Shiv Charan Das vs Charan Lal
2013 Latest Caselaw 5236 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

Reserved
 

 
Court No. - 39
 

 
Case :- SECOND APPEAL No. - 245 of 2007
 

 
Appellant :- Shiv Charan Das
 
Respondent :- Charan Lal
 
Counsel for Appellant :- Satish Mandhyan,B.D. Mandhyan
 
Counsel for Respondent :- Vivek Chaudhary,Ajay Rajendra,Rk Jain,S.S. Sachan
 

 
Hon'ble Dinesh Gupta,J.

This Second appeal is preferred against the judgment and decree dated 20.2.2007 passed by Additional District Judge, Court no.2, Meerut in Civil Appeal no.258 of 2005 arising out of judgment and decree passed on 14.10.2005 in O.S. Suit no.408 of 2001.

Brief facts which gave rise to this appeal are that:

Plaintiff respondent (hereinafter referred to as 'respondent') filed a suit for specific performance of contract against the defendant appellant (hereinafter referred to as 'appellant') .

As per the allegations contained in plaint the appellant was owner of land Khasra no. 1052 MI area 1.514 hectare situate in village Ghat, Pargana and Tehsil and District Meerut agreed to sell his aforesaid land in favour of respondent for a consideration of Rs. five lacs and after obtaining Rs. three lacs as earnest money executed a registered agreement of sale on 14.9.1998 and as per the terms of the agreement the appellant was to obtain permission from the competent authority and after obtaining permission was to inform the respondent and sale deed was to be executed within 2 ½ years.

The respondent asked the appellant to execute the sale deed. However, the appellant stalled the execution of the sale deed and when the respondent inquired from the competent authority then he came to know that there were no need to get permission from the competent authority. Then he sent a notice through his counsel on 8.2.2001 and asked the appellant to execute sale deed in his favour. He also informed the appellant that he will remain present on 17.2.2001 before the office of the sub registrar, Meerut. However, the appellant did not reply to the notice sent by the respondent nor he appeared before the Sub Registrar on the date fixed while the respondent remained present with the requisite money before the office of sub registrar then the respondent left with no option but to file suit for enforcement of agreement. The respondent also prayed in the suit that alternatively if it was not possible for some legal obstruction to execute sale deed in favour of the respondent then his earnest money along with interest @ of 24% be returned.

The defendant filed written statement and denied the agreement to sale and also denied that the respondent ever asked him to execute sale deed in his favour. He also submitted that he sent reply to the notice sent by the respondent.

He further submitted that in fact there was no agreement to sale his land nor he ever received Rs.three lacs as earnest money. In fact the son of the respondent who was a commission agent in the vegetable Mandi and had good relations with the appellant, and appellant used to take some loan from the son of the respondent, Hari Om Gupta. The appellant performed the marriage of her daughter in the year 1995 and there was some loan in connection with the marriage with her daughter and he asked the son of the respondent for some advancement of loan and the son of the respondent agreed that he will arrange loan to the appellant by his father and the appellant took Rs. two lacs as loan from the respondent and in order to secure the above said loan a document was executed and the appellant signed those documents under the impression that they are the documents to secure the loan. In fact there was no agreement to sale between the parties. When the appellant arranged the money of Rs.two lacs to give back to the respondent, he asked the respondent to receive his money and get that document cancelled. Then respondent filed this suit with mala fide intention. The appellant also claimed that suit of the respondent is barred by Sections 20 and 34 of Specific Relief Act and also Section 168-A of U.P.Z.A. & L.R. Act.

Respondent filed replication and reiterated the same facts which are stated by him in the plaint.

On the basis of pleadings of facts, the trial court framed the following issues:

1- D;k izfroknh us iz'uxr Hkwfe dks fodz; djus dk lknk oknh ds gd esa vadu 5 yk[k :i;s esa r; fd;k vkSj vadu 3 yk[k :i;s crkSj c;kuk izfroknh ls oknh ls izkIr djds fnukad 14-9-98 dks fodz; vuqca/k i= rgjhj o rdehy djkdj iathd`r djk;kA

2- D;k fookfnr Hkwfe ij oknh dkfct gSA

3- D;k oknh fodz; vuqca/ki= ds vk/kkj ij vius i{k esa fodz; vuqca/ki= vius i{k esa ges'kk rS;kj ,oa bPNqd jgk gSA

4- D;k izfroknh us oknh ls vadu 2 yk[k :i;s crkSj c;kuk izkIr djds dfFkr fodz;i= fu"ikfnr fd;k tSlk fd izfrokni= esa dFku fd;k x;k gSA

5- D;k iz'uxr nLrkost vadu 2 yk[k :i;s esa tekur dh ckcr fu"ikfnr gqvk gS tSlk fd izfrokni= dh /kkjk 21 esa vfHkdfFkr fd;k x;k gSA

6- D;k oknh dk okn /kkjk 20 ,oa /kkjk 34 fof'k"V vuqrks"k vf/kfu;e ls ckf/kr gSA

7- D;k oknh fdlh vuqrks"k dks izkIr djus dk vf/kdkjh gS\

8- D;k nkok oknh mRrj izns'k tehankjh ,oa Hkwfe lq/kkj vf/kfu;e dh /kkjk 168,0 ls ckf/kr gSA

In order to prove their case the parties examined witnesses. Respondent examined himself as PW 1 and also examined one Yogendra Shastri as PW 2. The appellant also examined as DW 1. No other witness was examined by either of the parties. After considering the evidence and the pleading of the parties the trial court dismissed the suit of the plaintiff for the relief of specific performance of contract, however, decreed the suit of the respondent for refund of Rs. three lacs with interest of 9% from the date of agreement.

Feeling aggrieved, the respondent preferred an appeal before the District Judge which was transferred to the Court of Additional District Judge who after considering arguments of both the parties allowed the appeal and decreed the suit of the plaintiff for the relief of specific performance of the contract and directed the appellant to execute the sale deed of the land in question in favour of the respondent after taking the remaining balance sale consideration of Rs.two lacs.

The appellant preferred this appeal against the order passed by the first appellate court. The appellate court while admitting the appeal framed the following substantial questions of law:

"1. Whether the applicability of Section 168-A of the U.P. Zamindari Abolition and Land Reforms Act to the agreement in question has to be examined with reference to the date of agreement or the date on which the suit was instituted or on the date the judgment was delivered, inasmuch as the appellate court has recorded that on the date of delivery of judgment Section 168-A of the U.P. Zamindari Abolition and Land Reforms Act has been deleted?

2. Whether the first appellate court in the facts of the present case could have interfered with the exercise of discretion by the trial court with reference to Section 20 of the Specific Relief Act while granting alternative prayer of return of the money instead of execution of the sale-deed in terms of the agreement?"

This court on 20.3.2007 passed following order on appeal:

"Supplementary affidavit filed is taken on record.

Summon the record at the appellant's expenses.

List after receipt of the record.

Sri B.D. Mandhyan, learned Senior Advocate submits that so far as the payment of amount to the tune of Rs.three lacs notwithstanding any further reasonable amount is concerned, the defendant-appellant can possibly have no objection in its deposit as appellant is still in position of the property, it is directed that the appellant will deposit an amount of Rs. four lakhs within a period of one month from today

before the trial court so that plaintiff respondent may withdraw the amount on moving appropriate application in this regard. Be as it may, it is made clear that the deposit of the amount by the appellant and its withdrawal by the plaintiff respondent has nothing to do with their respective claim. As and when the appeal comes up for hearing it will be for this Court to arrange the equity in accordance with law.

In view of the aforesaid, it is provided as an interim measure that till the next date of listing pursuant to the judgment and decree no sale deed will be executed.

In compliance of the order of this court the appellant deposited Rs. four lacs before the trial court. However, the same was not withdrawn by the respondent.

Heard Sri B.D. Mandhyan, leaned counsel for the appellant and Sri Awadhesh Singh holding brief of Sri S.S. Sachan and Sri Ajay Ranendra, learned counsel for the respondent.

Substantial question of law no.1

Learned counsel for the appellant submitted:

That the total area of plot no.1052, which is in dispute, is 9.558 hectare out of which the respondent as alleged to have purchased area 1.514 hectare and the deed was fragment of the total area of the plot in dispute. The agreement was hit by Section 168-A of the U.P.Z.A. and L.R. Act.

That Section 168-A was deleted by the amendment Act no.27 of 2004 which came into effect on 23.8.2004, therefore, even if Section 168-A was deleted the agreement to sale being of the year 1994 it was hit by Section 168-A of U.P.Z.A. & L.R Act and the suit of the respondent was clearly barred by provisions of Section 168-A.

That even if 168-A was deleted by the amendment Act 27 of 2004 Section 11 of the Amendment Act provided that it could be validated on depositing such fee as may be prescribed by the State Government. The respondent having not deposited the requisite fee, the alleged transaction was clearly hit by Section 168-A and the same was void.

That Section 168-A was deleted by the Amendment Act 27 of 2004 but it was well enforced on the date of execution of the agreement as well as on the date when the suit was filed by the respondent and court has to see whether the agreement in question could be legally enforced on the date when it was executed? Admittedly, the agreement in question was executed in the year 1998 when the provisions of Section 168-A were in force. The finding of the appellate court that the Section 168-A was deleted by the amendment Act 27 of 2004, therefore, the suit is not barred by Section 168-A is erroneous.

The learned counsel further submitted that agreement to sale was not liable to be enforced as it was against the provision of Section 168-A of U.P.Z.A. & L.R Act as there was bar to execute same in respect of fragmentation of agricultural land. The trial court has recorded the categorical finding that agreement to sale resulted in fragmentation of the holding of the appellant and the agreement to sale itself was barred by Section 168-A at any rate it was on the date of filing of the suit it was clearly barred by Section 168-A and the suit was not liable to be decreed for execution of the sale deed, therefore, the trial court instead of granting the relief of specific performance of the agreement only granted return of Rs. three lacs along with interest @ of 9%.

The learned counsel for the respondent submitted that suit of the plaintiff was not barred by Section 168-A. The agreement in question was in respect of the Bhoomidhari land of the appellant was having more than 3.125 acres or 5 bigha land and as per the U.P.Z.A. and L.R Act transfer of land more than 3.125 acre is not a fragment hence there was not a transfer of fragment therefore applicability of Section 168-A does not arise therefore, it is also not necessary to go into the question whether deletion of Section 168-A of U.P.Z.A. & L.R. Act was retrospective or prospective in nature.

The submission of the learned counsel for the respondent has some force. Admittedly, the parties have entered into an agreement to sale in respect of land measuring 1.514 hectare out of total area of plot no.9.558 hectare.

Fragment has been defined under the U.P.Z.A. and L.R. Act in Section 3 Sub-section (8-a). The relevant portion of the said sub-section reads:

(8-a) 'Fragment' means land of less extent than--(a)....(b) 3.125 acres in the rest of UP excluding Kumaun Division.

Admittedly, the land agreed to be transferred is 1.514 hectare it is more than 3.5 acre and as such it is not a fragment, therefore, the suit is not barred by Section 168-A as there was not the transfer of fragment.

Further, it has become redundant to examine a question whether the Act which stood deleted in 2004 was prospective or retrospective. However, admittedly the amendment is not retrospective, therefore, whether the provisions of Section 168-A were applicable or not has to be seen on the date of execution of the agreement.

Substantial quiestion of law no.2

Learned counsel for the appellant submitted

That the suit of the respondent was hit by Section 20 and Section 34 of the Specific relief Act.

That the appellant is agriculturist and his income is only from the agricultural land which is a source of livelihood and the appellant's son is disabled. The appellate court erred in decreeing the suit of the respondent for specific performance. The suit could be decreed only for the refund of earnest money in view of the Section 16(1) and (b) of the specific relief Act.

The learned counsel for the appellant further submitted that the trial court has categorically given a finding that the agreement in question was in fact not an agreement to sale but it was only executed to cover the amount of loan or to secure the loan. The trial court has also discussed while deciding the issue regarding the execution of agreement and raised certain suspicion on the execution of the agreement.

That the learned counsel elaborated this issue and submitted that stamp used in the agreement to sale was purchased earlier and was used subsequently. Further it was the son of the respondent who actively took part in the execution of agreement and the scribe and the witnesses are also own persons of the respondent and, therefore they played undue influence over the appellant who was under pressure as he was to repay his debts taken at the time of marriage of his daughter.

That the trial court also came to the conclusion that there was no unanimity between the parties. The appellant was treating as loan transaction and the deed was executed only to guarantee the loan where the respondent treated the said agreement as agreement to sale.

That the learned counsel further submitted that the trial court also recorded finding on the Section 20 Specific Relief Act considering the entire circumstances and the evidence on record and observed that since appellant was the cultivator-agriculturist and the respondent was not doing the cultivation and also recorded a finding that it was a loan transaction and not agreement to sale.

That the learned counsel further submitted that this court is also of the same view that it will be very harsh to ask the appellant to execute sale deed while infact appellant was never intended to sale his land in favour of the respondent and always treated the agreement as an agreement to secure the loan, therefore, this court also directed the appellant to deposit Rs. four lacs before the trial court while staying the execution of the decree and appellant rightly deposited the said amount before the trial court.

That learned counsel further submitted that even if this court directed the appellant to deposit any further amount, he is ready to do so.

The learned counsel relied on the following authorities:

1. Ganesh Shet v. Dr. C.S. J.K. Shetty and Ors. 1998 (33) ALR 512 512 SC

2. Kanshi Ram v. Om Prakash Jawal and Ors.AIR 1996 SC 2150 and

3. Smt. Jamila Khatoon v. Ram Niwas Gupta1998(2) AWC 852 (Alld)

4. Azhar Sultana Vs. B. Rajamani and Ors., 2009(2) ARC 370(SC)

5. K. Narendra v. Riviera Apartments Private Ltd. JT 1999 (4) SC 428

6. A.C. Arulappan v. Ahalya Naik JT 2001 (6)SC 394

7. Ram Singh and Ors. Vs.Sughar Singh, 2011 Alld Civil Journal

Learned counsel for the respondent submitted that the appellant entered into an agreement to sale his land for a sum of Rs. five lacs and executed an agreement to sale after taking Rs. three lacs as earnest money. Both the courts below have given categorical finding that Rs.three lacs were received by the appellant. The finding recorded by the trial court that it was a loan transaction covered by the agreement to sale was set aside by the appellate court while holding categorically that it was an agreement to sale and the real intention of the parties was to sell the land in question. The trial court while recording a finding, that there is hardship to the appellant if he was asked to execute the sale deed, was not based on any evidence or circumstances of the case. The trial court swayed away in sentiment and ignored material evidence on record.

The appellate court recorded a finding that the suit is not barred by Section 20 of the Specific Relief Act. The appellant has not come with clean hands that he executed an agreement to sale after taking Rs. three lacs and he is denying the same only when the prices of the land escalated.

The learned counsel further submitted that although the relief of specific performance of the contract is a discretionary relief but it is a settled principle of law that such discretion should be exercised judicially and not in an arbitrary manner.

Learned counsel further submitted that the respondent is also an agriculturist. The appellant agreed to sale his land and executed an registered agreement to sale and both the courts below have categorically given a finding that the respondent was always ready and willing to perform his part of the contract and the learned counsel further submitted that the appellant earlier sold his some portion of this land to the son of the respondent about four months prior to the execution of this deed and name of the respondent's grand sons already entered in the revenue records and the appellant has not challenged that sale deed although he admitted in his statements that he sold that land to the son of the respondent.

The learned counsel further submitted that the appellant has admitted that his total area of the plot is 9.5 hectare which is almost 95,000 sq. meter and his share is half of that. He already sold an area of about 12650 sq. meter in favour of son of the respondent and by this agreement he agreed to sale about 15140 sq meter area to the respondent, still he will have land more than 28000 sq. meter in this plot. The learned counsel further submitted that besides this land the appellant has owned other agricultural fields, therefore even if he is asked to execute the sale deed in favour of respondent he will not suffer hardship.

Before entering into factual aspect of this case, it will be necessary to examine the legal position in this regard.

Section 20 of the Specific Relief Act gives a discretion to the Court to decree the specific relief which is reproduced as below:

"Section 20 - Discretion as to decreeing specific performance

(1) The jurisdiction to decree specific performance is discretionary, and the court is not bound to grant such relief merely because it is lawful to do so; but the discretion of the court is not arbitrary but sound and reasonable, guide by judicial principles and capable of correction by a court of appeal.

(2) The following are cases in which the court may properly exercise discretion not to decree specific performance:--

(a) where the terms of the contract or the conduct of the parties at the time of entering into the contract or the other circumstances under which the contract was entered into are such that the contract, though not voidable, gives the plaintiff an unfair advantage over the defendant; or

(b) where the performance of the contract would involve some hardship on the defendant which he did not foresee, whereas its non-performance would involve no such hardship on the plaintiff; or

(c) where the defendant entered into the contract under circumstances which though not rendering the contract voidable, makes it inequitable to enforce specific performance.

(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.

(4) The court shall not refuse to any party specific performance of a contract merely on the ground that the contract is not enforceable at the instance of the other party."

It is well settled that the circumstances referred to in said clause 2 to 4 in regard to exercise of discretion for granting the decree for specific performance are not exhaustive, the relief of specific performance is discretionary and is not given merely because it is legal but it is governed by sound judicial principles.

It is again well settled that in a suit for specific performance if it is proved and agreement must be absolutely clear and certain further it is also clear that a greater amount or decree of certainty is required in terms of an agreement to sale which is to be specifically executed in equity. It is also well settled that the grant of this relief is the discretion of the court and can not be claimed as matter of right the court exercise a discretion and bring a specific performance unless it is what is called unreasonable to do so.

The question as to what instance or consequence shall be deemed highly unreasonable must dependent on the circumstances of the particular case. Specific performance can be refused although the contract is binding at law although the damages are not inadequate remedy; but the discretion is not arbitrary, and is governed by rules and principles.

In exercising the discretion, the Court should take into account the circumstances of the case, the conduct of the parties, and the respective interest under the contract. An agreement which inflicts more injury upon the defendant then confers the benefit on the plaintiff will not be enforced.

It is also well settled that a discretion exercised by the trial court will not be interfered in appeal unless it has been exercised perversely, arbitrarily, capriciously, unreasonably or against judicial principles.

As stated above, the circumstances as mentioned in the Section itself are not exhaustive. It is not possible to lay down the circumstances and the court can exercise its discretion against the plaintiff. However, they must be such that the representation by or the conduct or neglect of the plaintiff is directly responsible for including the defendant to change his position to his prejudice or such as to bring about situation when it would be inequitable to give such a relief.

It is also settled that under specific performance of a contract it is not vitiated by fraud or misrepresentation, can be granted if it could give an unfair advantage to the plaintiffs, and where the purpose of the contract would involve some hardship to the defendant which he did not foresee.

It is also a court's discretion to grant specific performance which is not exercised if the contract is not 'equal and fair'. Even where the contract is not voidable because the conduct of the defendant falls short of fraud, coercion or undue influence such as to justify rescission is shown, the court may still not enforce the contract if it would not be consistent with equity and good conscience to do so.

The conduct of the plaintiff is always an important element to be considered. The conduct of a person to the other parties in a disadvantageous position may in certain cases preclude him from obtaining a decree of specific performance. In every case the plaintiffs must come to the court with clean hands when the plaintiff does not come with clean hands or where he is guilty of fraud or some other practice he may ordinarily get no relief by way of specific performance.

Now it is also better to discuss the case law cited by the learned counsel for the appellant.

In Ganesh Shet v. Dr. C.S. J.K. Shetty and Ors. 1998 (33) ALR 512: 1998 (3) AWC 2.152 (SC) (NOC), Apex Court has clearly observed that the relief for specific performance is discretionary in nature and is not given merely because it is legal to do so. It further lays down that in a suit for specific performance the evidence and proof of the agreement must be absolutely clear and certain.

In the case of Kanshi Ram v. Om Prakash Jawal and Ors also a suit for specific performance was filed and alternatively a damages of Rs.12,000/- with interest was also asked. The court below granted the decree for specific performance however the appeal filed by the special leave by the defendant the court observed as under:

"Having regards to the facts of this case and the arguments addressed by the learned counsel, the question that arises for consideration is: whether it would be just, fair and equitable to grant the decree for specific performance? It is true that the rise in prices of the property during the pendency of the suit may not be the sole consideration for refusing to decree the suit for specific performance. But it is equally settled law that granting decree for specific performance of a contract of immovable property is not automatic. It is one of discretion to be exercised on sound principles. When the court gets into equity jurisdiction, it would be guided by justice, equity, good conscience and fairness to both the parties. Considered from this perspective, in view of the fact that the respondent himself had claimed alternative relief for damages, we think that the courts would have been well justified in granting alternative decree for damages, instead of ordering specific performance which would be unrealistic and unfair. Under these circumstances, we hold that the decree for specific performance is inequitable and unjust to the appellant."

The Court further allowed the appeal and defendants were asked to pay the same on Rs. ten lacs although this is a case of exceptional nature where by the lapse of time the prices increased exorbitantly however this will be taken into consideration while deciding question in hand.

In the case of Smt. Jamila Khatoon v. Ram Niwas Gupta the appellate court granted the relief of refund of earnest money with damages only on the ground when the suit was filed with inordinate delay.

In the case of Ajgar Vs. Raj Money also the apex court granted alternative relief of return of earnest money.

In the Case of K. Narendra v. Riviera Apartments Private Ltd. JT 1999 (4) SC 428: 1999 (3) AWC 2.104 (SC) (NOC), it has been held by the Supreme Court that the jurisdiction to decree specific performance is discretionary and the Court is not bound to grant such relief merely because it is lawful to do so and that the discretion of the Court ought not to be arbitrary in nature but must be based upon sound and reasonable judicial principles which may be capable of correction by the superior court. In short, grant of decree of specific performance is not automatic even if the agreement is found to be duly executed and the Plaintiff ready and willing to perform his part of the agreement but such grant of decree is dependent upon principles of justice, equity and good conscience.

In the case of A.C. Arulappan v. Ahalya Naik while dealing the case of specific performance of the contract the court observed as follows:

"7. The jurisdiction to decree specific relief is discretionary and the court can consider various circumstances to decide whether such relief is to be granted. Merely because it is lawful to grant specific relief, the court need not grant the order for specific relief; but this discretion shall not be exercised in an arbitrary or unreasonable manner. Certain circumstances have been mentioned in Section 20(2) of the Specific Relief Act, 1963 as to under what circumstances the court shall exercise such discretion. If under the terms of the contract the plaintiff gets an unfair advantage over the defendant, the court may not exercise its discretion in favour of the plaintiff. So also specific relief may not be granted if the defendant would be put to undue hardship which he did not foresee at the time of agreement. If it is inequitable to grant specific relief, then also the court would desist from granting a decree to the plaintiff."

In this case the apex court also relied upon a judgment of Parakunnan Veetill Joseph's Son Vs. Nadumbara Kuruvlla's Son & others the court observed as under:

" 9. In Parakunnan Veetill Joseph's Son Mathew vs . Nedumbara Kuruvila's Son & Ors. this Court cautioned and observed as under:

"Section 20 of the Specific Relief Act, 1963 preserves judicial discretion to Courts as to decreeing specific performance. The Court should meticulously consider all facts and circumstances of the case. The Court is not bound to grant specific performance merely because it is lawful to do so. The motive behind the litigation should also enter in the judicial verdict. The Court should take care to see that it is not used as an instrument of oppression to have an unfair advantage to the plaintiff".

In the case of A.C. Arulappan v. Ahalya Naik relying upon another judgment of Gobind Ram Vs. Gian Chand court observed :

"11. In Gobind Ram vs . Gian Chand (JT 2000(5) SC 101 = (2000)7 SCC 548, it was observed in paragraph 7 of the judgment that grant of a decree for specific performance of contract is not automatic and is one of the discretions of the court and the court has consider whether it would be fair, just and equitable. The court is guided by the principles of justice, equity and good conscience."

While dealing the case in question the apex court also observed that:

"15. Granting of specific performance is an equitable relief, though the same is now governed by the statutory provisions of the Specific Relief Act, 1963. These equitable principles are nicely incorporated in Section 20 of the Act. While granting a decree for specific performance, these salutary guidelines shall be in the forefront of the mind of the court. The trial court which had the added advantage of recording the evidence and seeing the demeanour of the witnesses considered the relevant facts and reached a conclusion. The appellate court should not have reversed that decision disregarding these facts and, in our view, the appellate court seriously flawed in its decision. Therefore, we hold that the respondent is not entitled to a decree of specific performance of the contract."

In the case of single judge of this court Ram Singh and Ors. Vs.Sughar Singh, 2011 Alld Civil Journal the court observed:

"In the instant case none of the courts below have exercised discretion under Section 20 of the Specif Relief Act. The suit has been decreed after holding that there existed an agreement whereunder the Defendant was enjoined upon to execute the sale deed on performance of certain conditions by the Plaintiff which he was always ready and willing to perform. Such an approach of the courts below is contrary to the mandate of Section 20 of the Specific Relief Act and cannot be approved of."

Now in the light of the legal position as discussed above, I take up the matter in issue.

In the present case the respondent filed a suit for specific performance with the allegation that an agreement to sale was registered after taking three lacs as earnest and two lacs to be paid at the time of execution of sale deed. The appellant denied and has taken a case that in fact the appellant was in need of loan of Rs. two lacs and by adding the interest therein an agreement was executed for Rs. three lacs. This was done to secure the loan. He also denied that there is actual intention of the parties to sell the property. The trial court after appreciating the evidence of the parties arrived at a conclusion that in fact the parties never intended to sell or purchase the land in question and in fact the agreement was executed to secure the loan. This finding was based on the appreciation of the evidence of the parties. While coming to this conclusion trial court has already taken into consideration the fact that in fact it was the son of the respondent who was previously known to the appellant and in the garb of loan he got executed an agreement to sale. Witness and the scribe was also own man of the respondent's son. Further the court has taken into consideration that the son of the appellant was doing business of Aarath in the vegatable Mandi.

The court also considered the evidence of the defendants that there was huge loan of him of the banks and other private persons which was taken at the time of marriage of his daughter. It is also not denied that in order to cover some loan the appellant sold his land to the respondent' son.

Again the trial court while taking the issue of undue hardships to the defendant also taken into consideration the circumstances and conditions of the parties and the court has specifically observed that the specific performance of the contract will put undue hardships upon the defendant who is agriculturist and is fully dependent on the agriculture. The court also deprecated the conduct of the respondent who had not come with clean hands and categorically stated that in the circumstances of the case the respondent is not entitled to the decree of specific performance and granted alternative relief of refund of earnest money.

The appellate court while dealing with the issue of hardship without giving specific finding on the hardships simply reversed the finding recorded by the court below only on the ground that the appellant executed an agreement to sale in favour of the respondent and it is legally to enforce the decree of specific performance. The appellate court has totally ignored the consistent view of the apex court that the court is not bound to enforce the specific performance of a contract only for the reason that it is lawful to do so.

While dealing with the Section 20 of the Specific Relief Act which deals with hardships of the parties. The appellate court is totally silent on this actual aspect of the case. Thus the findings recorded by the appellate court can not be said to be inconsonance with the legal position by the various authorities of the apex court and is not sustainable in the eye of law as observed by the apex court. In the case of K. Narendra v. Riviera Apartments Private Ltd. the apex court also cast a duty on the appellate court not to disturb the findings recorded by the trial court as the trial court has ample opportunity to observe the demeanour of the witnesses and can appreciate the evidence better than the appellate court. In the present case also the trial court has opportunity to see the demeanour of the witness and on the analysis of the evidence adduced by both the parties the trial court has categorically opined that the specific performance of the agreement caused undue hardship and will give unfair advantage to the respondent.

As argued by the learned counsel for the appellant that while admitting this appeal this court was also of the view that specific performance of the agreement will give undue advantage to the respondent directed the appellant to deposit Rs. four lacs before the trial court and then stay the execution of the decree. The learned counsel for the appellant further submitted before this court that in case this court is also inclined not to grant the specific performance of the agreement and inclined to grant the alternative relief of refund of earnest money, the court may impose a reasonable amount of compensation in addition to the refund of earnest money and they are ready to pay the same as they have already deposited Rs. four lacs in 2007.

The apex court also observed in some cases that when there is considerable time lost in the litigation and the prices of the land raised exorbitantly the plaintiff can be compensated with compensation along with the refund of earnest money.

Considering the above case law I am also of the view that appellate court simply granted the relief of specific performance of the contract considering it that it is legally to do so while totally ignoring the fact and circumstances of the case which disentitled the respondent to the decree of specific performance. The trial court has decreed the suit of the respondent for relief of earnest money along with the interest of 9%. The appellate court just reversed that finding without going into the contention of the parties and the facts and evidence available on record and as such the finding of the appellate court is not sustainable.

In view of the above discussion the court is of the opinion that in case the appellant is directed to enforce the agreement in question, it will put him under undue hardship while it will not be much advantageous to the respondent. However, the respondent can be compensated with some more compensation in addition to the refund of earnest money.

Thus the substantial questions of law raised by the counsel for the appellant has some force. The appellate court was not justified in interfering the finding of the issue of hard ship with reference to Section 20 of Specific Relief Act and also reversing the decree of refund of earnest money and decreeing the suit of specific performance of contract. The question thus answered in negative.

The appeal deserves to be allowed and the decree passed by the first appellate court is set aside and the decree passed by the trial court by which alternative relief of the respondent was decreed for refund of earnest money of Rs. three lacs with 9% interest is confirmed with the modification that in addition to the refund of earnest money of Rs. three lacs with interest an additional amount of Rs. three lacs shall be paid to the respondent by the appellant by way of compensation. The amount earlier deposited by the appellant shall be adjusted towards the amount so decreed. This amount shall be deposited by the appellant within a period of three months. In case the appellant fails to deposit this whole amount within a span of three months, then he will pay 9% interest on the amount of compensation also.

In view of the aforesaid observations the appeal is allowed with the above modification.

Order Date :- 29.8.2013/vkg