Thursday, 12 September 2019

Whether a party is entitled to get specific performance of contract if he fails to perform essential term of contract?

  As far as the present case is concerned, the vendor,
who was a lady received less than 20% of the sale consideration
but handed over the possession to the defendant, probably with
the hope that the dispute would be decided soon, or at least
within a year. Therefore, Clause 3 provided that if the case is
not decided within one year, then the second party shall pay to
the first party the customary rent for the land. It has been
urged by the respondents that the High Court rightly held that
this was not a reciprocal promise and had nothing to do with the
sale of the land. One cannot lose sight of the fact that the land
had been handed over to Bahadur Singh and he had agreed that
he would pay rent at the customary rate. Therefore, the
possession of the land was given to him only on this clearcut

understanding. This was, therefore, a reciprocal promise and
was an essential part of the agreement to sell.
10. Admittedly, Bahadur Singh did not even pay a penny as
rent till the date of filing of the suit. After such objection was
raised in the written statement, in replication filed by him, he
instead of offering to pay the rent, denied his liability to pay the
same. Even if we were to hold that this promise was not a
reciprocal promise, as far as the agreement to sell is concerned,
it would definitely mean that Bahadur Singh had failed to
perform his part of the contract. There can be no manner of
doubt that the payment of rent was an essential term of the
contract. Explanation (ii) to Section 16(c) clearly lays down that
the plaintiff must prove performance or readiness or willingness
to perform the contract according to its true construction. The
only construction which can be given to the contract in hand is
that Bahadur Singh was required to pay customary rent.
11. It has been urged that no date was fixed for payment of
rent. Tenancy can be monthly or yearly. At least after expiry of
one year, Bahadur Singh should have offered to pay the

customary rent to the vendor which could have been monthly or
yearly. But he could definitely not claim that he is not liable to
pay rent for 13 long years.
12. Learned counsel for the respondents urged that in case of
nonpayment
of rent the plaintiff was at liberty to file suit for
recovery of rent. We are not impressed with this argument. A
party cannot claim that though he may not perform his part of
the contract he is entitled to specific performance of the same.
13. Explanation (ii) to Section 16(c) of The Specific Relief Act
lays down that it is incumbent on the party, who wants to
enforce the specific performance of a contract, to aver and prove
that he has performed or has always been ready and willing to
perform the essential terms of the contract. This the plaintiff
miserably failed to do in so far as payment of rent is concerned.
14. A perusal of Section 20 of The Specific Relief Act clearly
indicates that the relief of specific performance is discretionary.
Merely because the plaintiff is legally right, the Court is not
bound to grant him the relief. True it is, that the Court while

exercising its discretionary power is bound to exercise the same
on established judicial principles and in a reasonable manner.
Obviously, the discretion cannot be exercised in an arbitrary or
whimsical manner. Sub clause(c) of subsection
(2) of Section 20
provides that even if the contract is otherwise not voidable but
the circumstances make it inequitable to enforce specific
performance, the Court can refuse to grant such discretionary
relief. Explanation (2) to the Section provides that the hardship
has to be considered at the time of the contract, unless the
hardship is brought in by the action of the plaintiff.
15. In this case, Bahadur Singh having got possession of the
land in the year 1964 did not pay the rent for 13 long years and
even when he filed the replication in the year 1978, he denied
any liability to pay the customary rent. Therefore, in our opinion,
he did not act in a proper manner. Equity is totally against him.
In our considered view, he was not entitled to claim the
discretionary relief of specific performance of the agreement
having not performed his part of the contract even if that part is
held to be a distinct part of the agreement to sell. 
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 7424-7425 OF 2011

SURINDER KAUR Vs  BAHADUR SINGH 

Deepak Gupta, J.
Dated:September 11, 2019



The question of law arising in these appeals is whether a
vendee who does not perform one of his promises in a contract
can obtain the discretionary relief of specific performance of that
very contract.
2. Briefly stated the facts are that Mohinder Kaur, predecessor
in interest of the appellants entered into an agreement with

Bahadur Singh, predecessor in interest of the respondents on
13.05.1964 whereby she agreed to sell the suit land to Bahadur
Singh for a total sale consideration of Rs.5605/.
Out of this,
Rs.1000/was
paid as earnest money at the time of execution of
agreement to sell, and it was agreed that the balance amount
would be paid at the time of registration of the sale deed. The
possession of the land was handed over to the vendee on the date
of agreement to sell itself. Since there was some litigation with
regard to the property it was agreed between the parties that the
sale deed would be executed within one month from the date of
decision of civil appeal pending before the Punjab and Haryana
High Court.
3. To decide the appeals, it would be necessary to refer to
Clauses 2 and 3 of the agreement to sell which read as under:“
xxx xxx xxx
2) That an appeal in respect of the abovementioned
land is pending in the High Court and after decision in the
said appeal, the First Party shall execute and register Sale
Deed in favour of the Second Party in the month of July, 1965.
3) That the possession of the land has been handed
today and in case the decision by the High Court in the appeal
is after one year, then the sale deed shall be executed and
registered after one month from the date of decision and in the

circumstance, the Second Party shall pay to the First party the
customary rent for the said land.
xxx xxx xxx ”
4. It is not disputed that the litigation referred to in the
agreement was decided on 17.01.1977, i.e., about 13 years after
the agreement to sell was entered into. Bahadur Singh
requested Mohinder Kaur to execute the sale deed but since she
failed to do so, a suit for specific performance of the agreement
was filed by Bahadur Singh. In the alternative, it was prayed
that a decree be passed for a sum of Rs.5605/,
i.e. Rs.1000/paid
as earnest money and Rs.4605/as
damages. This suit
was contested on various grounds but we are concerned with
only one wherein the defendant raised the plea that since
Bahadur Singh had admittedly failed to pay the rent of the land
in terms of Clause 3 of the agreement, he was not entitled to a
decree for specific performance.
5. The suit has been decreed by all the courts below. There is
no dispute with regard to the factual aspects. The only issue is
whether the vendee Bahadur Singh who admittedly did not pay
the rent is entitled to a decree of specific performance of the
agreement dated 13.05.1964. The courts below have held that

the agreement contained several promises which may be
reciprocal, contingent or separate. Section 511 of the Contract
Act,1872 provides that when a contract consists of reciprocal
promises to be simultaneously performed, no promisor needs to
perform his promise unless the promisee is ready and willing to
perform his reciprocal promise.
6. The aforesaid provisions have to be read along with Section
16(c)2 of The Specific Relief Act, 1963 which clearly lays down
that the specific performance of a contract cannot be enforced in
favour of a person who fails to prove that he has performed or
was always ready and willing to perform the essential terms of
the contract which were to be performed by him.
1 51. Promisor not bound to perform, unless reciprocal promisee ready and willing to perform.
—When a contract consists of reciprocal promises to be simultaneously performed, no promisor need
perform his promise unless the promisee is ready and willing to perform his reciprocal promise.
22 16. Personal bars to relief. – Specific performance of a contract cannot be enforced in favour of a
person –
(a)xxx xxx xxx
(b) xxx xxx xxx
(c) who fails to prove that he has 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
terms the performance of which has been prevented or waived by the defendant.
Explanation.—For the purposes of clause (c),—
(i) where a contract involves the payment of money, it is not essential for the plaintiff to
actually tender to the defendant or to deposit in court any money except when so
directed by the court;
(ii) the plaintiff must prove performance of, or readiness and willingness to perform, the
contract according to its true construction.

7. We shall also have to take into consideration that the
specific performance of contract of an immovable property is a
discretionary relief in terms of Section 203 of The Specific Relief
Act as it stood at the time of filing of the suit.
8. Section 20 of The Specific Relief Act lays down that the
jurisdiction to decree a suit for specific performance is a
320. 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.
(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 nonperformance
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.
Explanation 1.—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 2.— The question whether the performance of a contract would involve hardship
on the defendant 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 party.

discretionary jurisdiction and the court is not bound to grant
such relief merely because it is lawful.
9. The first issue is whether the promises were reciprocal
promises or promises independent of each other. There can be
no hard and fast rule and the issue whether promises are
reciprocal or not has to be determined in the peculiar facts of
each case. As far as the present case is concerned, the vendor,
who was a lady received less than 20% of the sale consideration
but handed over the possession to the defendant, probably with
the hope that the dispute would be decided soon, or at least
within a year. Therefore, Clause 3 provided that if the case is
not decided within one year, then the second party shall pay to
the first party the customary rent for the land. It has been
urged by the respondents that the High Court rightly held that
this was not a reciprocal promise and had nothing to do with the
sale of the land. One cannot lose sight of the fact that the land
had been handed over to Bahadur Singh and he had agreed that
he would pay rent at the customary rate. Therefore, the
possession of the land was given to him only on this clearcut

understanding. This was, therefore, a reciprocal promise and
was an essential part of the agreement to sell.
10. Admittedly, Bahadur Singh did not even pay a penny as
rent till the date of filing of the suit. After such objection was
raised in the written statement, in replication filed by him, he
instead of offering to pay the rent, denied his liability to pay the
same. Even if we were to hold that this promise was not a
reciprocal promise, as far as the agreement to sell is concerned,
it would definitely mean that Bahadur Singh had failed to
perform his part of the contract. There can be no manner of
doubt that the payment of rent was an essential term of the
contract. Explanation (ii) to Section 16(c) clearly lays down that
the plaintiff must prove performance or readiness or willingness
to perform the contract according to its true construction. The
only construction which can be given to the contract in hand is
that Bahadur Singh was required to pay customary rent.
11. It has been urged that no date was fixed for payment of
rent. Tenancy can be monthly or yearly. At least after expiry of
one year, Bahadur Singh should have offered to pay the

customary rent to the vendor which could have been monthly or
yearly. But he could definitely not claim that he is not liable to
pay rent for 13 long years.
12. Learned counsel for the respondents urged that in case of
nonpayment
of rent the plaintiff was at liberty to file suit for
recovery of rent. We are not impressed with this argument. A
party cannot claim that though he may not perform his part of
the contract he is entitled to specific performance of the same.
13. Explanation (ii) to Section 16(c) of The Specific Relief Act
lays down that it is incumbent on the party, who wants to
enforce the specific performance of a contract, to aver and prove
that he has performed or has always been ready and willing to
perform the essential terms of the contract. This the plaintiff
miserably failed to do in so far as payment of rent is concerned.
14. A perusal of Section 20 of The Specific Relief Act clearly
indicates that the relief of specific performance is discretionary.
Merely because the plaintiff is legally right, the Court is not
bound to grant him the relief. True it is, that the Court while

exercising its discretionary power is bound to exercise the same
on established judicial principles and in a reasonable manner.
Obviously, the discretion cannot be exercised in an arbitrary or
whimsical manner. Sub clause(c) of subsection
(2) of Section 20
provides that even if the contract is otherwise not voidable but
the circumstances make it inequitable to enforce specific
performance, the Court can refuse to grant such discretionary
relief. Explanation (2) to the Section provides that the hardship
has to be considered at the time of the contract, unless the
hardship is brought in by the action of the plaintiff.
15. In this case, Bahadur Singh having got possession of the
land in the year 1964 did not pay the rent for 13 long years and
even when he filed the replication in the year 1978, he denied
any liability to pay the customary rent. Therefore, in our opinion,
he did not act in a proper manner. Equity is totally against him.
In our considered view, he was not entitled to claim the
discretionary relief of specific performance of the agreement
having not performed his part of the contract even if that part is
held to be a distinct part of the agreement to sell. The vendee
Bahadur Singh by not paying the rent for 13 long years to the

vendor Mohinder Kaur, even when he had been put in possession
of the land on payment of less than 18% of the market value,
caused undue hardship to her. The land was agricultural land.
Bahadur Singh was cultivating the same. He must have been
earning a fairly large amount from this land which measured
about 9½ acres. He by not paying the rent did not act fairly and,
in our opinion, forfeited his right to get the discretionary relief of
specific performance.
16. In view of the above, we allow the appeals, set aside the
judgment and decree of all the courts below and dismiss the suit
for specific performance. As far as the alternative plea of refund
is concerned, we are clearly of the view that since the
respondents enjoyed the land for 55 long years without payment
of any rent they are not entitled to any relief. No order as
to costs.
…………………………J.
(Deepak Gupta)
…………………………J.
(Aniruddha Bose)
New Delhi
September 11, 2019

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