Delhi High Court
Shri Baldev Behl & Ors. vs Bhule And Ors. on 10 September, 2012
Author: Valmiki J. Mehta
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CS(OS) No.2458 /1989
% 10th September, 2012
SHRI BALDEV BEHL & ORS. ...... Plaintiffs
Through: Mr. Ashok K. Chhabra, Advocate
with Mr. Suryajyoti Singh Paul,
Advocate.
VERSUS
BHULE AND ORS. ...... Defendants
Through: Mr. Vipin K. Singh, Advocate for
defendant No.1.
Mr. Sharad Chandra, Advocate with
Mr. Manoj Bansal, Advocate for
defendant No.3.
CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA
To be referred to the Reporter or not? Yes
VALMIKI J. MEHTA, J (ORAL)
1. The subject suit is a suit for specific performance. The
plaintiffs seek specific performance with respect to 36 bighas and 13
biswas of agricultural land comprising in Mustatil No.7, Kila No.1(35-13),
Mustatil No.24, Kila No.1/1 (1-0). The plaintiffs rely upon two agreements
to sell. The first agreement to sell is the written agreement to sell dated
27.8.1988 and the second agreement is an oral agreement to sell dated
CS(OS) No.2458/1989 Page 1 of 37
7.1.1989. As per the 1st agreement to sell dated 27.8.1988
(Ex.PW4/1/Ex.P1) the subject land comprising 36 bighas and 13 biswas
was agreed to be sold at ` 3 lacs per acre. The total price comes to about `
22.5 lacs as stated to me by the counsel for the parties during the course of
final arguments. Under the first agreement to sell dated 27.8.1988, the
plaintiff No.1 paid a sum of ` 1.7 lacs. Under the agreement to sell since
part of the subject land was occupied by the encroachers and who had
constructed jhuggis, chawls, jhopries and hutments etc, the defendant No.1-
proposed seller was to get the encroached portion vacated within 70 days
and thereafter had to apply to the necessary authorities for taking
permission for selling of the land. The agreement to sell further provided
that in case jhuggis are not removed, plaintiff No.1 will have the option to
purchase whole or part of the land which was not covered under the
jhuggis.
2. Under the second and subsequent oral agreement to sell dated
7.1.1989, plaintiffs claim that the following are the salient terms:-
"a) That the oral agreement to sell dated 7.1.89 shall supersede
the earlier agreement to sell dated 27.8.1988.
b) Total consideration for the entire land of 36 bighas 13
biswas will be ` 3,75,000/- (Rupees three lakhs seventy five
thousand only).
c) All the liabilities existing on the land in question shall be
the responsibility of the plaintiff i.e., getting the land vacated from
Jhuggy dwellers at the cost of the plaintiffs and getting the land
CS(OS) No.2458/1989 Page 2 of 37
released from the administration who have given mining permit to
DSMDC for the entire land in question.
d) Levelling of the land will also be done by the plaintiffs at
their own costs.
e) Compensation, if any, spend by the Administration as
royalty for quarrying stones, and damages for causing ditched shall
be receivable by the plaintiffs."
3. The plaintiff No.1 further pleads in the plaint that since the
plaintiff No.1 was entitled to nominate the persons to get the sale deed
executed as the plaintiff No.1‟s nominees, plaintiff Nos.2 and 3 were
nominated on behalf of the plaintiff No.1 with respect to 1/3 rd share each of
the subject land. Each of the three plaintiffs were to get an area of 12
bighas and 4.5 biswas at a consideration of ` 1.25 lacs by each of the
plaintiffs i.e. the total price of the land from about 22.5 lacs came down to
` 3.75 lacs inasmuch as the defendant No.1 could not remove the
jhuggis/hutments and therefore the total land was taken by the three
plaintiffs in three equal parts for a total consideration of ` 3.75 lacs. In the
plaint, it is pleaded that the defendant No.2 as an attorney of the defendant
No.1 received a sum of ` 1 lakh from plaintiff No.2 and executed receipts
dated 14.3.1989. So far as plaintiff No.3 is concerned, the plaint alleges
that vide a cheque of ` 1.25 lacs, the plaintiff No.3 paid his entire share of
the sale consideration to the defendant no.1 through his attorney the
defendant no.2. Plaintiff No.1 is said to have made payment of ` 1 lakh in
CS(OS) No.2458/1989 Page 3 of 37
cash. To clarify further on the payments aspect, as per para 8 of the plaint,
plaintiff No.1 had paid ` 1 lakh in cash and plaintiff No.3 paid an amount
of ` 1.25 lacs by cheque to the defendant No.2 as an attorney of the
defendant No.1. Plaintiff No.2 also paid an amount of ` 1 lakh in cash
similarly to the defendant No.2 as attorney of the defendant No.1. There
are further averments in the plaint of the defendants signing various
declarations for obtaining NOCs from the revenue authorities. The plaint
further makes averments with respect to defendants failing to receive
balance consideration of ` 50,000/- and failing to turn up before the sub
Registrar for selling the suit property. Para 13 of the plaint thereafter
makes a statement that a total of ` 5,57,500/- has been paid by the plaintiffs
to the defendant Nos.1and 2 as under:-
"13. That Shri Ranjit Singh has been added as defendant No.2 as
he has been acting as duly constituted attorney of defendant No.1 and
has also been receiving payments from the plaintiffs on behalf of
defendant No.1.
13(a). Plaintiffs submit that in case the agreement to sell
referred to hereinabove is not passed in favour of the plaintiffs and
against the defendants then in such an event the plaintiffs claim, being
entitled to, to recover the following amounts from the defendants:-
i) Amount paid by the plaintiffs to defendant No.1 ` 1,70,000/-
on 27.8.88 at the time of signing of the agreement
to sell dated 27.8.88
ii) Amount paid by plaintiff No.1 to defendant No.1 ` 1,00,000/-
CS(OS) No.2458/1989 Page 4 of 37
through his attorney defendant No.2 on 14.3.89
iii) Amount paid by plaintiff No.2 to defendant No.1 ` 1,00,000/-R
through his attorney defendant No.2 on 14.3.89
iv) Amount paid to defendant No.1 vide cheque ` 1,25,000/-
defendant3.3.89 drawn on Canara Bank Branch.
v) Interest at the rate of 18% per annum from the ` 62,500/-
date of amounts till the date of filing of the suit
4. The relief prayed for in the plaint is for specific performance
either of the first agreement to sell dated 27.8.1988 or the second oral
agreement to sell dated 7.1.1989. I may state that originally the plaint only
sought specific performance of the second oral agreement to sell dated
7.1.1989, however, plaintiffs applied for amendment of the plaint to seek
specific performance of the 1st Agreement to Sell dated 27.8.88, and which
amendment was allowed vide order dated 1.10.1992.
5. In the suit, originally there were two defendants i.e. proposed
seller defendant No.1 and his stated attorney defendant No.2 Sh. Ranjit
Singh. Defendant No.3 was added as a defendant in the suit on his
application under Order 1 Rule 10 of Code of Civil Procedure, 1908 (CPC)
inasmuch as the defendant No.3 is stated to have purchased from the
CS(OS) No.2458/1989 Page 5 of 37
defendant no.1 an area of 12 bighas in Mustatil No.7 Kila No.1 out of the
subject land under a registered sale deed dated 8.4.1988 i.e prior to both
the agreements to sell which the plaintiffs seek specific performance of.
Defendant No.3 accordingly filed his written statement denying the claim
of specific performance so far as the 12 bighas of land which he had
already purchased.
6. The defendant No.1 filed his written statement admitting
entering into the agreement to sell dated 27.8.1988. It is pleaded in the
written statement that the plaintiff No.1 in terms of the agreement dated
27.8.1988 had clear cut option of getting the sale deed executed with
respect to balance portion which was free from the encroachers/hutments,
however, plaintiff No.1 is said to have failed to exercise that option.
Defendant No.1 also stated that plaintiff No.1 at best under the agreement
to sell dated 27.8.1988 can get the payment of ` 1,70,000/- alongwith 21%
interest as stated in the said agreement. The defendant No.1 denied that
defendant No.2 was ever appointed by him as an attorney. It is further
denied that the defendant No.1 has ever received any amount from any of
the plaintiffs no. 2 and 3 through defendant No.2. It is further pleaded that
the land in question which was agreed to be sold under the first agreement
to sell dated 27.8.1988 was in fact under quarrying pursuant to the licence
CS(OS) No.2458/1989 Page 6 of 37
granted by the Delhi State Mineral Development Corporation and therefore
there cannot be specific performance qua the subject land. Defendant No.1
also pleaded breach of contract on the part of the plaintiff No.1 in failing to
perform his part of the contract. Defendant No.1 admits receiving of two
amounts of ` 1,70,000/- and ` 1,25,000/- by cheque. Defendant No.1,
however, pleaded that the signatures on the NOCs for obtaining clearance
from the revenue authorities were not of the defendant No.1 and these were
forged and fabricated. Defendant No.1 pleads forfeiture of the amount of `
2,95,000/- received by him on account of breach committed by the plaintiff
No.1.
7. Issues in the present case were framed on 25.3.1996 and they
read as under:-
"1. Whether the defendant No.1 entered into an oral agreement
to sell dated 7.1.89 with the plaintiffs?
2. Whether if Issue No.1 is proved against the plaintiffs,
defendant No.1 is not liable to perform the agreement to sell dated
27.8.1988 for reasons alleged in the written statement?
3. Whether plaintiffs No.2 and 3 have no locus standi to sue?
4. Whether defendant No.2 is not a necessary or property
party to the suit?
5. Whether the suit is bad for mis-joinder of parties? If so, to
what effect?
6. Whether Collector of Mines, Delhi and the Delhi State
Mineral Development Corporation are necessary parties to the suit?
7. Whether defendant No.1 did not have any subsisting right,
title or interest in respect of 12 bighas of suit land as alleged by
defendant No.3?
8. Whether the suit is not liable to be decreed in respect of 12
CS(OS) No.2458/1989 Page 7 of 37
bighas of suit land as claimed by defendant No.3?
9. Whether the plaintiffs have been ready and willing to
perform their part of the agreement?
10. To what relief, if any, the plaintiffs are entitled?
11. Relief."
8. I may note that only the plaintiffs and defendant No.3 have led
evidence in this case and there is no evidence on behalf of either defendant
No.1 or defendant No.2. The defendant Nos.1 and 2 have also not cross-
examined the witnesses of the plaintiffs. However, separate written
statements were filed by defendant Nos.1 and 2. Defendant No.2 had in his
written statement denied the payment of ` 3,25,000/- as alleged by the
plaintiff No.1. The defendant No.2 also denied that he ever acted as the
attorney of defendant no.1.
9. At the very outset, I must note that though defendant Nos.1
and 2 have not led any evidence or cross-examined the witnesses of the
plaintiffs, however, the present being a suit for specific performance, heavy
onus has been thrown on the Court to dispassionately and thoroughly
examine the evidence so as to decide that whether the suit for specific
performance must succeed even if there is no evidence led on behalf of
defendant Nos.1 and 2. This is so mandated on this Court as per the
judgment of the Supreme Court in the case of Balraj Taneja and Anr. Vs.
Sunil Madan and Anr. (1999) 8 SCC 396 wherein Supreme Court has
CS(OS) No.2458/1989 Page 8 of 37
stated that even if there is no defence of the defendant, if the plaint itself
discloses such averments which show existence of disputed questions of
facts, the Court has to examine the facts and evidence led in the case
thoroughly and thereafter pass a detailed judgment dealing with the issues
which require to be decided for deciding the suit. Even though there is no
defence, the Court is still bound to decide whether the plaintiff has
succeeded in proving the case as made out. It is relevant to note that
judgment of the Supreme Court in the case of Balraj Taneja and Anr.
(supra) was passed in a suit like the present suit for specific performance
and where the written statement was not filed by the defendant. It is in that
context that the Supreme Court has made the following observations:-
29. As pointed out earlier, the Court has not to act blindly
upon the admission of a fact made by the defendant in his Written
Statement nor the Court should proceed to pass judgment blindly
merely because a Written Statement has not been filed by the
defendant traversing the facts set out by the plaintiff in the plaint
filed in the Court. In a case, specially where a Written Statement
has not been filed by the defendant, the Court should be a little
cautious in proceeding under Order 8 Rule 10 CPC. Before
passing the judgment against the defendant it must see to it that
even if the facts set out in the plaint are treated to have been
admitted, a judgment could possibly be passed in favour of the
plaintiff without requiring him to prove any fact mentioned in the
plaint. It is a matter of Court's satisfaction and, therefore, only on
being satisfied that there is no fact which need be proved on
account of deemed admission, the Court can conveniently pass a
judgment against the defendant who has not filed the Written
Statement. But if the plaint itself indicates that there are disputed
CS(OS) No.2458/1989 Page 9 of 37
questions of fact involved in the case regarding which two
different versions are set out in the plaint itself, it would not be
safe for the Court to pass a judgment without requiring the
plaintiff to prove the facts so as to settle the factual controversy.
Such a case would be covered by the expression "the Court may,
in its discretion, require any such fact to be proved" used in Sub-
rule (2) of Rule 5 of Order 8, or the expression "may make such
order in relation to the suit as it thinks fit" used in Rule 10 of
Order 8.
30. Applying these tests to the instant case, it will be noticed that
in a suit for specific performance it is mandatorily required by
Section 16 of the Specific Relief Act to plead readiness and
willingness of the plaintiff to perform his part of the contract. The
Court, before acting under Order 8 Rule 10 has to scrutinise the
facts set out in the plaint to find out whether all the requirements,
specially those indicated in Section 16 of the Specific Relief Act,
have been complied with or not. Readiness and willingness of the
plaintiff to perform his part of the contract is a condition precedent
to the passing of a decree for specific performance in favour of the
plaintiff.
xxxx xxxx xxxx xxxx
38. As will be evident from the facts set out above, the plaint itself
showed a serious disputed question of fact involved between the
parties with regard to the obtaining of Certificate (permission)
from the Income Tax Department and its communication by the
defendants to the plaintiff (Respondent No. 1). Since this question
of fact was reflective of the attitude of the plaintiff, whether he
was ready and willing to perform his part of the contract, it had to
be prayed as a fact that the Certificate (permission) from the
Income Tax Department had not been obtained by the defendants
and, therefore, there was no occasion of sending it to him. If the
pleadings of respondent No. 1 were limited in character that he
had pleaded only this much that the defendants had not obtained
the Certificate (permission) from the Income Tax Department and
had not sent it to him, this fact would have stood admitted on
account of non-filing of the Written Statement by the defendants.
But Respondent No. 1, as plaintiff, himself pleaded that
"defendants insisted that they had obtained the Certificate
(permission) from the Income Tax Department and sent it to him".
He denied its having been obtained or sent to him. Non-filing of
the Written Statement would not resolve this controversy. The
plaint allegations, even if treated as admitted, would keep the
controversy alive. This fact, therefore, had to be proved by the
plaintiff and the Court could not have legally proceeded to pass a
judgment unless it was established clearly that the defendants had
committed default in not obtaining the Certificate (permission)
from the Income Tax Department and sending the same to the
plaintiff.
xxxx xxxx xxxx xxxx
42. "Judgment" as defined in Section 2(9) of the CPC means the
statement given by the Judge of the grounds for a decree or order.
What a judgment should contain is indicated in Order 20, Rule
4(2) which says that a judgment:
"shall contain a concise statement of the case, the points for
determination, the decision thereon and the reasons for such
decision.
It should be a self-contained document from which it should
appear as to what were the facts of the case and what was the
controversy which was tried to be settled by the Court and in what
manner. The process of reasoning by which the Court came to the
ultimate conclusion and decreed the suit should be reflected
clearly in the judgment." (underlining added).
10. The discussion with respect to decreeing or dismissing the
present suit for specific performance can be taken up basically under four
heads as under:-
(1) Whether there were agreements to sell of the suit land in
favour of the plaintiff No.1?
(2) Who is guilty of breach of contract, whether the plaintiff No.1
or defendant No.1?
(3) Whether plaintiff No.1 has always been and continues to be
ready and willing to perform his part of contract?
(4) Whether plaintiff No.1 is entitled to the discretionary relief of
specific performance?
11. I would deal with issues framed on 25.3.1996 under these four
heads and refer to specific issues at the appropriate stage of discussion.
12. The first aspect is whether the defendant No.1 had entered into
agreements to sell dated 27.8.1988 and 7.1.1989 with the plaintiff No.1.
The issues in this regard which would be dealt with under the present
discussion would be issue Nos.1,3, 4 and 5. Counsel for the plaintiffs, at
the outset, stated that plaintiff No.1 is not seeking specific performance
under the second oral agreement to sell dated 7.1.1989 and is only seeking
specific performance of the first agreement to sell dated 27.8.1988. What
is the effect of this submission and stand of the plaintiffs will be examined
in the later part of this judgment as it will have a bearing on the decision of
entitlement of the plaintiff no.1 to the reliefs claimed, even if we were to
hold that there was entered into an agreement to sell dated 27.8.1988.
Second oral agreement to sell relied upon by the plaintiffs dated 7.1.1989
brings in the plaintiff Nos.2 and 3 and who are alleged to have paid
consideration of ` 1,00,000/- and ` 1,25,000/- respectively, defendant
No.3 having paid his complete consideration payable by him in
performance of his part of oral agreement to sell dated 7.1.1989. The
plaintiff no.1 seeks benefit of payment of `1.25 lacs by cheque by the
plaintiff no.3 to the defendant no.1. As already stated the plaintiff No.1is
said to have made a payment of ` 1 lakh in cash. This becomes clear from
the averments made in para 8 of the plaint with regard to the second
agreement to sell. If therefore, in view of the statement made before me
today that the plaintiff no. 1 no longer relies on the cause of action of the
second alleged oral agreement to sell dated 7.1.89, and hence the case in
terms of the second agreement to sell goes, then, really the payments made
by plaintiff Nos.2 and 3 also goes and hence the need to decide the issue
no.1. Those issues also go with respect to defendant No.2 being the
attorney of the defendant No.1 and acting so for the second oral agreement
to sell dated 7.1.1989, and also of the locus of plaintiffs no. 2 and 3 and the
aspect of misjoinder of parties.
13. Issue No.1 therefore is decided as being given up by the
plaintiffs and therefore there is no need to decide issue Nos.3 to 5. These
issues are disposed of accordingly.
14. That leaves us with the issue of plaintiff No.1 being entitled to
specific performance of the agreement to sell dated 27.8.1988. While
dealing with issue, I would also have to deal with issue Nos.7 and 8
inasmuch as plaintiff No.1 will not be able to seek specific performance of
the area of 12 bighas of land which was already purchased by defendant
No.3 under a registered sale deed dated 8.4.1988. I deal with these issue
Nos.7 and 8 first. The registered sale deed dated 8.4.1988 is part of the
document Ex.PW5/1 (colly) being the entire set of papers showing
mutation of this land in favour of defendant No.3. Nothing to the contrary
to show otherwise had been argued before me on behalf of the plaintiff
no.1. Accordingly, issue Nos.7 and 8 are decided in favour of defendant
No.3 and really there was or could hardly be any contest on behalf of
plaintiff No.1 on this aspect inasmuch as registered sale deed dated
8.4.1988 in favour of defendant No.3 has been duly proved and exhibited
on record alongwith relevant mutation papers, and therefore, an area of 12
bighas Mustatil no.7, Killa no.1 Min automatically goes out of the total
area of 36 bighas and 13 biswas of land under the agreement to sell dated
27.8.1988. Issue Nos.7 and 8 are therefore decided against the plaintiff
no.1. Also, this will have a bearing on the determination of issue no.2 as
the subsequent discussion in this judgment will show.
Issue No.2
15. While dealing with this principal issue no.2, let us now first
deal with the aspect as to who is guilty of breach of contract i.e. whether
the plaintiff No.1 is guilty of breach of contract/agreement to sell dated
27.8.1988 and hence not entitled to specific performance or that the
defendant Nos.1 is guilty of breach of contract/agreement to sell dated
27.8.1988.
16. In terms of the agreement to sell dated 27.8.1988, two
eventualities were envisaged. The first eventuality was if the defendant
No.1 was able to remove the jhuggis/hutments situated on a portion of the
suit land. In such circumstances, the agreement had to go ahead as a whole
with respect to the entire subject land of 36 bighas and 13 biswas. In case,
the defendant No.1 failed to remove the hutments within a period of 70
days as stated in the agreement to sell dated 27.8.1988, then, thereafter
within 20 days the plaintiff No.1 had to exercise the option whether the
plaintiff No.1 wanted to purchase only the balance land on which there
were no hutments. Admittedly, the first eventuality did not arise because
the defendant No.1 admittedly did not/could not remove hutments on the
subject land. Once this is so, it was plaintiff No.1 who had to specifically
exercise the option as to whether he wanted to purchase the whole or part
of the balance land which was the subject matter of the agreement dated
27.8.1988. Obviously, this option had to be specifically exercised inasmuch
as by exercise of the option, the plaintiff No.1 had to specifically state that
he wanted to take whole or part of the remaining land which was not
occupied by the hutments. Exercise of the option was also necessary
because thereafter the balance area on which hutments were not there had
to be calculated for being sold, and consequently as regards remaining area
on which there was no hutments the price at which that specific area was to
be purchased by the plaintiff No.1would also have to be decided/calculated.
17. On behalf of the plaintiff No.1, there is no oral or
documentary evidence as to the aforesaid specific option having been
exercised by the plaintiff No.1 i.e the plaintiff No.1 wanted to purchase the
entire balance land on which there were no jhuggis or the plaintiff No.1
wanted to purchase only a part of the balance land. In fact when we look at
the two telegrams dated 16.5.1989 Ex.P2 and Ex.P3 we find that the
plaintiff No.1 through these telegrams seeks sale of the entire land i.e that
land on which there were no hutments and land on which there were
hutments also i.e the entire 36 bighas and 13 biswas, a position not
envisaged under the agreement to sell dated 27.8.1988. The two telegrams
Ex.P2 and Ex.P3 do not state that the plaintiff No.1 in terms of the
agreement to sell dated 27.8.1988 is seeking sale with respect to the entire
balance land not covered by jhuggis/hutments or a portion thereof. Even in
the affidavits by way of evidence filed on behalf of the plaintiff No.1,
counsel for the plaintiffs has failed to point out to me any deposition made
on behalf of the plaintiff No.1 of the aforesaid option being exercised as
required under the agreement to sell dated 27.8.1988. Therefore, I hold
that it was the plaintiff No.1 who was guilty of breach of the terms and
conditions of the agreement to sell dated 27.8.1988 by failing to exercise
one of the two options. The fact that defendant No.1 had received a sum of
` 1,25,000/- on about 3.3.1989 at best would be taken as an additional
payment under the agreement to sell dated 27.8.1988, even though really
this payment was made by the plaintiff no.3 under the 2 nd oral agreement to
sell dated 7.1.1989, and the case on the basis of this agreement to sell dated
7.1.1989 has been given up on behalf of plaintiff no.1 as stated above.
Therefore, in view of the breach committed by the plaintiff
No.1 in failing to exercise the necessary option, I hold that it is the plaintiff
No.1 who is guilty of breach of the terms and conditions of the agreement
dated 27.8.1988.
18. While on this aspect of breach, Section 12 of the Specific
Relief Act, 1963(hereinafter referred to as „the Act‟), is relevant inasmuch
as this section provides that in case the agreement to sell cannot be
performed as a whole, then, the plaintiff No.1/proposed buyer who seeks
specific performance must give up his rights under that part of the
agreement to sell which cannot be performed for the fault of the defendant.
Of course, I have already held that there is no fault of the defendant No.1 in
the facts of the present case as the eventuality which arose after expiry of
70 days of entering into the agreement to sell dated 27.8.1988 which had to
be enforced by the plaintiff no.1 for purchasing whole or part of the
balance land not under the hutments and which the plaintiff No.1 failed to
do so. Section 12 of the Specific Relief Act, 1963 is also relevant for
another purpose as I am stating hereunder, but before that I would seek to
reproduce Section 12 of the Act and which reads 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 so 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 damage 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."
19.(i) I have already held issue Nos.7 and 8 as decided in favour of
the defendant No.3 inasmuch as the defendant No.3 had even prior to the
agreement to sell dated 27.8.1988 become the owner of 12 bighas under the
sale deed dated 8.4.1988, Ex.PW5/1 (colly), and therefore the plaintiff
No.1 had to exercise the option conditioning the same by two factors. First
is the area in the occupation of the jhuggis/hutments had to be left out and
then even out of the balance remaining land on which there were no
hutments the whole or part had to be purchased at the option of the plaintiff
No.1, and the second is the land of 12 bighas with the defendant No.3 had
also to be left out once it came to be known that defendant No.3 was
already the owner of 12 bighas out of the suit land.
(ii) So far as the option under Section 12(1) is concerned, the
plaintiff No.1 is required to exercise such option once he comes to know
the fact that there cannot be a sale deed with respect to the entire land
which would be the subject matter of the agreement to sell. This has
happened at two stages. The first stage is after the 70 days of the
agreement to sell dated 27.8.1988 and which aspect I have already
discussed above to hold that the plaintiff No.1 committed breach of
contract in failing to exercise the option and the second stage was when the
plaintiff No.1 came to know that in fact the defendant No.1 was not the
owner of 12 bighas of land which was proposed to be sold to the plaintiff
No.1 out of the total land which was the subject matter of the agreement to
sell dated 27.8.1988 when the defendant No.3 was added as a party in the
suit on 29.7.1994. On this date, it became clear that the defendant No.1
was not the owner of 12 bighas of land out of the total area of 36 bighas
and 13 biswas which was subject matter of the agreement to sell dated
27.8.1988 inasmuch as the defendant No.3 relied upon a registered sale
deed dated 8.4.1988. Plaintiff No.1 has however from 29.7.1994 right till
the stage of final arguments failed to exercise the option to purchase the
land under the agreement to sell dated 27.8.1988 less the area of 12 bighas
which was sold to the defendant No.3 under the sale deed dated 8.4.1988.
While on this aspect, I must also refer to the admission made by the
plaintiff No.1 in his cross-examination on 6.12.2005 wherein the plaintiff
No.1 admitted that he became aware of the sale deed executed with respect
to 12 bighas of land in favour of defendant No.3 when the defendant No.3
had filed another suit for injunction in the District Courts. This suit was
filed in the year 1992. Therefore, in around the year 1992, plaintiff No.1
had to exercise the option to take 12 bighas less, but he failed to exercise
the necessary option. The conclusion is that the plaintiff No.1 has failed to
exercise different options at different stages, and which failure has to be
very strongly read against the plaintiff No.1 disentitling him to the relief of
specific performance inasmuch as there is a specific statutory bar to
specific performance of part of an agreement to sell unless the requisite
option is exercised.
(iii) Further, the plaintiff No.1 neither in the plaint and nor right till
the stage of final arguments has even exercised the option to take whole or
part of the land which is the subject matter of the agreement to sell dated
27.8.1988 less the area which was occupied by the hutments.
20.(i) After the arguments in the case commenced and when I put to
notice of the counsel for the plaintiffs that this suit would be liable to be
dismissed because of Section 12 of the Act, then, suddenly the plaintiff
No.1 thereafter sought to exercise the option under Section 12 by filing an
affidavit before the Registry. Though, this affidavit is not before me, yet, I
am told that this affidavit only mentions specific performance of 2/3 rd of
the area of the land. In fact, even this affidavit cannot be said to be an
option exercised in terms of Section 12 of the Act inasmuch as the exercise
of options by plaintiff No.1 can only be at best, assuming the suit has to
succeed (and which of course is being dismissed by today‟s judgment),
with respect to the land of the defendant No.1 which was the subject matter
of the agreement to sell dated 27.8.1988 less 12 bighas of land which was
already sold to the defendant No.3. There is no such mention, I am told in
this affidavit in which the option under Section 12 of the Act has been
exercised by the plaintiff No.1. I also do not think that an option can be
exercised under Section 12 unless it is first known that what is the area of
land occupied by the jughies/hutments and what is the balance land
available. There is no such averment in this affidavit I am told. It is
additionally necessary to specifically state the area of land inasmuch as
assuming the agreement to sell dated 27.8.1988 had to go through then by
exercising of the option the amount/price/consideration which would have
to be paid would become clear, and which cannot become clear in view of
the fact that the proper option has not been exercised even at the stage of
final arguments.
(ii) In fact, in my opinion, the option which is required under
Section 12 of the Act to be exercised by the plaintiff No.1/proposed
purchaser has to be immediately after such a proposed purchaser/plaintiff
No.1 comes to know that the entire agreement to sell cannot be performed.
I have already referred to the fact that plaintiff No.1 after 70 days of the
agreement to sell dated 27.8.1988 came to know that the entire agreement
to sell could not be performed and which was the first stage and at which
stage the option was not exercised. The second stage was at the date of
filing of the suit but again that option was not exercised because the suit
seeks specific performance of the entire land which is subject matter of the
agreement to sell dated 27.8.1988. The third stage was when the plaintiff
No.1 came to know that defendant No.3 had already purchased 12 bighas
of land under a sale deed dated 8.4.1988 (Ex.PW5/1 (colly)) in around the
year 1992/1994, yet, once again no option was again exercised for purchase
by removing the area of 12 bighas of land from the subject matter of the
agreement to sell dated 27.8.1988.
21. Learned counsel for the plaintiffs has sought to place reliance
upon two judgments of the Supreme Court in the cases of Rachakonda
Narayana Vs. Ponthala Parvathamma and Anr. (2001) 8 SCC 173 and
Kammana Sambamurthy (dead) by LRs. vs. Kalipatnapu Atchutamma
(dead) and Ors. (2011) 11 SCC 153 to argue that the option under Section
12 of the Act can be exercised at any stage including the stage of final
arguments or even in the appeal.
22.(i) So far as the judgment in the case of Kalipatnapu
Atchutamma (supra) is concerned, the same only lays down the ratio under
Section 12 and does not lay down the ratio that option can be exercised at
the stage of final arguments in a suit or in appeal. No such para of this
judgment has been pointed out to me on behalf of the plaintiffs. In the
judgment in the case of Rachakonda Narayana, the Supreme Court had
allowed exercising of the option at the appellate stage.
(ii) The question is what is the ratio of Rachakonda Narayana's
case and will it apply to the facts of the present case. If we see the facts of
Rachakonda Narayana's case, the Supreme Court had entitled to exercise
the option at the appellate stage because it is only at the appellate stage that
the proposed purchaser came to know that the entire agreement to sell
could not be performed as part of the property which was to be sold
belonged to the wife of the proposed seller. Therefore, at that stage when the
proposed purchaser came to know this he exercised the option and therefore
the Supreme Court observed that at the appellate stage option under Section
12 of the Act would be exercised. The facts of the present case are
however different because as already stated above at three stages the
plaintiff No.1 ought to have exercised the option under Section 12 of the
Act, however, the plaintiff No.1 at each of the three stages failed to
exercise the option and the option is only being exercised pursuant to the
observations made by the Court of Section 12 of the Act during the stage of
final arguments.
(iii) I, therefore hold that the judgments cited on behalf of the
plaintiffs of the Supreme Court have no application to the facts of the
present case and the plaintiff No.1 is not entitled to exercise the option
under Section 12 of the Act at the stage of final arguments. Of course, the
observations made as regards dismissing of the suit because of Section 12
of the Act are independent of the other findings and conclusions of the case
which themselves are sufficient for dismissal of the suit including on the
ground of breach by the plaintiff No.1 as concluded above.
23. Issue No.2 is to this extent therefore is decided against the
plaintiff No.1 and in favour of the defendant No.1 that the agreement to sell
dated 27.8.1988 need not be performed by the defendant No.1 on account
of the plaintiff No.1 being guilty of breach of performance of his
obligations under the said agreement. The other aspect of issue No.2 is qua
the aspect of specific performance being a discretionary relief and plaintiff
No.1 being not entitled to the discretionary relief is being dealt with in the
following paras.
24. Let me now go to the aspect of whether the plaintiff No.1
would be entitled to discretionary relief of specific performance. This
aspect would be included in issue No.2 and partly in issue No.10. I have
recently had an occasion to examine this aspect in the judgment in the case
of Shri Jinesh Kumar Jain Vs. Smt. Iris Paintal and Ors. in CS(OS)
No.1154/1989 decided on 10.7.2012 wherein in paras 13 to 18 I have
observed as under:-
"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."
25. The aforesaid ratio will squarely apply to the facts of the
present case inasmuch as not only the plaintiff No.1 has not received
possession of whole or part of the land under the subject agreement to sell
dated 27.8.1988, but also that the plaintiff No.1 at best has proved a total
payment of ` 2.95 lacs (giving plaintiff No.1 benefit of ` 1.25 lacs paid by
plaintiff No.3 under agreement to sell dated 7.1.1989 rights under which
stand given up) out of the total consideration. As per the plaintiffs, this
amount therefore comes to approximately about 20 odd percent of the total
price and therefore I refuse to exercise the discretionary relief of specific
performance in favour of the plaintiff No.1 inasmuch as the plaintiff No.1
has not done substantial acts as required under Section 20(3) of the Act to
entitle the plaintiff No.1 to specific performance. An appeal was filed
against the judgment in the case of Shri Jinesh Kumar Jain(supra) before
the Division Bench and the Division Bench vide its judgment dated
31.8.2012 in RFA(OS) No.75/2012 has dismissed the appeal and has
specifically relied upon Section 20(3) of the Act as also the conclusions
given by this Court disentitling the plaintiff to specific performance in that
case, and which conclusions will apply to the facts of the present case
which are more or less similar. I therefore hold that the plaintiff No.1 is
also not entitled to discretionary relief of specific performance and issue
Nos.2 and 10 to the extent they deal with this aspect are decided in favour
of the defendant No.1 and against the plaintiff No.1.
Issue No.9
26(i). This issue pertains to plaintiff No.1 being ready and willing to
perform his part of the agreement to sell. As per Section 16(c) of the Act,
every plaintiff in a suit for specific performance must aver and prove that
the plaintiff has always been and continues to be ready and willing to
perform his part of the contract/agreement to sell. Readiness is financial
capacity to go ahead with the agreement to sell and willingness is the
intention. I may, at this stage, specifically invite attention to the
observations of the Supreme Court in the case of Balraj Taneja and Anr.
(supra), and relevant paras have been reproduced above, and which show
that in a suit for specific performance even if there is no defence of the
defendant, yet, the aspect of readiness and willingness has to be specifically
proved by the plaintiff. This is stated by the Supreme Court in para 30 of
the said judgment. The question is whether the plaintiff No.1 has proved
his readiness and willingness at the relevant time and also continues to be
ready and willing to perform his part of the contract/agreement to sell.
(ii) Readiness to perform the obligations by a proposed purchaser
is a very important aspect and it has to be proved by categorical evidence.
Mere oral evidence and self-serving depositions cannot be a substitute for
categorical evidence on the specific statutory requirement of Section 16(c).
It is not disputed on behalf of the plaintiff No.1 that plaintiff No.1 has not
filed any income tax returns or any bank account or proof of any other
assets/properties or any other evidence to show the financial capacity of the
plaintiff No.1 to pay the balance sale consideration. As per the case of the
plaintiff No.1, the balance sale consideration would be approximately `
19.5 lacs and there is no evidence worth the name in the record to show the
plaintiff No.1‟s financial capacity for this amount. Of course, while on this
argument, I am assuming that there is a certainty as to consideration
because in reality there is no certainty as to balance sale consideration
inasmuch as the plaintiff No.1 has failed to exercise the option in terms of
the agreement to sell as to which area of the balance land less the
hutment/portion the plaintiff No.1 seeks specific performance of. Also, as
already stated above, this area claimed by the plaintiff No.1 has to be
further conditioned by an area of 12 bighas which has already been sold to
be defendant No.3 under the sale deed dated 8.4.1988. In any case, I need
not state anything further inasmuch as there is not a single piece of paper
on record or any credible evidence which proves the financial capacity of
the plaintiff No.1. I accordingly hold that plaintiff No.1 has miserably
failed to prove his readiness to perform his obligations under the agreement
to sell dated 27.8.1988. In fact, even willingness on the part of the plaintiff
No.1 is absent inasmuch as there is no certainty of any option exercised by
the plaintiff No.1 as to specific area which the plaintiff No.1 seeks to
purchase, and which specific area had necessarily to be clear inasmuch as
there is the issue of lessening the area whether on account of hutments or
on account of 12 bighas of land already purchased by the defendant No.3
vide sale deed dated 8.4.1988 and hence of clarity as to for what area and
for what price the agreement to sell has to go ahead.
Issue No.6
27. So far as issue No.6 is concerned as to whether the Collector
of Mines, Delhi and the Delhi State Mineral Development Corporation is a
necessary party, counsel for the defendant No.1 did not press this issue and
in any case I am told that licence of the appropriate authority for quarrying
on the subject land has already come to an end.
Issue No.10
28. The question is that what is the relief which the plaintiff No.1
will be entitled to. This is issue No.10 in this case. In the alternative to
specific performance of an agreement to sell, in case it is proved that the
defendant Nos.1 and 2 are guilty of breach of contract and plaintiff No.1
was otherwise ready and willing to perform his contract, the Court can
grant damages. Before however this relief is granted, the plaintiff has to
lead evidence to show what are the amounts of damages which plaintiff
No.1 is entitled to and which damages are normally the difference in prices
with respect to the subject immovable property on the date of the breach.
Plaintiff No.1 has however admittedly led no evidence whatsoever on this
aspect. Not only there is no documentary evidence, there is no deposition
also on behalf of any of the witness of the plaintiffs as to the plaintiff No.1
suffering specific amount of monetary loss being the difference in the
prices of the suit property as on the date of breach, on account of alleged
breach of the contract by the defendant No.1. Once there is no evidence,
there is no question of grant of any damages. Of course, I have already
held that it was the plaintiff No.1 and not the defendant No.1 and 2 who
was guilty of breach of contract and therefore the plaintiff No.1 in any case
would not have been entitled to any damages.
29. Learned counsel for the plaintiffs states that there is an
alternative plea of refund of the amount which is paid to the defendant
No.1 under the agreement to sell and which can be granted by this Court. I
have given a finding above that plaintiffs have paid a sum of ` 2,95,000/-
and therefore I direct that this amount of ` 2,95,000/- be refunded to the
plaintiffs alongwith interest @ 18% per annum simple pendente lite and
future till payment.
Relief
30. In view of the above, the suit of the plaintiffs is dismissed so
far as the reliefs of specific performance and damages are concerned,
however, money decree of ` 2,95,000/- alongwith interest @ 18% per
annum simple pendente lite and future till payment is passed in favour of
the plaintiff No.3 and against the defendant No.1. Parties are left to bear
their own costs.
VALMIKI J. MEHTA, J
SEPTEMBER 10, 2012
Ne
