Canara Bank vs K.L. Rajgarhia
2009 Latest Caselaw 500 Del

     *IN THE HIGH COURT OF DELHI AT NEW DELHI

+                   CS(OS)1669/1989

%12.02.2009             Date of decision: 12th February, 2009

CANARA BANK                                    .......     Plaintiff
                         Through: Mr Pradeep Dewan and Mr Rajiv
                                  Samaiyar, Advocates

                                 Versus

K.L. RAJGARHIA                                 ....... Defendant
                         Through: Mr T.K. Ganju, Sr Advocate with Mr
                         A.K. Thakur, Mr Bharat Gupta and Mr R.K.
                         Mishra, Advocates.


CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

1.    Whether reporters of Local papers may Yes
      be allowed to see the judgment?

2.    To be referred to the reporter or not?     Yes

3.    Whether the judgment should be reported
      in the Digest?                        Yes


RAJIV SAHAI ENDLAW, J.

1. The suit for specific performance of an agreement dated 27th

December, 1984 between the parties and for other reliefs is for final

adjudication. The plaintiff approached the court with a case that in

or about 1984 the plaintiff bank had felt the need for purchase of

residential flats for the use of its officers; the plaintiff entered into

negotiations with the defendant who owned the plot of land

admeasuring 300 sq yards bearing No.B-9, East of Kailash, New

Delhi; that the defendant agreed to construct residential flats on the

said plot and to hand over the same to the plaintiff; that agreement

dated 27th December, 1984 was entered into between the parties.

2. At this stage, the salient terms of the said agreement, insofar

as relevant for the present, may be discussed. In the said agreement,

the defendant is described as the vendor and the plaintiff as the

purchaser; the agreement records that in pursuance to payment of

Rs 27,100/- the Delhi Development Authority on behalf of the

President of India has granted a lease of the aforesaid plot of land to

the defendant on the terms and conditions contained in the perpetual

lease deed, copy whereof is annexed to the agreement; that the

defendant had proposed that he will construct residential flats on the

said plot of land in accordance with plan annexed to the agreement

and of the area as specified in Schedule I to the agreement, at his

own costs for the use of the plaintiff as residential premises and that

the defendant had agreed to sell to the plaintiff the said flats

alongwith the leasehold rights over the plot of land and the plaintiff

had agreed to purchase the same. The plaintiff under the said

agreement agreed to pay a total sum of Rs 32,07,500/- to the

defendant as consideration for the flats set out in Schedule I to the

agreement together with the leasehold rights over the land and at

the rate of Rs 340/- per sq. ft. of covered area of the flat and Rs 250/-

per sq. ft. of the covered area in the basement as described in

Schedule II to the agreement and in the instalments set out in

Schedule III to the agreement; that the total consideration had been

arrived at by taking into consideration the approximate area of each

flat as mentioned in Schedule I but the said consideration was

subject to variation and was to be finally determined after

completion of the construction in all respects and after the actual

area was measured - the total consideration payable was on the

actual covered area ascertained on actual measurement; that as per

the then plan, the ground floor, first floor and second floor each was

to contain two flats of approximate covered area of 1000 sq. ft. and

mezzanine floor and the third floor of barsati each were to contain

one flat of 1000 sq. ft., besides basement of an approximately

covered area of 1950 sq ft. It was further provided that if the

defendant constructed additional two flats, the defendant shall sell

the same only to the plaintiff at the same rates and subject to the

same conditions and specifications as applicable to the other flats. It

was further agreed that the defendant shall not construct even if

permissible to do in excess of ten flats and basement. The obligation

for obtaining of the necessary permission from the DDA or other

governmental authorities for transferring and conveying all rights,

title and interest in respect of land and the flats to the plaintiff was

of the defendant and all expenses, charges in connection with

transfer including payment of any statutory dues or amount by way

of unearned increase in the value of the plot to the Delhi

Development Authority or any other authority was also to be borne

by the defendant. The defendant had agreed to complete the flats

within the period of 18 months from the date of the agreement.

3. Some of the clauses of the aforesaid agreement which would

be relevant for the discussion hereunder are set out hereinbelow.

"3. It is agreed that on the plot of land in question, no other structure or building will be erected; the intention being that no one else other than the purchaser will have any right, title or interest to any part of the plot or any structure thereon.

5. It shall be the duty of the vendor to obtain all the necessary permissions from the Delhi Development Authority or other Governmental authorities for transferring and conveying all the rights, title and interest in respect of the land and the flats to the purchaser. If for whatever reason, the vendor is not able to convey and transfer the right, title and interest as mentioned hereinabove to the purchaser, the entire amount paid by the purchaser to the vendor shall be treated as a loan advanced by the purchaser to the vendor and will be repayable on demand with interest at 18% per annum compounded quarterly from the date on which the flats are to be handed over under this agreement. It is specifically agreed that all expenses, charges in connection with transfer including the payment of any statutory dues or amount

by way of unearned increase in the value of the plot to the Delhi Development Authority or any other authority shall be borne by the vendor.

6. it is specifically understood that the purchaser is interested in purchasing the flats to be constructed thereon alongwith the rights concerning the plot of land and not the rights over the land alone and therefore the construction of the flat within the period and subject to the specification set out herein is the essential term of this agreement. The Vendor therefore shall not sell or lease or otherwise transfer the flats to any other person.

8. It is agreed that in the event of the vendor failing to complete the construction in all respects and put the purchaser in possession after obtaining completion certificate and all other necessary certificates and permissions from the authorities concerned for making it legally possible for the purchaser to occupy the flats within the period mentioned above, the Vendor shall be liable to pay to the purchaser damage at the rate of Rs.1000/- per day till the date of which the purchaser is lawfully put in possession of all the flats.

8 (a) if at any time, the Vendor abandons the building project or if the purchaser is of the opinion that the Vendor is neglecting to complete the construction or if the purchaser has reason to believe that the building is not likely to be completed within a reasonable period after the due date, it shall be open to the purchaser to cancel the contract and to demand repayment of the entire amount paid by the purchaser to the Vendor with interest at 18% p.a. treating the said payments as loan and further the Vendor will have no claim whatsoever against the purchaser either by way of damages or otherwise arising out of or attributable to such cancellation.

10. The purchaser, if at any time immediately after the completion of the above mentioned period is of the opinion that the Vendor is neglecting or unwilling or unable for any reason except as provided to complete the construction and hand over possession, may itself complete the remaining part of the work at such costs and expenses as it thinks necessary and all such expenses and costs shall be treated as loan advanced to the Vendor by the purchaser and the amount will be repayable on demand with interest at 18% per annum compounded quarterly from the date of incurring of such expenditure. PROVIDED further the purchaser is not obliged to complete the construction as hereinabove mentioned.

11. Immediately after the construction of the flats are complete to its satisfaction, the purchaser may at its discretion occupy the flats without any specific permission by the vendor to so occupy the flats.

13. It is agreed that the purchaser shall be entitled at its discretion to specifically enforce this agreement including every clause if it.

19. It shall be the responsibility of the Vendor to obtain all licences, permissions or sanctions at his own cost from the authorities for the purpose of construction of these flats for procuring of the building materials and for taking of all and every step for fully and effectually implementing this agreement."

4. The plaintiff further averred in the plaint that it had in part

performance of the contract paid to the defendant a sum of Rs

28,86,750/- which constituted about 90% of the total sale

consideration; that the defendant was bound to complete the

construction and hand over the possession of the flats on or before

27th June, 1986 and in any case before 27th December, 1986 but had

failed to do so; that the defendant was failing to complete the

construction due to steep rise in prices of the property and was thus

avoiding to perform his part of the agreement and had abandoned

the construction and not resumed the same despite requests. The

plaintiff pleaded that it was ready and willing to perform its part of

the contract and was seeking specific performance of the agreement

and also the damages stipulated in the agreement for delay in

delivery of the flats. Relying upon clause 10 (supra) the plaintiff also

sought the relief of mandatory injunction for directing the defendant

to hand over to the plaintiff the plot and the incomplete construction

thereon so that the plaintiff could complete the balance work and

occupy the flats. The plaintiff also claimed the decree for accounts.

The plaintiff in the event of the court not finding it entitled to the

relief of specific performance also claimed the relief of damages in

the sum of the difference in the contracted rate and the current rate

of the property on the date of pronouncement of judgment. On an

application of the plaintiff for interim relief being IA.No.4644/1989

vide ex parte order dated 13th July, 1989 the defendant was

restrained from selling, alienating, transferring, dispossessing of or

encumbering in any manner or dealing with the suit property in

favour of any person except the plaintiff till further orders. The

application for interim relief was not got listed for hearing after

notice and the order dated 13th July, 1989 continued during the

pendency of the suit.

5. The defendant contested the suit by filing the written

statement dated 20th November, 1989 on, inter alia, the following

grounds:

i. that the agreement dated 27th December, 1984 was intended to be and was, in fact, a loan transaction between the plaintiff and the defendant;

ii. that the defendant, in accordance with the terms of the perpetual lease, was required to complete the construction on the plot within two years from possession;

iii. that the defendant did not have funds for the same and approached the plaintiff, with whom several of his companies had financial arrangements, for financial assistance for construction on the aforesaid plot of land by creating equitable mortgage of the property as security;

iv. that the officers of the plaintiff bank, however, informed the defendant that though the bank had no scheme or policy for grant of loan for construction of houses and suggested grant of loan under the cover of an agreement to sell the residential flats which the defendant was intending to construct on the said plot of land. Reliance was placed in this regard on the clause in the agreement which gave an option to the plaintiff bank to at any time opt out of the agreement by claiming refund of the monies advanced till then with interest at 18% per annum thereon;

v. acting on the said basis the defendant also handed over the original title deeds of the property to the plaintiff by way of equitable mortgage;

vi. The defendant thus denied that the plaintiff was entitled to specific performance and pleaded that he was ready and willing to pay to the plaintiff the entire advance of Rs 28,86,750/- alongwith interest at 18% per annum;

vii. that the agreement was not a result of fair bargaining and was vitiated by undue coercion by the plaintiff and their officers being in a dominating position;

viii. The agreement was therefore claimed to be voidable and not enforceable against the defendant;

ix. that the agreement was unconscionable and unreasonable and was one sided and lacked mutuality. Again various clauses of the agreement were referred to in this regard;

x. that the consideration for the sale of the flat was unconscionable and did not represent the fair market price. It was pleaded that the total cost of the land and construction and other charges payable under the agreement by the defendant was Rs 48.60 lacs while the consideration under the agreement was about Rs 32 lacs only;

xi. that the performance of the agreement would cause undue hardship to the defendant which he had not foreseen at the time of execution of the agreement;

xii. the defendant had no other house or suitable accommodation in Delhi and was residing in tenanted accommodation alongwith his family and needed the accommodation in the property for his own residence;

xiii. that the agreement was unenforceable under Section 20 of the Specific Relief Act for the aforesaid reasons;

xiv. that the plaintiff would be fully protected if received back the amount paid together with interest at 18% per annum with quarterly rests upto the date till which the defendant had offered the said monies to the plaintiff;

xv that the plaintiff would not suffer any hardship by non performance of the agreement;

xvi. that under clause 5 of the agreement, if the defendant was unable to convey and transfer the rights as agreed to the plaintiff, the amount paid by the plaintiff to the defendant was to be treated as loan repayable with interest at 18% per annum. It was thus contended that the subsequent clauses 10 and 13 reproduced hereinabove entitling the plaintiff to specific performance ought not to and the earlier of the two clauses ought to prevail;

xvii thus the plaintiff bank was not entitled to specific performance and was entitled only to refund of monies advanced with interest and which was sufficient compensation;

xviii that the agreement was unenforceable in view of Section 269UC contained in chapter XX C of Income Tax Act inasmuch as the parties had not complied with the provision thereof and which further showed that the parties were not ready and willing;

xix it was pleaded that the relief claimed by the plaintiff of mandatory injunction was not maintainable under Section 14(3) of the Specific Relief Act;

xx that the plaintiff had committed breach of the agreement by interfering in the construction activity and was thus not entitled to the relief of specific performance.

6. The plaintiff filed a replication dated 19th May, 1999. It was

denied that the transaction between the parties was a loan

transaction or unfair or unreasonable or as a result of unequal

bargaining power.

7. In the aforesaid state of pleadings, the following issues were

struck on 16th July, 1993:

"1. Whether the plaint has been signed and verified and suit instituted by a person duly authorized? OPP

2. Whether the agreement dated 27th December, 1984 was intended to be and is in fact a loan transaction? OPD

3. Whether the agreement dated 27th December, 1984 is vitiated by undue influence and coercion exercised by the plaintiff and is against public policy? OPD

4. Whether the suit is not maintainable and the plaintiff is not entitled to specific performance of the contract under Section 20 of the Specific Relief Act? OPD

5. Whether the refund to the plaintiff of total amount received by defendant along with interest 18% p.a. as per agreement disentitles plaintiff for specific performance of agreement under Section 14 of the Specific Relief Act? OPD

6. Whether the stipulation regarding refund of the total amount to the plaintiff along with interest @18% p.a. as per clause 5 of the said agreement amounts to an alternative contract, the performance of which discharges the defendant from specific performance of agreement dated 27th December, 1984? OPD

7. Whether the agreement dated 27th December, 1984 is unenforceable, illegal and void under chapter XXC and U/Section 269 UC of the Income Tax Act? OPD

8. Whether the plaintiff has been ready and willing to perform his part of the contract? OPD

9. Relief."

8. The counsel for the plaintiff, by referring to the

contemporaneous correspondence between the parties, sought to

belie the plea of the defendant in the written statement of the

transaction being a loan transaction and not an agreement for sale /

purchase of immovable property. The counsel for the plaintiff was

heard on 25th September, 2008, 1st October, 2008 and 27th

November, 2008. The senior counsel for the defendant before

commencing his submission on 29th January, 2009, on instruction,

stated that the defendant was not pressing the pleas in the written

statement of the transaction between the parties being a loan

transaction or of the agreement being vitiated by undue influence

and coercion exercise by the plaintiff or the plea of the contract

being for refund of total amount paid by the plaintiff alongwith

interest at 18% per annum.

9. It was informed that upon withdrawal of the said pleas by the

defendant, the issue No.2, the part of the issue No.3 dealing with the

plea of undue influence and coercion do not fall for adjudication.

The senior counsel for the defendant confined his submission to the

construction of 8 flats/dwelling units as per the agreement being not

possible on the property - neither at the time of entering into the

agreement nor even today, being prohibited by master plan, building

bye laws and the sanctioned building plan. The only submission thus

was that the contract was incapable of specific performance.

Attention of the senior counsel for the defendant was drawn to

Section 12 of the Specific Relief Act and it was inquired as to why,

subject to the plaintiff agreeing, order thereunder could not be

made. The senior counsel for the plaintiff made his submission on the

same which will be discussed hereunder. However, in view of the

aforesaid turn of events, the same were recorded in the order of 29th

January, 2009 and the statement of the counsel for the plaintiff was

also recorded qua Section 12 of the Specific Relief Act.

10. It is now apposite to return findings issue wise and on the new

pleas raised during the arguments by the senior counsel for the

plaintiff.

11. Re: Issue No.1 ("1. Whether the plaint has been signed and verified and suit instituted by a person duly authorized? OPP)

12. Though the senior counsel for the defendant did not address on

this issue but informed that the defendant was not conceding the

same.

13. The suit has been instituted and the plaint signed and verified

by Mr R.K. Arora who, in para 2 of the plaint, is described as the

Manager of the plaintiff at its circle office and incharge and principal

officer of the premises and general Section, Delhi circle of the

plaintiff and holding a power of attorney authorizing him to institute

the suit and to do other things in connection therewith. The

defendant, of course, denied the contents of the said paragraph of

the plaint leading to the framing of the issue. Exhibit P24 is a

photocopy of the general power of attorney dated 3rd February, 1977

by the Chairman and Managing Director of the plaintiff bank in

favour of Shri Rajindra Kumar Arora in service of the bank. The

same authorizes the said Shri R.K. Arora to transact various acts as

described therein on behalf of the plaintiff bank. Exhibit P25 is the

photocopy of the supplement power of attorney dated 15th July, 1995

executed by the plaintiff bank in favour of Shri R.K. Arora aforesaid

recording that pursuant to the general power of attorney dated 3rd

February, 1977 (supra) the said Mr R.K. Arora had, on behalf of the

bank from time to time, filed suits and in which the authority of the

said Mr A.K. Arora had been challenged, necessitating the execution

of the supplemental power of attorney ratifying all acts, deeds and

things done by the said Mr R.K. Arora in pursuance to the power of

attorney. The said power of attorney ratifies each and every suit

filed by the said Mr Arora and further authorizes him to continue

prosecuting or defending legal proceedings and to do other things in

connection therewith.

14. The Division Bench of this court in Chet Ram Gupta Vs.

Motian Devi Lamba 148 (2008) DLT 473 has held that any defect in

institution, signing, verification of legal proceedings is not fatal and

is curable by ratification. Thus even though supplemental power of

attorney Ex. P-25 is of a date post institution of present suit, if

ratifies the institution of suit, can be considered.

15. The plaintiff has also examined Mr R.K. Arora who has proved

the aforesaid power of attorneys in his favour. The plaintiff also

examined its Manager Mr S.K. Sharma who identified the signatures

of Mr R.K. Arora on the plaint and also deposed about the power of

attorneys aforesaid which were brought in original by him to the

court. Neither in the cross examination of Mr R.K. Arora nor of Mr

S.K. Sharma anything has come out to discredit the power of

attorneys as aforesaid. Even otherwise the Apex Court in United

Bank of India Vs. Naresh Kumar (1996) 6 SCC 660 in relation to

the nationalized banks as the plaintiff, though in the matter of

suits/legal proceedings for recovery of dues has held that a technical

view on issues such as this cannot be taken and suits cannot be

dismissed. Though the present is not a suit by a nationalized bank

against a debtor but the property/rights involved are on the same

parity of reasoning, public properties and the ratio shall apply. I

therefore find the plaintiff to have proved the issue No.1, which is

decided in favour of the plaintiff and against the defendant.

16. Re: Issue No.2. (Whether the agreement dated 27th December, 1984 was intended to be and is in fact a loan transaction? OPD)

17. Since the defendant has withdrawn the plea in the written

statement on which the aforesaid issue was struck, this issue is

deleted in exercise of power under Order 14 Rule 5 of the CPC.

18. Re Issue No.3 (Whether the agreement dated 27th December, 1984 is vitiated by undue influence and coercion exercised by the plaintiff and is against public policy? OPD)

19. The defendant has withdrawn the pleas of undue influence and

coercion exercised by the plaintiff. As far as the plea of the

agreement being against the public policy is concerned, the same

shall be considered while adjudicating the new plea raised by the

defendant for the first time during the course of arguments.

20. Re Issues 4, 5,6 and 8.

4. Whether the suit is not maintainable and the plaintiff is not entitled to specific performance of the contract under Section 20 of the Specific Relief Act? OPD

5. Whether the refund to the plaintiff of total amount received by defendant along with interest 18% p.a. as per agreement disentitles plaintiff for specific performance of agreement under Section 14 of the Specific Relief Act? OPD

6. Whether the stipulation regarding refund of the total amount to the plaintiff along with interest @18% p.a. as per clause 5 of the said agreement amounts to an alternative contract, the performance of which discharges the defendant from specific performance of agreement dated 27th December, 1984? OPD

8. Whether the plaintiff has been ready and willing to perform his part of the contract? OPD

21. These issues being interconnected are taken up together. No

arguments were advanced on these. However, since the please on

which these issues were framed were not given up, they have to be

adjudicated. The agreement dated 27th December, 1984 which is not

disputed and has been proved as Exhibit P1 is of transfer of

immovable property. The same is not challenged in the written

statement. The only challenge, as aforesaid, was that it was, in fact,

not an agreement of transfer of immovable property but a loan

transaction and which plea has now been withdrawn. Under the

explanation to Section 10 of the Specific Relief Act, until the contrary

is proved there is a presumption that the breach of a contract to

transfer immovable property cannot be adequately relieved by

compensation in money.

22. The plea is that clause 5 of the agreement, while providing that

it is the duty of the defendant to obtain all the necessary permissions

for transferring and conveying all rights in respect of the land and

the flats to the plaintiff, further provides that if for whatever reason

the defendant is not able to convey and transfer the right title and

interest as mentioned hereinabove to the plaintiff, the entire amount

paid by the plaintiff to the defendant shall be treated as a loan

advanced by the plaintiff to the defendant repayable with interest at

18% per annum compounded quarterly. The case appears to be that

since the parties have so agreed, the plaintiff, as purchaser, is not

entitled to specific performance but is only entitled to money.

23. Undoubtedly if the parties agree that in the event of breach by

the seller, a specified amount shall be paid to the purchaser, in my

view, the agreement would be not specifically enforceable. The Apex

Court as well as Division Bench of this court has in Dadarao Vs.

Ramrao (1999) 8 SCC 416 and Ashok Kumar Batra Vs. Simi

Katyal 91 (2001) DLT 82 (DB) has taken the same view. This is so

because a party claiming specific performance of the contract is

bound by the terms of the contract and cannot plead at variance

therewith. But that is not the contract in the present case. Clause 5

pleaded by the defendant in this regard in his written statement

relates to permissions from DDA or other governmental authorities

for transferring and conveying the rights, title and interest in respect

to the land and the flats to the purchaser. In that context, it is

provided that if such conveyance and transfer is not possible then

the monies would be refunded. It is neither pleaded nor argued that

such conveyance or transfer is not possible. Thus clause 5 would not

be attracted.

24. The perpetual lease of the land underneath the property has

been proved as Exhibit P9 (admitted document). Clauses II (4) (a)

thereof prohibits sale, transfer, assignment or parting with

possession of whole or in part of the plot (as distinct from super

structure thereon) except with the previous consent in writing of the

superior lessor i.e., the President of India. It further provides that

the superior lessor as a term of granting such consent/permission

may impose levy of unearned increase. Thus, it is not as if

conveyance/transfer as provided for in clause 5 is prohibited. The

parties were fully aware of the same and had, in clause 5, itself

provided for payment of all charges, expenses including unearned

increase for such transfer. Thus, the contingency of the

plaintiff/purchaser being entitled to refund of advance sale

consideration paid with agreed interest is to arise only in the event

of the conveyance/transfer being not possible and not otherwise. But

that is not the case. It is neither pleaded, proved or argued that it is

not possible to convey, transfer right, title, interest in the property

agreed to be transferred. The government of India has also brought

out a scheme for conversion of lease hold rights in such plots of land

into freehold. Upon such conversion also, no unearned increase

even is payable. Judicial notice can be taken of the fact that the

charges for freehold conversion are much lower than the unearned

increase and of, it being a term of most agreements of sale of

leasehold properties of the seller prior to executing the sale deed

having the leasehold rights converted into freehold. In the present

case, the responsibility for payment of all charges for such

conveyance/transfer was taken by the defendant and it is the choice

of the defendant to either pay the unearned increase for obtaining

permission for sale / transfer or to have the leasehold rights

converted into freehold and whereafter no such permission from the

present superior lessor of the land shall be required. It is also to be

noticed that the suit was filed before the stage for

conveyance/transfer was reached. The suit was filed owing to the

abandonment of the work of the construction by the defendant.

25. Thus, while clause 5 (supra) of the agreement is not attracted,

there are other specific clauses of the agreement dealing with these

contingencies. Clause 8 provides for payment of damages by the

defendant/seller at the rate of Rs 1000/- per day for failing to

complete the construction and put the plaintiff / purchaser into

possession within the agreed time. Clause 8(a) (supra) provides for

the contingencies of the defendant/ vendor abandoning the building

project and entitled the plaintiff / purchaser to demand repayment of

the advance sale consideration paid with interest in such

contingency. This was, however, the option of the plaintiff. The

words are "it shall be open to the purchaser....." Thus it cannot be

argued that upon abandonment of work by the defendant, the said

consequence automatically follows. Clause 10 entitles the plaintiff in

the event of the defendant failing to complete the work of

construction to enter into possession and complete the works itself.

Clause 13 entitles the plaintiff to the relief of specific performance in

its discretion.

26. On a reading of all the aforesaid clauses, what follows is that

upon the defendant not completing the work of construction as is the

present situation, the plaintiff had a choice of either cancelling the

agreement and demanding refund with interest or seeking a specific

performance of the agreement alongwith agreed damages or to enter

into possession of the property and to complete the remaining works

itself. It thus cannot be said that it was the agreement of the parties

that upon the defendant not completing the works of construction,

the plaintiff will only be entitled to refund of advance sale

consideration with interest. The Apex Court in P. D'Souza Vs.

Shondrilo Naidu 2004 (6) SCC 649 has held that where such a

choice has been vested in the purchaser, the claim for specific

performance cannot be defeated for the reason of other monetary

choice being also available under the agreement to the purchaser.

27. As far as the readiness and willingness of the plaintiff to

perform its part of the contract is concerned though nothing has

been argued, the only plea in the written statement even in that

regard is of the plaintiff interfering with the work of construction.

The said plea is also bereft of any particulars whatsoever and is, in

fact, no plea in the eyes of law. The defendant examined only himself

as the witness and in paras 16 and 20 of his affidavit by way of

examination in chief repeated the said plea. It is deposed that the

plaintiff in violation of the agreement appointed their own architects

who started making unwarranted objections and raised non existing

deficiencies, shortcomings in the work and for which reason the

construction was held up. The defendant was cross examined at his

residence on commission and on being asked whether he was

intimated of the appointment of the architect by the plaintiff bank

replied that he did not know whether he was intimated or not but

further deposed that after being intimated by the bank he had

objected to the same. However, he further deposed that he did not

write any letter in this regard and also denied knowledge whether

his architects were at times taking instructions from the architect of

the plaintiff.

28. In response to another question he deposed that he had met

the officer of the bank to apprise them of the objections being

created by officers of the bank but further stated that he did not

remember whether he issued any letter or notice in this regard.

Significantly in response to another question he deposed that the

work at the site was stopped sometime in February/March 1989 and

because the contractor abandoning the work. He did not remember

whether the architects of the plaintiff were visiting the site or not.

In this regard it may be stated that the suit itself was instituted on

10th July, 1989. He denied the suggestion that the architect of the

plaintiff had never caused any obstruction.

29. As against the aforesaid evidence of the defendant, the plaintiff

examined its architect Mr G.L. Kak as PW4. He deposed that the

defendant and the contractor were fully aware of about their

appointed as the architect by the plaintiff bank; that he visited the

site once in a week or a fortnight and that he was supposed to report

to the bank about the progress of the work or the deviation in the

work from the specification appended to the agreement dated 27 th

December, 1984. He further deposed that the shortcomings in the

construction were also informed to the representative of the

contractor at the site and that the construction done till then was

basically a shell construction of columns, beams and slabs and only

part of plastering and plumbing had been done but no sanitary

fittings had been installed; flooring had not been completed and the

doors had not been affixed. The said witness was cross examined by

the counsel for the defendant. Significantly not a single instance of

obstruction of the work was put to him. This alone, in my view, is

clinching material to discard the plea of the defendant of

obstructions caused by the architect of the plaintiff. The other

witnesses of the plaintiff, namely, Mr R.K. Arora and Mr K.S. Mohan

Parmeshwaram were also not cross examined in this regard. It

appears that the defendant till that stage was banking on the plea of

the loan transaction only and which has been given up- now.

30. Had the plaintiff caused any obstruction in construction

leading to an inference of the plaintiff not being ready and willing to

perform its part of the agreement, the defendant would have

definitely written a letter or given a notice in this regard calling

upon the plaintiff to remove such obstruction.

31. Clause 16 of the agreement provides that if the plaintiff /

purchaser at any time pointed out any defect or shortcoming in

construction than as specified in the annexure thereto and or

suggested any alteration, the defendant shall ratify or carry out the

same. It further provides that if any of the said works suggested by

the plaintiff necessitated any extra expenditure the same after

mutual agreement shall borne by the plaintiff. Clause 17 of the

agreement permitted the plaintiff and their duly authorized men

including the architects to visit the site for the purposes of

inspecting the construction work without however, being obliged to

do so. The said clauses of the agreement totally falsify the stand of

the defendant in cross examination of the plaintiff having appointed

the architect in contravention of the agreement. The correspondence

which has been proved also shows that the parties were exchanging

letters as to the progress of the work. The said correspondence of

the contemporaneous time also does not suggest any obstruction in

the construction work by the officers or architect of the plaintiff.

The plaintiff has also proved as exhibit P-22 the letter dated 31st

October, 1985 receipt whereof was admitted in admission/denial

whereby the defendant was informed of appointment of the architect

by the bank to supervise the construction. Exhibits P2 and P3 dated

20th November, 1985 and 10th January, 1986, the receipt whereof are

again admitted, make observations with respect to the report

submitted by the architect to the bank. Exhibit P21 dated 15th

October, 1986 is a letter of the defendant to the plaintiff reporting

that the work had been completed to the extent of 90 per cent and

hoping that the plaintiff had got similar confirmation from its

architect. The aforesaid contemporaneous documents again falsify

the plea of the defendant of obstruction caused by the architect of

the plaintiff.

32. Save for the said plea there is no other plea challenging the

readiness and willingness of the plaintiff.

33. The plaintiff, as the purchaser, was required to pay only the

sale consideration as aforesaid. 90% of the total agreed sale

consideration has been paid. As per the calendar of payment

contained in schedule III to the agreement, 90 per cent of the

payment was to be paid up to the completion of the second floor and

out of the balance, 5% on completion of 3rd Floor and handing over

possession of the entire building and 5% on execution of the sale

deed. There is no plea that the plaintiff is in breach of the said

calendar.

34. The plaintiff has, in accordance with Section 16(c) of the Act,

averred that it has performed and has been ready and willing to

perform the essential terms of the contract and in the absence of any

other plea save of obstruction as aforesaid in this regard it also

stands proved that the plaintiff has performed and has been ready

and willing to perform the essential terms of the contract to be

performed by it.

35. The next aspect is as to the discretion of this court in grant of

the relief of specific performance. Section 20(2) lays down the cases

in which the court may properly exercise the discretion not to decree

the specific performance. The plea of the circumstances existing at

the time of entering into the agreement, and of the exercise of

coercion and undue influence by the officials of the plaintiff has now

been given up. In fact, no arguments were addressed on this aspect

at all. It was, of course, argued that this being the only property of

the defendant and his family members at Delhi, specific performance

would involve undue hardship to the defendant. The said plea, even

if considered, is meritless. The argument is that the defendant was

staying in tenanted premises and from which he has been evicted.

However, no material has been brought on record as to when the

eviction proceedings were initiated. Even otherwise tenancy rights

are not such owing to which the defendant ought to have had an

assurance of permanency. If the defendant was, at the time of

entering into the agreement was residing in the tenanted premises,

merely because he has subsequently been evicted from the same

would not amount to a hardship within the meaning of Section 20

(2)(b) of the Act and which the defendant could not foresee.

Similarly, the pleadings about inadequacy of consideration (which

has not been proved) etc do not constitute a hardship. No

circumstances making it inequitable to enforce specific performance

have been pleaded, proved or argued. The plea of the defendant

being now required to use property as a residence is even otherwise

misconceived. The defendant was not intending to build on the

property as a residence for himself and his family members. The

defendant was treating the construction on the aforesaid plot as a

commercial venture of constructing several flats to reap maximum

value by selling the same. The plaintiff has proved as exhibit P6 the

letter dated 25th November, 1983 of the defendant to the plaintiff

informing the plaintiff that a new building was being constructed by

him on the aforesaid property comprising of seven independent flats

and offering the same for sale to the plaintiff. Exhibit P7 (dated 5 th

April, 1984) Exhibit P8 (undated), Exhibit P10 (dated 2nd August,

1984), Exhibit P11 (dated 9th July, 1984) and Exhibit P12 (dated 2nd

June, 1984) are the other letters of negotiation between the parties.

The defendant in his evidence also has not established any

factor/reason against exercise of discretion for specific performance.

36. The Division Bench of this court in Vijaya Myne Vs. Satya

Bhushan Kaura 142 (2007) DLT 483 (DB) held that if the intention

of the seller had been to shift to the property agreed to be sold, she

would not have entered into agreement and such a plea cannot

constitute hardship within the meaning of Section 20. It was further

held that there have to be valid and cogent reasons for refusal of the

relief of specific performance and applying the exception. It was

further held that it is not just one or two factors but sum total of

various factors which are required to enter into judicial verdict.

37. Even otherwise, in modern, orderly society, specific

performance of agreement ought not to be interfered with and ought

to be encouraged. The modern trend of law is squarely in favour of

extension of Specific Relief at the expense of traditional primacy of

damages. A man should honour his word and should be bound by his

agreement. If he does not do so, the court shall enforce. The

conduct of the defendant even otherwise in this case does not call for

the exercise of any discretion in favour of the defendant. The suit

has been pending for 20 years in the court of first instance. The

defendant took elaborate pleas denying the agreement of transfer of

immovable property itself and claiming it to be a sham and pleading

the real transaction to be of a loan. Such pleas by the defendant

insisted framing of issues and a lengthy trial. The defendant, in my

view, did not even make any attempt to establish the case pleaded.

The pleas of a loan transaction, undue influence and coercion

exercised by the bank officials appear to have been taken only to

delay the disposal of the suit. Had the said pleas not been taken and

had the defence been what has been finally argued, no trial even

may have been necessary and the suit could have been disposed of

on submissions / arguments only. The endeavour of the defendant

appears to be to, by involving the plaintiff in lengthy litigation,

prevail upon the plaintiff and its officials to settle with the defendant

and to the advantage of the defendant. Having ultimately failed in

the said endeavour, there was nothing worth arguing also on the

pleas taken. Time has come that the litigants indulging in such

practices are severly dealt with. Discretion in the grant of relief

even if exercisable in favour of such litigants ought not to be

exercised. If in spite of indulging in such practices they become

entitled to exercise of discretion and indulgence in their favour, it

will only encourage such practices and to the detriment of the legal

system and the society. As aforesaid, pleas were taken to show that

the costs of land and the cost of construction were higher than what

was agreed. No witness whatsoever was examined in this regard.

Obviously, the defendant knew that the said pleas could not

withstand the test of cross examination.

38. The plaintiff has led positive evidence of its readiness and

willingness. The plaintiff has even invoked Clause 10 of the

agreement to complete the remaining works of construction itself.

The counsel for plaintiff even on 29th January, 2009 gave a statement

that the plaintiff shall bring the exiting construction in accordance

with law on its own.

39. Reference to Section 14 (3) of Specific Relief Act is made in

Preliminary Objection XI in the written statement by stating that the

defendant has not obtained possession of the land subject matter of

agreement. It is further pleaded that the building work to be carried

out runs into minute and numerous details dependant in personal

qualification or volition which cannot be specifically enforced.

40. There is no merit in the said plea also. Section 14 (3) (c)

provides for enforcement of contract of construction of building. I

find that all the three conditions laid down therein are met in the

present case. The first condition is of the building work required to

be done being precisely described. In the present case, it is the own

letter of the defendant that 90% work has been completed and only

10% remain. The "Brief Specifications for construction of plot No.B-

9, East of Kailash, New Delhi belonging to Mr. K.L. Rajgarhia"

appended to the agreement are fairly precise as to plastering,

flooring, terracing, tiles, woodwork, fittings, finishing etc. Moreover,

the agreement itself permitted the plaintiff to complete the

remaining works itself and which option the plaintiff has exercised.

Thus no personal qualification or volition of defendant arises. The

court is also not required to supervise the said works in as much as

the plaintiff is to carry out remaining works itself. No continuous

duty on the part of the defendant which the court cannot supervise is

also involved.

41. The second condition of Section 14 of plaintiff having

substantial interest in performance and for which compensation in

money is not adequate is also met. The plaintiff has agreed to

purchase immovable property and paid approximately 90% of agreed

consideration. The defendant was not merely a building contractor

but was a seller of immovable property to be constructed and which

according to defendant himself has been 90% constructed. There

has been tremendous increase in prices of immovable properties in

Delhi, as noticed by court also. The plaintiff ought not to be

deprived of right of specific performance, ordinarily attaching to

agreement of sale of immovable property merely because 10% of

work of construction is remaining; more so when the agreement

enabled the plaintiff to complete the remaining works. The essence

of the agreement was sale of flats and not construction of flats on the

property. Thus plaintiff has substantial interest in performance of

contract.

42. The last condition of the defendant having obtained possession

of land on which building is to be constructed. Admittedly, the

defendant is in possession of the land and has already carried out

90% work of construction. The plea has been taken in the written

statement under misconception that for Section 14 (3) to be

applicable, the plaintiff is required to be in possession. The reason

for this condition is that even if the defendant had agreed to sell the

flats on land to be allotted to him but if the defendant himself was

not put in possession of land, no specific performance could be

directed against him.

43. Thus, the plea of Section 14 of Specific Relief Act in the written

statement is misconceived.

44. The issues 4,5,6,&8 are thus decided in favour of plaintiff and

against the defendant.

45. Re Issue 7. (Whether the agreement dated 27th December, 1984 is unenforceable, illegal and void under chapter XXC and U/Section 269 UC of the Income Tax Act? OPD)

46. The Senior counsel for the defendant has fairly stated that

though he is not giving up the said plea but the law as laid down and

as in force today is against him. Even otherwise in view of the said

judgment, the failure of the parties to apply under Chapter XX C of

the Income tax Act (which was then in force and has since been

deleted) does not make the agreement of transfer of immovable

property illegal and void.

47. Re: New plea of the defendant.

The arguments of the senior counsel for the defendant may be

succinctly recorded as under:

A. that no plan as stated to be annexed to the agreement was, in

fact, annexed and has not been filed or proved by any party. A

photocopy of a sanctioned plan for construction on the property was

handed over;

B. The agreement was not for sale of a plot of land but for

construction. Attention was invited to Schedule I to the Agreement

providing for construction of 8 residential units.

C. It was argued that, as per the then master plan, only 2.5

residential units were permissible on a plot of land admeasuring 300

sq yd and as per the prevalent master plan also maximum 5 dwelling

units are permissible.

D. The construction was also sanctioned for 2.5 dwelling units

only i.e., one on the ground floor, one on the first floor and half on

the second floor. Per contra, the agreement was for construction of

two dwelling units on each of the ground, first and second floor and

one in the mezannine and one on the terrace.

E. The agreement provided for construction of two additional flats

making a total ten flats.

F. The defendant before sale had to construct 8 and maximum 10

flats.

G. Differences in the areas and the accommodation in the

construction as per the agreement and as permitted under the

building bye laws and as sanctioned were pointed out.

H. Attention was invited to appendix Q of the building bye laws to

urge that additional construction envisaged in the agreement was

not even compoundable.

I. It was argued that the contract was therefore illegal and

contrary to law contained in the master plan bye laws, sanctioned

plan and was thus void and not specifically enforceable.

J. It was further argued that because the contract was illegal, the

relief of refund of advance sale consideration also could not be

granted in favour of the plaintiff inasmuch as the agreement was

void on the date of making and not discovered to be void within the

meaning Section 65 of the Contract Act.

48. The counsel for the plaintiff naturally contended that this was

not the plea of the defendant and could not be taken up. In response

thereto reliance was placed on Smt. Surasaibalini Debi Vs.

Phanindra Mohan Mazumdar AIR 1965 SC 1634, Waman

Shriniwas Kini Vs. Ratilal Bhagwandas & Co. AIR 1959 SC 689,

Universal Plast Ltd. Vs. Santosh Kumar Gupta AIR 1985 Delhi

383, State Bank of India Vs. Aditya Finance and Leasing

Company Pvt. Ltd. AIR 1999 Delhi 18 and Koteswar Vittal

Kamath Vs. K. Rangappa Baliga & Co. AIR 1969 SC 504 to urge

that illegality of the contract even if not pleaded could be set up at

any stage and would be considered by the court. It was argued that

the defendant could not be directed to perform an action which was

illegal and thus the plaintiff was not entitled to the relief of specific

performance.

49. Though even the sanctioned plan, copy of which has now been

handed over has not been proved and cannot now be considered in

the manner sought to be done but this court cannot shut its eyes to

the fact that in accordance with master plan and the building bye

laws, the construction of 8 dwelling units on the plot may not have

been possible then or now.

50. Thus, notwithstanding the absence of a plea or proof, while

passing any order, the said factor has necessarily to be borne in

mind. In my view it cannot be argued that the essence of the

agreement between the parties was to construct of 8 flats by the

defendant and sell thereafter to the plaintiff. If that had been the

agreement between the parties, the agreement would not have

provided that upon the failure of the defendant to complete the work

of construction, the plaintiff would be entitled to take over the same

and complete the construction itself. The agreement between the

parties was of sale of the aforesaid immovable property.

51. The following facts are relevant in this regard:-

a) It is the defendant who vide letter dated 5th April, 1984 Ex.

P-7 had approached the plaintiff with the intention that he

was in the process of constructing seven independent flats

on the property and offering to sell the same to plaintiff.

b) The agreement to sell between the parties fixed the

consideration on per sq.ft. of the covered area basis - the

total consideration being dependant on actual covered area

constructed.

c) The agreement was of sale of entire property with entire

constructed area thereon.

d) 90% of the work of construction, as per the defendant

himself had been completed prior to institution of suit and is

existing till date.

52. In the aforesaid circumstances the new plea aforesaid taken

for the first time during arguments appeared to be malafide and an

attempt to take advantage of own wrong. It was felt that even if the

construction of eight flats in accordance with law was not

permissible, whether the law permitted such dishonesty and the

defendant wriggling out of the contractual obligation of sale of the

property, to his obvious advantage and to the detriment of the

plaintiff.

53. In the aforesaid light attention of the senior counsel for the

plaintiff was invited to Section 12 of the Specific Relief Act which is

as under:

12. Specific performance of part of contract. (1) Except as otherwise hereinafter provided in this section the court shall not direct the specific performance of a part of a contract.

(2) Where a party to a contract is unable to perform the whole of his part of it, but the part which must be left unperformed by only a small proportion to the whole in value and admits of compensation in money, the court may, at the suit of either party, direct the specific performance of so much of the contract as can be performed, and award compensation in money for the deficiency.

(3) Where a party to a contract is unable to perform the whole of his part of it, and the part which must be left unperformed either -

(a) forms a considerable part of the whole, though admitting of compensation in money; or

(b) does not admit of compensation in money,

he is not entitled to obtain a decree for specific performance;

but the court may, at the suit of other party, direct the party in default to perform specifically to much of his part of the contract as he can perform, if the other party -

(i) in a case falling under clause (a), pays or has paid the agreed consideration for the whole of the contract reduced by the consideration for the part which must be left unperformed and a case falling under clause (b), [pays or had paid] the consideration for the whole of the contract without any abatement; and

(ii) in either case, relinquishes all claims to the performance of the remaining part of the contract and all right to compensation, either for the deficiency or for the loss or damages sustained by him through the default of the defendant.

(4) When a part of a contract which, taken by itself, can and ought to be specifically performed, stands on a separate and independent footing from another part of the same

contract which cannot or ought not to be specifically performed, the court may direct specific performance of the former part."

54. The senior counsel for the defendant, at the outset, argued that

since clause 6 of the agreement was that the plaintiff was interested

in purchasing flats to be constructed alongwith the land and not in

the rights in the land alone Section 12 was not applicable. After

some thought it was argued that for Section 12 to become applicable

there has to be first a contract; if there was no enforceable contract

owing to the illegality aforesaid and/or the agreement was void, the

question of application of Section 12 would not arise. A question

was posed to the senior counsel for the plaintiff, whether "inability to

perform the whole of his part of the contract" within the meaning of

Section 12 could not be inability owing to illegality of the contract?

If that was so, whether inability to perform part only of the contract

owing to illegality, would not under Section 12 permit Specific

Performance of part which was legal. He of course answered in

favour of his client; but no precedent has been cited to show that

"inability" under Section 12 has to be for reasons other than of

illegality. I do not find any justification for so restricting the wide

and simple language and scope of Section 12. It is significant that

Sections 23 and 24 of the Contract Act also do not prohibit

enforcement of valid portion of transfer of property, if it is severable

from the invalid portion (see BOI Finance Ltd. Vs. Custodian 1997

(10) SCC 488). The English courts call it the Blue Pencil Rule i.e.,

severance can be effected when the part severed can be removed by

running a blue pencil through it. So in my view, even if contract for

sale of property with eight flats is illegal and void being contrary to

building regulations and master plan, the agreement for sale of

property with lesser number of flats, if permitted under Section 12,

is enforceable.

55. I may at this stage notice Jambu Rao Satappa Vs. Neminath

Appayya AIR 1968 SC 1358. It entailed an agreement for sale of

land. The suit for specific performance was contested on the ground

that if the suit was decreed it would result in the plaintiff having land

in excess of the ceiling limit and thus the agreement was pleaded to

be void under Section 23 of the Contract Act. The Apex Court held

that neither the object of the agreement nor consideration therefor

was illegal or to defeat any law, even though the statute made the

acquisition of excess land to be invalid. It was further held that the

object of the agreement could not be said to be to hold land in excess

of ceiling. It was further held that it was open to the plaintiff to

transfer the excess land or otherwise deal with the same to bring his

holding within ceiling but there was nothing in the agreement, nor

could it be implied from circumstances that it was the object of the

parties that ceiling laws should be transgress; the mere possibility of

that being the effect of agreement being so would not make the same

void. Also the possibility of statutory forfeiture of excess land in the

hands of plaintiff was held not to invalidate the agreement between

parties.

56. In the present case also, as long as the plaintiff does not insist

upon the defendant carrying out any works on the property in

contravention of law, in my view the agreement to sell of which

specific performance is claimed cannot be said to be invalid. Even if

the construction as existing is not in accordance with law, it is

always open to the plaintiff to after acquiring, bring the same in

consonance with law.

57. Since the aforesaid and application of Section 12 required

input from the plaintiff, its response was elicited. The counsel for the

plaintiff stated that the plaintiff was willing to take the property as it

is. The statement of the counsel for the plaintiff to the aforesaid

effect was also recorded. The defendant after conclusion of hearing

moved IA.No.1806/2009 for rectification of statement of its counsel

recorded on 29th January, 2009. The same was allowed on 9th

February, 2009. On that date also, the counsel for the plaintiff

stated that plaintiff was electing for the relief under Section 12 and

waives / abandons any other claims or right which may be

impediment thereto.

58. I may notice that in Rachakonda Narayana Vs. Ponthala

Parvathamma AIR 2001 SC 3353 a plea was raised that relief under

Section 12(3) of Specific Relief Act should be pleaded in the plaint.

The same was negated and it was held that relief under Section

12(3) can be granted at any stage of litigation. In the present case,

no defence of inability of the defendant to perform the agreement

was raised at any time prior to in final hearing as aforesaid and the

plaintiff, immediately on such defence being raised has made

election under Section 12(3).

59. At this stage, it will be apposite to quote Viscount Haldane in

Rutherford Vs. Acton-Adams XXXII Indian Cases 47.

"In exercising its jurisdiction over specific performance a court of equity looks at the substance and not merely at the letter of the contract. If a vendor sues, and is in opposition to convey substantially what the purchaser has contracted to get, the court will decree specific performance with compensation for any small and immaterial deficiencies, provided that the vendor has not, by misrepresentation or otherwise, disentitled himself to his remedy. Another possible case arises where a vendor claims specific performance and the court refuses it, unless the purchaser is willing to consent to a decree on terms that the vendor will make compensation to the purchaser, who agrees to such a decree on condition that

he is compensated. If it is the purchaser who is suing, the court holds him to have an even larger right. Subject to considerations of hardship, he may elect to take all that he can get, and to have a proportionate abatement from the purchase money."

60. In Pirthi @ Sansi Vs. Jati Ram AIR 1997 SC 1598, the seller

after the agreement to sell in favour of plaintiff had inducted others

in possession of the property and the court below had declined

specific performance on the ground that the others had been in

possession for long and decreeing specific performance would entail

further litigation. The Apex Court while decreeing specific

performance held that if such contentions in defence were to be

accepted, no contract could be enforced and the party seeking to

avoid contract would always create such impediments.

61. Similarly in Kartar Singh Vs Harjinder Singh AIR 1990 SC

854 specific performance was directed of the sellers share of the

property belonging to seller and his sister, when the seller had

agreed to persuade his sister and agreed to sell the entire property

and even after the sister of the seller had refused to sell her share.

62. Khardah Co. Ltd Vs. Raymon & Co. AIR 1962 SC 1810 and

Chatturbhuj Vithaldas Vs. Mareshwar Parashram AIR 1954 SC

236 relied upon by senior counsel for defendant and which do not

relate to specific performance of an agreement are, in the face of

aforesaid judgments, not found applicable.

63. There is yet another aspect of the matter. The agreement on

meaningful reading only refers to proposal (see recital 5) of

construction of eight flats. Else, the agreement was for payment of

consideration on per sq. ft. of covered area constructed basis.

Operative clause 6 of the agreement also does not refer to eight flats

and records only the intent of the purchaser to purchase the flats to

be constructed on the property alongwith rights in land. Thus it can

otherwise also not be said that what will be specifically enforced will

be different from that agreed. The agreement nowhere is subject to

or conditional upon construction of eight flats.

64. Though the exact status of the construction as existing is not

before the court but as aforesaid the defendant in his letter ((supra)

had informed the plaintiff that 90% of the construction was

complete. During the arguments also it was suggested that the

superstructure is complete. In reply to IA. No. 4644/1989 under

Order 39 Rules 1 and 2 of the plaintiff also, the defendant stated on

oath that the entire superstructure was ready and only the finishing

or wood work was remaining. It may also be noted that the

defendant during the pendency of the suit filed IA.No.7491/2001

(which was dismissed on 6th December, 2005) pleading that owing to

the dispute which had arisen, the further construction had been

stopped but since he was to vacate his tenanted premises, he should

be permitted to complete the same. It will be noted that what has

been finally argued is contrary to the stand aforesaid. It was not

informed at the time of filing IA.No.7491/2005 even that the

construction was illegal or had to be demolished. On the contrary, it

was portrayed as if merely by doing some finishing work or touches

the defendant would be able to occupy the same. All these facts lead

to conclusion, notwithstanding judicial notice of construction of 8

dwelling units being not possible, that the construction as existing

with some modification is permissible and it is not as if the entire

construction has to be demolished.

65. In the aforesaid state of fact, when the defendant has

been taking inconsistent stand, in my view, the claim of the plaintiff

for specific performance ought not to be defeated specially when the

plaintiff has expressed willingness to act under Section 12 of the Act.

66. The next question which arises is as to the relief to be granted

to the plaintiff. The agreement in the present case expressly

provided for the plaintiff entering to possession and completing the

works. The plaintiff has also claimed the specific performance of

that clause of the agreement. The specific performance of that

clause cannot be denied to the plaintiff. The plaintiff, of course, by

stepping into the shoes of the defendant in the matter of raising

construction shall not be entitled to raise any illegal/unauthorized

construction even if that was the agreement. The plaintiff can raise

only construction in accordance with law. The plaintiff has given its

assent therefor. The defendant who has been found in default can be

directed to perform specifically so much of his part of the contract as

he can perform, i.e., by putting the plaintiff into possession of the

property and by transferring/selling/conveying the property to the

plaintiff as agreed. The defendant would, of course, have a choice

whether to first have the leasehold rights in the property converted

into freehold in his own name or to pay the unearned increase and

transfer the leasehold rights in the land to the plaintiff.

67. The next question to be determined is of the balance sale

consideration, if any, to which the defendant would be entitled from

the plaintiff and with respect to the reduction of the agreed

consideration for the part remaining unperformed and

compensation, if any, payable by the defendant to the plaintiff. The

plaintiff, as aforesaid, has claims for damages. Naturally much

money would be spent now in being the existing construction in

consonance with the building bye laws. The breach / deficiency of

the defendant undoubtedly admit of compensation. However, in the

exercise of discretion vested in the court and considering the long

lapse of time, and the equitable nature of the relief, justice would be

done if while so directing the defendant to put the plaintiff into

possession and convey/transfer the property to the plaintiff, hold that

neither the balance 10% of the consideration is payable by the

plaintiff to the defendant nor is the plaintiff entitled to recover any

compensation or damages or other amounts by way of delay or costs

or breach or deficiency from the defendant. This is being done in a

hope that with such an order the parties would not continue with the

litigation.

68. Accordingly, a decree for specific performance of agreement

dated 27th December, 1984 is passed in favour of plaintiff and

against the defendant by- (a) directing the defendant to within 30

days put the plaintiff into vacant, peaceful, physical possession of

property No. B-9, East of Kailash, New Delhi together with

construction as existing thereon.

(b) the defendant is further directed to within six months, execute

the conveyance/transfer deed in favour of the plaintiff after either

getting the leasehold rights in land converted to freehold or after

obtaining permission to transfer leasehold rights in the land. The

plaintiff to sign all documents and do other acts required to be done

in this regard, including of making the perpetual deed of leasehold

rights available, if so required.

The plaintiff shall also be entitled to costs of the suit from the

defendants. Counsels fee assessed at Rs 1 lakh.

RAJIV SAHAI ENDLAW (JUDGE) February 12, 2009 M