Thus, the position of law is that relinquishment could be made at any stage of the litigation including the appellate stage. The claim of the plaintiff appellant for grant of benefit under
Section 12(3) of the Act was, therefore, rightly not rejected by
the High Court on the simple ground that it was not made at the
trial stage and had been made for the first time at the appellate
stage. In our view the claim can also not be rejected on the short
ground that it was not incorporated in the plaint or was not set
forth in writing before the Trial Court. [See: Ram Niwas v. Smt.
Omkari and another : AIR 1983 All 310] {Para 21}
REPORTABLE
IN THE SUPREME COURT OF INDIA
EXTRAORDINARY APPELLATE JURISDICTION
Petition for Special Leave to Appeal (C) No.25246/2023
VIJAY PRABHU Vs S.T. LAJAPATHIE & ORS.
1. We have heard Mr. S. Nagamuthu, the learned Senior counsel
appearing for the petitioner (original plaintiff) and Mr. Balaji
Srinivasan, the learned counsel appearing for the respondents
(original defendants).
2. This petition arises from the judgment and order passed by the
High Court of Judicature at Madras dated 24.03.2023 in Appeal Suit
No. 211 of 2013 by which the High Court dismissed the appeal and
thereby affirmed the judgment and decree passed by the District
Judge of Nilgiris at Udhagamandalam dated 18.02.2010 in Original
Suit No. 45 of 2008. It appears from the materials on record that
the petitioner herein (original plaintiff) instituted Original Suit
No. 45 of 2008 seeking specific performance of the agreement dated
07.11.2005 and for delivery of possession of the suit property. In
the alternative, he prayed for Rs. 60,00,000/- with interest at 12
per cent per annum towards the damages from the date of filing of
the suit.
3. The Trial Court rejected the prayer for specific performance and
directed that the amount of Rs. 20,00,000/- paid by the plaintiff
to the defendants towards the earnest money be refunded with
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interest at 12 per cent per annum.
4. The Trial Court framed the following issues:
“1. Whether the plaintiff is entitled to the relief of
specific performance of sale agreement dated
07.11.2005 with modifications as prayed by him?
2. Whether the plaintiff is entitled to possession of
the suit property described in the plaint schedule
excluding the portion in the possession of the
tenants?
3. In the alternative, whether the plaintiff is
entitled to refund of the advance amount of
Rs.20,00,000/- and for damages to a tune of
Rs.40,00,000/- from the defendants?
4. Whether the plaintiff is entitled to claim interest
at the rate of 12% p.a. on the above amounts? (end of
the 6th page in original)
5. Whether the plaintiff is entitled to charge over
the suit property for the above amounts as claimed by
him?
6. To what other reliefs the plaintiff is entitled?”
5. The Trial Court recorded a finding that the plaintiff was not
ready and willing to perform his part of the contract. Besides, the
plaintiff had failed to plead and prove that he has suffered
damages.
6. The High Court while deciding the appeals framed the following
points for its determination:
“(1) Whether the plaintiff was ready and willing
to perform his part of the agreement of sale dated
07.11.2005?
(2) Whether the plaintiff can seek to invoke Sec.12
of the Specific Relief Act, 1963?
(3) Whether the plaintiff is entitled to the
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discretionary and equitable relief of specific
performance?
(4) Whether the plaintiff, in the event of not
being entitled to the relief of specific
performance, would be alternatively entitled to the
relief of damages and refund of advance to the tune
Rs.40,00,000/- and Rs.20,00,000/- respectively?”
7. The High Court in Para 35 while discussing Section 12 of the
Specific Relief Act (for short, “the Act”) has observed as under:-
“35. Thus, when the plaintiff has chosen to waive only
one of the obligations that remained unfulfilled at the
end of the defendants, it is not open to the plaintiff
to seek shelter U/s.12 and claim specific performance
of the part of the agreement of sale in his favour.
Interestingly, it is also seen that apart from seeking
relief of specific performance, the plaintiff has also
made a claim for damages besides refund of advance.
Thus, the plaintiff does not qualify to invoke clause
(ii) of Sub-Section (3) to Sec.12, when admittedly, he
has not relinquished “all claims” and when he
approaches the Court seeking damages. This Court also
holds that Sec.12(3) is only a discretionary relief,
which can be granted to the plaintiff, depending on
peculiar facts and circumstances of the case. In the
opinion of this Court, Sec.12(3) cannot be invoked
where the terms of the contract are not capable of
being segregated. In the instant case, we do not find
that the agreement of sale can be compartmentalised in
order to grant specific performance of only a part of
the agreement of sale. It is also seen that A.S.Nos.211
and 355 of 2013 mandate of Sec.12 is very clear in so
far as payment of the whole of the consideration.
Admittedly, in the instant case, the plaintiff has paid
only a sum of Rs.20,00,000/- and a sum of
Rs.64,00,000/- was still outstanding. Unless the
plaintiff's pay or has paid the sum of Rs.64,00,000/-
he was not even justified in invoking the part
performance of the agreement of sale by resorting to
Sec.12 of the Act.”
8. The learned Senior counsel appearing for the petitioner
(plaintiff) reiterated that his client is entitled to the benefit
of the provisions of Section 12(3) of the Specific Relief Act (for
short, “the Act”) and the High Court has not appreciated this
aspect of the matter in its true perspective.
4
9. Section 12 of the Act:
“12. Specific performance of part of contract.—(1)
Except as otherwise hereinafter provided in this
section, the court shall not direct the specific
performance of a part of a contract.
(2) Where a party to a contract is unable to perform
the whole of his part of it, but the part which must
be left unperformed by only a small proportion to the
whole in value and admits of compensation in money,
the court may, at the suit of either party, direct the
specific performance of so much of the contract as can
be performed, and award compensation in money for the
deficiency.
(3) Where a party to a contract is unable to perform
the whole of his part of it, and the part which must
be left unperformed either—
(a) forms a considerable part of the whole, though
admitting of compensation in money; or
(b) does not admit of compensation in money;
he is not entitled to obtain a decree for specific
performance; but the court may, at the suit of other
party, direct the party in default to perform
specifically so much of his part of the contract as
he can perform, if the other party—
(i) in a case falling under clause (a), pays or has
paid the agreed consideration for the whole of the
contract reduced by the consideration for the part
which must be left unperformed and in a case
falling under clause (b), pays or has paid the
consideration for the whole of the contract without
any abatement; and
(ii) in either case, relinquishes all claims to the
performance of the remaining part of the contract
and all right to compensation, either for the
deficiency or for the loss or damage sustained by
him through the default of the defendant.
(4) When a part of a contract which, taken by itself,
can and ought to be specifically performed, stands on
a separate and independent footing from another part
of the same contract which cannot or ought not to be
specifically performed, the court may direct specific
performance of the former part.
Explanation.—For the purposes of this section, a party
to a contract shall be deemed to be unable to perform
5
the whole of his part of it if a portion of its
subject-matter existing at the date of the contract
has ceased to exist at the time of its performance.”
10. A bare perusal of the aforesaid provision contained in Section
12 of the Act makes it clear that it is not open to the High Court
to direct specific performance of a part of contract except
otherwise provided in the section in absence of any of the
exigencies available under the provisions of sub-sections (2), (3)
and (4) of Section 12 so as to decree the suit.
11. The words ‘unable to perform’ suggest that the sub-section is
applicable only when the party cannot for any reason perform the
whole of what he has promised. The inability may arise by any
cause whatsoever including any statutory limitations. The
inability to perform may arise by—
(i) deficiency in quantity of the subject-matter, or
(ii) variance in quality, or
(iii) defect in title; or
(iv) some legal prohibition; or
(v) other causes.
12. The expression ‘considerable part’ implies that the part which
will be left unperformed is either large as regards quantity or as
regards quality. In other words, it is material and not
insignificant, so that a reasonable objection can be taken by the
promisee to accept performance. The phrase ‘does not admit of
compensation’ implies that there is no data for ascertaining a
fair and reasonable amount as the money value of the difference
between what can be performed and the express subject-matter of
the contract. The amount need not be mathematically accurate. If a
reasonable estimate of the amount as the money value can be made,
it will not be a case where the compensation is unascertainable.
13. The power to grant partial relief, from the very language of
6
Section 12(3) of the Act is discretionary with the court to be
exercised keeping in view the facts and circumstances of each case
and the rights and interests of the parties involved. Section
12(3) of the Act can be invoked only where the terms of contract
permit segregation of rights and interests of parties in the
property.
14. In view of the specific finding recorded by the courts below
that the plaintiff was not ready and willing to perform his part
of the contract and the plaintiff being in default he could not be
said to be entitled to invoke Section 12(3) of the Act also.
15. In the aforesaid context, we may refer to a decision of this
Court in Jaswinder Kaur (Now Deceased) through her Legal
Representatives and Others v. Gurmeet Singh and Others reported in
(2017) 12 SCC 810, wherein this Court observed in paras 19, 20 and
21 respectively as under:
“19. In Abdul Haq v. Mohd. Yehia Khan reported in AIR
1924 Pat 81, the Court observed that the Court will
not as a general rule compel specific performance of
a contract unless it can execute the whole contract.
It is not a case where the entire contract is not
capable of performance. Section 12 encompasses
provisions in respect of a claim for specific
performance of part of a contract. Sections 14 and 17
of the old Act have been amalgamated with
modifications and the explanation based on Section 13
of the repealed Act together, the law is stated with
clarity under Section 12 of the Act.
20. Section 12(1) of the Act provides that specific
performance can be granted on part of a contract only
in the circumstances mentioned in the section.
Section 12(2) of the Act deals with breach the
contract if a party is unable to perform the whole of
its part and such part bears a small proportion to
the whole in value and admits compensation in money.
The expression “unable to perform” in Section 12(2)
of the Act for instance would mean that a part of the
property destroyed after contract or act of God or an
act by which it would cease to exist. In such a case
party to a contract shall be deemed to be unable to
7
perform the whole or its part of the contract. Such a
person would come within the words “party in
default”. The inability to perform may arise by
deficiency in quantity of subject-matter or
deficiencies or some legal prohibition or such other
causes. None of such causes is present in the instant
case.
21. Section 12 of the Act does not apply where the
inability to perform specific performance on part of
contract arises because of the plaintiff's own
conduct as held in Abdul Rahim v. Maidhar
Gazi reported in AIR 1928 Cal 584.
In Graham v. Krishna Chunder Dey reported in AIR 1925
PC 45, it has been laid down that the Explanation in
the section exhaust all the circumstances in which
part-performance can be granted. Section 12(2) of the
Act deals with the situation where a party is unable
to perform and such part is only a small proportion
in value and capable of compensation in form of
money. It was not a case covered in Section 12(2) of
the Act at all. Under Section 12(3) of the Act party
in default is entitled to specific performance on
payment of whole consideration or for the part left
unperformed but here in the instant case the
plaintiff being in default could not be said to be
entitled to invoke Section 12(3) of the Act also.”
16. There is one another issue, we must look into and clarify. In
para 29, the High Court has observed as under:
“29. Learned Senior counsel for the plaintiff relied
on Sec.12 of the Act and vehemently contended that
the plaintiff would be entitled to a decree when the
plaintiff was willing to relinquish his claims to the
performance by the defendants, of the remaining part
of the agreement of sale. This Court at the very
outset notices that such a plea was never raised
before the Trial Court and no grounds have also been
raised in the memorandum of First Appeal in this
regard. However, this Court is inclined to deal with
the elaborate submissions made by the learned Senior
counsel for the plaintiff touching Sec.12 of the
Act.”
(Emphasis supplied)
17. Thus, the High Court expressed doubt whether the plea as
regards Section 12 of the Act if not raised before the Trial Court
8
could have been raised for the first time before the High Court in
first appeal.
18. In the aforesaid context, we may only say that the
relinquishment of claim to further performance of the remaining
part of the contract and all rights to compensation can be made at
any stage of litigation. This was held in Kalyanpur Lime
Works v. State of Bihar reported in AIR 1954 SC 165. This Court
referred with approval to a Division Bench decision of the Lahore
High Court in Waryam Singh v. Gopi Chand, (AIR 1930 Lah 34).
19. In the case of Kalyanpur Lime Works (supra) the plaintiff had
sued the State of Bihar for specific performance of a contract for
lease. It was found that an earlier lease in favour of another
company was in force and could not be forfeited and, therefore,
the Government was not in a position to grant lease of the
property to the Lime company. The Lime Company made an application at the appellate stage claiming benefit of the provisions of old Section 15 and prayed for grant of lease for a period of five
years which remained after the expiry of the period of lease of
the other company. This Court observed:
“Relinquishment of the claim to further performance
can be made at any stage of the litigation.”
Thus, Waryam Singh's case was referred to with approval. However,
the benefit of old Section 15 was not allowed on other
considerations.
20. In Waryam Singh's case the defendant Nos. 1 and 2 respectively
had agreed to sell 200 Kanals of specified land, but later on it
was found that they were owners of only two-third of that land. In
the Trial Court the plaintiff insisted on specific performance of
the whole contract and prayed that the defendants be asked to make
good the deficiency from the other land belonging to them. At the
time of the arguments the plaintiff had moved an application
claiming benefit of the old Section 15 in case it was held that
the defendants were incompetent to sell the whole of the land. The
Division Bench held:
“It is open to the plaintiff to relinquish his claim to
any part of the property in suit on the conditions
specified in Section 15 at any time before the suit is
finally decided by the Court of appeal.”
21. Thus, the position of law is that relinquishment could be made at any stage of the litigation including the appellate stage. The claim of the plaintiff appellant for grant of benefit under
Section 12(3) of the Act was, therefore, rightly not rejected by
the High Court on the simple ground that it was not made at the
trial stage and had been made for the first time at the appellate
stage. In our view the claim can also not be rejected on the short
ground that it was not incorporated in the plaint or was not set
forth in writing before the Trial Court. [See: Ram Niwas v. Smt.
Omkari and another : AIR 1983 All 310]
22. We are of the view that no error not to speak of any error of
law could be said to have been committed by the High Court in
passing the impugned order.
23. In such circumstances, referred to above, the Special Leave
Petition fails and is hereby dismissed.
24. The amount of Rs.20,00,000/- which came to be deposited by the
defendants in the Trial Court in the form of refund of the earnest
money to the original plaintiff must have been invested by the
Court concerned with any bank by way of fixed deposit receipt, the
said amount shall be refunded to the petitioner – herein (original
plaintiff) within a period of four weeks from today with the
accumulated interest as awarded by the Court below.
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25. Pending applications, if any, also stand disposed of.
………………………………………………………J.
(J.B. PARDIWALA)
………………………………………………………J.
(R. MAHADEVAN)
New Delhi.
8th January, 2025.
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