Shri Jinesh Kumar Jain vs Smt. Iris Paintal & Ors.
2012 Latest Caselaw 4019 Del

*              IN THE HIGH COURT OF DELHI AT NEW DELHI

+                           CS(OS)No.1154/1989

%                                                        10th July, 2012

         SHRI JINESH KUMAR JAIN                     ...... Plaintiff
              Through: Mr. B.P.Aggarwal with Mr. Rajinder Singh, Advs.


                      VERSUS

         SMT. IRIS PAINTAL & ORS.                    ...... Defendants
              Through: Ms. Rekha Aggarwal, Adv. for D-1.
                        Mr. Ashim Vachher with Mr. S.M.Hashmi, Advs.
                        for D-2 and LRs of D-4
                        Mr. Davinder Verma, Adv. for D-3.


CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA

    To be referred to the Reporter or not?         Yes


VALMIKI J. MEHTA, J (ORAL)

1.

This is suit for specific performance. The agreement to sell in

question is dated 26.9.1988 (Ex.P1) entered into between the plaintiff as the

prospective purchaser and the defendants as the prospective sellers.

Defendant no.1 acted as an attorney for and on behalf of the defendants no. 2

to 4 at the time of the execution of the agreement to sell. The total sale

consideration was Rs.48,50,000/-. The defendant no.1 for and on behalf of the

defendants received a sum of Rs.4,50,000/- as advance. In the plaint, the

plaintiff specifically admits that with respect to the subject land there were

acquisition proceedings going under the Land Acquisition Act, 1894. There is

a reference to notifications under Sections 4 and 6 of the Land Acquisition

Act, 1894 in paras 3 and 5 of the plaint. Para 7 of the plaint mentions of an

Award being passed acquiring the land on 6.6.1987 i.e. about 9 months before

the agreement to sell was entered into between the parties on 26.9.1988. The

plaintiff pleads that the defendants were guilty of breach of contract inasmuch

as they failed to obtain the permissions to sell the property from the Income

Tax Authority and from the appropriate authority under the Delhi Lands

(Restriction of Transfer) Act, 1972 (hereinafter referred to as "Act of

1972/1972 Act"). The plaintiff pleads that the defendants failed to perform

the contract because a Division Bench of this Court in a case quashed the

acquisition proceedings and consequently the price of land increased, giving

the reason for the defendants to back out from the contract. Plaint para 15

refers to the factum of the quashing of the acquisition notification issued for

various lands, including the subject land. The plaintiff claims to have always

been and continuing to be ready and willing to perform his part of contract.

2. Written statements have been filed by the defendants. Defendant

no.1 has filed her written statement. Defendants no.2 to 4 have jointly filed

their written statements separate from the defendant no.1. Whereas the

defendant no.1 has taken up pleas with respect to the agreement in question

being barred by the Act of 1972 as also the breach committed by the plaintiff

in failing to perform his part of the contract as the sale transaction had to be

completed in 45 days, it is also claimed that the plaintiff was not ready and

willing to perform his part of the contract and that the discretionary relief for

specific performance should not be granted in his favour. The defendants no.

2 to 4 have in their written statement in addition to pleading the aforesaid

defences pleaded that the power of attorneys, if any, executed by defendants

no.2 to 4 in favour of defendant no.1 were not valid or in any case were

cancelled prior to the subject agreement to sell dated 26.9.1988 was entered

into between the defendant no.1 and the plaintiff, and thus on the said date the

defendant no.1 could not have acted as the power of attorney-holder for

defendants no. 2 to 4.

3. The following issues in this case were framed on three separate

dates i.e. 11.4.1991, 12.12.1995 and 26.9.2001:-

"11.4.1991

1. Whether the agreement is not enforceable as the provisions of section 269 UC of Income Tax Act were not complied with (PO2 WS)

2. Whether the agreement is barred by Section 4 of the Delhi Land (Restriction of Transfer) Act, 1972 and is void under section 23 of the Contract Act. (PO3 WS).

3. Whether the defendant has obtained the necessary permission, if so, by what date and if not, what is the effect.

4. Whether the plaintiff was ready and willing to perform his part of the contract.

5. Whether the plaintiff is entitled to the relief of specific performance.

6. Relief.

12.12.1995

1. Whether the plaintiff has filed the suit in collusion with defendant No.1? OPD 2-4.

2. Whether the agreement dated 26.9.1988 purported to have been entered on behalf of defendants 2 to 4 was illegal, collusive, fictitious, fraudulent and unauthorized? (Onus to prove on parties.)

3. Whether defendants 2 to 4 did not execute any valid power of attorney in favour of defendant No.1 to sell their shares in the property in question? OPD 2 to 4.

4. Whether the defendants 2 to 4 did not receive any consideration for the purported sale of their interest in the suit property? If so, to what effect? OPD 2-4.

5. Whether the defendants 2 to 4 had revoked and cancelled the power of attorney issued in favour of defendant No.1 prior to 26.9.1988? OPD 2-4.

6. Relief.

26.9.2001

1. Whether payment received by defendant no.1 on behalf of defendants 2 to 4 is illegal and prohibited in view of Section 9 of Foreign Exchange Regulation Act, 1973? OPD 2 to 4"

4. Counsel for the defendants no. 2 to 4 does not press the issue

framed on 26.9.2001. During the course of hearing, counsel for the

defendants, and in my opinion very fairly, also did not press the issues framed

on 12.12.1995 including with respect to lack of authority in the defendant no.1

to execute the agreement to sell, and I say that this has rightly been done

inasmuch as, the defendant no.1 herself has filed photocopies of these power

of attorneys. Accordingly, no decision is also therefore required to be given

with regard to any of the issues as framed on 12.12.1995. Counsel for the

defendants also do not press issue no.1 which was framed on 11.4.1991. The

real issues are thus issues no. 2 to 5 as framed on 11.4.1991, and which I

would now deal with and decide hereinafter.

5. I will take up issue no.2 framed on 11.4.1991 at the outset. In

this issue, though the reference is to Section 4 of the Act of 1972, really it is

Section 3 which will apply inasmuch as whereas Section 3 applies where the

land has been acquired i.e. Award has been passed in the land acquisition

proceedings, Section 4 applies when land has not been acquired but it is

proposed to be acquired because notifications have been issued under Sections

4 and 6 of the Land Acquisition Act, 1894. Since the issue really is an issue

of law, I re-frame issue no.2 in exercise of my powers under Order 14 Rule 5

CPC which permits the Court to amend or strike out issues at any stage of the

suit. Issue no.2 is therefore re-framed as under:-

"Whether the agreement to sell dated 26.9.1988 is barred

under Section 3 of the Delhi Lands (Restriction of Transfer)

Act, 1972 and is void under Section 23 of the Contract Act,

1872?"

6. The difference of language employed in Sections 3 and 4 of the

Act of 1972 is very clear. This difference of language is apparent even from a

plain reading of the same. Whereas under Section 3 there is an absolute bar

with respect to transferring those lands which have already been acquired by

the Government i.e. with respect to which Award has been passed, those lands

which are in the process of acquisition i.e. Award has not been passed, then

Section 4 of the Act of 1972 will apply, and as per which, there is no absolute

bar with respect to such lands, and, transfer can take place subject to

permission of appropriate authority being taken under Section 5 of the 1972

Act, and whose orders are appealable under Section 6 of the Act of 1972. The

Supreme Court has with respect to difference between these two provisions

observed as under in para 66 of the judgment in the case of Shanti Sports

Club & Anr. vs. Union Of India & Ors., 2009 (15) SCC 705:-

"66. The distinction between the above-reproduced two provisions is that while Section 3 contains an absolute prohibition on transfer of the acquired land by sale, mortgage, gift, lease or otherwise, Section 4 declares that no person shall, except with the previous permissions in writing of the competent authority, transfer or purport to transfer by sale, etc. of any land or part thereof, which is proposed to be acquired in connection with the scheme and in relation to which a declaration to the effect that such land or part thereof is needed for a public purpose has been made by the Central Government and the Central Government has not withdrawn from the acquisition under Section 48(1)."

7. A Division Bench of this Court in the case of Sh.Raghubir vs.

Union of India, WP(C) No.3186/2000 decided on 19.5.2005, has held that

contracts which have been entered into in violation of the 1972 Act are void.

Paras 17 and 19 of this judgment are relevant and they read as under:-

"17. It cannot be disputed that the lands in question were acquired for a public purpose which can itself be a continuing public purpose like „Planned Development of Delhi‟. Large chunks of land are acquired for the

development projects from time to time. Once a notification is issued under section 4 of the Act and it is clearly indicated by way of a notification for the benefit of public at large that the land is sought to be acquired by the appropriate Government, in such circumstances, any sale, mortgage or creation of a charge subsequent thereto would be ineffective. Such transactions would be in apparent conflict with the provisions of Delhi Land (Restriction on Transfer) Act as well as the Indian Contract Act, 1872. Under section 3 of the Delhi Land (Restriction on Transfer) Act, there is a complete prohibition to the effect that no person shall purport to transfer, sale, gift, lease or otherwise any land or part thereof situated in the Union Territory of Delhi which the Central Government under the Land Acquisition or any other law for acquisition of Land for public purpose. Sections 4 and 5 of the abovesaid Act intends to regulate the transfer of the lands in regard to which acquisition proceedings have been initiated and the manner in which such an application is to be filed before the Competent Authority. Section 4 would come into the play where declaration under section 6 has been issued and the land has not been withdrawn by the Central Government under section 48 of the Act. In the case of Krishan Kumar Malik vs. Union of India and Ors. AIR 1985 Delhi 225, this Court has held that the effect of permission under the Act if that the same, may be recognized as valid for the purposes of claiming compensation or other benefits arising therefrom, which in absence of the permission would be deemed to be a void sale thus conferring no right at all. In the case of O.P.C.Jain vs. ADM 42 (1990) DLT 478, division bench of this court took the view that if no notification under Section 4 and 6 of the Act has been issued, there is no need for obtaining a certificate or permission or no objection certificate under the Provisions under the Delhi Land (Restriction on Transfer), Act. In the case of Meera Sawhney & Ors. vs. Lt. Governor, 89 (2001) DLT 484, a Full Bench of this court took the view that the

very object of 1972 Act was to curb such illegal transactions of sale and purchase of land. The Bench held as under:-

"16. We are of the view that NOC is of no legal consequence. We also hold that no permission under Section 5 of the 1972 Act was ever sought regarding transfer of land in question nor any permission was granted. The alleged transfer, therefore, is clearly in violation of the provision of the 1972 Act. It has no legal validity. The Act does not envisage any NOC. Section 5 only recognizes a permission in writing for transfer of lands under Sections 4 and 6 notifications and the permission is to be granted by the Competent Authority under the Act alone. In fact the learned Counsel for the petitioner did not dispute that permission was a sine qua non. His entire case, however, was that the alleged NOC amounted to permission under Section 5 of the Act. We are enable to accept this. The onus was clearly on the petitioners to show that they had applied for permission under Section 5 and they had obtained the same in accordance with the provisions of Section 5 of the 1972 Act. The petitioners have miserably failed to discharge this onus. The very object of the 1972 Act was to curb such illegal transactions of sale and purchase of lands and to protect unwary customers in this behalf. The object of the Act is given in the preamble which runs as under:

An Act to impose certain restrictions on transfer of land which have been acquired by the Central Government or in respect of which acquisition proceedings have been initiated by the Government, with a view to preventing large scales transactions of purported transfers, or, as the case may be, transfers of such lands to unwary public."

xxxx xxxxx xxxx

19. Further more the documents executed in favour of the petitioners (subsequent purchasers) are also opposed to the provisions of the Indian Contact Act in as much as they offend the provisions of Sections 23, 24 of the Act. The Supreme Court in the above judgment have clearly stated that they have no right as these contracts are void. One of the main essentials for a contract to be valid is that the agreement should not be opposed to public policy. Keeping in view the effect of acquisition policy of the State, public at large being beneficiary of such acquisition and there being specific restriction upon transfer of land in terms of the provisions of 1972 Act there can be no doubt that such contracts would be opposed to public policy. No right would vest in such purchasers to question the legality and validity of the notifications."(underlining added).

8. A reading of the aforesaid judgment of the Division Bench shows

that contracts which are entered into in violation of the 1972 Act are against

public policy and hence are of no legal effect. In the present case inasmuch as

admittedly the agreement to sell dated 26.9.1988 was entered into after the

land was acquired i.e. after an Award was passed (para 15 of the plaint states

this in so many words) clearly, the agreement to sell dated 26.9.1988 is void.

Though it is a moot question whether the plaintiff was or was not aware of the

Award being passed, however, I would hold that in the facts of the present

case it is inconceivable for the plaintiff not to have known when the

agreement to sell was entered into that the subject lands were already acquired

by an Award passed under the Land Acquisition Act, 1894. This I say so

because no one agrees to pay lakhs of rupees unless the proposed buyer has

taken some necessary steps for enquiring the status / title of the lands which

are proposed to be bought. A reading of para 7 of the plaint also shows

knowledge by the plaintiff that the land had already been acquired before the

agreement to sell was entered into. In any case, even if I for the sake of the

argument even presume that the plaintiff was not aware, or even both the

parties were not aware of the Award having been passed with respect to the

subject lands under the Land Acquisition Act, 1894, that cannot take away the

binding effect of Section 3 of the 1972 Act which provides that any purported

transfer of the land which has already been acquired is absolutely barred. In

my opinion, counsel for the plaintiff is not right in contending that what

Section 3 bars is only a sale deed and not an agreement to sell. This I say so

because the Division Bench in the case of Sh.Raghubir (supra) has held that

agreements in violation of the provisions of Sections 3 and 4 of the 1972 Act

are void being against the public policy. The Division Bench in para 19 of its

judgment reproduced above, has specifically held that the documents in the

nature of a power of attorney, an agreement to sell, etc. are hit by Section 23

of the Contract Act, 1872 being voilative of the public policy and the intention

of the Legislature enacting the 1972 Act, are hence void. I therefore hold

that the agreement to sell dated 26.9.1988 itself was void in view of a

complete bar to any agreement being entered into which "purport" to transfer

by sale etc land which is acquired under the Land Acquisition Act, 1894 i.e.

with respect to lands for which an Award has been passed.

9. Let us now take the case as if the agreement is not void, and then

examine as to who is guilty of breach of contract. It will also have to be seen

as to whether the plaintiff was always ready and willing to perform his part of

the contract, and also as to whether the plaintiff should be held entitled to the

discretionary remedy of specific performance.

10. On the aspect as to who is guilty of breach of contract, one thing

is clear that the agreement to sell does provide for the necessary permissions

to be obtained by the defendants. The defendants have not proved on record

that they ever applied to the Income Tax Authority or appropriate authority

under the 1972 Act for permission to transfer the land. Of course, I have

already stated above that the appropriate authority under the 1972 Act would

never have given permission because there is an absolute bar under Section 3

of the Act where the land has already been acquired, however, so far as the

permission of the Income Tax Authority is concerned, I do not find any

document placed on record whereby the defendants have applied for

permission. In my opinion, however, this is not the end of the matter because

the defendant no.1 sent a notice dated 2.12.1988 (Ex.P2), and in which notice

there is an allegation against the plaintiff of having committed breach of

contract in not completing the transaction within 45 days as provided under

the agreement to sell. Reference in this notice, Ex.P2 therefore is clearly to

the lack of availability of finances with the plaintiff for completing the

transaction of sale. Though this aspect will also be dealt with by me while

dealing with the issue of readiness and willingness, it is clear in the facts of

the present case, that the plaintiff is also guilty of breach of contract inasmuch

as the plaintiff has not filed even a single document of any substance

whatsoever of his having financial capacity from 26.9.1988 to the period of 45

days after entering into agreement to sell, and thereafter till filing of the suit.

No doubt, plaintiff may want to say that he was liable to have the moneys

ready only after the defendants had obtained the necessary permissions,

however, one cannot overlook the fact that considering the period of

performance to be a short period of 45 days, the plaintiff cannot presume that

the permissions will not be applied for; nor obtained, and therefore, he need

not be ready to perform his part of the bargain by having the balance sale

consideration of `44,00,000/- in the 45 days period. I do not think that it is

open for the plaintiff to urge that he need not have established on record his

financial capacity during this period of 45 days after entering into the

agreement to sell. I must hasten to add that where no period of performance is

provided for or where there is a very long period to enable the proposed buyer

for completion of his obligations the position possibly may have been

different than in this case where the period is only of 45 days. I therefore hold

that both the parties were guilty of breach of their respective obligations to be

performed under the agreement dated 26.9.1988.

11. Now on to the related crucial issue no.4 framed on 11.4.1991

with respect to readiness and willingness on the part of the plaintiff to perform

his obligation under the agreement to sell. I take up this issue for disposal.

Section 16(c) of the Specific Relief Act, 1963 requires that the plaintiff in a

suit for specific performance must aver and prove that he has always been

ready and willing and continues to be ready and willing to perform his part of

the contract. The Courts have interpreted the expression "readiness" under

Section 16(c) to mean capacity to perform i.e. financial capacity of a

purchaser to pay the balance consideration. Willingness is the intention to go

ahead with the agreement to sell.

12. The undisputed position which emerges on record is that the

plaintiff has miserably failed to prove his readiness and willingness i.e. his

financial capacity with respect to making available the balance sale

consideration of `44,00,000/-. No Income Tax Returns of the plaintiff have

been filed for any of the years including post the filing of the suit. The

plaintiff has similarly failed to file his bank accounts to show availability with

him of amounts to pay balance consideration of `44,00,000/-. The plaintiff

has in fact not even filed details of his assets in any form to show his financial

capacity to pay the balance consideration of `44,00,000/-. In my opinion,

merely stating in legal notices or replies that the plaintiff is ready to perform

his part of the contract is neither here nor there inasmuch as the issue of

readiness is a crucial aspect which requires that by clear-cut evidence, which

can be believed by the Court, the plaintiff proves his financial capacity. The

plaintiff has wholly failed to do so in the present case. I therefore hold that

the plaintiff has totally failed to prove the financial capacity to pay the balance

consideration and, hence it cannot be said that the plaintiff was and continued

to be ready and willing to perform his part of the obligation under the

agreement to sell at all points of time i.e. for the period of 45 days after

entering into the agreement to sell, after the period of 45 days till the filing of

the suit, and even thereafter when evidence was led. I therefore hold that the

plaintiff has failed to comply with the requirement of Section 16(c) of the

Specific Relief Act, 1963, and therefore, the plaintiff is not entitled to the

relief of specific performance.

13. Now let us assume that the agreement to sell dated 26.9.1988 was

not hit by the 1972 Act; the defendants were guilty of breach of their

obligation to perform their part of contract; and that the plaintiff was ready

and willing to perform his part; even then, can it be said that the plaintiff is yet

entitled to the discretionary relief of specific performance. It will be

appropriate at this stage to refer to Section 20 of the Specific Relief Act, 1963,

and more particularly sub-Section 3 thereof. Section 20 reads as under:-

20. Discretion as to decreeing specific performance.-

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

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

(a) where the terms of the contract or the conduct of the parties at the time of entering into the contract or the other circumstances under which the contract was

entered into are such that the contract, though not voidable, gives the plaintiff an unfair advantage over the defendant; or

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

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

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

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

14. Sub-Section 3 makes it clear that Courts decree specific

performance where the plaintiff has done substantial acts in consequence of a

contract/agreement to sell. Substantial acts obviously would mean and

include payment of substantial amounts of money. Plaintiff may have paid

50% or more of the consideration or having paid a lesser consideration he

could be in possession pursuant to the agreement to sell or otherwise is in the

possession of the subject property or other substantial acts have been

performed by the plaintiff, and acts which can be said to be substantial acts

under Section 20(3). However, where the acts are not substantial i.e. merely

5% or 10% etc of the consideration is paid i.e. less than substantial

consideration is paid, (and for which a rough benchmark can be taken as 50%

of the consideration), and/or plaintiff is not in possession of the subject land, I

do not think that the plaintiff is entitled to the discretionary relief of specific

performance.

15. The Supreme Court in the recent judgment of Saradamani

Kandappan vs. Mrs. S. Rajalakshmi, 2011 (12) SCC 18 has had an occasion

to consider the aspect of payment of a nominal advance price by the plaintiff

and its effect on the discretion of the Court in granting the discretionary relief

of specific performance. Though in the facts of the case before the Supreme

Court, it was the buyer who was found guilty of breach of contract, however,

in my opinion, the observations of the Supreme Court in the said case are

relevant not only because I have found in this case the plaintiff/ buyer guilty

of breach of contract, but also because even assuming the plaintiff/buyer is not

guilty of breach of contract, yet, Section 20 sub-Section 3 of the Specific

Relief Act, 1963 as reproduced above clearly requires substantial acts on

behalf of the plaintiff/proposed purchaser i.e. payment of substantial

consideration. Paras 37 and 43 of the judgment in the case of Saradamani

Kandappan (supra) are relevant and they read as under:

"37. The reality arising from this economic change cannot continue to be ignored in deciding cases relating to specific performance. The steep increase in prices is a circumstance which makes it inequitable to grant the relief of specific performance where the purchaser does not take steps to complete the sale within the agreed period, and the vendor has not been responsible for any delay or non-performance. A purchaser can no longer take shelter under the principle that time is not of essence in performance of contracts relating to immovable property, to cover his delays, laches, breaches and "non-readiness". The precedents from an era, when high inflation was unknown, holding that time is not of the essence of the contract in regard to immovable properties, may no longer apply, not because the principle laid down therein is unsound or erroneous, but the circumstances that existed when the said principle was evolved, no longer exist. In these days of galloping increases in prices of immovable properties, to hold that a vendor who took an earnest money of say about 10% of the sale price and agreed for three months or four months as the period for performance, did not intend that time should be the essence, will be a cruel joke on him, and will result in injustice. Adding to the misery is the delay in disposal of cases relating to specific performance, as suits and appeals therefrom routinely take two to three decades to attain finality. As a result, an owner agreeing to sell a property for rupees one lakh and received rupees ten thousand as advance may be required to execute a sale deed a quarter century later by receiving the remaining rupees ninety thousand, when the property value has risen to a crore of rupees.

xxxxxx xxxxxxx xxxxxxx

43. Till the issue is considered in an appropriate case, we can only reiterate what has been suggested in K.S. Vidyanandam.

(i) The courts, while exercising discretion in suits for specific performance, should bear in mind that when the parties prescribe a time/period, for taking certain steps or for completion of the transaction, that must have some significance and therefore time/period prescribed cannot be ignored.

(ii) The courts will apply greater scrutiny and strictness when considering whether the purchaser was "ready and willing" to perform his part of the contract.

(iii) Every suit for specific performance need not be decreed merely because it is filed within the period of limitation by ignoring the time-limits stipulated in the agreement. The courts will also "frown" upon suits which are not filed immediately after the breach/refusal. The fact that limitation is three years does not mean that a purchaser can wait for 1 or 2 years to file a suit and obtain specific performance. The three-year period is intended to assist the purchasers in special cases, as for example, where the major part of the consideration has been paid to the vendor and possession has been delivered in part-performance, where equity shifts in favour of the purchaser."

(emphasis is mine)

16. A reading of the aforesaid paras shows that Courts have a

bounden duty to take notice of galloping prices. Surely it cannot be disputed

that the balance of convenience i.e. equity in the present case is more in favour

of the defendants who have only received 10% of the consideration. If the

hammer has to fall in the facts of the present case, in my opinion, it should fall

more on the plaintiff than on the defendants inasmuch as today the defendants

cannot on receiving of the balance consideration of `44,00,000/-, and even if

exorbitant rate of interest is received thereon, purchase any equivalent

property for this amount. Correspondingly, the plaintiff has had benefit of

90% of sale consideration remaining with him (assuming he has any) and

which he could have utilized for purchase of assets including an immovable

property. In specific performance suits a buyer need not have ready cash all

the time and his financial capacity has to be seen and thus plaintiff can be said

to have taken benefit of the 90% balance with him. It is well to be

remembered at this stage that in a way that part of Specific Relief Act dealing

with specific performance is in the nature of exception to Section 73 of the

Contract Act, 1872 i.e. the normal rule with respect to the breach of a contract

under Section 73 of the Contract Act, 1872 is of damages, and, the Specific

Relief Act, 1963 only provides the alternative discretionary remedy that

instead of damages, the contract in fact should be specifically enforced. Thus

for breach of contract the remedy of damages is always there and it is not that

the buyer is remediless. However, for getting specific relief, the Specific

Relief Act, 1963 while providing for provisions of specific performance of the

agreement (i.e. performance instead of damages) for breach, requires

discretion to be exercised by the Court as to whether specific performance

should or should not be granted in the facts of each case or that the plaintiff

should be held entitled to the ordinary relief of damages or compensation.

17. I have recently in the case titled as Laxmi Devi vs. Mahavir

Singh being RFA No. 556/2011 decided on 1.5.2012 declined specific

performance, one of the ground being payment of only nominal consideration

under the agreement to sell. Para 11 of the said judgment reads as under:-

"11. Besides the fact that respondent/plaintiff was guilty of breach of contract and was not ready and willing to perform his part of the contract lacking in financial capacity to pay the balance consideration, in my opinion, the facts of the present case also disentitle the respondent/plaintiff to the discretionary relief of specific performance. There are two reasons for declining the discretionary relief of specific performance. The first reason is that the Supreme Court has now on repeated occasions held that unless substantial consideration is paid out of the total amount of consideration, the Courts would lean against granting the specific performance inasmuch as by the loss of time, the balance sale consideration which is granted at a much later date, is not sufficient to enable the proposed seller to buy an equivalent property which could have been bought from the balance sale consideration if the same was paid on the due date. In the present case, out of the total sale consideration of `5,60,000/-, only a sum of `1 lakh has been paid i.e. the sale consideration which is paid is only around 17% or so. In my opinion, by mere payment of 17% of the sale consideration, it cannot be said that the respondent/plaintiff has made out a case for grant of discretionary relief or specific performance..............."

18. Therefore, whether we look from the point of view of Section 20

sub-Section 3 of the Specific Relief Act, 1963 or the ratio of the judgment of

the Supreme Court in the case of Saradamani Kandappan (supra) or even on

first principle with respect to equity because 10% of the sale consideration

alongwith the interest will not result in the defendants even remotely being

able to purchase an equivalent property than the suit property specific

performance cannot be granted. In fact, on a rough estimation, the property

prices would have galloped to at least between 30 to 50 times from 1988 till

date. I take judicial notice of this that in the capital of our country, like in all

other megapolis, on account of the increase in population and rapid

urbanization, there is a phenomenal increase in the prices of urban immovable

property.

I therefore hold and answer issue no. 5 against the plaintiff and in

favour of the defendants holding that the plaintiff is not entitled to

discretionary relief of specific performance.

19. At this stage, I must note that actually the plaintiff should have

been cautious enough to claim the alternative relief of damages/compensation

and which a prospective purchaser is always entitled to. Unfortunately, the

subject suit is only a suit for specific performance in which there is no claim

of the alternative relief of compensation/damages. Not only is there no case

set out with respect to the claim of damages/compensation, the plaintiff has

led no evidence whatsoever as to difference in market price of the subject

property and equivalent properties on the date of breach, so that the Court

could have awarded appropriate damages to the plaintiff, in case, this Court

came to the conclusion that though the plaintiff was not entitled to specific

performance, but he was entitled to damages/compensation because it is the

defendants who are guilty of breach of contract.

20. The question is therefore what ought to be done. Though this has

not been at all argued on behalf of the plaintiff, I think in exercise of my

power under Order 7 Rule 7 CPC I can always grant a lesser relief or an

appropriate relief as arising from the facts and circumstances of the case. It

cannot be disputed that the defendants have received a sum of `4,50,000/-

under the agreement to sell dated 26.9.1988. Considering all the facts of the

present case as detailed above, I consider it fit that though an agreement itself

was void under the 1972 Act, the plaintiff should be entitled to refund of the

amount of `4,50,000/- alongwith the interest thereon at 18% per annum

simple pendente lite and future till realization.

21. In view of the above discussion, suit of the plaintiff claiming the

relief of specific performance is dismissed. The plaintiff however will be

entitled to a money decree for a sum of `4,50,000/- alongwith pendente lite

and future interest at 18% per annum simple till realization.

22. Parties are left to bear their own costs. Decree sheet be prepared.

VALMIKI J. MEHTA, J JULY 10, 2012 ak