SC: U/S. 21 of the Specific Relief Act, plaintiff is entitled to compensation with solatium and interest when land has been acquired by the acquiring body [Read Judgment]

The Supreme Court recently comprising of a bench of Justices D.Y. Chandrachud &  M.R. Shah observed that when the contract has become impossible for no fault of the plaintiff and land has been acquired by the acquiring body, they are eligible for compensation instead and in substitution of specific performance under section 21 of the Specific Relief Act. (Sukhbir vs. Ajit Singh)

Facts of  the Case

An agreement to sell was executed by the appellant in favor of the respondent with respect to land for a consideration of Rs. 32 lakhs, out of which the respondent paid to the appellant Rs. 31,50,000/- to the appellant. Upon the failure of the appellant to execute the sale deed, the respondent served a legal notice to be present at the sub-registrar to register the same. when the appellant refused to remain present, the respondent filed a suit for specific performance of the agreement to sell and hand over the possession of the land. It was also alternatively prayed for the recovery of Rs.31,50,000/- @ 24% per annum from 9.3.2010 till the date of payment. Further before passing the final decree, the land was acquired by the acquiring body under section 6 of the land acquisition act. However, this information was not brought to the attention of the trial court. The trial court passed the judgment in favor of the respondent with all the remedies prayed.

The High Court reaffirmed the decision of the Trial Court based on the case of Jagdish Singh vs. Nattu Singh [1992 1 SCC 647] where after the land in question was acquired by way of section 21 of the Specific Relief Act, it was held that the plaintiff is entitled to take all benefits of compensation along with solatium and interest, etc. due to the acquisition of land.

Contention of the Parties

While opposing the present appeal, Shri Rakesh Talukdar, learned Advocate appearing on behalf of the plaintiff has heavily relied upon the decisions of this Court in the cases of Jagdish Singh (supra) and Urmila Devi v. Deity, Mandir Shree Chamunda Devi, (2018) 2 SCC 284. It was submitted that in both the cases this Court had an occasion to consider the very submission made on Section 21 of the Specific Relief Act and it was held by this Court that the original plaintiff shall be entitled to the amount of compensation awarded under the Land Acquisition Act less the amount of expenses incurred by the defendant – original land owner for receiving the compensation. It was submitted that in the present case, as such, there is nothing on record that any amount was incurred by the defendant for receiving the amount of compensation under the Land Acquisition Act.

It was submitted by the learned Advocate appearing on behalf of the plaintiff that as held by this Court in the case of Jagdish Singh (supra), which has been subsequently considered by this Court in the case of Urmila Devi (supra), having regard to Section 21 of the Specific Relief Act when the contract becomes impossible with no fault of the plaintiff, Section 21 of the Specific Relief Act enables the Court to award compensation in lieu and substitution of the specific performance.

Shri Sushil Sardana, learned Advocate appearing on behalf of the defendant has vehemently submitted that in the facts and circumstances of the case and more particularly when during the pendency of the suit the land in question came to be acquired under the provisions of the Land Acquisition Act, the defendant had no saleable right and interest in the suit property and therefore no relief for specific performance of the agreement to sell could have been passed. It was submitted that in fact in the appeal preferred by the defendant – appellant herein the High Court has modified the decree passed by the learned trial court, affirmed by the first appellate court, and held that in lieu of decree for specific performance, the plaintiff shall be entitled to the entire amount of compensation with solatium and interest.

It was further submitted that in view of Section 21 of the Specific Relief Act r/w Section 73 of the Indian Contract Act, the plaintiff at the most shall be entitled to the refund of the amount of sale consideration paid with interest.

It was further submitted that in the present case the plaintiff never claimed for any compensation. It was submitted that as per Section 21(1) of the Specific Relief Act if the contract is broken by the defendant, in that event, compensation may be granted, but again Section 21(5) says that no compensation shall be awarded under Section 21 unless the plaintiff has claimed such compensation in his plaint. It was submitted that in the present case the plaintiff himself by an alternate prayer prayed that if the specific performance cannot be performed by any reason, in that event, decree for refund of Rs. 31,50,000/- along with interest @ 24% per annum may be passed.

Courts Observation & Judgment

The Supreme court opined that as held in the case of Jagdish Singh and Urmila Devi, the question specifically was whether the plaintiff (here respondent) was entitled to the amount of compensation received in the land acquisition proceedings or was entitled only to the refund of the earnest money.

The Supreme court held that under section 21 it would be an award of compensation instead of and substitution of the specific performance. For calculation of the same, the compensation under the Land Acquisition Act to be damages subject to the deduction of the money value of service, time, etc. put in by the original landowner. Therefore making it clear that the decree for compensation holds good since it was passed as an alternate decree instead of the decree of the specific performance.

The Courts Observed, “Applying the law laid down by this Court in the aforesaid two decisions to the facts of the case in hand, it cannot be said that the High Court has committed any error in modifying the decree for specific performance. As rightly held by the High Court, as such, the plaintiff will be deemed to be in the shoes of the defendant and therefore shall be entitled to the amount of compensation, determined and awarded under the provisions of the Land Acquisition Act.”

The Court further noted, “Now so far as the submission on behalf of the appellant that as compensation has not been specifically prayed by the plaintiff in the suit, the plaintiff shall not be entitled to any amount of compensation even considering Section 21 of the Specific Relief Act. The aforesaid has no substance. The decree for compensation is passed as an alternate decree and in lieu of the decree for specific performance.”

The Court disposing the appeal observed,

“Now so far as the amount of compensation is concerned, as observed by this Court in the case of Jagdish Singh (supra), the compensation determined and awarded under the Land Acquisition Act may safely be taken into consideration. Therefore, the High Court has rightly observed and held that the plaintiff shall be entitled to the entire amount of compensation awarded under the Land Acquisition Act together with interest and solatium. However, at the same time, the defendant – original land owner shall also be entitled to the deduction therefrom of money value of the services, time and energy expended in pursuing the claims of compensation and the expenditure incurred by him in the litigation culminating in the award. As such, nothing is on record to suggest that any expenses have been incurred by the appellant. However, in the facts and circumstances of the case and considering the decisions of this Court in the cases of Jagdish Singh (supra) and Urmila Devi (supra), ends of justice will be served if the plaintiff is awarded the entire amount of compensation determined under the Land Acquisition Act together with interest and solatium less Rs. 2,50,000/- + Rs.50,000/- (towards the balance sale consideration).

In view of the above and for the reasons stated above, the present appeal is disposed of by modifying the impugned judgment and order passed by the High Court to the extent directing and holding that the plaintiff – respondent herein shall be entitled to recover the entire amount of compensation along with solatium and interest awarded under the provisions of the Land Acquisition Act, which is reported to be lying/deposited with the acquiring body with respect to the land in question minus Rs. 3,00,000/- (Rs. 2,50,000/- towards the expenses which might have been incurred in pursuing the claims of compensation and the expenditure incurred by him in the litigation culminating in the award + Rs. 50,000/- towards balance sale consideration). Therefore, the appellant – defendant shall be entitled to Rs. 3,00,000/- from the amount of compensation deposited with the acquiring body and the balance amount of compensation together with interest and solatium to be paid to the original plaintiff.”

Read Judgment @Latestlaws.com

Picture Source :