Delhi High Court
Dr. Kimti Lal vs Harpal Singh & Anr on 26 September, 2018
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ RFA No. 436/2016
% 26th September, 2018
DR. KIMTI LAL
..... Appellant
Through: Mr. Ashish Dholakia, Mr. Rajiv
Dewan and Mr. Angad Singh,
Advocates (Mobile No.
9811673338).
versus
HARPAL SINGH & ANR
..... Respondents
Through: Mr. Anil K. Kher, Sr. Advocate
with Mr. Rishi Manchanda, Mr.
Kunal Kher and Mr. D.R.
Bhatia, Advocates (Mobile No.
9910072729).
CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA
To be referred to the Reporter or not?
VALMIKI J. MEHTA, J (ORAL)
RFA No. 436/2016 and C.M. Appl. Nos. 26409/2016 (for stay),
39689/2018 (under Section 340 (2) Cr.P.C., filed by the
respondents)
1. This Regular First Appeal under Section 96 of the Code
of Civil Procedure, 1908 („CPC‟) is filed by the defendant in the suit
impugning the Judgment of the Trial Court dated 14.05.2016 by which
the trial court has decreed the suit for specific performance filed by the
respondents/plaintiffs with respect to half undivided share of property
no. A-3, Kirti Nagar, New Delhi-15 situated on a plot of 698 sq. yards
and having 2 ½ storey built up structure. The subject Agreement to
Sell is dated 26.08.2004.
2. The facts of the case are, that the parties entered into an
Agreement to Sell on 26.08.2004 for the suit property for a total sale
consideration of Rs. 55,00,000/-. Admittedly, only a sum of Rs.
5,00,000/- was paid by the respondents/plaintiffs to the
appellant/defendant under the Agreement to Sell. Time fixed under
the agreement to sell for completing the transaction was 31.03.2005
and the respondents/plaintiffs claimed that though they were ready to
pay the balance sale consideration, but the sale transaction could not
go through as income tax clearance certificate was not obtained by the
appellant/defendant. The appellant/defendant is an NRI and therefore
did not present himself for completion of the sale contract, although
the respondents/plaintiffs claim to be always ready and willing to
perform their part of the contract. It was also pleaded in the plaint
that on the instructions of the appellant/defendant, the
respondents/plaintiffs took possession of different parts of the property
from the outgoing tenants.
3. The appellant/defendant contested the suit by filing a
written statement. It was pleaded that it was not the
appellant/defendant but the respondents/plaintiffs who were guilty of
breach of contract because they did not complete the sale transaction
by 31.03.2005, as they did not have the balance payment/amount to
fulfill their end of the bargain. It was pleaded that on account of
violation of the respondents/plaintiffs to complete their part of the
obligation, hence the agreement to sell was cancelled, and the earnest
money of Rs. 5,00,000/- was forfeited. The suit was also prayed to be
dismissed because there was a clause in the agreement to sell which
entitled the respondents/plaintiffs to seek a refund of double the
amount paid. The suit for specific performance was also prayed to be
dismissed on the ground that there was a delay of 18 months in filing
of the present suit and therefore discretionary relief of specific
performance should not be granted.
4. After the pleadings were complete, the trial framed the
following issues:-
"1) Whether the plaintiffs have been ready and willing to
perform their part of the agreement to sell and if so, to what effect?
OPP
2) Whether the discretion in the grant of the relief of specific
performance is to be exercised in favour of the plaintiff? OPP
3) Whether time for payment of balance sale consideration
was of the essence of the agreement and if so, whether the plaintiff
has failed to pay the balance consideration and to what effect? OPD
4) Relief."
5. The subject agreement to sell is an admitted document
and the same has been exhibited as Ex.PW1/2. There are two issues
which arise for consideration and the first being whether the
respondents/plaintiffs had the financial capacity and were thus ready
to perform their part of the contract, this aspect of readiness/financial
capacity is the sine qua non as per Section 16(c) of the Specific Relief
Act, 1963. The second aspect is as to whether merely by having made
a payment of Rs.5,00,000/- only out of a total sale consideration of Rs.
55,00,000/-, whether the respondents/plaintiffs were entitled to the
discretionary relief of specific performance.
6. The trial court has held that the respondents/plaintiffs had
the financial capacity because during the course of cross-examination
of respondent no. 1/plaintiff no. 1 as PW1 on 09.09.2009, they brought
the bank statement. This bank statement was filed on record by the
appellant/defendant, and therefore, the trial court has held that the
respondents/plaintiffs have proved their readiness i.e. financial
capacity.
7. In my opinion, the trial court has committed a complete
illegality in holding that the respondents/plaintiffs had the financial
capacity because financial capacity cannot be judged on the basis of
self-serving ipse dixit. Financial capacity is one of the most important
ingredients of a sale transaction because not only is this aspect related
to the breach of contract being non-performance by a buyer because of
not having requisite moneys, the readiness or financial capacity
independently under Section 16(c) of the Specific Relief Act is an
aspect which has to be proved right from the date of the agreement to
sell till the decree of the suit vide N.P. Thirugnanam (D) through
LRs v. Dr. R. Jagan Mohan Rao & Ors, 1995 (5) SCC 115. The
relevant para of this judgment is para 5 which reads as under:-
"5. It is settled law that remedy for specific performance is an
equitable remedy and is in the discretion of the court, which
discretion requires to be exercised according to settled principles of
law and not arbitrarily as adumbrated under s.20 of the Specific
Relief Act 1963 (for short, 'the Act'). Under s.20, the court is not
bound to grant the relief just because there was valid agreement of
sale. Section 16(c)of the Act envisages that plaintiff must plead and
prove that he had performed or has always been ready and willing to
perform the essential terms of the contract which are to be performed
by him, other than those terms the performance of which has been
prevented or waived by the defendant. The continuous readiness and
willingness on the part of the plaintiff is a condition precedent to
grant the relief of specific performance. This circumstance is
material and relevant and is required to be be considered by the court
while granting or refusing to grant the relief. If the plaintiff fails to
either aver or prove the same, he must fail. To adjudge whether the
plaintiff is ready and willing to perform his part of the contract, the
court must take into consideration the conduct of the plaintiff prior
and subsequent to the filing of the suit alongwith other attending
circumstances. The amount of consideration which he has to pay to
the defendant must of necessity be proved to be available. Right
from the date of the execution till date of the decree he must
prove that he is ready and has always been willing to perform his
part of the contract. As stated, the factum of his readiness and
willingness to perform his part of the contract is to be adjudged with
reference to the conduct of the party and the attending circumstances.
The court may infer from the facts and circumstances whether the
plaintiff was ready and was always ready and willing to perform his
part of contract."
(emphasis supplied)
8. Therefore, it is seen that in law to prove readiness under
Section 16(c) of the Specific Relief Act, a buyer/plaintiff must show
his financial capacity to pay the balance sale consideration right from
the time of entering into the agreement to sell, till the decree of the
suit. In the present case, the Agreement to Sell is dated 26.08.2004
and evidence was led by the respondents/plaintiffs in 2009, and
therefore, it is to be seen that whether there is any evidence on record
which satisfies the judicial conscience of this Court that the
respondents/plaintiffs have the financial capacity to pay the balance
sale consideration of Rs. 50,00,000/-.
9. Before considering the arguments urged on behalf of the
respondents/plaintiffs, as also the evidence existing on the trial court
record on the aspect of financial capacity/readiness, it is required to be
observed that financial capacity has to be proved by clear cut evidence
to the satisfaction of the Court being an extremely important aspect in
a suit for specific performance. I have in the case of Baldev Behl &
Ors. v. Bhule & Ors., (2012) 132 DRJ 247 held that financial capacity
has to be proved to the satisfaction of the Court by clear cut
documentary evidence and self serving ipse dixit cannot be held to
discharge the onus of proof with respect to the aspect of
readiness/financial capacity. The relevant paras of the judgment in the
case of Baldev Behl & Ors. (supra) are paras 26(i) and 26(ii) and
these paras read as under:-
"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 Rs.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."
(emphasis is mine)
10. In the present case, it is seen that admittedly no
documentary evidence whatsoever has been filed by the
respondents/plaintiffs with respect to their financial capacity. No
income tax returns have been filed. No proof of bank deposits have
been filed. No proof that balance sale consideration existed in the
bank account of the respondents/plaintiffs has been filed. No
documents have been filed to show that respondents/plaintiffs were
owners of various properties or had other means to show financial
capacity to pay the balance sale consideration of Rs. 50,00,000/-. In
my opinion, therefore, the trial court was completely unjustified in
holding that the respondents/plaintiffs have proved their financial
capacity. I cannot agree with the arguments urged on behalf of the
respondents/plaintiffs that since the respondent no. 1/plaintiff no.
1/PW1 had in his cross-examination dated 09.09.2009 stated that he
had brought with him the bank pass book, therefore, it should be held
that the respondents/plaintiffs have proved their financial capacity.
The contents of document can only be known if the document is filed
and in the absence of the document, it cannot be assumed as to what
was the content of the document.
11. I may note that the onus of proof of financial capacity is
on the plaintiff in a suit for specific performance and there is no need
of any rebuttal evidence by the seller, as is argued on behalf the
respondents/plaintiffs, once the primary onus by a buyer/plaintiff itself
is not discharged by leading such evidence which will satisfy the
judicial conscience of the Court to establish capacity to pay balance
sale consideration.
12(i). Learned counsel for the respondents/plaintiffs places
reliance upon the judgment passed by this Court in the case of D.C.
Khosla v. Vinod Kumar Jain, 232 2016 DLT 354 to argue that this
Court has held in the said case that once there is an oral statement of a
witness having brought a bank account statement, then in such a case
financial capacity is held to be proved.
12 (ii). I, however, cannot agree with this argument urged on
behalf of the respondents/plaintiffs because the facts of the case in
D.C. Khosla (supra) were completely different and those facts showed
that the buyer had the money which was deposited in his bank. In the
case of D.C. Khosla (supra), the financial capacity was held to be
proved because the witness in the said case specifically gave the bank
account no. as 7215 of State Bank of India, Clock Tower, Sabzi
Mandi, Delhi, and the deposit of the balance amount of sale
consideration was also evidenced from the receipt and pass book of
the account which were brought in court. Therefore, in the facts of the
said case where there was categorical evidence of the amount as also
the bank account in question, hence it was held that financial capacity
existed. In the present case, however, besides a PW1 making a
statement in his cross-examination, that he had brought his bank
account statement, it is not shown that the bank account statement was
of which bank, whether the amount of Rs. 50,00,000/- was available in
that bank account, what was the account number of the bank and what
was the period of existence of the alleged Rs. 50,00,000/-in the bank
account. Also, at best the respondents/plaintiffs would have proved an
amount existing in the bank account on a specific date, this specific
amount though is not exactly mentioned, whereas the requirement of
readiness/financial capacity is to be shown right from the date of
entering into the agreement to sell till the decision in the suit for
specific performance, and therefore on the basis of just one line in the
cross-examination of PW1 of his having brought his bank account
statement, without any details, whatsoever, it cannot be said that such
evidence exists which this Court must believe in the facts of this case
for holding that the respondents/plaintiffs have proved their financial
capacity.
13. I, therefore, hold that the respondents/plaintiffs have
failed to prove their readiness as required by Section 16(c) of the
Specific Relief Act and on this ground itself the suit for specific
performance was liable to be dismissed.
14. The second aspect is that whether the suit of the
respondents/plaintiffs can be decreed for specific performance
because the respondents/plaintiffs have only paid an amount of Rs.
5,00,000/- out of the total sale consideration of Rs. 55,00,000/- i.e. just
9-10% of the total sale price. This aspect has been considered by this
Court in detail in the case of M/s Hotz Industries Pvt. Ltd. v. Dr. Ravi
Singh (Since deceased through L.Rs) & Ors., CS(OS) No. 1261/1995
decided on 28.02.2018 and it was held that a buyer of a property
merely on the payment of about 10% of the price is not entitled to the
discretionary relief of specific performance. Detailed reasons have
been given in the judgment in the case of Hotz Industries Pvt. Ltd.
(supra), that object of an agreement to sell is to see that the seller is
able to buy an equivalent property as agreed to be sold by receipt of
consideration, and once a considerable amount of time lapses between
the date of the agreement to sell and the decree of the suit for specific
performance, a seller cannot get a property of equivalent value much
later than the date of agreement to sell as per the consideration of the
property agreed to be sold which is of many years earlier. Also, this
Court has noted in the case of Hotz Industries Pvt. Ltd. (supra) that
the seller within his pocket if has the balance sale consideration, such
balance sale consideration to the extent of 90% would have been used
by the seller either for purchasing a property or for making investment
or for getting other returns, and therefore it is not as if that the buyer is
in any manner prejudiced if the suit for specific performance is not
granted when only about 10% of the sale consideration is paid and
especially when for breach of contract he can be compensated by
awarding monetary damages/compensation. The relevant paras of the
judgment in the case of Hotz Industries Pvt. Ltd. (supra) are
paragraphs 20(i) to 23 and these paragraphs read as under:-
20.(i) The next aspect to be considered is as to whether
plaintiff is entitled to the discretionary relief of specific performace.
In law, merely because there is an agreement to sell, and that the
proposed seller is found to be guilty of breach of agreement to sell,
yet it does not automatically follow that a proposed buyer is only for
that reason entitled to the specific performance of the agreement to
sell. In fact, besides the defendants/proposed sellers being guilty of
breach of contract, and that even if the proposed buyer/plaintiff
proves that there was financial capacity in the plaintiff to pay the
balance sale consideration, yet the plaintiff is not necessarily and
automatically entitled to specific performance, and this is because the
grant of relief of specific performance is a discretion vested in the
Court as per Section 20 of the Specific Relief Act.
(ii) An agreement to sell is a contract between the parties
and contracts between the parties are subject matter of the
Indian Contract Act, 1872. The effect of breach of contract is
provided under Section 73 of the Indian Contract Act. If there is
a breach of contract then an aggrieved party is entitled to
monetary damages as per Section 73 of the Indian Contract Act
and which monetary damages is the amount of loss which is
caused to the aggrieved party under the contract. An aggrieved
party who was the proposed buyer under the agreement to sell
will suffer loss if in case on the date and in around the date of
breach, the value of a similar property as the contracted
property under the agreement to sell, which could be purchased
by the plaintiff as a proposed buyer, had increased. To the
extent of increase of price of the property a plaintiff who is a
proposed buyer suffers loss when a proposed seller/defendant
does not sell the property under an agreement to sell, because a
buyer has to pay a higher price for purchase of a similar
property, and thus ordinarily whenever there is a breach of
contract of an agreement to sell on account of the breach by the
defendant/proposed seller, then the plaintiff/proposed buyer
becomes entitled ordinarily to damages/loss under Section 73 of
the Indian Contract Act being the difference of the contract price
and the higher price of a similar property in around the date of
breach. The Specific Relief Act contains provisions that in spite
of a plaintiff who is the proposed buyer, and against whom
breach of contract is caused by a defendant in the suit being the
proposed seller, the plaintiff/proposed buyer need not ask for
and be granted damages in such a case where the
plaintiff/proposed buyer pleads and seeks that there should be
specific performance of the contract and not the breach of the
contract. In a way therefore the provisions of Specific Relief Act
directing specific performance of a breached agreement to sell
are in the nature of Exceptions or Provisos to Section 73 of the
Indian Contract Act. What is being stated by this Court is that if
there is a breach of contract then an aggrieved party on account
of the breach of the contract gets under Section 73 of the Indian
Contract Act monetary damages but where instead of grant of
damages because of the contract being broken, a
plaintiff/proposed buyer instead seeks/prays that the contract
should be specifically performed, then such a scenario is in the
nature of an Exception or a Proviso to the ordinary situation
comprised in Section 73 of the Indian Contract Act that breach
of contract entitles a person to monetary damages on account of
the loss caused. Therefore once the provisions of Specific Relief
Act with respect to specific performance are not the normal
consequence of a breach of contract being of grant of damages as
per Section 73 of the Indian Contract Act, therefore the
provisions of the Specific Relief Act; with the important
provision therein being Section 20 of the Specific Relief Act;
provides that Court has the discretion whether or not to grant
specific performance and that merely because it is lawful to do
so, the Court will not grant specific performance but instead may
only grant damages with the measure of damages being those as
provided in Section 73 of the Indian Contract Act. This aspect
has been considered by this Court in detail in the judgment in the
case of Jinesh Kumar Jain Vs. Iris Paintal and Ors. ILR (2012) 5
Delhi 678. The relevant paras of this judgment are paras 13 to 18
and these paras read 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.
xxxxx xxxxx xxxxx
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. " (underlining added)
21. The ratio of the judgment passed by this Court in
Jinesh Kumar Jain (supra) has been thereafter followed by this
Court in the following cases:-
(i) Sushil Jain Vs. Meharban Singh and Others
(2012) 131 DRJ 421.
(ii) Baldev Behl & Ors. Vs. Bhule & Ors. (2012) 132
DRJ 247 (In para 25 of this judgment it is noted that the
appeal against the judgment in the case of Jinesh
Kumar Jain (supra) being RFA(OS) No.75/2012
stands dismissed by a Division Bench of this Court
on 31.8.2012).
(iii) A.K. Narula Vs. Iqbal Ahmed and Others ILR
(2013) I Delhi 315.
22.(i) A reading of the ratio of the aforesaid judgment of
this Court in the case of Jinesh Kumar Jain (supra) shows that a
proposed buyer as a plaintiff when only has paid a very limited
amount of consideration, then such a plaintiff may not ordinarily be
entitled to the discretionary relief of specific performance when the
grant of specific performance is being decided after a long period of
time having elapsed after entering into the agreement to sell and the
suit for specific performance coming up for final disposal. The logic
is very simple that from the balance sale consideration which has to
be paid by the plaintiff/proposed buyer under an agreement to sell to
the defendant/proposed seller, even by adding thereto interest, surely
the defendant/proposed seller from the balance sale consideration
plus interest cannot purchase a property of an equivalent type as
would have been purchased by receipt of the sale consideration at the
time when the agreement to sell was entered into many many years
earlier.
(ii) As a result of rise in the prices of a property, that in the
facts of the present case this Court can take judicial notice that prices
of properties in Delhi, and that prices in the year 1995 would be far
far lesser than the prices of the property today in the year 2018, and
that too more so with the fact of the suit property being situated in
one of the prime colonies of the Delhi being Maharani Bagh, grant of
specific performance will severly and gravely prejudice the
defendants. On a conservative estimate the value of the suit property
as on today would be at least around 20 times more than what was
the price of the suit property in the year 1995 and that therefore with
the balance sale consideration payable to the defendants as on today
even with interest, the defendants will not be able to purchase the
property as the defendants could have purchased with the value of
the balance sale consideration in the year 1995.
(iii) In my opinion in such cases as the present the plaintiff in
fact should be extremely careful in such a suit for specific
performance; that when evidence is led the plaintiff also leads
requisite evidence as to the loss which would be caused to the
plaintiff on account of the breach of contract by the
defendants/proposed sellers, so that the Court can grant monetary
damages to the plaintiff/proposed buyer on account of the breach of
contract by the defendants/proposed sellers along with the interest,
but indubitably the position on record in the present case is that the
plaintiff has led no evidence whatsoever as to what was the
difference of the property price in around April/May, 1995 than what
was the price of the property on the date of entering into agreement
to sell on 10.2.1995. Once a plaintiff fails to lead any evidence
whatsoever to prove loss, then the plaintiff harms its own case
because the Court in equity when it exercises discretionary power to
deny specific performance because of Section 20 of the Specific
Relief Act, and that the Court wants to grant damages on the
principles under Section 73 of the Indian Contract Act, the Court
cannot do so since it does not have any evidence before it in order to
grant monetary damages to the plaintiff/proposed buyer and which
loss/monetary damages the plaintiff would have been entitled to on
account of defendants/proposed sellers held guilty of breach of
agreement to sell. After all it is not that the plaintiff has pleaded
and proved why it wants to be the owner only and only of the suit
property and that why any other property in the same or similar
area would not be sufficient for the plaintiff's needs. Therefore
since plaintiff with the balance sale consideration with it plus an
additional amount could well have purchased a similar property
in the same or similar area in around May, 1995 and within some
reasonable time thereafter, but yet plaintiff has chosen not to,
hence the plaintiff is held disentitled to the discretionary relief of
specific performance. It is therefore held that since the plaintiff
has only paid approximately 14.5% of the sale consideration as
on the date of entering into the agreement to sell being the
amount of Rs.37 lacs, therefore plaintiff is not entitled to the
discretionary relief of specific performance.
(iv) It is also relevant that since plaintiff has over this period
from the year 1995 to 2018 had moneys in its pocket of the balance
sale consideration of Rs.2.18 crores, the plaintiff would/could have
invested wisely for obtaining returns on this amount of balance sale
consideration.
(v) Therefore on the one hand defendants cannot purchase a
similar property in similar area as in the year 1995 when the
agreement to sell was entered into with respect to the sale
consideration of 1995 in the year 2018, on the other hand the plaintiff
has had benefit of having enjoyed and put to use and derived benefits
of the balance sale consideration of Rs.2.18 crores, assuming the
plaintiff had such a balance sale consideration amount with it (and in
reality though it does not have as held while deciding issue no.6)
therefore if the plaintiff is granted specific performance in the facts
of the present case there would result not only in grave jeopardy to
the defendants but that situation would be accompanied by the
benefit which the plaintiff has had by having with it and having used
or could have used the balance sale consideration of Rs.2.18 crores.
23. I therefore hold that plaintiff in the facts of this case
is not entitled to the benefit of being granted the discretionary relief
of specific performance. Issue no. 7 is therefore decided in favor of
the defendant nos. 1 to 3 and against the plaintiff."
(emphasis added)
15. In view of the ratio in the case of Hotz Industries Pvt.
Ltd. (supra,) and the fact that admittedly the respondents/plaintiffs
have paid just about 9% to 10% of the total sale consideration, it is
held that the respondents/plaintiffs are not entitled to the discretionary
relief of specific performance.
16.(i) Learned counsel for the respondents/plaintiffs finally
argued that the respondents/plaintiffs have taken possession of
different parts of the property from the tenants by paying
consideration to the tenants and therefore specific performance be
granted in the facts of the present case as equities are in the favour of
the respondents/plaintiff. Unfortunately, however, this argument
urged by the respondents/plaintiffs is a blatant lie being argued in this
Court because not only under the agreement to sell, possession was
not to be received by the respondents/plaintiffs till the sale deed was
registered inasmuch as the Agreement to Sell clearly states that the
possession will be delivered i.e. will be delivered in future but also
that para 9 of the plaint of the respondents/plaintiffs itself concedes
that they received possession from the tenants only because tenants
wanted to vacate and the appellant/defendant told them to receive
possession on his behalf from the tenants. This para 9 of the plaint
admitting that the respondents/plaintiffs did not receive possession
from the tenants after paying them consideration but only receive
possession for and on behalf of the appellants/defendants reads as
under:-
"9. That at the time of entering into the agreement the defendant was in
possession of 2 rooms, kitchen, latrine, 2 bathrooms on ground floor and
had been occupying the same. Besides this the defendant had inducted a
tenant namely Chetan Oberio with respect to the portion upon garage on
the second floor. There was another tenant having possession of office on
the first floor and godown in the basement in the said property."
(ii). Any doubt in this regard is removed from the admission
made by the respondent no.1/plaintiff no. 1/ PW1/ in his cross-
examination on 09.09.2009 where it is clearly admitted by the plaintiff
no. 1 that he had taken possession form the tenants of the
appellant/defendant on behalf of the defendant and as the trustee of the
appellant/defendant.
(iii). This argument, therefore, urged on behalf of the
respondents/plaintiffs is clearly a blatant lie and falsehood in the face
of the Court in view of the aforesaid discussion, and therefore the
same is rejected.
17. In view of the aforesaid discussion, this appeal is
allowed. The impugned judgment of the trial court dated 14.05.2016
is set aside. The suit of the respondent/plaintiff for specific
performance will stand dismissed. Decree sheet be prepared.
18. Appellant/defendant is entitled to costs of the entire
litigation till date and with respect to which the appellant/defendant
will file the certificate of fees and costs in this Court within a period of
two weeks from today.
19. It is also finally observed that counsel for the
respondents/plaintiffs had initially sought to impugn the General
Power of Attorney executed by the appellant/defendant in favour of
his attorney Mr. Pradeep Kharbanda, and who is none other than the
brother-in-law of the appellant/defendant, and photocopy of this
General Power of Attorney duly notarized and dated 21.12.2010 is on
the record, the counsel for the appellant/defendant is response says
that to remove any doubt whatsoever a fresh Power of Attorney will
be executed by the appellant/defendant in favour of his brother-in-law
Sh. Pradeep Kharbanda and filed in this Court within four weeks from
today, and which will be duly notarized or attested by Indian Embassy
in United Kingdom. The Power of Attorney now being filed will also
confirm with respect to execution of the earlier Power of Attorney
dated 21.12.2010 and also ratifying all acts of Sh. Pradeep Kharbanda
taken both in the suit as also this appeal.
20. The appeal is accordingly allowed and disposed of in
terms of the aforesaid observations.
SEPTEMBER 26, 2018/AK VALMIKI J. MEHTA, J
