THE SPECIFIC RELIEF (AMENDMENT) ACT, 2018 brought into effect

http://www.egazette.nic.in/WriteReadData/2018/187919.pdf

http://www.mondaq.com/india/x/728614/Contract+Law/Specific+Relief+Amendment+Act+2018

The Central Government as on 19-09-2018, vide S.O. 4888(E), in exercise of powers conferred  by Section 1(2) of the Specific Relief (Amendment) Act, 2018 (18 of 2018), has appointed 01-10-2018 as the date on which the provisions of the said Act shall come into force.

Ministry of Law and Justice

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Whether suit for specific performance of contract can be dismissed if defendant has suppressed that property was encumbered?

The assurance given by the Appellant at the time when the agreement dated 30.06.2000 (Ex. A1) was executed that there was no encumbrance over the suit property was not a correct statement of fact. The further recital that the "Original Parent Document" was in the Bank again was not a fair and complete disclosure. It is true that these averments were copied in the subsequent suit agreement dated 20.09.2000. However the communication dated 22.09.2001 (Ex. A6) emanating from Respondent No. 1 records that by the time the suit agreement was entered into the existence of the encumbrance was a well known fact. For the purposes of the present matter what is important is the common understanding with which the parties had entered into the transaction. If Respondent No. 1 was well aware about the existence of encumbrance over the suit property at the time when suit agreement was entered into, he cannot thereafter submit to the contrary. In the face of such clear understanding under which the suit agreement was entered into, the High Court was completely in error in observing that the entire case put forth on the part of the Appellant was required to be summarily thrown out. Further, reliance on the decision in S.P. Chengalveraya Naidu (supra) was also misplaced. That case did not arise from a suit for specific performance and more over the Plaintiff in that case was found to have withheld relevant documents and as such the judgment rendered by the trial Court dismissing his claim was restored by this Court. The principle laid down therein cannot apply either on facts or in law to the present case.

8. As regards suit for specific performance, the law is very clear that the Plaintiff must plead and prove his readiness and willingness to perform his part of the contract all through i.e., right from the date of the contract till the date of hearing of the suit. If Respondent No. 1 was well aware about the encumbrance and the parties had chosen that the balance consideration be paid to the Appellant before 20.03.2001 so that the sale deed could be registered without any encumbrance, it was for Respondent No. 1 to have taken appropriate steps in that behalf for completion of transaction. The facts on record disclose that the first step taken by Respondent No. 1 after the suit agreement was well after four months, when further amount of Rs. 2 lakhs was paid on 21.01.2001. Thereafter nothing was done till 20.03.2001 by which the transaction had to be completed. The record is completely silent about any communication sent around 20.03.2001 towards completion of transaction. As a matter of fact the first step thereafter was six months after the deadline namely on 22.09.2001 when the communication (Ex. A6) was sent along with amount of Rs. 10 lakhs. The written submissions filed on behalf of Respondent No. 1 also do not indicate any steps till this time so as to say that he was all the while ready and willing to complete the transaction.

9. The assertion made by Respondent No. 1 in paragraph 7 of the plaint is a mere assertion without any relevant details as to what exactly he had done towards fulfillment of his obligations and completion of the transaction. The factual aspects as detailed above are quite clear that Respondent No. 1 had completely failed in his obligations and was not ready and willing to perform his part of the contract. Even going by the case set up by Respondent No. 1, that around 29.07.2002 an arrangement was arrived at, under which out of the balance amount Rs. 19.5 lakhs, Rs. 13.5 lakhs were to be made over by Respondent No. 1 to the Bank directly and rest of the sum of Rs. 6 lakhs was to be paid to the Appellant in cash, the facts do not indicate any observance of these conditions. Beyond filing an application for impleadment which came to be dismissed, Respondent No. 1 did not take any step. The amount of Rs. 13.5 lakhs was independently deposited and discharge was obtained by the Appellant.

10. If Respondent No. 1 was put in possession of the suit property pursuant to the arrangement as suggested by him, his corresponding obligation under such arrangement was also twofold namely to pay off the dues to the Bank directly and pay rest of the sum to the Appellant. There is nothing on record which could be consistent with discharge of such obligation on the part of Respondent No. 1.

11. The case put up by Respondent No. 1 that he was put in possession pursuant to an arrangement arrived at on or around 29.07.2002 is not free from doubt. In a matter where Rs. 19.5 lakhs were still outstanding, it is not possible to accept that the vendor may put the purchaser in possession when the original agreement did not contemplate handing over of the possession even before execution of the sale deed. The contemporaneous facts including the aspects that the Appellant had initiated criminal proceedings and made complaints to various authorities about forcible possession having been taken by Respondent No. 1, also indicate falsity in the claim of Respondent No. 1. Be that as it may the basic issue is whether Respondent No. 1 was ready and willing to perform his part of the contract which in our considered view has to be answered against him. We are conscious that two Courts have arrived at a finding of fact but in our view such finding is completely opposed to and contrary to the facts on record and is completely unsustainable.

12. We, therefore, reject the claim of Respondent No. 1 and hold that the suit for specific performance preferred by Respondent No. 1 is required to be dismissed. At the same time we accept the counter claim made by the Appellant and hold that he is entitled to recovery of possession. 

IN THE SUPREME COURT OF INDIA

Civil Appeal Nos. 3353-3354 of 2018 (Arising out of SLP (Civil) Nos. 22018-22019 of 2014)

Decided On: 28.03.2018

P. Meenakshisundaram Vs. P. Vijayakumar and Ors.

Hon'ble Judges/Coram:

R. Banumathi and U.U. Lalit, JJ.

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Whether plaint can be rejected for non disclosure of cause of action in suit for specific performance?

Again in para No. 15, there are averments as to the exact cause of action. Therefore it cannot be said that the plaint was conspicuously silent about the cause of action against the present petitioners. The law is well settled that at the stage of deciding the application for rejection of the plaint under Order VII Rule 11 CPC on the count that it does not disclose the cause of action, the averments in the plaint are to be taken at their value value and for that purpose, entire plaint as a whole is required to be read.

10. Here in the case, wholistic reading of the plaint clearly discloses the cause of action against the present petitioners. Averments in the plaint clearly go to show that the present petitioners had previously entered into the agreement regarding their respective fields with defendant No. 3 Dinesh and thereafter on the basis of that agreement, Dinesh has entered into agreement of sale with the plaintiff-respondent and obtained substantial amount of consideration from the plaintiff, subsequent thereto these present petitioners executed different sale deeds in favour of different persons in respect of the same property. Therefore, when the plaintiff's suit is not only for specific performance of contract, but also for the possession and injunction, then there is definitely a cause of action for the plaintiff to sue the present petitioners also. Therefore, on the bare reading of the plaint, it cannot be said that no cause of action was disclosed by the plaintiff to sue the present petitioners.

IN THE HIGH COURT OF BOMBAY (NAGPUR BENCH)

Civil Revision Application No. 94/2016

Decided On: 22.06.2017

 Ayyub Shah Haidar Shah and Ors. Vs. Ajay Dhananjay Daware and Ors.

Hon'ble Judges/Coram:

Dr. Shalini Phansalkar Joshi, J.

Citation: 2018(1) MHLJ 188

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Whether court can refuse to pass decree for specific performance of contract on ground of delay?

It has been consistently held by the courts in India, following certain early English decisions, that in the case of agreement of sale relating to immovable property, time is not of the essence of the contract unless specifically provided to that effect. The period of limitation prescribed by the Limitation Act for filing a suit is three years. From these two circumstances, it does not follow that any and every suit for specific performance of the agreement [which does not provide specifically that time is of the essence of the contract] should be decreed provided it is filed within the period of limitation notwithstanding the time limits stipulated in the agreement for doing one or the other thing by one or the other party. That would amount to saying that the time-limits prescribed by the parties in the agreement have no significance or value and that they mean nothing. Would it be reasonable to say that because time is not made the essence of the contract, the time-limits specified in the agreement have no relevance and can be ignored with impunity? It would also mean denying the discretion vested in the court by both Sections 10 and 20. As held by a Constitution Bench of this Court in Chand Rani v. Kamal Rani MANU/SC/0285/1993 : AIR1993SC1742 , "it is clear that in the case of sale of immovable property there is no presumption as to time being the essence of the contract. Even if it is not of the essence of the contract, the court may infer that it is to be performed in a reasonable time if the conditions are (evident?): (1) from the express terms of the contract; (2) from the nature of the property; and (3) from the surrounding circumstances, for example, the object of making the contract". In other words, the court should look at all the relevant circumstances including the time-limits specified in the agreement and determine whether its discretion to grant specific performance should be exercised. Now in the case of urban properties in India, it is well-known that their prices have been going up sharply over the last few decades - particularly after 1973*. In this case, the suit property is the house property situated in Madurai, which is one of the major cities of Tamil Nadu. The suit agreement was in December 1978 and the six months' period specified therein for completing the sale expired with 15th of June, 1979. The suit notice was issued by the plaintiff only on 11.7.1981, i.e., more than two years after the expiry of six months' period. The question is v/hat was the plaintiff doing in this interval of more than two years? The plaintiff says that he has been calling upon Defendants 1 to 3 to get the tenant vacated and execute the sale deed and that the defendants were postponing the same representing that the tenant is not vacating the building. The defendants have denied this story. According to them, the plaintiff never moved in the matter and never called upon them to execute the sale deed. The Trial Court has accepted the defendants' story whereas the High Court has accepted the plaintiffs story. Let us first consider whose story is more probable and acceptable. For this purpose, we may first turn to the terms of the agreement. In the agreement of sale, there is no reference to the existence of any tenant in the building. What it says is that within the period of six months, the plaintiff should purchase the stamp papers and pay the balance consideration whereupon the defendants will execute the sale deed and that prior to the registration of the sale deed, the defendants shall vacate and deliver possession of the suit house to the plaintiff. There is not a single letter or notice from the plaintiff to the defendants calling upon them to get the tenant vacated and get the sale deed executed until he issued the suit notice on 11.7.1981. It is not the plaintiffs case that within six months, he purchased the stamp papers and offered to pay the balance consideration. Defendants' case is that the tenant is their own relation, that he is ready to vacate at any point of time and that the very fact that the plaintiff has in his suit notice offered to purchase the house with the tenant itself shows that the story put forward by him is false. The tenant has been examined by the defendant as DW-2. He stated that soon after the agreement, he was searching for a house but could not secure one. Meanwhile [i.e., on the expiry of six months from the date of agreement], he stated, the defendants told him that since the plaintiff has abandoned the agreement, he need not vacate. It is equally an admitted fact that between December 15, 1978 and July 11, 1981, the plaintiff has purchased two other properties. The defendants' consistent refrain has been that the prices of house properties in Madurai have been rising fast, that within the said interval of 2 1/2 years, the prices went up by three times and that only because of the said circumstance has the plaintiff [who had earlier abandoned any idea of going forward with the purchase of the suit property] turned round and demanded specific performance. Having regard to the above circumstances and the oral evidence of the parties, we are inclined to accept the case put forward by Defendants 1 to 3. We reject the story put forward by the plaintiff that during the said period of 2 1/2 years, he has been repeatedly asking the defendants to get the tenant vacated and execute the sale deed and that they were asking for time on the ground that tenant was not vacating. The above finding means that from 15.12.1978 till 11.7.1981, i.e., for a period of more than 21/ 2 years, the plaintiff was sitting quiet without taking any steps to perform his part of the contract under the agreement though the agreement specified a period of six months within which he was expected to purchase stamp papers, tender the balance amount and call upon the defendants to execute the sale deed and deliver possession of the property. We are inclined to accept the defendant's case that the values of the house property in Madurai town was rising fast and this must have induced the plaintiff to wake up after 2 1/2 years and demand specific performance.

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 7467 of 1996

Decided On: 06.02.1997

K.S. Vidyanadam and Others 

Vs.

Vairavan

Coram:

B.P. Jeevan Reddy and S.B. Majmudar, JJ.

Citation:1997(2) MHLJ SC 642

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When court can extend time for deposit of balance consideration in suit for specific performance of contract?

 The   Hon'ble   Supreme   Court   in  Sardar   Mohar   Singh
(supra) has held that under provisions of Section 28(1) of the said
Act, after the decree for specific performance is passed, the Court
does not lose its jurisdiction nor does it become functus officio. Till
the period the sale deed is executed in execution of the decree, the
trial Court retains its powers and jurisdiction to deal with the
decree.  The Court has the power to enlarge the time despite an
application for rescission of the decree being filed by the judgment
debtor.  The prayer for extension of time is distinct from a prayer
for condonation of delay. In the aforesaid case, the delay of about
seven and half years was extended for complying with the decree
of specific performance.
In the light of the aforesaid legal position, if the facts
of   the   present   case   are   considered,   it   can   be   seen   that   the
respondents had applied for certified copy on 7-­1­2-012.  The same
was received on 13­-4­-2012. Immediately thereafter on 19­-4-­2012,
the application for enlargement of time came to be moved.  While

considering this application, the trial Court found that though the
said application was filed under Section 148 of the Code, it would
be treated as an application seeking extension of time to deposit
the balance consideration.   The application was treated as one
filed under Section 28 of the said Act.   In para 21 of its order, the
trial   Court   has   found   the   reasons   mentioned   therein   to   be
justifiable,   bonafide   and   convincing.     If   the   application   for
extension of time  to deposit balance consideration is to be treated
differently from an application for condontation of delay and if
within   a   short   period   from   receiving   certified   copy,   such
application for extension of time had been moved, I do not find
that by accepting the prayer for extension of time the trial Court
acted in any manner contrary to law.  The trial Court not having
become  functus officio  it acted within its jurisdiction in allowing
the application moved by the respondents.
10. Though   the   learned   Counsel   for   the   petitioner   is
justified in submitting that the knowledge of the decree ought to
be   attributed   to   the   parties   on   the   day   the   judgment   is
pronounced, in the facts of the present case when the time of two
months   was   granted   to   make   the   balance   payment   and   the
application for extension was moved within a period of a month
and half thereafter, it cannot be said that in this situation there

was any deliberate delay on the part of the respondents in seeking
extension   of   time   to   deposit   the   balance   consideration.   The
discretion in that regard was rightly exercised by the trial Court
especially when it did not lose seisin of the matter.   The judgment
of the learned Single Judge in Bhujangrao Ganpati (supra) cannot
be relied upon in the light of the subsequent judgment of the
Hon'ble   Supreme   Court   in  Sardar   Mohar   Singh   (supra).   The
judgments   relied   upon   by   the   learned   Senior   Counsel   for   the
respondents support his submissions.

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH : NAGPUR.
WRIT PETITION NO.6716 OF 2015
M/s   Armor's   Developers   Pvt.   Ltd., V  Smt.   Asha   W/o   Rajendra   Paigwar,

           CORAM: A.S. CHANDURKAR, J.
                            DATED:  11th  AUGUST,  2016.
Citation:2017(2) MHLJ 324

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When court should not grant decree for specific performance of contract?

Even if the plaintiff had proved that there was
agreement of sale, this Court or the Courts below in ordinary
course would have refused to grant relief of specific performance
of contract. At that time, the provision of section 20 of the
Specific Relief Act could have been used. The record shows that
the total area of two lands was more than 22 Acres. There were
2 wells in the lands and there is record to show that atleast on
one well electric motor was installed. In Survey No. 14 even cash
crops like sugarcane were taken in some portion by Sandu in the
year 1975-76. For taking one well, the loan of Rs. 5,300/- was
taken by Sandu from Land Development Bank prior to the date
of transactions. There were many trees and there was structure
of cattleshed in the land. It can be said that the value of the two
wells, cattleshed and electric motor was certainly more than Rs.
15,000/- at the relevant time. The defendant No. 1 has given

substantive evidence that value of the land per Acre at the
relevant time, in the year 1977 was between seven to eight
thousand rupees. Thus, the total value was more than Rs. 1.5
lakh. These were the only lands with Sandu at the relevant time
and his occupation was agriculture. In view of these
circumstances, the Court could have refused to use the
discretion in favour of plaintiff as per the power given to it in
section 20 (a) (b) and (c) of the Specific Relief Act. This Court
holds that plaintiff is not entitled to relief of specific performance

as he failed to prove that there was agreement of sale.
IN THE HIGH COURT AT BOMBAY
APPELLATE SIDE, BENCH AT AURANGABAD
SECOND APPEAL NO. 188 OF 2010
Kashinath S/o Yadeo Hiwarde,

Versus
 Osman Baig Sandu Baig @ Amir Baig,

CORAM : T.V. NALAWADE, J.
DATED : 10th December, 2015.
Citation; AIR2016(NOC)266 Bom

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Whether prohibition in special Act for alienation of land bar maintainability of suit for specific performance?

Learned counsel for the appellant, however, further referred to Section 3 of the J & K Prohibition on Conservation of Land and Alienation of Orchards Act, 1975 which is as under: - 3. Prohibition on conversion of land and alienation of orchards.(1) Notwithstanding anything contained in any other law for the time being in force

(a) no person shall alienate an orchard except with the previous permission of the Revenue Minister or such officer as may be authorised by him in this behalf;

[Provided that alienation of orchards to the extent of Four Kanals only in favour of one or more persons for residential purposes shall not need any permission.]

(b) Considering the aforesaid section, it is apparent that prohibition on transfer of orchards is not absolute and the question of obtaining previous permission as contemplated under Section 3(1)(a) would arise at the time of execution of the sale deed on the basis of decree for the specific performance. Section 3 does not bar the maintainability of the suit and permission can be obtained by filing proper application after the decree is passed. Therefore, it cannot be stated that decree for specific performance is not required to be passed. Further, under Section 3 of the J & K Prohibition on Conservation of Land and Alienation of Orchards Act, 1975, prohibition on transfer is limited. Firstly, the proviso makes it clear that alienation of orchards to the extent of four kanals only in favour of one or more persons for residential purposes will not require any permission. Secondly, for more than four kanals of land, previous permission of the Revenue Minister or such Officer as may be authorised by him in this behalf is required to be obtained. Dealing with similar contention, this Court in Bai Dosabai v. Mathuradas Govinddas and Others[(1980) 3 SCR 762] observed that even if the Act prohibits alienation of land, if the decree is passed in favour of the plaintiff, it is required to be moulded suitably. 

Supreme Court of India

Manzoor Ahmed Margray vs Gulam Hassan Aram & Ors on 5 October, 1999

Bench: M.B.Shah, D.P.Wadhwa

Citation:(1999) 7 Supreme Court Cases 703       

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Whether decree for specific performance of contract can be granted in favour of person not entering into witness box?

 In this case, there is absolutely no evidence on the side of the first respondent to prove that he was ready and willing to perform his part of the contract and such readiness and willingness continued till the date of the decree. It is certainly the duty of the first respondent to have gone into the box and given formal evidence that he was ready and willing to perform his part of the contract and subjected himself to cross-examination. In the absence of the first respondent from the witness box, we are unable to find that the first respondent plaintiff has discharged the duty enjoined on him under S. 16(c) of the Specific Relief Act 1963, entitling him to a decree for specific performance. No doubt, it is not specifically clear from the judgment of the trial Judge whether the question regarding the readiness and willingness of the first respondent to perform his part of the contract was urged before the learned Judge. In our opinion, it would be certainly open to the appellant to raise the question before us.

Section 16(c) of the Specific Relief Act 1963 is prohibitory and that a duty is cast on courts by a public statute that a specific performance of a contract cannot be granted in favour of a person unless he avers and proves his readiness and willingness to perform his part of the contract. That being the nature of the statute, it would be the duty of the court to see whether the person who seeks to enforce the contract satisfies the mandatory provisions of S. 16 of the Specific Relief Act.

Madras High Court

H.G. Krishna Reddy And Co. vs M.M. Thimmaiah And Anr. on 24 January, 1983

Equivalent citations: AIR 1983 Mad 169, (1983) 1 MLJ 467

Bench: K Singh, Padmanabhan

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Whether legal heirs of deceased are entitled to defend suit for specific performance filed against deceased?

 In the light of the law laid down as above, there is no escape from the proposition that in the case of death of the original vendor defending a specific performance suit, his legal representatives have to be joined as party Defendants upon his death and it is they alone, who represent the estate of the deceased vendor and not the subsequent transferee of the original vendor.

Equivalent Citation: 2014(6)ABR776,AIR 2015(NOC)207 Bom

IN THE HIGH COURT OF BOMBAY

Chamber Summons Nos. 614 and 1056 of 2014 in Suit No. 1166 of 2006

Decided On: 27.08.2014

 Nirav Deepak Modi

Vs.

 Najoo Bhiwandiwala

Hon'ble Judges/Coram:S.C. Gupte, J.

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When seller is bound to refund earnest money with interest to purchaser of immovable property ?

The further aspect that requires to be noticed is as to the nature and character of earnest money deposit and in that context the distinguishing features, which help to delineate the differences, if any. The matter is not, at any rate, res integra. In (Kunwar) Chiranjit Singh v. Har SwarupMANU/PR/0083/1925, it was held that the earnest money is part of the purchase price when the transaction goes forward and it is forfeited when the transaction falls through, by reasons of the fault or failure of the purchaser. This statement of law had the approval of this Court in Maula-Bux v. Union of India MANU/SC/0081/1969 : [1970]1SCR928 . Further, it is not the description by words used in the agreement only that would be determinative of the character of the sum but really the intention of parties and surrounding circumstances as well, that have to be baked into and what may be called an advance may really be a deposit or earnest money and what is termed as 'a deposit or earnest money' may ultimately turn out to be really an advance or part of purchase price. Earnest money or deposit also, thus, serves two purposes of being part payment of the purchase money and security for the performances of the contract by the party concerned, who paid it.

17. Coming to the facts of the case, it is seen from the agreement dated 13.5.1994 entered into between parties - particularly Clause 1, which specifies more than one enumerated categories of payment to be made by the purchaser in the manner and at stages indicated therein, as consideration for the ultimate sale to be made and completed. The further fact that the sum of Rs. 38 lakhs had to be paid on the date of execution of the agreement itself, with the other remaining categories of sums being stipulated for payment at different and subsequent stages as well as execution of the sale deed by the Vendors taken together with the contents of the stipulation made in Clause 2.3, providing for the return of it, if for any reason the Vendors fail to fulfill their obligations under Clause 2, strongly supports and strengthens the claim of the appellants that the intention of the parties in the case on hand is in effect to treat the sum of Rs. 38 lakhs to be part of the prepaid purchase-money and not pure and simple earnest money deposit of the restricted sense and tenor, wholly unrelated to the purchase price as such in any manner. The mention made in the agreement or description of the same otherwise as "deposit or earnest money" and not merely as earnest money, inevitably leads to the inescapable conclusion that the same has to and was really meant to serve both purposes as envisaged in the decision noticed supra. In substance, it is, therefore, really a deposit or payment of advance as well and for that matter actually part payment of purchase price, only. In the teeth of the further fact situation that the sale could not be completed by execution of the sale deed in this case only due to lapses and inabilities on the part of the respondents - irrespective of bonafides or otherwise involved in such delay and lapses, the amount of rupees 33 lakhs becomes refundable by the Vendors to the purchasers as of the prepaid purchase price deposited with the Vendors. Consequently, the sum of rupees 38 lakhs to be refunded would attract the first limb or part of Section 55(6)(b) of the Transfer of Property Act itself and therefore necessarily, as held by the learned Single Judge, the defendants prima facie became liable to refund the same with interest due thereon, in terms of Clause 2.3 of the agreement Therefore, the statutory charge envisaged therein would get attracted to and encompass the whole of the sum of rupees 38 lakhs and the interest due thereon. In the light of the above, in our view, the learned Single Judge on the original side was right in passing the order dated 23.10.2001 and the order of the Division Bench, taking a contrary view in the order under challenge, is contrary to law and the reasons assigned therefore cannot be countenanced. Hence, the same is hereby set aside and the order of the learned Single Judge shall stand restored, and to be in force pending disposal of the suit.

Supreme Court of India

Videocon Properties Ltd vs Dr. Bhalchandra Laboratories & ... on 19 December, 2003

Bench: Doraiswamy Raju, Arijit Pasayat.

Citation: AIR2004SC1787, 2004(2)ALD87(SC), 2004(5)ALLMR(SC)559, 2004 (54) ALR 575, 2004 2 AWC(Supp)1470SC, 2004(106(2))BOMLR802, JT2004(5)SC490, 2004-2-LW871, 2003(10)SCALE1085, (2004)3SCC711.

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When seller of immovable property can forfeit earnest money paid by purchaser?

To justify the forfeiture of advance money being part of 'earnest money' the terms of the contract should be clear and explicit. Earnest money is paid or given at the time when the contract is entered into and, as a pledge for its due performance by the depositor to be forfeited in case of non-performance, by the depositor. There can be converse situation also that if the seller fails to perform the contract the purchaser can also get the double the amount, if it is so stipulated. It is also the law that part payment of purchase price cannot be forfeited unless it is a guarantee for the due performance of the contract. In other words, if the payment is made only towards part payment of consideration and not intended as earnest money then the forfeiture clause will not apply.

 REPORTABLE
                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION
                        CIVIL APPEAL NO. 7588 OF 2012
                [Arising out of SLP (Civil) No. 4605 of 2012]
Satish Batra                                             .. Appellant
                                   Versus
Sudhir Rawal                                             .. Respondent
Citation;2013(2)MhLj596, 2013(2)MPLJ1, 2013(1)OLR593, 2012(4)PLJR237, 2012(4)RCR(Civil)890, 2013 118 RD657, 2012(10)SCALE393, (2013)1SCC345,
K. S. Radhakrishnan, J.

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Whether it is necessary to claim declaration in suit for specific performance when agreement of sale is terminated?

The plaintiff had issued reply letter dated 16.3.1985 to the advocates of defendant Nos. 1-4, in which he had admitted his default in performing his part of contract and prayed time till 23.05.1985 to get the sale deed executed in his favour. Another legal notice dated 28.03.1985 was sent by the first defendant to the plaintiff extending time to the plaintiff asking him to pay the sale consideration amount and get the sale deed executed on or before 10.04.1985, and on failure to comply with the same, the Agreement of Sale dated 25.12.1983 would be terminated since the plaintiff did not avail the time extended to him by defendant Nos. 1-4. Since the plaintiff did not perform his part of contract within the extended period in the legal notice referred to supra, the Agreement of Sale was terminated as per notice dated 28.03.1985 and thus, there is termination of the Agreement of Sale between the plaintiff and defendant Nos. 1-4 w.e.f. 10.04.1985. As could be seen from the prayer sought for in the original suit, the plaintiff has not sought for declaratory relief to declare the termination of Agreement of Sale as bad in law. In the absence of such prayer by the plaintiff the original suit filed by him before the trial court for grant of decree for specific performance in respect of the suit schedule property on the basis of Agreement of Sale and consequential relief of decree for permanent injunction is not maintainable in law. Therefore, we have to hold that the relief sought for by the plaintiff for grant of decree for specific performance of execution of sale deed in respect of the suit schedule property in his favour on the basis of non existing Agreement of Sale is wholly unsustainable in law. Accordingly, the point No. 1 is answered in favour of the defendant No.5.
In the absence of a prayer, seeking declaratory relief to declare the termination of Agreement of Sale as bad in law, the original suit filed by the Plaintiffs for grant of decree for specific performance in respect of the suit property on the basis of Agreement of Sale and consequential relief of decree for permanent injunction is not maintainable in law. Further it has laid down that the relief sought for by the Plaintiffs for grant of decree for specific performance of execution of sale deed in respect of the suit property in his favour on the basis of non existing Agreement of Sale is wholly unsustainable in law.

Supreme Court of India

I.S.Sikandar (D) By Lrs.& Ors vs K.Subramani & Ors on 29 August, 2013

Bench: G.S. Singhvi, V. Gopala Gowda

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Whether conduct of plaintiff subsequent to filing of suit can be taken into consideration by court in suit for specific performance of contract?

In N.P. Thirugnanam V. Dr. R. Jagan Mohan Rao [MANU/SC/0025/1996 : (1995) 5 SCC 115] at SCC para 5, this Court held: (SCC pp. 117-18)

5. ... Section 16(c) of the Act envisages that the Plaintiffs 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 Plaintiffs is a condition precedent to grant the relief of specific performance. This circumstance is material and relevant and is required to be considered by the court while granting or refusing to grant the relief. If the Plaintiffs fails to either aver or prove the same, he must fail. To adjudge whether the Plaintiffs is ready and willing to perform his part of the contract, the court must take into consideration the conduct of the Plaintiffs prior and subsequent to the filing of the suit along with 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 Plaintiffs was ready and was always ready and willing to perform his part of the contract.

Supreme Court of India

N.P. Thirugnanam (D) By Lrs vs Dr. R. Jagan Mohan Rao & Ors on 12 July, 1995

Equivalent citations: 1996 AIR 116, 1995 SCC (5) 115

Bench: Ramaswamy, K.

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Whether plaintiff can seek specific performance of contract when said contract is terminated?

 Further the Supreme Court of India in the case of I.S.

SIKANDAR VERSUS K. SUBRAMANI 2014 (1) SCALE 1 has laid down that in the absence of a prayer, seeking declaratory relief to declare the termination of Agreement of Sale as bad in law , the original suit filed by the Plaintiffs for grant of decree for specific performance in respect of the suit property on the basis of Agreement of Sale and consequential relief of decree for permanent injunction is not maintainable in law. Further it has laid down that the relief sought for by the Plaintiffs for grant of decree for specific performance of execution of sale deed in respect of the suit property in his favour on the basis of non existing Agreement of Sale is wholly unsustainable in law.

Delhi High Court

Surjit Singh Bhatia & Others vs Tej Raj Singh Goel (Huf) on 1 July, 2014

Author: Sanjeev Sachdeva

        CS(OS) 1447/2010   

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When plaintiff has failed to prove readiness and willing to perform his part of contract in suit for specific performance of contract?

 On a plain reading of Ex.P67, it is clear that the defendants were not expected to do anything except to execute a sale-deed, the moment the remaining sum of Rs.55 lakhs was paid to them. It is the case of plaintiffs that they had personally met Yogananda several times demanding him to execute a sale deed by receiving the balance consideration. It is further pleaded that he dodged to execute a sale deed on one pretext or the other. No evidence is forthcoming with regard to the dates on which demand was made. If he was really taking time on one pretext or the other, no prudent man would keep quiet. Prudence demands that such a purchaser would find such reasons as only ruse and would suddenly get a legal notice issued.

21. Agreement is dated 13.09.2008. six months time fixed in Ex.P67 expired on 13.03.2009. No notice was got issued. Suit was filed on 20.08.2010 i.e., almost one year five months after the lapse of six months time stipulated in Ex.P67. Yogananda died on 01.06.2010 i.e., long after the expiry of six months.

22. What is argued before this court by Sri. R.L. Patil, learned counsel is that time is not the essence of contract in respect of immovable properties and hence suit so filed on 20.08.2010 is in time as it is within three years as mandated in Part I of Article 54 of the Limitation Act.

23. We are unable to agree with Sri.R.L.Patil, learned counsel, on this aspect. Schedule property is described as an agricultural land in Ex.P67. Reality is that substantial portion of the land had already been converted into non-agricultural purpose prior to executing Ex.P67. Apart from this 60 to 70 RCC houses were already in existence in the suit land as on the date of executing Ex.P67. The approximate value, even as per the very admission of PW-1, was valued between Rs.35 to 40 lakhs. Land in question is in Coorg District and is by the side of Cauvery river. Entire Coorg District is known for attracting tourists from different parts of the country. Such being the case, the property in question is very much potential to be used for attracting tourists. As such plaintiffs, were expected to exercise their right of specific performance at the earliest without giving room for any laches. It need not be reiterated that laches disentitle the plaintiffs to have the relief of specific performance which is an equitable relief. Learned Judge has dealt with all these aspects meticulously. Hence, we are the considered opinion that the learned Judge is justified in answering Issue No. 2 in the negative. 

Karnataka High Court

Sri M V Prema Chandra vs Smt Sarojamma on 14 October, 2014

Author: K.L.Manjunath And A.V.Chandrashekara
Citation; AIR 2015 Karnataka 1

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Adding of parties in suit for specific performance of contract when it can be permitted?

 The decision of the Supreme Court in Bharat Karsondas Thakkar vs. Kiran Construction Co., MANU/SC/7476/2008 : AIR 2008 SC 2134 rested on facts which were as follows:

By the proposed amendment what was sought to be introduced was a challenge to a consent decree which the Appellant had obtained. Although this fact was brought to the notice of the First Respondent in March 1984, no steps were taken to amend the plaint at that stage and the First Respondent waited until a consent decree was passed before applying for amendment of the plaint. Hence, the Supreme Court held that the proper course of action was for the First Respondent to challenge the consent decree not in its suit for specific performance but in a separate suit for a declaration that the consent decree ought not to have been passed and was not binding on the First Respondent. Significantly, in the case before the Supreme Court, the agreement in question was prior to the suit agreement. Significantly, the Supreme Court observed as follows:

... If, as was held in Durga Prasad's case (supra), the impleadment of the appellant was only for the purpose of joining him in the conveyance if the respondent No. 1's suit ultimately succeeded, the ratio of the said decision would possibly have been applicable to the facts of this case. Unfortunately, that is not the case here, since the respondent No. 1 has by amending the plaint prayed for a declaration that the consent decree obtained by the appellant was not binding on him and also for a declaration that the consent decree was null and void and was liable to be quashed.

These principles have been followed by a Division Bench of this Court in a judgment dated 9 April 2013 in Shree Kamal Constructions vs. Kamlakar Jiwan Patil⁶.

7. In the present case, the Third Appellant is a necessary party to the suit for specific performance. The Third Appellant claims under the First Appellant. The Third Appellant does not set up a title adverse to that of the First Appellant or an independent title. Moreover, the agreement between the First and Third Appellants of 2 August 2008 is subsequent to the agreement dated 10 November 2005 that was entered into between the First and Second Appellant and the Plaintiffs. Hence, the application for amendment would not change the character of the suit for specific performance.

IN THE HIGH COURT OF BOMBAY

Appeal (L) No. 285 of 2012 in Chamber Summons No. 1600 of 2010 in Suit No. 2318 of 2010

Decided On: 26.07.2013

Appellants: Shri Swastik Developers and Ors.
Vs.
Respondent: Saket Kumar Jain and Anr.

Hon'ble Judges/Coram:D.Y. Chandrachud and S.C. Gupte, JJ.

Citation;2014(2)ALLMR183 BOM

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