumar)
Vendor (K.Prakash)
(Purchaser)
Sd/-
(Kanthamani)
WITNESSES: WITNESSES
Sd/- 1) Sd/-
Sd/- 2) Sd/-
Sd/- 3) Sd/-”
15. Indisputably, remedy for specific performance is an
equitable remedy. The Court while granting relief for
specific performance exercise discretionary jurisdiction.
Section 20 of the Act specifically provides that the court’s
jurisdiction to grant decree of specific performance is
discretionary but not arbitrary. Discretion must be exercised
in accordance with the sound and reasonable judicial
principles.
16. The King’s Bench in Rookey’s Case [77 ER 209; (1597)
5 Co.Rep.99] it is said :
“Discretion is a science, not to act arbitrarily
according to men’s will and private affection:
so the discretion which is exercised here, is to
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be governed by rules of law and equity, which
are to oppose, but each, in its turn, to be
subservient to the other. This discretion, in
some cases follows the law implicitly, in others
or allays the rigour of it, but in no case does it
contradict or overturn the grounds or principles
thereof, as has been sometimes ignorantly
imputed to this Court. That is a discretionary
power, which neither this nor any other Court,
not even the highest, acting in a judicial
capacity is by the constitution entrusted with”
The Court of Chancery in Attorney General vs.
Wheat [(1759) 1 Eden 177; 28 ER 652] followed the Rooke’s
case and observed :
“the law is clear and courts of equity ought to
follow it in their judgments concerning titles to
equitable estates; otherwise great uncertainty
and confusion would ensue. And though
proceedings in equity are said to be secundum
discretionem boni vin, yet when it is asked, vir
bonus est quis? The answer is, qui consulta
partum, qui leges juraq servat. And as it is said
in Rooke’s case, 5 Rep. 99 b, that discretion is a
science not to act arbitrarily according to men’s
will and private affection: so the discretion
which is exercised here, is to be governed by
rules of law and equity, which are to oppose,
but each, in its turn, to be subservient to the
other. This discretion, in some cases follows
the law implicitly, in others or allays the rigour
of it, but in no case does it contradict or
overturn the grounds or principles thereof, as
has been sometimes ignorantly imputed to this
Court. That is a discretionary power, which
neither this nor any other Court, not even the
highest, acting in a judicial capacity is by the
constitution entrusted with. This description is
full and judicious, and what ought to be
imprinted on the mind of every judge.”
17. The principles which can be enunciated is that where
the plaintiff brings a suit for specific performance of contract
for sale, the law insists a condition precedent to the grant of
decree for specific performance that the plaintiff must show
his continued readiness and willingness to perform his part
of the contract in accordance with its terms from the date of
contract to the date of hearing. Normally, when the trial
court exercises its discretion in one way or other after
appreciation of entire evidence and materials on record, the
appellate court should not interfere unless it is established
that the discretion has been exercised perversely, arbitrarily
or against judicial principles. The appellate court should also
not exercise its discretion against the grant of specific
performance on extraneous considerations or sympathetic
considerations. It is true, as contemplated under Section 20
of the Specific Relief Act, that a party is not entitled to get a
decree for specific performance merely because it is lawful
to do so. Nevertheless once an agreement to sell is legal
and validly proved and further requirements for getting such
a decree is established then the Court has to exercise its
discretion in favour of granting relief for specific
performance.
18. Mr. Shetty, lastly submitted that grant of decree for
specific performance in favour of the appellant will cause a
great hardship for the reason not only because of the lesser
price shown in the agreement but also because of the rise in
price which have been increased ten times the price agreed
between the parties.
19. Subsequent rise in price will not be treated as a
hardship entailing refusal of the decree for specific
performance. Rise in price is a normal change of
circumstances and, therefore, on that ground a decree for
specific performance cannot be reversed.
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20. However, the court may take notice of the fact that
there has been an increase in the price of the property and
considering the other facts and circumstances of the case,
this Court while granting decree for specific performance can
impose such condition which may to some extent
compensate the defendant-owner of the property. This
aspect of the matter is considered by a three Judge Bench of
this Court in Nirmala Anand vs. Advent Corporation
(P) Ltd. and Others, (2002) 8 SCC 146, where this Court
held :-
“6. It is true that grant of decree of specific
performance lies in the discretion of the court and it is
also well settled that it is not always necessary to
grant specific performance simply for the reason that
it is legal to do so. It is further well settled that the
court in its discretion can impose any reasonable
condition including payment of an additional amount
by one party to the other while granting or refusing
decree of specific performance. Whether the
purchaser shall be directed to pay an additional
amount to the seller or converse would depend upon
the facts and circumstances of a case. Ordinarily, the
plaintiff is not to be denied the relief of specific
performance only on account of the phenomenal
increase of price during the pendency of litigation.
That may be, in a given case, one of the
considerations besides many others to be taken into
consideration for refusing the decree of specific
performance. As a general rule, it cannot be held that
ordinarily the plaintiff cannot be allowed to have, for
her alone, the entire benefit of phenomenal increase
of the value of the property during the pendency of
the litigation. While balancing the equities, one of the
considerations to be kept in view is as to who is the
defaulting party. It is also to be borne in mind
whether a party is trying to take undue advantage
over the other as also the hardship that may be
caused to the defendant by directing specific
performance. There may be other circumstances on
which parties may not have any control. The totality
of the circumstances is required to be seen.”
21. As discussed above the agreement was entered into
between the parties in 2003 for sale of the property for a
total consideration of Rs.16,10,000/-. Ten years have
passed by and now the price of the property in that area
where it situates has increased by not less than five times.
Keeping in mind the factual position we are of the view that
the appellant should pay a total consideration of Rs.25
lakhs, being the price for the said property.
22. We, therefore, allow this appeal and set aside the
judgment and order passed by the High Court and restore
the judgment and decree of the trial court with the
modification that on payment of Rs.25 lakhs, less already
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paid by the plaintiff, the defendant-owner shall execute a
registered sale deed within a period of three months from
today.
………………………….J.
[ M.Y. Eqbal ]
…………………………….J
[Pinaki Chandra Ghose]
New Delhi
September 22, 2014
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