Mr. Navendu vs Mr. Amarjit S. Bhatia
2012 Latest Caselaw 5135 Del

       *          IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                       Judgment reserved on: 28.08.2012
                                        Judgment pronounced on: 30.08.2012

+      CS(OS) 643/2009

       MR. NAVENDU                                                   ..... Plaintiff

                           Versus



       MR. AMARJIT S. BHATIA                                       ..... Defendant

Advocates who appeared in this case:
For the Plaintiff :  Mr. Gaurav Gupta
For the Defendant :  Mr. Anukul Raj

CORAM:
HON'BLE MR. JUSTICE V.K.JAIN

V.K. JAIN, J.

1. The defendant, who is the owner of the property bearing number Q-12-B,

Jangpura Extension, New Delhi-110 014, entered into an agreement dated

17.11.2008 to sell the first floor of the above referred property to the plaintiff for a

consideration of Rs.69,50,000/- and received a part consideration of Rs.20 lac from

his on the same day. The balance amount was agreed to be paid within two months

i.e. by 17.01.2009, at the time of registration of the sale deed, and the defendant

was to handover possession of the property to the plaintiff at that time. It is alleged

that despite requests made by the plaintiff from time to time, defendant refused to

produce the original documents of title of the aforesaid property for perusal of the

representative of the bank from which the plaintiff intended to take a loan. It is

further alleged that the plaintiff arranged the entire balance payment required for

completing the transaction and vide notice dated 13.01.2009 called upon the

defendant to bring the original papers and execute the sale deed on or before

17.01.2009. He also informed the defendant that the balance sale consideration was

ready with him. The plaintiff also visited the Office of Sub-Registrar on

16.01.2009, but the defendant did not turn up on that date. It is further alleged that

in the second week of February, 2009, the defendant assured the plaintiff that he

would produce the original documents in the second week of February, 2009 and

that the plaintiff should arrange the sale consideration partly in cash and partly by

way of a demand draft of Rs.19 lac. The defendant kept on assuring the plaintiff

that he would be able to locate the original title deeds. Apprehensive of the

intentions of the defendant, the plaintiff issued a public notice on 22.02.2009 in the

newspapers informing the public in general with respect to the agreement which

the defendant had executed with him. Since the transaction was not completed, the

plaintiff has filed this suit claiming specific performance of the agreement dated

17.4.2008, production or the original title deeds and execution of conveyance deed

in his favour. He also claimed an alternative relief for recovery of Rs.20 lac as also

such damages as may be quantified by the Court.

2. The defendant has contested the suit. He has admitted execution of the

agreement with the plaintiff as also receiving Rs.20 lac from him. It is alleged in

the written statement that the original sale deed has been misplaced and a certified

copy was, therefore, obtained by the defendant from the Office of Sub-Registrar,

well before signing the agreement with the plaintiff. The defendant provided this

information to the plaintiff and only thereafter did the plaintiff request him to sell

the property. It is also alleged that in December, 2008, the plaintiff asked the

defendant to sell the property at a lesser price since there was a recession in the

market. The defendant, however, denied the illegal demand of the plaintiff and

asked him to pay the balance amount as per the agreement. It is further alleged that

the plaintiff informed the defendant that he did not have the remaining amount to

pay to him. The receipt of the letter/ notice dated 13.5.2009 has however not been

disputed in the written statement.

3. On 24.11.2009, the following issues were framed on the pleadings of the

parties:

"1. Whether the plaintiff has always been willing and ready to perform his part of the contract under the agreement 17th November 2008? OPP

2. Whether the plaintiff is entitled to specific performance of the agreement dated 17th November 2008? OPP

3. Whether in case specific performance is not granted, in alternative, plaintiff is entitled to recovery of Rs.20 lac as damages along with interest, as claimed? OPP

4. Whether it was defendant who failed to perform his part of the contract? OPP

5. Relief."

4. Issue No.1 to 4: These issues are interconnected and, therefore, can be

conveniently decided together.

A perusal of the agreement to sell dated 27.11.2008 (Ex.PW1/1) would show

that the balance sale consideration of Rs.49,50,000/- was to be paid by the plaintiff

to the defendant at the time of registration of the sale deed in the office of Sub-

Registrar, within two months from the date of the agreement. This would mean that

the balance sale consideration could be paid to the defendant on or before

17.11.2009.

5. Section 16(c) of the Specific Reliefs Act provides that specific performance

of a contract cannot be enforced in favour of a person who fails to aver and prove

that he has performed or has always been ready and willing to perform the essential

terms of the contract which are to be performed by him, other than terms the

performance of which has been prevented or waived by the defendant. The

explanation to Clause (c) provides that where a contract involves the payment of

money, it is not essential for the plaintiff to actually tender to the defendant or to

deposit in court any money except when so directed by the court. The philosophy

behind the aforesaid statutory provision is that a person who comes to the Court

seeking specific performance of a contract to which he is a party must show and

satisfy the Court that his conduct having been blemishless he is entitled to grant of

specific performance of the contract.

6. As observed by the Supreme Court in His Holiness Acharya Swami Ganesh

Dassji v Sita Ram Thapar [1996 (4) SCC 526], there is a distinction between

readiness to perform the contract and willingness to perform the contract. By

readiness is meant the capacity of the plaintiff to perform his part of the contract

including his financial position to pay the sale consideration whereas willingness

signifies his intention and conduct to complete the transaction. As held by the

Supreme Court in Sukhbir Singh and others v Brij Pal Singh and others [AIR

1996 SC 2510] that it is sufficient for the purchaser to establish that he had the

capacity to pay the sale consideration. It is not necessary that he should always

carry the money with them from the date of the suit till date of the decree.

7. In the case before this Court, a perusal of Ex.PW4/A which is the statement

of the accounts of the plaintiff with Oriental Bank of Commerce, Defence Colony,

New Delhi would show that on 14.01.2011, there was a credit balance of

Rs.13,51,806.42 in his account. It further shows that on the same day, a sum of

Rs.12,50,000/- was debited from his account by way of auto sweep which mean

that the amount was transferred to the FD account of the plaintiff. Thereafter, three

cheques, one for Rs.6,01,582/-, second for Rs.17,787/- and the third for

Rs.1,91,787/- were credited in his account on 17.01.2009. Thus, the plaintiff had

Rs.21,62,962.42 in Oriental Bank of Commerce, Defence Colony, New Delhi on

that date. A perusal of Ex.PW5/A which is the statement of account with HDFC

Bank, would show that the plaintiff had a credit balance of Rs.21,81,349.70 in the

aforesaid account on 14.01.2009. Thus, the plaintiff had a total sum of

Rs.43,44,311/- available with him on 17.01.2009.

It was contended by the learned counsel for the defendant that the credit

balance of the plaintiff with Oriental Bank of Commerce on 13.01.2009, even after

taking into credit the sweep entry of Rs.12,50,000/-, was Rs.13,51,806.42 and if

this amount is added to the amount available in HDFC Bank, the total would come

only to Rs.35,33,156/-. In my view, the contention is misconceived. The very fact

that the three cheques were credited in the account of the plaintiff with Oriental

Bank of Commerce on 17.01.2009 clearly shows that he had the financial capacity

to raise the aforesaid amount even on 16.01.2009, since the cheques which were

credited on 17.01.2009 must have been deposited in the bank account on or before

16.01.2009. This is also the case of the plaintiff that in addition to the amount

available in the banks, he also had cash amounting to Rs.7.5 lac with him which he

had also carried to the office of the Sub-Registrar. However, the plaintiff was not

cross examined with respect to this part of his deposition. He was not asked

wherefrom he had arranged the cash amounting to Rs.7.5 lac. He was not asked

why he had kept so much of cash with him and fromwhere that money was

arranged by him. No suggestion was given to him that he did not have Rs.7.5 lac in

cash with him. In absence of any cross examination of plaintiff with respect to this

part of his deposition, the defendant is deemed to have admitted that the plaintiff

did have Rs.7.5 lac in cash with him. If the aforesaid cash amount of Rs.7.5 lac is

added to the amount available with the plaintiff with Oriental Bank of Commerce

and HDFC Bank, it is evident that the plaintiff had made arrangements for payment

of Rs.49,50,000/- to the defendant on or before 17.01.2009.

8. It was contended by the learned counsel for the defendant that since the three

cheques, one of Rs.6,01,582/-, second for Rs.17,787 and the third for Rs.1,91,797/-

were credited in the account of the plaintiff only on 17.01.2009, this much amount

was not available with him on 13.01.2009 when he went to the office of Sub-

Registrar. The case of the plaintiff is that he was to pay Rs 7.5 lakh in cash and the

balance by way of a cheque. Considering the fact that the last date stipulated in the

agreement for payment of the balance sale consideration was 17.10.2009, it would

be sufficient compliance with the requirement of Section 16(c) of the Specific

Reliefs Act. If the plaintiff has been able to prove that he had financial capacity to

pay Rs.49,50,000/- to the defendant even on 17.01.2009.

9. As regards willingness of the plaintiff to complete the transaction, a perusal

of the letter dated 13.01.2009 (Ex.PW1/2) would show that vide this letter the

plaintiff had informed the defendant that he had balance payment ready with him

and had requested the defendant to show the original documents to him before

17.01.2009, complete the registration and transfer of the property on or before

17.01.2009. This letter written by the plaintiff to the defendant well before expiry

of the last date stipulated for completing the transaction clearly indicates his

willingness to come forward for the transaction and complete the same in

accordance with the terms agreed between the parties. The plaintiff also inserted a

public notice in the newspapers on 22.02.2009 and also got prepared a demand

draft of Rs.19 lac in favour of the defendant on 19.02.2009. This is yet another

proof of willingness of the plaintiff to complete the transaction. It is true that vide

letter dated 13.01.2009, the plaintiff had also asked the defendant to show the

original title documents to him. But, since the agreement between the parties did

not take away the right of the plaintiff to seek inspection of the original documents

of title, he was well within his right in seeking inspection of the original documents

of title. Section 55 of the Transfer of Properties Act to the extent it is relevant

provides that in the absence of a contract to the contrary, the seller is bound to

produce to the buyer, at his request, for examination, documents of title relating to

the property which are in the seller's possession or power. The case of the

defendant is that the original of the title had been lost by him and this was brought

to the notice of the plaintiff at the time of execution of the agreement. However, no

such indication is found in the agreement Ex.PW1/1. Had the defendant disclosed

to the plaintiff that the original document of title have been lost, the parties would,

in the natural course of human conduct, certainly have stated so in the agreement.

Moreover, even on receipt of the letter dated 13.01.2009 from the plaintiff, the

defendant did not write to him, saying that the original document of title had been

lost and this fact had already been brought by him to the knowledge of the plaintiff

at the time of execution of agreement dated 17.11.2008. Even after the plaintiff

issuing a public notice in the newspaper on 22.02.2009, the defendant did not write

to him stating therein that the original documents had been lost/ misplaced and this

fact was in the knowledge of the plaintiff.

10. The defendant, even after publishing the public notice in the newspapers did

not write to the plaintiff stating therein that he had failed to perform his part of the

agreement and that he did not have the balance sale consideration available with

him. The case of the defendant is that after execution of the agreement, the

plaintiff asked him for reduction of the sale price on the ground that prices in the

market had gone down. The defendant, however, has not been able to substantiate

this plea. Neither any reply to the letter dated 13.01.2009 nor any response to the

public notice published in the newspaper was given by the defendant claiming that

it was the plaintiff who wanted reduction in the sale consideration and, therefore,

was not willing to go ahead with the transaction.

11. The learned counsel for the defendant has placed reliance upon the decision

of the Supreme Court in J.P. Builders and another v A. Ramadas Rao and

another[(2011) 1 SCC 429], following the view was taken by it in N.P.

Thirugnanam v Dr. R. Jagan Mohan Rao [(1995) 5 SCC 115]:

"5.Section 16(c) of the Act envisages that plaintiff must plead and prove that he had performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him, other than those terms the performance of which has been prevented or waived by the defendant. The continuous readiness and willingness on the part of the plaintiff is a condition precedent to grant the relief of specific performance. This circumstance is material and relevant and is required to be considered by the court while granting or refusing to grant the relief. If the plaintiff fails to either aver or prove the same, he must fail. To adjudge whether the plaintiff is ready and willing to perform his part of the contract, the court must take into consideration the conduct of the plaintiff prior and subsequent to the filing of the suit along with other attending circumstances. The amount of consideration which he has to pay to the defendant must of necessity be proved to be available. Right from the date of the execution till date of the decree he must prove that he is ready and has always been willing to perform his part of the contract. As stated, the factum of his readiness and willingness to perform his part of the contract is to be adjudged with reference to the conduct of the party and the attending circumstances. The court may infer from the facts and circumstances whether the plaintiff was ready and was always ready and willing to perform his part of contract."

The following view was taken in P.D'Souza v Shondrilo Naidu [(2004) 6

SCC 649], was also referred in the case of J.P. Builders (supra):

"19. It is indisputable that in a suit for specific performance of contract the plaintiff must establish his readiness and willingness to perform his part of contract. The question as to whether the onus was discharged by the plaintiff or not will depend upon the fact and circumstances of each case. No straitjacket formula can be laid down in this behalf....

21. ....The readiness and willingness on the part of the pla8intiff to perform his part of contract would also depend upon the question as to whether the defendant did everything which was required of him to be done in terms of the agreement for sale."

This judgment does not help the defendant in any manner since the plaintiff

has been able to establish his readiness and willingness to perform his part of the

contract and the conduct of the plaintiff has also been found to be consistent with

such readiness and willingness on his part. It is the defendant who was not ready

and willing to go ahead with the transaction as is evident from his conduct in not

responding either to the letter dated 13.01.2009 or to the public notice dated

22.02.2009.

12. For the reasons hereinabove, I have no hesitation in holding that the plaintiff

had always been ready and willing to perform his part of the agreement dated

17.11.2008 and it was the defendant who committed breach of the aforesaid

agreement by not coming to execute the sale deed in favour of the plaintiff.

13. During the course of arguments, it was contended by the learned counsel for

the defendant that since there has been steep appreciation in the value of the suit

property during the pendency of this suit and the defendant is living there with his

family, specific performance of the contract, which is otherwise a discretionary

relief and cannot be claimed as a matter of right, should not be granted to the

plaintiff.

14. It is true that the Court is not bound to grant specific performance of an

agreement to sell immovable property merely because it is lawful to do so, but, the

discretion whether to grant or refuse specific performance of such an agreement

being a judicial discretion, cannot be exercised arbitrarily and needs to be guided

by sound and reasonable judicial principle. It is neither possible nor desirable to

classify the cases where specific performance should be granted and the cases

where it should be refused. Ordinarily, in the cases where the plaintiff has not

played any fraud and has duly performed his obligations under the agreement, the

Court should direct specific performance of an agreement unless it is satisfied that

in the facts and circumstances of the case, it would be unreasonable, inequitable

and unconscionable to do so. The inordinate delay, if any, in coming to the Court,

which results in steep appreciation in the value of the property in the interregnum,

is one of the factors which the Court can take into consideration in such cases. If

the vendor, anticipating receipt of sale consideration from the vendee, has entered

into another transaction for purchase of some other property and delay in payment

of balance sale consideration by the vendee results in that transaction getting

cancelled, leading to the vendor being deprived of appreciation in the value of the

other property which he contracted to purchase, would be yet another circumstance,

which, if found to exist, can be taken into consideration by the Court. If the vendor

had agreed to sell the property on account of a time bound requirement of money

and he is unable to meet that requirement on account of delay on the part of the

vendee in making payment of the balance sale consideration, that would be yet

another relevant factor which the Court can take into consideration in appropriate

cases.

I find that no evidence has been led by the parties to prove as to how much

has been appreciation in the value of the suit property during pendency of this suit,

though it can hardly be disputed that there must have been substantial appreciation

in line with appreciation of the immovable properties throughout the country. What

is important in this regard is that there has been no delay on the part of the plaintiff

in coming to the Court. He sent a written notice /letter to the defendants four days

before the last date stipulated in completion of the transaction. This was followed

by giving a public notice in newspapers on 22.02.2009. The defendant did not

write to the plaintiff at any point of time saying that since he did not pay the

balance sale consideration within the stipulated period, the part payment made by

him had been forfeited by him and the agreement, therefore, stood terminated.

The present suit was filed on 6.4.2009. The plaintiff had paid 30% of the sale

consideration to the defendant at the time of execution of the agreement on

18.11.2008. The written statement in this case was filed on 23.06.2009. In the

written statement, the defendant did not express any desire to complete the

transaction on receipt of the balance sale consideration with or without any interest

on that amount. The plea taken by him on the other hand was that the part payment

made to him by the plaintiff stood forfeited on account of his failure to pay the

balance sale consideration within the stipulated time. Had the defendant, while

filing written statement, expressed desire either to accept balance sale consideration

with interest or refund the amount received by him from the plaintiff with

appropriate interest, one of them could have purchased another property since

there would not have been much appreciation between 17.1.2009 when the

transaction was to be completed and 23.6.2009 when the written statement was

filed. During the course of arguments, the learned counsel for the plaintiff stated

that though it is the defendant who has been in breach of the agreement and has

been in possession of the suit property throughout during pendency of this suit, the

plaintiff is willing to pay the balance sale consideration along with interest on that

amount @ 15% per annum. This proposal, however, was rejected by the defendant

who gave a counter offer to refund the amount received from the plaintiff at a

higher interest.

15. In Gobind Ram Vs. Gian Chand [AIR 2000 SC 3106], Supreme Court, in

order to mitigate the hardship resulting to the vendor due to lapse of time and

escalation of prices of urban properties, directed payment of further compensation

to the vendor while granting a decree for specific performance, in terms of the

agreement between the parties.

In Nirmala Anand Vs. Advent Corporation (P)Ltd. and Ors. (2002) 8 SCC

146, Hon‟ble Mr Justice Doraiswamy Raju, after noticing the facts and

circumstances of the case, including that out of the total sale consideration of Rs

60,000/-, only a sum of Rs 35,000/- had been paid by the purchaser, observed that

it would be not only unreasonable, but too inequitable for Courts to make the

appellant the sole beneficiary of the escalation of real estate prices and the

enhanced value of flat in question which the respondents had all along preserved

by keeping alive the issues pending with the authorities of the Government and

municipal bodies. The Hon‟ble Judge was of the view that the balance of equity

has also to be struck taking into account all the relevant aspects of the matter,

including the lapses which had occurred and parties respectively responsible

therefor. The Hon‟ble Judge felt that before decreeing the specific performance, it

is obligatory for the Courts to consider, whether by doing so any unfair advantage

would result for the plaintiff over the defendant, the extent of hardship that may be

caused to the defendant and if it would render such enforcement inequitable,

besides taking into consideration the totality of the circumstances of each case.

The Court, therefore, directed the appellant to pay at least a sum of Rs 40 lakh to

the respondent Nos. 1 and 2, in addition to the amount which she had already paid.

She was also held entitled to a decree for specific performance only subject to

compliance of condition for this additional amount. Hon‟ble Mr Justice Ashok

Bhan, however, had reservations with respect to this part of the order. Noticing

that in certain cases, the Court in equity and to mitigate the hardship to the vendor

had directed the vendee to pay further compensatory amount, His Lordship was of

the view that this is not a principle of universal application and payment of

additional compensation would depend on the facts and circumstances of each

case. His Lordship was of the view that escalation of price during the period may

be relevant consideration under certain circumstances for either refusing to grant

the decree of specific performance or for decreeing the specific performance with a

direction to the plaintiff to pay an additional amount to the defendant and

compensate him. It would depend upon on the facts and circumstances of each

case. His Lordship observed that the respondents cannot take advantage of their

own wrong and then plead that the grant of decree of specific performance would

amount to an unfair advantage to the appellant. The view taken by his Lordship is

that the appellant was entitled to specific performance of the agreement on the

prices stipulated in the agreement to sell.

16. It would thus be seen that in appropriate cases, the Court while directing

specific performance of an Agreement to Sell may grant additional compensation

to the vendor on account of appreciation in the prices of the property subject matter

of the agreement though it is not a rule of law that the court must direct payment of

additional compensation in each and every case merely because there has been

overall appreciation in the prices of the properties. Whether additional

compensation should be directed to be paid or not and if so how much would

depend upon the facts and circumstances of each case, the purpose being to balance

the equity between the parties.

17. Issues No. 5: In view of my findings on the above issues, the plaintiff

is entitled to a decree for specific performance of the agreement to sell dated

17.11.2008. However, considering the overall appreciation in the value of

immovable properties, I am of the view that the defendant should be paid the

balance sale consideration along with interest on that amount @ 24% per annum by

way of additional compensation, so as to balance the equities between the parties.

18. For the reasons stated hereinabove, a decree for specific performance of the

agreement to sell dated 17.11.2008 is hereby passed in favour of the plaintiff and

against the defendant by directing the defendant to execute the sale deed in favour

of the plaintiff of the first floor of the property bearing number Q-12-B, Jangpura

Extension, New Delhi-110 014 in favour of the plaintiff, subject to the plaintiff

depositing the balance sale consideration of Rs. 49,50,000/- with interest on that

amount @ 24% per annum with effect from 17.01.2009 till date, towards additional

compensation, by way of a pay order in the name of Registrar General of this

Court, within six weeks. The defendant is also directed to handover peaceful and

vacant possession of the first floor of the aforesaid property to the plaintiff as soon

as the aforesaid amount is deposited. The sale deed would be executed by the

defendant within six weeks of plaintiff's depositing the balance amount in terms of

this order, under intimation to him. If the defendant fails to execute the sale deed in

favour of the plaintiff and/or fails to handover peaceful and vacant possession of

the first floor of the aforesaid premises to him, it would be open to the plaintiff to

approach to the Court for appointment of a Court Commissioner to execute the sale

deed and for issuing warrants of possession of the first floor of the aforesaid

premises in his favour. The amount which the plaintiff deposits, in compliance of

this order shall be kept by the Registry in a short term FDR and shall be released to

the defendant on his executing the sale deed and handing over the possession of the

first floor premises to the plaintiff. In the facts and circumstances of the case, there

shall be no orders as to costs. Decree sheet be drawn accordingly.

V.K.JAIN, J

August 30, 2012 Rd/bg