Punjab-Haryana High Court

Mehar Chand vs Subhash Chander on 11 March, 2024

Author: Alka Sarin

Bench: Alka Sarin

                                                                                                      -1-
                         RSA No.453 of 1996

                                                                                   2024:PHHC:033843

                                    IN THE HIGH COURT OF PUNJAB AND HARYANA AT
                                                   CHANDIGARH

                         204                                           RSA No.453 of 1996 (O&M)
                                                                       Reserved on : 22.02.2024
                                                                       Date of Decision : 11.03.2024

                         Mehar Chand                                                        ....Appellant

                                                            VERSUS

                         Subhash Chander (deceased) through LRs                            ....Respondent

                         CORAM : HON'BLE MRS. JUSTICE ALKA SARIN

                         Present :      Mr. Surinder Gandhi, Advocate for the appellant.

                                        Mr. Amit Jain, Senior Advocate with
                                        Mr. Aryaman Thakur, Advocate and
                                        Mr. Varun Parkash, Advocate for the respondent.

                         ALKA SARIN, J.

1. The present regular second appeal has been preferred by the

defendant-appellant in a suit for specific performance.

2. The plaintiff-respondent filed a suit for possession by specific

performance of agreement to sell dated 20.07.1988 regarding property in

dispute. It was stated that on 20.07.1988 the defendant-appellant agreed to

sell the property in dispute for Rs.60,000/- and executed an agreement to sell

and received Rs.10,000/- as earnest money vide a cheque. The property in

dispute was mortgaged with HouseFed and the defendant-appellant agreed to

execute the sale deed after redeeming the property in dispute till 31.12.1990

and also agreed that if he could not redeem the property in dispute then the

plaintiff-respondent could get it redeemed and get the sale deed registered

after payment of the remaining amount. It was further stated in the plaint

that the defendant-appellant delivered the possession of the property in

integrity of this judgment/order.

2024:PHHC:033843

dispute to the plaintiff-respondent on that very date. However, in October

1988 the defendant-appellant tried to alienate the property in dispute when

the plaintiff-respondent filed a suit and got a stay order. The said suit was

dismissed for want of prosecution and the plaintiff-respondent had filed an

application for revival which was fixed for 09.01.1991. It was further

averred that in response to that suit the defendant-appellant had denied the

agreement. It was averred that the defendant-appellant was asked to admit

the claim of the plaintiff-respondent several times but of no use and that the

plaintiff-respondent always remained ready and willing to perform his part

of the contract and is still ready and willing to do so. Hence, the suit. In the

written statement the defendant-appellant denied the execution of the

agreement to sell and stated that he never agreed to sell the property in

dispute to the plaintiff-respondent, the alleged agreement, if any, was a false

and fabricated document. It was also denied that the defendant-appellant

received Rs.10,000/- as earnest money from the plaintiff-respondent. It was

also stated that the property in dispute was under mortgage with HouseFed

Rs.40,000/- and that the defendant-appellant never agreed to redeem the

property in dispute upto 31.12.1990 and that the defendant-appellant had not

delivered the possession to the plaintiff-respondent. The further stand taken

was that the defendant-appellant was managing a lottery in which the

plaintiff-respondent was a member and that some of the members stopped

paying the instalment and due to this payment was blocked and payment was

not made to the members. The defendant-appellant had taken a loan of

Rs.10,000/- from the plaintiff-respondent for paying to the other members

and that the loan amount of Rs.10,000/- was repaid by the defendant-

integrity of this judgment/order.

2024:PHHC:033843

appellant to the plaintiff-respondent and the plaintiff-respondent had played

a fraud and misrepresentation upon the defendant-appellant and prepared the

false agreement to sell only to grab the property in dispute. It was alleged

that the agreement to sell was null and void and ineffective, without

consideration, and not binding. It was further stated that there was no

question of readiness and willingness of the plaintiff-respondent as the

defendant-appellant had not executed any agreement sell. Regarding the

earlier suit it was submitted that the same was withdrawn by the plaintiff-

respondent. The plaintiff-respondent filed a replication reiterating his pleas

taken in the plaint and controverting those of the written statement.

3. The following issues were framed by the Trial Court :

1. Whether the defendant executed agreement to sell

dated 20.07.88 in favour of the plaintiff to sell the suit

property ? OPP

2. Whether the plaintiff remained ready and willing to

perform his part of sale contract in suit ? OPP

3. Whether the plaintiff is entitled to a decree for

possession of the suit property by way of specific

performance of the sale contract in suit ? OPP

4. If issue No.1 is proved whether the sale contract in

suit is false and forged and has been prepared by playing

fraud and misrepresentation upon the defendant ? OPD

5. Whether the sale contract in suit is without

consideration ? OPD

integrity of this judgment/order.

2024:PHHC:033843

6. Whether the suit of the plaintiff is not legally

maintainable in this form ? OPD

7. Whether the defendant is entitled to special

compensatory costs? If so, to what extent ? OPD

8. Relief.

4. Vide judgement and decree dated 15.02.1993 the Trial Court

decreed the suit only for recovery of Rs.10,000/- paid as earnest money. The

Trial Court found that at the time of the agreement to sell the loan amount

payable to HouseFed was Rs.40,000/- but as per statement of DW4 the

outstanding balance of HouseFed was Rs.68000/- which was much more

than the consideration stated in the agreement to sell and further the

defendant-appellant had stated that he had paid Rs.35,104/- to HouseFed and

as such it was difficult to calculate how much the plaintiff-respondent should

pay to HouseFed and how the amount of Rs.35104/- which was paid to

HouseFed by the defendant-appellant was to be adjusted. An appeal was

filed by the plaintiff-respondent against the judgement and decree of the

Trial Court. Vide judgement and decree dated 11.01.1996 the First Appellate

Court accepted the appeal and decreed the suit for specific performance.

Hence, the present regular second appeal.

5. Learned counsel for the defendant-appellant has contended that

the Courts have erred in decreeing the suit of the plaintiff-respondent. It is

argued that the plaintiff-respondent had not come to court with clean hands.

Elaborating the submission it is stated that the defendant-appellant had taken

the plea that infact a loan of Rs.10,000/- had been taken from the plaintiff-

respondent which was admitted by the plaintiff-respondent in the replication,

integrity of this judgment/order.

2024:PHHC:033843

though no such plea was raised in the plaint itself. However, the plaintiff-

respondent had further stated that he had filed a suit for recovery of the loan

amount against the defendant-appellant which suit was pending. As per

learned counsel this statement was incorrect as no such suit for recovery was

filed by the plaintiff-respondent and a wrong statement was made before the

Court disentitling the plaintiff-respondent to a decree in his favour. Further,

the plaintiff-respondent had averred in the plaint that possession of the

property in dispute was handed over to him at the time of agreement to sell

which has been found to be incorrect. It is further contended that the

plaintiff-respondent had failed to prove his readiness and willingness and

therefore the suit for specific performance ought to have been dismissed. A

further argument has been raised that decreeing the suit would cause

immense hardship to the defendant-appellant and his family as the property

in dispute was the only residential house held by them. It was also argued

that the suit was premature it having been filed before the date fixed for

execution of the sale deed.

6. Per contra, learned senior counsel appearing for the plaintiff-

respondent has submitted that both the Courts have returned concurrent

findings of fact in his favour which warrant no interference in second appeal.

It is submitted that since both the Courts have decreed the suit, the readiness

and willingness stands established. It is argued that the defendant-appellant

had not taken a plea of hardship in his written statement and neither the

argument of loan found favour with the Courts below. It is submitted that a

suit cannot be dismissed as being premature since the relief could be granted

subsequently.

integrity of this judgment/order.

2024:PHHC:033843

7. Heard learned counsel for the parties and perused the record.

8. In the present case the agreement to sell is dated 20.07.1988.

The target date for redemption of the mortgage and execution of the sale

deed was 31.12.1990. As per the admission of the plaintiff-respondent in the

plaint itself, before filing the present suit for specific performance he had in

1988 itself filed a suit for injunction against the defendant-appellant

regarding the property in dispute. It is further stated in the plaint that this suit

for injunction was dismissed in default and an application for restoration was

filed which was fixed on 09.01.1991. While that application was pending,

the present suit for specific performance was filed on 19/20.12.1990. On

21.12.1990 notice in the present suit was issued for 11.01.1991.

Unfortunately, counsel for both the parties are unable to shed any light as to

what happened in the restoration application filed in the suit for injunction.

9. In a suit for specific performance the conduct of a plaintiff has

to be blemishless throughout entitling him to the specific relief. In the

present case in his plaint the plaintiff-respondent made no mention of having

lent money to the defendant-appellant. It was when the defendant-appellant

took a plea in his written statement of having taken a loan of Rs.10,000/-

from the plaintiff-respondent that the plaintiff-respondent in his replication

stated that "It is correct that the defendant borrowed an amount of

Rs.10,000/- from the plaintiff and in consideration thereof executed a

pronote and receipt in his favour on the basis of which the plaintiff has filed

a suit for recovery against him which is pending in the Court of Sub Judge

Ist Class Rajpura (B)". The pronote and receipt for Rs.10,000/- were never

produced by the plaintiff-respondent. Surprisingly, in his cross-examination

integrity of this judgment/order.

2024:PHHC:033843

the plaintiff-respondent denied having given any loan of Rs.10,000/- to the

defendant-appellant. No documents evidencing the filing or pendency of any

suit for recovery of Rs.10,000/- by the plaintiff-respondent was produced by

him though in his deposition he mentioned filing a suit for recovery of

Rs.2,000/-. Thus, clearly the plaintiff-respondent disclosed half-baked facts

in his pleadings and in his oral deposition before the Court. To the contrary,

the defendant-appellant mentioned in his written statement about taking a

loan of Rs.10,000/- from the plaintiff-respondent and having repaid the

same. This was supported in his statement as DW4 and by the statements of

his witnesses DW1 and DW3. Infact DW3 also deposed that he had

withdrawn money from his bank which was given to the defendant-appellant

for paying to the plaintiff-respondent. Even the plea by the plaintiff-

respondent of being in possession of the property in dispute was negatived

and the Trial Court found that he was not in possession. The conduct of a

plaintiff has to be judged having regard to the entirety of the pleadings as

also the evidence brought on the record. In the present case the plaintiff-

respondent has not come to the court with clean hands and has come forward

with untrue facts. Refusal of decree for specific performance of agreement to

sell in such a situation would promote honesty in society.

10. Further, the case as set-up by the plaintiff-respondent was that

the target date for redemption of the mortgage and execution of the sale deed

was 31.12.1990. To show his readiness and willingness, as per his

deposition in Court as PW1, on 31.12.1990 he reached the office of the Sub

Registrar with the balance sale consideration of Rs.50,000/- and Rs.5,000/-

towards expenses. This statement of fact could not have been part of the

integrity of this judgment/order.

2024:PHHC:033843

plaint which is dated 19.12.1990. Infact, in the plaint the plaintiff-respondent

in para 5 only stated that he has the balance amount ready but the defendant-

appellant had declined to honour his commitment. No specific amount being

ready in cash or in the bank was disclosed by the plaintiff-respondent. Thus,

the readiness and willingness on 31.12.1990 disclosed in the oral statement

of the plaintiff-respondent is not supported by his pleadings in the plaint. It

is settled law that no amount of evidence which is not supported by

pleadings can be looked into by a Court. The readiness and willingness of

the plaintiff-respondent is thus also not proven in this case with supporting

pleadings.

11. The discretion to grant or refuse specific performance cannot be

arbitrarily exercised. The power under Section 20 of the Specific Relief Act,

1963 to exercise discretion to grant or refuse specific performance has a

number of parameters on which it is exercised, one way or the other. The

principle that the discretion to decree specific performance cannot be

arbitrarily exercised is enumerated in the provisions of Section 20 (as it

stood before its amendment by Act No.18 of 2018). It reads :

"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 capable of

correction by a court of appeal.

integrity of this judgment/order.

2024:PHHC:033843

(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

under circumstances which though not rendering the

contract voidable, makes it inequitable to enforce

specific performance .

Explanation I - Mere inadequacy of consideration, or

the mere fact that the contract is onerous to the

defendant or improvident in its nature, shall not be

deemed to constitute an unfair advantage within the

meaning of clause (a) or hardship within the meaning of

clause (b).

Explanation II - The question whether the performance

of a contract would involve hardship on the defendant

integrity of this judgment/order.

2024:PHHC:033843

within the meaning of clause (b) shall, except in cases

where the hardship has resulted from any act of the

plaintiff, subsequent to the contract, be determined with

reference to the circumstances existing at the time of the

contract.

(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 other

party."

12. Specific performance, being an equitable relief, can be refused

on the ground that the plaintiff had not come to Court with clean hands and

had suppressed material facts. Likewise, the defendant too can suffer

specific performance, because of breach of contract being fully proved

against him, his conduct prior to commencement of action and during the

course of trial disentitle him to the discretion of the Court granting the

alternate relief of refund instead of specific performance. There have been

cases where phenomenal rise in the price of immovable property has

weighed with the Courts in substituting the relief of specific performance by

a decree for payment in lump sum of a much higher compensation to the

integrity of this judgment/order.

2024:PHHC:033843

successful plaintiff or requiring the plaintiff to enforce specific performance

on payment of a higher sale consideration.

13. In the case of Shenbagam vs. KK Rathinavel [2022 SCC

OnLine SC 71] the Hon'ble Supreme Court held :

"29. All the three courts, including the High Court,

grossly erred in the manner in which they have

adjudicated upon this dispute in a suit for specific

performance. In the first instance, the trial court failed

to frame an issue on whether the respondent-plaintiff

was ready and willing to perform his obligations under

the contract and instead assessed whether he is entitled

to the relief of specific performance. In doing so, the

trial court viewed the legal issue from an incorrect lens.

The foundation of a suit for specific performance lies in

ascertaining whether the plaintiff has come to the court

with clean hands and has, through his conduct,

demonstrated that he has always been willing to

perform the contract. There is a conspicuous absence in

judgment of the trial court of any reference to evidence

led by the respondent to indicate his willingness to

perform the contract. The trial court merely adverted to

"document produced on behalf of the plaintiff" and

concluded that he had sufficient means to purchase the

suit property. Apart from this observation, the judgment

fails to analyse the terms of the agreement, the

integrity of this judgment/order.

2024:PHHC:033843

obligations of the parties and the conduct of the

respondent or the appellant.

30. In evaluating whether the respondent was ready

and willing to perform his obligations under the

contract, it is not only necessary to view whether he had

the financial capacity to pay the balance consideration,

but also assess his conduct throughout the transaction.

xxx

41. True enough, generally speaking, time is not of the

essence in an agreement for the sale of immoveable

property. In deciding whether to grant the remedy of

specific performance, specifically in suits relating to

sale of immovable property, the courts must be

cognizant of the conduct of the parties, the escalation of

the price of the suit property, and whether one party will

unfairly benefit from the decree. The remedy provided

must not cause injustice to a party, specifically when

they are not at fault. In the present case, three decades

have passed since the agreement to sell was entered into

between the parties. The price of the suit property would

undoubtedly have escalated. Given the blemished

conduct of the respondent-plaintiff in indicating his

willingness to perform the contract, we decline in any

event to grant the remedy of specific performance of the

integrity of this judgment/order.

2024:PHHC:033843

contract. However, we order a refund of the

consideration together with interest at 6% per annum."

14. Recently, in the case of Major Gen. Darshan Singh (D) by

LRs & Anr. vs. Brij Bhushan Chaudhary (D) by LRs [CA No.9360 of

2013 decided on 01.03.2024] the Hon'ble Supreme Court held :

"9. Under Section 20 of the 1963 Act, the grant of a

decree for specific performance is always discretionary.

The exercise of discretion depends on several factors.

One of the factors is the conduct of the plaintiff. The

reason is that relief of a decree of specific performance

is an equitable relief. A person who seeks equity must do

equity."

In para 14 of the same decision it was inter-alia held :

"14. As observed earlier, the relief of specific

performance is discretionary and equitable.

Considering the plaintiffs' conduct of making false

and/or incorrect statements in the plaint, which were

very material, we hold that the plaintiffs are disentitled

to relief of specific performance."

15. In Lourdu Mari David vs. Louis Chinnaya Arogiaswamy

[(1996) 5 SCC 589] it was inter-alia held that :

"It is settled law that the party who seeks to avail of the

equitable jurisdiction of a court and specific

performance being equitable relief, must come to the

court with clean hands. In other words the party who

integrity of this judgment/order.