Discretion as to Decreeing Specific Performance – Section 20 | Specific Relief Act

Section 20 of the Specific Relief Act, 1963 Provides that:

1. Agreement for sale:

An agreement for sale of property was executed by defendant No. 1, who was the sole executor appointed by his mother in Will. Agreement was executed in favour of plaintiff, an Advocate and tenant in property in question. Correspondence between plaintiff and defendant No. 1 show that plaintiff created a scare in mind of defendant No. 1 and got agreement for sale executed. Apart from it, there was a clause in that agreement making it clears that it was “subject to ratification by co-heirs”. It shows that it was not a concluded contract, as such could not be enforced in Court of law. Although executor has an absolute right to transfer property. But facts of this case put back this right into back seat because there was no concluded contract and was not enforceable also. Therefore, power under Section 20 could not be exercised in such a case.

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Appellant getting a suitable accommodation before she could be asked to specifically perform contract of sale and in case of genuine difficulty arising to opt for returning earnest money with interest. Further it was held, that she cannot in the present set of facts be obliged to part with her prop­erty by effecting a sale.

It is worthwhile to recount that permission to sell the house was granted to the appellant in the month of May, 1979. Within a few weeks, hurriedly, the appellant was served with a notice dated 9.7.1979 requiring her to execute the sale-deed totally overlooking her need to get another house, on failing to put her to notice that she was required to search for and get a suitable house within a reasonable time.

Such course could be suggested to her by the respondent, showing his concern and willingness. Strangely rather, she was required to come to the office of Registrar ten days later, i.e. on 19.7.1979 to execute the sale-deed.

Since the respondent had not re­quired of the appellant to search for a house, she rightly in her reply dated 9.7.1979 did not feel obliged on her own to seek time from the respondent to obtain another suitable house. She rightly ventured otherwise to resist the claim of the respondent for specific performance.

A suit then was filed by the respondent on 26.7.1979. So all the events took place in a hurried manner from May to July 1979. In this situation, the appellant cannot be attributed any conduct of neglect in not searching for another suitable house within a reasonable time. At the same time it cannot be lost sight of that Nagpur being a populous town, where admittedly rent control legislation was operative, accommodation could not easily be had by purchase or lease on the mere asking and it normally was expected to take some time, which the parties to the agreement necessarily must have been conscious of.

It is in this context the two terms afore-referred to were required to be read together and interpreted for they carried a suitable meaning insofar as the transfer of the house by way of sale was concerned. It is more than clear that the parties had appreciated and recognized the appellant’s need to have another suitable house and that there could arise a difficulty on that score in transferring the house if a suitable house could not become avail­able within a reasonable time.

In that situation, it was stipulated that the sum of Rs. 5,000/- paid as earnest money would be returned with interest. Viewed in the context, close to the heels of the permission granted in May, 1979, how could the respondent unabashedly bound ‘he appellant to ex­ecute the sale-deed, knowing fully well her need to obtain another suitable accommodation ignoring her difficulty on that account. Such conduct of the respondent as it appears from the peculiar facts and circumstances of this case was highly objectionable and unreasonable, disentitling him to seek relief of specific performance for sale of the house in question.

The respondent, in the situation, could not straight away ask the appellant to specifically perform the contract unless he initially had put the appellant to notice to seek and get another suitable accommodation within a reason­able time within which it could reasonably be available in the town of Nagpur. Such a notice obviously could be given only after the grant of permission to sell by the competent authority, Nagpur, because in the event of non-grant of permission the search for another suitable accommodation would have become unnecessary.

Thus their Lordships were of the view that in the fact and circumstances, the two terms afore-referred to bore important contin­gencies, i.e. the appellant getting suitable accommodation before she could be asked to specifically perform the contract of sale and in case of a genu­ine difficulty arising to opt for returning the earnest money with interest. She cannot, in the present set of facts, be obliged to part with her property by effecting a sale.

Defendant had sought adjournment to produce evidence. But the trial Court declined the adjournment and dismissed suit. The suit in first appeal, grant of opportunity to lead evidence was also declined and suit was dis­missed on finding that defendant might had been pressurised to execute the sale agreement only as a security for recovery of the loan and that there existed loan transaction between the parties. It was not proper and matter was remanded to trial Court to afford opportunity to defendant to adduce evidence.

In suit for specific performance of sale agreement, it is for defendant to prove that the agreement, the execution where off was admitted by him in fact was not intended to be a real sale agreement and it was only a security for the loan advanced to him by the plaintiff.

2. Agreement of reconveyance:

Where suit for specific performance of agreement of reconveyance of property was filed after payment of loan taken by plaintiff it was held that after receiving back amount given as loan, defendant was bound to perform the terms of agreement of reconveyance.

3. Agreement of sale:

The recitals of the agreement of sale clearly mention the necessity of sale arising from the pressure of public dues and taxes. The vendor could not have waited for an unreasonably long period of pendency of sanction suit when commencement of recovery proceedings for public dues and taxes could have commenced any time.

There is no period fixed in the terms of the contract for obtaining sanction of the Court, but keeping in view the other terms of the contract and the pressing re­quirement for sale of the property to clear public dues, it has to be held that obtaining of Court’s sanction within a reasonable period and in any case within a period well before commencement of recovery proceedings for dues and taxes, was in contemplation of the parties as an implied term, notice served for terminating the contract, after waiting for two years for sanction by the Court, cannot therefore be held to be a breach of the con­tract on the part of the vendor.

4. Agreement:

As appellant refused to execute the sale deed the suit was filed for specific performance of the agreement. Both the suits were contested.

The trial Court dismissed the suit filed by the appellant for cancellation of the agreement and decreed the suit filed by the respondents for specific performance. Appellant filed an appeal against the order passed which was dismissed by the first appellate Court. Aggrieved against which the appel­lant filed second appeal which has been dismissed by the impugned order.

The High Court on re-appreciation of the entire evidence came to the same conclusion as that of the Courts below. Counsel for the appellants failed to point out any error in the findings recorded by the Courts below. The only contention raised by him is that the agreement was unconscio­nable as the price of land at the time of the alleged agreement to sell was more than 20 lakhs and the appellant is being deprived of his valuable land for a petty amount. On perusal of the written statement filed by the appel­lant in the trial Court we find that no such plea was raised in the written statement. No issue was framed. No evidence was led by the appellant to prove that the market price of the land was Rs. 20 lakhs as argued before us. In the absence of plea having been raised or an issue framed or evi­dence led on the point, we are unable to hold that his agreement to sell was unconscionable.

Where there was agreement to sell only the portion in occupation of vendors and portion let out to tenants was not included in the agreement, it was held that agreement of vendee in respect of portion let out to tenants had failed. Therefore, mere use of the words ‘entire house’ in agreement was immaterial.

5. Alterations in:

It has been observed by Supreme Court that: “Where an instrument, or if a bill the acceptance thereon is materi­ally altered without the assent of all the parties liable on it, the in­strument is voided as regards all the parties except anyone who has himself made, authorised or assented to the alteration, and those who have become parties to the instrument subsequent to the ma­terial alteration. The following alterations are specifically declared to be material: any alteration of (1) the date; (2) the sum payable; (3) the time of payment; (4) the place of payment, or the addition of a place of payment where one is mentioned by the acceptor, without the acceptor’s consent.”

6. Amendment:

Agreement to sell property nowhere stating that in event permission to sell minor’s share was not obtained within period speci­fied therein, same shall become invalid or otherwise unenforceable in law. Application for grant of permission to sell minor’s share rejected only dur­ing pendency of suit. Thus, contract was not contingent contract. Vendors having definite share in property excluding minor’s share. It was not com­posite contract. Decree for specific performance of contract regarding ven­dors excluding share of minor can be passed moreso, when purchaser re­linquished his claim in respect of property belonging to minor by way of amendment.

7. Appeal against:

In this appeal on behalf of the vendee it is now contended that had the suit for sanction been prosecuted by the vendor bona fide and diligently, as stipulated in the terms of the contract, the Court might have granted sanction despite objection of the reversioners because there was likelihood of loss of the property in process of recovery of public dues by auction and sale. If that was the legal position, the vendee ought not to have suffered the alleged wrongful dismissal of suit for sanction as infructuous. When decree granted for conveyance of life interest of the vendor in the suit for specific performance was challenged by the subse­quent vendee before the Division Bench of the High Court, the vendee could as well have preferred cross appeal against the dismissal of the suit for sanction as infructuous. He was a co-plaintiff in that suit can had an inde­pendent right of appeal. The non-filing of any appeal against dismissal of sanction suit as infructuous is a clear indication that the vendee was satis­fied with the grant of decree merely of specific performance of conveyance of life interest of the vendor. It is not open to the vendee now to question the correctness of the dismissal of the suit for sanction as infructuous by the learned Single Judge.

8. Appeal:

In an appeal against order of specific performance, the Appellate Court generally does not interfere with the discretion exercised by the Trial Judge unless it appears that while exercising such discretion the learned Trial Judge has wrongly applied the principles for grant of such discretion or unless it is established that such discretion has been unrea­sonably or capriciously used.

In the instant case, the Supreme Court did not permit a mixed question of law and fact to be raised for the first time as it was not raised in the pleading, no issue was raised in respect thereof and no argument was ad­dressed either in the Trial Court or in the High Court.

It prominently appears that the plaintiff put off performing her part of the contract presumably because she had not the necessary wherewithal to take the conveyance when she would be obliged to pay the balance of consideration and having obtained possession stuck on to it without meet­ing her obligation. If in this background, the High Court interfered with the decree of the Trial Court, there is nothing objectionable in it. The decree for specific performance in this case has been rightly refused and this appeal is liable to be dismissed.

When Appellate Court agrees with the view of the Trial Court on evi­dence, it need not restate the effect of the evidence or to reiterate the reasons given by the Trial Court, is well-merited.

9. Applicability of:

Defendant No. 2 was aware of plaintiff’s posses­sion in the suit premises as a tenant. Defendant No. 2 had filed, in the Court of Small Causes, for eviction of the plaintiff herein, under Section 21 (1) (h) of the Karnataka Rent Control Act, 1961. A bare reading of the order dated 14.10.1985 passed by the Small Causes Court in the above eviction suit indicates that defendant No. 2 was put to notice that in case the plaintiff succeeds in the suit for specific performance, defendant No. 2 will have to vacate. In the circumstances, it cannot be said that second defendant was not in a position to foresee the ensuing hardship. Hence, Section 20 (2) (b) is not applicable to the facts of the present case.

Where appellants were seeking the remedy in the civil suit; any subse­quent sale would be barred by the doctrine of Us pendens. Therefore, the subsequent purchaser is bound by the decree of specific performance and liable to reconvey the property to the appellants. The decree of the Trial Judge is accordingly restored and that of the High Court and the Additional Civil Judge stand set aside. The remedy of recovery of the purchased money from the respondent may be sought in an appropriate action.

10. Ascertainment of:

For the purposes of granting relief, the reason­able time has to be ascertained from all the facts and circumstances of the case.

11. Assignment of interest:

In case of assignment of interest in prop­erty where act of third party akin to champertous i.e. traffic in litigation it was held that specific performance may be refused.

12. Auction:

In the instant case, immovable property of lady (Defen­dant) was to be sold in auction sale by Court, therefore, plaintiff with inten­tion to help his sister (Defendant) gave the amount mentioned in agree­ment and protected her property from such auction sale. This fact shows that agreement was not intended for execution. Court, therefore rightly re­fused its execution keeping in view the facts of this case viz., impecunious circumstances and hard-up condition of that lady in which that agreement was executed and directed refund of money given by plaintiff.

13. Bank accounts:

According to the purchaser he was ready with the requisite fund, having kept it in the Bank, and the defendant failed to in­quire with the Bank nor called upon the plaintiff to produce his Bank ac­counts.

14. Basis of:

The jurisdiction to order specific performance of a con­tract is based on the existence of a valid and enforceable contract. Where a valid and enforceable contract has not been made, the Court will not make a contract for them. The specific performance of a contract is the actual execution of the contract according to its stipulations and terms, and the Court directs the party in default to do the very thing which he contracted to do.

The stipulations and terms of the contract have, therefore, to be certain and the parties must have been consensus ad idem. The acceptance must be absolute, and must correspond with the terms of the offer. The burden of showing the stipulations and terms of the contract and that the minds were ad idem, is, of course, on the plaintiff. If the stipulations and terms are uncertain, and the parties are not ad idem, there can be no specific perfor­mance, for there was no contract at all.

15. Bona fide:

Agreement entered into to protect the unpaid interest on the loan and there was undue delay in seeking relief of specific perfor­mance. Thus, payment of consideration under agreement was doubtful. Therefore relief of specific performance denied and decree of amount of consideration without any interest, granted.

In an agreement to sell the property, induction of third party in the property after institution of suit not bona fide. Possession of third party is no impediment to grant specific performance.

It has been observed on aspects of review of decision in the following words:

“It cannot be overlooked that three Courts have held concurrently in this case, that the respondent has proved that he requires the suit premises bona fide for his personal need. Such concurrence undoubtedly, has relevance on the question whether this Court should exercise its jurisdiction under Article 136 of the Constitution to review a particular decision. That jurisdiction has to be exercised sparingly. But that cannot possibly mean that injustice must be per­petrated because it has been done three times in a case. The bur­den of showing that a concurrent decision of two or more Courts or Tribunals is manifestly unjust lies on the appellant. But once that burden is discharged, it is not only the right but the duty of this Court to remedy the injustice. The learned Counsel, who appeared for the respondent, argued that this may lead and, in practice, does lead to different standards being applied by different Courts to find out whether a concurrent decision is patently illegal or unjust. That, in the present, dispensation is inevitable. Quantitatively, the Supreme Court has a vast jurisdiction which extends over matters as far apart as Excise to Elections and Constitution to Crimes. The Court sits in Benches and not enbanc, as the American Supreme Court does. Indeed, even if the entire Court were to sit to hear every one of the eighty thousand matters which have been filed this year, a certain amount of individuality in the response to injustice cannot be avoided. It is a well-known fact of constitutional history, even in countries where the whole Court sits to hear every case, that the composition of majorities is not static. It changes from subject to subject though perhaps not from case to case. Personal responses to injustice are not esoteric. Indeed, they furnish refreshing assur­ance of close and careful attention which the Judges give to the cases which come before them. We do not believe that the litigating public will prefer a computerised system of administration of justice; only, that the Chancellor’s foot must tread warily.

16. Burden of proof:

The burden of proof is heavy upon a person who intends to get an oral agreement specifically enforced through a Court of law.

The burden of proving the readiness and willingness to perform his part of the contract is entirely on the plaintiff and he cannot succeed in his claim for a decree for specific performance, by establishing that the vendor- defendant was avoiding to perform the contract; defendant’s failure to per­form his part’ of the contract is the course for the suit; but to succeed in the suit, plaintiff has to prove his readiness and willingness.

The Supreme Court on aspects of burden to proof documents held that:

“As regards documents taken from pardanashin women the Court has to ascertain that the party executing them has been a free agent and duly informed of what she was about. The reason for the rule is that the ordinary presumption that a person understands the docu­ment to which he has affixed his name does not apply in the case of a pardanashin woman. The burden of proof shall always rest -upon the person who seeks to sustain a transaction entered into with a pardanashin lady to establish that the said document was entered into by her after clearly understanding the nature of the transaction. It should be established that it was not her physical act but also her mental act. The burden can be discharged not only by proving that the document was explained to her and that she understood it but also by other evidence, direct and circumstantial.”

17. Circumstances:

Certain circumstances have been mentioned in Section 20(2) of the Specific Relief Act, 1963 as to under what circum­stances the Court shall exercise such discretion. If under the terms of the contract the plaintiff gets an unfair advantage over the defendant, the Court may not exercise its discretion in favour of the plaintiff. So also, specific relief may not be granted if the defendant would be put to undue hardship which he did not foresee at the time of agreement. If it is inequitable to grant Specific Relief, then also the Court would desist from granting as decree to the plaintiff.

18. Claim of:

In view of the fact that the respondent himself had claimed alternative decree for damages it appears that he Courts would have been well justified in granting alternative decree for damages instead of ordering specific performance which would be unrealistic and unfair.

19. Condonation of delay:

In dealing with the question of condoning the delay tinder Section 5 of the Limitation Act the party seeking relief has to satisfy the Court that he had sufficient cause for not preferring the appeal or making the application within the prescribed time and this has always been understood to mean that the explanation has to cover the whole pe­riod of delay.

20. Condonation of:

It is not possible to lay down precisely as to what facts or matters would constitute ‘sufficient cause’ under Section 5 of the Limitation Act. But those words should be liberally construed, so as to advance substantial justice when no negligence or any inaction or want of bona fides is imputable to a party, i.e., the delay in filling an appeal should not have been for reasons which indicate the party’s negligence in not tak­ing necessary steps which he would have or should have taken. What would be such necessary steps will against depend upon the circumstances of a particular case.

21. Conduct:

Under Section 20 of the Specific Relief Act, 1963 the decree for specific performance is in the discretion of the Court but the discretion should not be refused arbitrarily. The discretion should be exercised on sound principles of law capable of correction by an appellate Court.

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 makes false allegations does not come with clean hands and is not entitled to the equitable relief.

22. Considerations for:

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-limit(s) 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.

For a period of more than 2½ 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. The Court 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 2½ years and demand specific performance.

Indeed, the Court is inclined to think that the rigor of the rule evolved by Courts that time is not of the essence of the contract in the case of immovable properties, evolved in times when prices and values were stable and inflation was unknown, requires to be relaxed, if not modified, particularly in the case of urban immovable properties. It is high time, we do so.

May be, the parties knew of the said circumstance but they have also specified six months as the period within which the transaction should be completed. The said time-limit may not amount to making time the essence of the contract but it must yet have some meaning, not for nothing could such time-limit would have been prescribed. Can it be stated as a rule of law or rule of prudence that where time is not made the essence of the contract, all stipulations of time provided in the contract have no signifi­cance or meaning or that they are as good as non-existent? All this only means that while exercising its discretion, the Court should also bear in mind that when the parties prescribe certain time-limit(s) for taking steps by one or the other party, it must have some significance and that the said time-limit(s) cannot be ignored altogether on the ground that time has not been made the essence of the contract.

In an agreement to sell there is stipulation for damages in case of breach of contract. The object of such stipulation is to secure performance of contract and not give an option of paying money in lieu of specific perfor­mance.

In case of an agreement to sell immovable property, relief of specific performance is not automatic rise in price of property during pendency of proceedings is a relevant consideration. Damages claimed by the plaintiff as alternate relief, allowed holding the decree of specific performance to be inequitable and unjust in the circumstances.

The ordinary rule is that specific performance should be granted. It ought to be denied only when equitable considerations point to its refusal and the circumstance show that damages would constitute and adequate relief. In the present case, the conduct of the appellant has not been such as to disentitle him to the relief of specific performance.

Nor is there anything to prove that the performance of the contract would involve the respondents in some hardship which they did not fore­see. In our opinion, there is no reason why the appellant should not be granted the relief of specific performance.

What the parties themselves could do or perform, if they wish or so desire, may be compelled to be performed by the mandate of the compe­tent Court also and Court cannot be held to be disabled or disentitled in law to direct the parties to perform their obligations, express and implied by adhering to the solemn undertaking under the contract between the par­ties.

23. Consideration of:

In the instant case, the High Court declined to grant a decree for specific performance in favour of the plaintiff even though the defendant was guilty of breach of agreement. That was a case where the defendant had constructed costly structures and if a decree for specific performance was granted, the defendant would have been put to special hardship. This Court directed the defendant to pay compensation to the plaintiff.

It is true that the rise in prices of the property during the pendency to the suit may not be the sole consideration for refusing to decree the suit for specific performance. But it is equally settled law that granting decree for specific performance of a contract of immovable property is not automatic. It is one of discretions to be exercised on sound principles. When the Court gets into equity jurisdiction it would be guided by justice, equity, good con­science and fairness to both the parties. Considered from this perspective. In View of the fact that the respondent himself had claimed alternative relief for damages, the Courts would have been well justified in granting alternative decree for damages, instead of ordering specific performance which would be unrealistic and unfair.

24. Contract:

Specific performance of contract of reconveyance of properties cannot be refused only on the ground of assignment.

25. Decree for specific performance:

In the instant case, appellant agreed to sale the disputed property for a consideration of rupees 16,000/ – to the respondent and accordingly agreement to sale was executed and a sum of Rs. 1,000/- was paid as earnest money to the appellant. Respondent filed the suit for specific performance of the contract as the appellant failed to execute the sale-deed within time.

The suit was decreed and the respon­dent deposited balance consideration of Rs. 15,000/- in the Trial Court and also the amount in the High Court, as directed. On the other hand, appel­lant tried to wriggle out of the contract in view of the tremendous escalation of prices of real estate properties. However, to mitigate the hardship to the appellant. Court directed respondent to deposit a further sum of Rs. 3, 00,000/- within 4 months with the registry of this Court and the amount shall be kept in Short Term Deposit in a nationalised Bank. This amount is to be paid to the appellant on giving his possession of the suit property to the respondent within 6 months from the date of the deposit.

26. Demand for:

A lawful agreement being proved and judicial con­science of the Court being satisfied the equity would demand enforcement of an agreement rather than granting an alternative relief of damages to the plaintiff, it need not be reiterated that equity must give relief where equity demands. Equitas nuquam liti ancillatur ubi remedium potest dare is a clear illustration which has been duly accepted by the Indian Courts. The time taken by the Courts in deciding suit or appeals would normally be not per­mitted to work to the disadvantage of the party to the lis.

27. Denial of:

Failure to perform the contract. Where time is the es­sence of contract amounts to denial of relief of specific performance.

Where relief of specific performance was concurrently granted by both the lower Courts, it was held that such relief could not be denied in appeal simply on the ground that there had been considerable rise in the price of land agreed to be sold due to passage of time since after the agreement.

Where the plaintiff was ready and willing to perform his contract while defendants were not ready and willing to perform their part of contract the equitable relief cannot be denied to plaintiff.

28. Determination:

In agreement to sell the time is not always es­sence of contract, unless the contract itself stipulates a date for its perfor­mance.

29. Direction for:

In a suit for specific performance it was formed that vendor committed breach of contract and failed to execute sale-deed and execution of family settlement by vendor in respect of suit property in favour of his children and subsequently suit for declaration of title by children were found to be collusive. Therefore, the vendor directed to execute sale- deed.

30. Discharge:

The Supreme Court has interpreted the word “dis­charge” in the following words:

“The provisions of Section 7 are not limited to suites or decrees on monetary claims only, Nor is there any reason to think that the word ‘discharge’ can refer only to debts. Discharge means to free from liability. The liability may be in respect of monetary claims, like debts; it may be in respect of possession of property; it may be in respect of taking some order as regards property; it may be in respect of many other matters. Except in the case of declaratory decrees or decrees of a similar nature, the decree in favour of one person against another requires the person against whom the decree is made liable to do something or to refrain from doing something. This liability is in a sense a debt, which the party is in law bound to discharge.”

31. Discretion of Court:

As to when the Court may not exercise dis­cretion to grant the decree for specific performance has been mentioned in sub-section (2); whereas sub-section (3) states as to when the Court may properly exercise its discretion to decree specific, performance. Mo doubt what has been stated in these two sub-sections is not exhaustive, but is illustrative, yet the intention of the Legislature has been well-reflected, both as regards the granting of the relief and non-granting of the same.

The delay not having been occasioned by any act of the plaintiff, he may not be punished for the same on the principle of “actus curiae neminem gravabit” an act of the Court shall prejudice no man. As regards the rise in prices, the submission is that it should not weigh with the Court in refusing the relief if otherwise due. If merely because the prices have risen during the pendency of litigation. Courts were to deny the relief of specific perfor­mance if otherwise due, this relief could hardly be granted in any case, because by the time the litigation comes to an end sufficiently long period is likely to elapse in most of the cases. The factor, therefore, should not normally weigh against the suitor in exercise of discretion by a Court in a case of the present nature.

Certain circumstances have been mentioned in Section 20 (2) of the Specific Relief Act, 1963 as to under what circumstances the Court shall exercise such discretion. If under the terms of the contract the plaintiff gets an unfair advantage over the defendant, the Court may not exercise its discretion in favour of the plaintiff. So also, specific relief may not be granted if the defendant would be put to undue hardship which he did not foresee at the time of agreement.

If it is inequitable to grant specific relief then also Court would desist from granting a decree to the plaintiff.

Discretion is conferred on the Court before which an application for condoning delay is made and if the Court after keeping in view relevant principles exercises its discretion granting relief, unless it is shown to be manifestly unjust or perverse, this Court would be loathe to interfere with it.

Performance of the contract involving some hardship on the defendant which he did not foresee while non-performance involving no such hard­ship on the plaintiff is one of the circumstances in which the Court may properly exercise discretion not to decree specific performance. The doc­trine of comparative hardship has been thus statutorily recognized in India.

However, mere inadequacy of consideration or the mere fact that the con­tract is onerous to the defendant or improvement in its nature shall not constitute an unfair advantage to the plaintiff over the defendant or en­forceable hardship on the defendant.

Section 20 of the Act preserves judicial discretion of the Courts whether to grant decree of specific performance or not when it is the power of the Court to consider the facts and circumstances of the case meticulously, and they should examine while discharging their statutory duty as to whether the plaintiff disentitled for discretionary relief or not. Therefore, the Courts are not bound to grant the relief of specific performance in every original suit.

Since, the third respondent had no knowledge whatever to the agree­ment, therefore, he was bona fide purchaser for value without notice. The Courts below rightly refused to exercise the discretion on legal principles of grant specific performance.

The grant of decree for specific performance is a matter of discretion under Section 20 of the Specific Relief Act, 1963. The Court is not bound to grant such relief merely because it is lawful to do so but the discretion is not required to be exercised arbitrarily. It is to be exercised on sound and settled judicial principles. One of the grounds on which the Court may de­cline to decree specific performance is where it would be inequitable to enforce specific performance.

The relief of specific performance is discretionary but not arbitrary and discretion must be exercised in accordance with the sound and reasonable judicial principles.

The Supreme Court on aspects of grant of decree for specific perfor­mance observed that:

“The jurisdiction to decree specific relief is discretionary and the Court can consider various circumstances to decide whether such relief is to be granted. Merely because it is lawful to grant specific relief, the Court need not grant the order for specific relief; but this discretion shall not be exercised in an arbitrary or unreasonable manner. Certain circumstances have been mentioned in Section 20 (2) of the Specific Relief Act, 1963 as to under what circumstances the Court shall exercise such discretion. It is clear that the respondent (Plaintiff) had been trying to take an unfair advantage over the appellant and that the circumstances/in which this agreement was executed within a short period of termi­nation of the first contract by the respondent, make it highly prob­able that the appellant might not have readily agreed to this con­tract. There are other circumstances also to hold that the/defen­dant respondent had not approached the Court with clean hands. Granting of specific performance is an equitable relief, though the same is now governed by the statutory provisions of the Specific Relief Act 1963. These equitable principles are nicely incorporated in Section 20 of the Act. While granting a decree for specific perfor­mance, these salutary guidelines shall be in the forefront of the mind of the Court.”

The Supreme Court while interpreting Section 20 of the Specific Relief Act, 1963 held as follows:

“Granting or refusing a decree for specific performance is in the discretion of the Court. But the discretion should not be refused arbitrarily. Discretion should be exercised on sound principles of law and can be of correction by Appellate Court.” The Supreme Court in the said case further held:

“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 makes false allegations does not come with clean hands and is not entitled to the equitable relief.”

32. Discretion:

The discretion in granting relief of specific performance is not to be exercised arbitrarily but on sound and reasonable grounds “guided by judicial principles so that it is capable of correction by a Court of appeal”. It appeared, quite rightly, to the High Court that the Trial Court had gone completely astray in the exercise of its discretion on the footing that the plaintiff-respondent enjoyed an “unfair advantage” over the first defen­dant-appellant, whereas, on the facts and circumstances of the case, it was the first defendant who was placed in a position to exploit the need of the plaintiff and the plaintiffs allegedly insecure position under the first agree­ment. It is clear that the plaintiff-respondent had dealt very fairly and squarely with the first defendant-appellant. The Trial Court’s error in the exercise of its discretion on an utterly untenable, fanciful and unsound ground was rightly corrected by the High Court.

While exercising the discretion under Section 20 of the Specific Relief Act, Court should see that it is not used as an instrument of oppression to have an unfair advantage to the plaintiff and the Court is not bound to grant specific performance merely because it is lawful to do so.

33. Discretionary:

Grant of decree for specific performance is discre­tionary and the Court is not bound to grant such relief merely because it is lawful to do so, the discretion of the Court is not arbitrary but sound and reasonable guided by judicial principles. If performance of a contract involve some hardship on the defendant which he did not foresee while non-perfor­mance involving no such hardship on the plaintiff, is one of the circum­stances in which the Court may properly exercise discretion not to decree specific performance.

It is well-settled that the circumstances in regard to exercise of discre­tion for granting a decree for specific performance are not exhaustive. The relief for specific performance is discretionary and is not given merely be­cause it is legal but it is governed by sound judicial principles.

34. Dismissal of:

In case of suit for specific performance of agree­ment for sale of immovable property the powers of Court are discretionary but for exercise of it, relevant circumstances are to be considered. Although time was not essence of contract, but suit was filed after 2V2 years of agree­ment. Suit although was within limitation of three years as provided by Article 54 but Supreme Court took circumstances of case into consider­ation and trend of steep rise in prices and held that plaintiff does not de­serve equity. Plaintiffs suit, therefore, was dismissed.

35. Distinction:

In England the relief of specific performance pertains to the domain of equity; in India, to that of statutory law. In England there is no period of limitation for instituting a suit for the said relief and, therefore, mere delay may itself be sufficient to refuse the relief; but, in India mere delay cannot be a ground for refusing the said relief, for the statute pre­scribes the period of limitation. If the suit is in time, delay is sanctioned by law; if it is beyond time, the suit will be dismissed as barred by time; in either case, no question of equity arises.

36. Duty of Court:

If, and when the Court is satisfied that great injus­tice has been done it is not only the ‘right’ but also the ‘duty’ of this Court to reverse the error and the injustice and to upset the finding, notwithstand­ing the fact that it has been affirmed thrice. There is no warrant to import the concept of the conclusiveness of divorce on the utterance of “Talaq” thrice in interpreting the scope of the jurisdiction of this Court under Article 136.

It is not the number of times that a finding has been reiterated, that matters. What really matters is whether the finding is manifestly an unrea­sonable and unjust one in the context of evidence 01 record. It is no doubt true that this Court will unlock the door opening into the area of facts only sparingly and only when injustice is perceived to have been perpetrated. But in any view of the matter, there is no jurisdictional lock which cannot be opened in the face of grave injustice.

37. Effect of:

It would be purely in file of speculation as to what would have actually happened had the vendor continued to prosecute the suit despite the objection of the reversioners. The complications in disposal of sanction suit on merit were created by the vendee himself by getting him­self transposed as co-plaintiff and then filing an affidavit restricting his claim to transfer of life interest.

It is, thereafter that the sanction suit was dis­missed as infructuous. If the order of the Court refusing sanction was erro­neous and when and appeal was filed by the subsequent vendee against grant of decree of specific performance of life inter t to the vendee, the vendee could have appealed against dismissal of suit for sanction as infructuous.

It is argued that the two suits were clubbed for trial and as the lesser relief of transfer of life interest was granted in suit for specific perfor­mance, it was not necessary for the vendee to have appealed against dis­missal of the sanction suit. Court need not deal with this argument any further, as the sanction was not granted for sale by the Court within a rea­sonable period of two years and the possibility of commencement of coer­cive proceedings of tax recovery loomed large, the vendor cannot be held to have committed a breach of the contract when he served a notice of termination of contract.

Since execution of the agreement has brushed aside that the consider­ation was insufficient or inadequate.

Specific performance of the agreement cannot be denied to the plain­tiff merely on the ground that there has been considerable rise in prices of real estate’s during the period litigation remained pending between the par­ties.

There was delay in seeking performance in spite of fixed time limit for performance. Enhancement in prices of properties should be considered while exercising discretion grant relief of specific performance. When rights of third parties came into existence then in the face of such circumstance, relief of specific performance was rightly declined.

38. Enforcement of:

Mere delay is not sufficient to deny specific per­formance unless there is a waiver or abandonment. But in this case, there was no waiver at all at any point of time; nor had the plaintiff-respondent abandoned its right. On the contrary, it is the other way about. If there was nothing to suggest in the conduct of the plaintiff-respondent implying abandonment, the contract will have to be enforced.

The plaintiffs entered into a contract of sale of a house belonging to the defendant on the plot granted by the Government, One of the terms of the contract, was that the vendor should obtain necessary permission of the Government for the sale within two months of the agreement and if the permission was not forthcoming within that time, it was open to the vend­ees to extend the date, or to treat the agreement as cancelled.

The vendor made an application for permission, but for the reasons of her own, with­drew the same. In the suit filed by the vendees for specific performance of the contract or in the alternative for damages, it was found that the vendees were always willing and ready to perform their part of the contract, that it was the vendor who wilfully refused to perform her part of the contract and that the time was not of the essence of the contract.

The Supreme Court held that the contract was not a contingent contract and that the parties had agreed to bind themselves by the terms of the document executed between them. The Court had got to enforce the terms of the contract and to enjoin upon the vendor to make the necessary application for permis­sion. In the event of the permission being refused, the vendees shall be entitled to the damages.

The vendee himself prosecuted it and rendered it infructuous by his own filing of an affidavit giving up his claim for the interest of reversioners. In such a situation where the vendor was not in any manner guilty of not obtaining the sanction and the clause of the contract requiring Court’s sanc­tion for conveyance of full interest, being for the benefit of both the parties, the contract had been rendered unenforceable with the dismissal of the sanction suit. Where the clause requiring obtaining of sanction was to pro­tect interest of both the parties and when the sanction could not be ob­tained for reasons beyond the control of the parties, the contract cannot be directed to be specifically enforced.

This is not a case where the vendor had only right of spes successionis and after execution of agreement of sale, he subsequently acquired full interest in the property to be held bound by Section 43 of the Transfer of Property Act. In the case the reversioners were not parties to the agreement of sale.

When in the suit for sanction to transfer their interest they were made parties and were noticed, they expressly objected to the proposed transfer. No principle of estoppel or provisions of Section 43 of the Transfer of Property Act can, therefore, operate against them. So far as the subse­quent vendee is concerned, in the course of suit, he was pushed to a posi­tion in which he could not take a stand that he had no knowledge of the prior agreement with the vendee but he was separately purchased life inter­est from the vendee and obtained separate release deeds, on payment of consideration, from the reversioners. The reversioners being not parties to the sale agreement entered into with the vendee, the latter could enforce the contract against the former.

Where a third person is entitled to the benefit of an obligation arising out of contract and annexed to the ownership of immovable property, but not amounting to an interest therein, such right or obligation may be en­forced against a transferee of the property affected thereby, but not against a transferee for consideration and without notice of the right or obligation nor against such property in his hands. It is a right no doubt arising from contract in the property. Section 54 of the Transfer of Property Act in terms provides that such a contract of sale does not create as in English law, any equitable estate in the immovable property which is the subject-matter of the contract.

39. Entitlement for:

The case of plaintiff that third party purchasers had prior notice of agreement for sale between himself and vendor on basis of such application was not made out. The third party purchasers under such circumstances could be said to be bona fide purchasers without prior notice and plaintiff would not v be entitled to relief of specific performance.

The plaintiff were in possession of suit land by investing considerable sum for improvement, held that the decree of specific relief for contract would involve hardship on defendants as compared to plaintiff, however, plaintiff was entitled to be compensated by decree of compensation and the defendants were directed to pay Rs. 3,000/- to plaintiff with interest @ 12% from the date of filing of suit till date of payment.

The way in which the respondent has been instituted different proceed­ings in different forum within a short time making inconsistent allegations show that the respondent has been abusing the process of Court and not come to Court with clean hands. He is not entitled to get any equitable relief under the Specific Relief Act.

While granting a decree for specific performance, salutary guidelines incorporated in Section 20 shall be in the forefront of the mind of the Court. The Trial Court, which had the added advantage of recording the evidence and seeing the demeanour of the witnesses considered the relevant facts and reached a conclusion. The Appellate Court should not have reversed that decision disregarding these facts and in so doing, it has seriously flawed in its decision. Therefore, it was held that the respondent is not entitled to a decree of specific performance of the contract.

40. Entitlement of:

Admittedly the respondent and her husband are neighbours. The appellant and his brother being coparceners or co-owners and the appellant after getting the tenant ejected both the brothers started living in the house. As a prudent purchaser they ought to have made enqui­ries whether defendant No. 1 had exclusive title to the property.

Evidence of mutation of names in the municipal Register establishes that the prop­erty was mutuated in the joint names of the appellant and his brother. And was in joint possession and enjoyment. The Courts below, therefore, have, committed manifest error of law in exercising their discretion directing spe­cific performance of the contract for the entire property. The house being divisible and the appellant being not a consenting party to the contract, equity and justice demand partial enforcement of the contract, instead of refusing specific performance in its entirety, which would meet the ends of justice. The respondent No. 1 being successor-in-interest becomes entitled to the enforcement of the contract of the half share by specific performance. The decree of the Trial Court is confirmed only to the extent of half share in the property in question.

41. Equitable remedy:

It is settled-law that remedy for specific perfor­mance is an equitable remedy and is in the discretion of the Court, which discretion requires to be exercised according to settled principles of law and not arbitrarily as adumbrated under Section 20 of the Specific Relief Act, 1963 (for short “the Act”). Under Section 20, the Court is not bound to grant the relief just because there was a valid agreement of sale.

42. Escalation of prices:

The Courts below need not grant the relief of specific performance in favour of plaintiff in exercise of their discretion­ary power as the escalation of the prices and astronomical value of the property at the time of granting the judgment and decree is relevant aspect of the case should have been considered by the Courts below and they should have exercised their discretionary power in favour of the defendant at the time of passing the impugned judgments.

43. Essence of contract:

The position in law is that even where the time is not of the essence of the contract, the Court may infer that in the circumstances of the case, it has to be performed within a reasonable time, and it will depend upon the intention of the parties which has to be ascer­tained (1) from the expressed stipulation of the contract; (2) from the na­ture of the property; and (3) from the surrounding circumstances.

There are a large number of decisions to hold that where there is nothing in the sur­rounding circumstances from which such an intention can be inferred, the fact that the contract is for the sale of land does not import such an inten­tion and the mere fact that a date has been mentioned for the purpose of the agreement does not conclusively prove that time was intended to be of the essence of the contact.

Further, whether time is the essence of the contract or not, very much depends upon the nature of the property, upon the construction of the contract and upon the objects which the parties had in entering into it. In equity, if the contract relates to sale of immovable property, it would normally be presumed that time was not the essence of the contract. Mere incorporation in the written agreement of a clause im­posing penalty in case of default, does not by itself evidence an intention to make time the essence.

44. Evidence and proof:

In a suit for specific performance, the evi­dence and proof of the agreement must be absolutely clear and certain.

In the evidence of the plaintiff it is stated that he was willing and, in fact, he had offered a sum of Rs. 4.500/-. On the other hand, another wit­ness has stated that he has offered to pay a sum of Rs. 4,000/-. On this minor discrepancy of Rs. 500/-, the Court below was not right in disbeliev­ing the entire evidence.

When the contract on which relief is based is found to be not a con­cluded contract, relief cannot be given on the basis of another contract alleged by the plaintiff to be a concluded contract. The facts in the said case were that the property was owned jointly by three brothers. The purchaser clearly stated that at their meeting with one of the brothers, he told that he is yet to consult his two brothers about sale consideration.

Tenor of several letters between the parties showed that sale consideration was not finalised in their meeting. It was held that there was no concluded contract between the parties on which decree for specific performance could not be passed. In the said case, Supreme Court held that in a suit for specific performance the evidence and proof of agreement must be absolutely clear and certain.

45. Execution of:

The decree for specific performance has to be ex­ecuted under Order XXI, Rule 32 of the Code of Civil Procedure and not as a money decree under Order XXI, Rule 30 of the Code.

46. Exercise of discretion:

The discretion should be exercised on sound judicial principles. Agreement to sell not binding on co-owner who was not party to the agreement. Therefore, partial specific performance in respect of the share of property under the occupation of other co-owner was granted.

47. Exercise of:

In suit for specific performance, second defendant, subsequent purchaser can raise any ground that is available to first defen­dant and Court will exercise its discretion in granting decree.

In the instant case the question was as to whether in the facts and circumstances of the case a concluded contract can be said to have been arrived at. Having regard to the discussions made the Court has no hesita­tion in holding that the agreement of sale in question could not have been specifically enforced and in that view of the matter the question is as to whether the Original defendant No. 1 had an absolute right to dispose of the property in question in exercise of his power as an Executor of the Will or not takes a back seat.

In any event, having regard to the facts and cir­cumstances of this case and in particular the subsequent events as well as the conduct of the plaintiff No. 1, it is not a fit case where a discretionary jurisdiction of this Court in terms of Section 20 of the Specific Relief Act, 1963 should be exercised.

In case of equitable relief in suit for specific performance of agreement of sale of land the discretion of Court to be exercised on sound principles of law and relief be not refused arbitrarily. The person claiming equity must also come to Court with clean hands.

The grant of decree for specific performance is a matter of discretion under Section 20 of the Specific Relief Act, 1963. The Court is not bound to grant such relief merely because it is lawful to do so but the discretion is not required to be exercised arbitrarily. It is to be exercised on sound and settled judicial principles. One of the grounds on which the Court may de­cline to decree specific performance is where it would be inequitable to enforce specific performance.

The Supreme Court on aspects of exercise of discretion in granting decree laid down as follows:”Diverse situations may arise which may in­duce a Court not to exercise the discretion in favour of the plaintiff. It may better be left undefined except to state what the section says, namely, dis­cretion of the Court is not arbitrary, but sound and reasonable guided by judicial principles and capable of correction by a Court of appeal.

The Trial Court while extending the time mentioned that it is at the risk of the plaintiff but having exercised the discretion and allowed the respon­dents to deposit the balance consideration it amounts that the Court has extended the time. The respondents have complied with the original direc­tion contained in the decree. The Courts below, therefore, have rightly exer­cised the discretion in extending the time for compliance.

Where under the terms of the contract the plaintiff gets an unfair ad­vantage over the defendant the Court may not exercise its discretion in favour of the plaintiff. So also, specific relief may not be granted if the defendant would be put to undue hardship which he did not foresee at the time of agreement. If it is inequitable to grant specific relief, then also the Court would desist from granting a decree to the plaintiff.

While exercising the discretion under Section 20 of the Specific Relief Act, Court should see that it is not used as an instrument of oppression to have an unfair advantage to the plaintiff and the Court is not bound to grant specific performance, ‘merely because it is lawful to do so.

48. Exhaustive:

Although a matter on which the Act defines the law it might generally be exhaustive, the Act as a whole cannot be considered as exhaustive of the whole branch of the law of specific performance.

49. Facts and circumstances:

The Supreme Court on aspects of re­quirement to grant relief observed as follows:

“11. When, concededly, the time was not of the essence of the con­tract, the appellant-plaintiff was required to approach the Court of law within a reasonable time. A Constitution Bench of this Hon’ble Court in Chand Rani v. KamaI Rani, 1993 (1) SCC 519, held that in case of sale of immovable property there is no presumption as to time being of the essence of the contract. Even if it is not of the essence of contract, the Court may infer that it is not be performed in a reasonable time if the conditions are (i) from the express terms of the contract; (ii) from the nature of the property; and (iii) from the surrounding circumstances, for example, the object of the making the contract. For the purposes of granting relief, the reasonable time has to be ascertained from all the facts and circumstances of the case.”

50. Filing of:

Where a suit for specific performance of agreement was filed by society and under the agreement, which was between trust and one of the promoters of the society, there was no assignment of right of said person flowing from the agreement in favour of the society, the society was not competent to file the suit for specific performance of agreement to sell.

51. Frustration of:

Condition imposed by the contract that in case the premises is requisitioned, the contract would come to and end. The stipula­tion for exclusive benefit for one party can be waived unilaterally.

52. Grant of decree:

Grant of a decree for specific performance of contract is not automatic and is one of discretion of the Court and the Court has to consider whether it will be fair, just and equitable. Court is guided by principle of justice, equity and good conscience.

The grant of a decree for specific performance of contract is not auto­matic and is one of the discretions of the Court and the Court has to con­sider whether it will be fair, just and equitable. The Court is guided by principle of justice, equity and good conscience.

53. Grant of sanction:

As has been seen from the facts of this case, the vendor did apply for sanction, waited for two years and when it found that the—reversioners opposed the grant of sanction, cancelled the con­tract. The sanction suit, despite instructions to his lawyer was not, in fact, withdrawn. The suit for sanction frustrated not because the vendee became co-plaintiff but because he filed an affidavit restricting his claim to life inter­est of vendor. The life interest was not agreed to be separately sold apart from the interest of the reversioners.

The terms of sale agreement clearly stipulate sale of full interest in the property. Whatever may be the reasons, the sanction of the Court could not be obtained for sale of interest of the reversioners. The reversioners were not parties to the sale agreement. In such a situation, the question is whether in law and equity, the vendee can insist that the vendor should convey, if not full interest, his own life interest in the property.

54. Grant of:

In the circumstances of the case when specific perfor­mance could not be directed, instead compensation granted to the plaintiff.

The Supreme Court on aspects of grant of alternative remedy held as follows:

“73. While the remedy under Article 226 is extraordinary and is of Anglo-Saxon vintage, it is not a carbon copy of English processes. Article 226 is a sparing surgery but the lancet operates where injus­tice suppurates. While traditional restraints like availability of alter­native remedy hold back the Court, and judicial power should not ordinarily rush in where the other two branches fear to tread, judi­cial daring is not daunted where glaring injustice demands even affirmative action. The wide words of Article 226 are designed for service of the lowly numbers in their grievances if the subject be­longs to the Court’s province and the remedy is appropriate to the judicial process. There is a native hue about Article 226, without being anglophilic or anglophobic in attitude. Viewed from this juris­prudential perspective, we have to be cautious both in not overstep­ping as if Article 226 were as large as an appeal and not failing to intervene where a grave error has crept in. Moreover, we sit here in appeal over the High Court’s judgment. And an appellate power interferes not when the order appealed is not right but only when it is clearly wrong. The difference is real, though fine.”

The Court is not bound to grant such relief merely because it is lawful to do so, but at the same time it enjoins that the discretion of the Court should not be arbitrary but sound and reasonable, guided by judicial prin­ciples and capable of correction by a Court of appeal. It would thus be seen that the discretion given to the Court of enquiry is required to be exercised not arbitrarily but on sound and reasonable basis guided by judicial prin­ciples.

By the terms of the contract the vendor had to put the purchaser in possession of the property when conveyance is executed and balance of consideration is paid and that was to be done by the end of April, 1956. Even though the plaintiff purchaser has failed to perform part of the con­tract by the end of April, 1956, the vendor put the plaintiff in actual posses­sion of the first and second floors of the premises to be sold on 28.4.1956 and the plaintiff of the first and second floors or the premises to be sold on 28.4.1956 and the plaintiff is in possession of the same after a lapse of more than 20 years. On the other hand, she deposited after struggle and procrastination the balance of consideration on 6.2.1968 that is nearly 12 years after the date of agreement.

The plaintiff thus enjoyed actual posses­sion of the property from April 1956 to February 1968 when she parted with consideration without paying for the use and occupation of the pre­mises which on a reasonable construction of the contract, she was not entitled at all, till she parted with the full consideration and took the con­veyance. This has undoubtedly weighed with the High Court in coming to the conclusion that the plaintiff is disentitled to a relief of specific perfor­mance of contract.

Compensation in lieu of specific performance of agreement to sale was granted by Supreme Court to plaintiff to recover money paid by plaintiff against mortgage debt created by defendant and paid by plaintiff along-with accrued interest thereon. In addition to this payment of compensation in lieu of specific performance, recovery of money paid against mortgage debt of defendant by plaintiff and interest accrued thereon is also granted to the plaintiff.

Grant of decree for specific performance is discretionary, but discre­tion not to be arbitrary and to be guided by judicial principles. If granting of specific performance makes it “inequitable”, the Court may not grant the relief. Merely because prices have risen during pendency of litigation, relief for specific performance cannot be denied.

Grant of relief in suit for specific performance is discretionary. How­ever, it cannot be given merely because it is legal. Evidence and proof of agreement in question should be absolute, clear and certain and no relief can be given if it is not pleaded.

If the plot in dispute has been transferred the proper form of the de­cree would be the same as indicated at page 369 in Lala Durga Prasad v. Lala Deep Chand, AIR 1954 SC 75: “to direct specific performance of the contract between the vendor and the plaintiff and direct the subsequent transferee to join in the conveyance so as to pass on the title which resides in him to the plaintiff. He does not join in any special covenants made between the plaintiff and his vendor; all he does is to pass on his title to the plaintiff.

In the instance case, there was an agreement of sale of agricultural land to be executed in favour of the tenant after obtaining the permission of the Collector converting it into non-agricultural land. The tenant also ex­ecuted an agreement of sale in favour of third person stipulating that He will execute the sale after obtaining the requisite sanction under statute the right of the owner vested in the tenant. He obtained permission also. The third person filed suit for specific performance. The erstwhile tenant con­tended that as the previous owner is now not in a position to perform his part of the contract. The contract is contingent and as such specific perfor­mance cannot be granted.

In the instant case, the defendant on three different occasions invited the plaintiff to complete the transaction. By 17.7.1956 was fixed as the date for execution and registration and by dated 9.8.1956, 12.8.1956 was fixed as the date for execution and registration of the conveyance. Again, by letter dated 27.8.1956, the plaintiff was informed that if the transaction was not completed within a week from 26.8.1956, the defendant would treat the agreement of sale as cancelled, forfeit the earnest money and claim damages for wrongful use and occupation of the premises. In this background it is not possible to accept the submission that even if the plaintiff was guilty of delay in performing her part of the contract, in view of the fact that she is in possession of a substantial portion of the property which is the subject-matter of this appeal, the delay should be overlooked and a decree for specific performance should be granted.

In the present case, “A” agreed to purchase a plot from “R” on speci­fied date of which latter was not in possession and in respect of which he had not obtained lease deed from the Government and the receipt for ear­nest money provided that the balance of consideration was to be paid within a month at the time of the execution of the registered sale deed and further it was also enjoined upon the vendor to obtain sanction of the Government before the transfer of lease hold plot to the vendee.

Since the vendee was aware of this condition that the execution of the sale-deed was dependent upon prior sanction from the competent authority which he has undertaken to inform to the vendee and since he never took any steps till specified date to apply for sanction but on the contrary informed that he was not willing to wait indefinitely for want of sanction it was held on the facts and circum­stances of the case that the vendee could not be non-suited for the reason for the vendee being unwilling to perform his part and the vendee was entitled to a decree for specific performance.

In the present case, the appellant by his notice had clearly indicates that he had cancelled the agreement and had forfeited the advance amount deposited by the defendant. By the said notice, it was clearly indicated that the appellant was no longer willing to perform the agreement to sell.

In the circumstances, it was incumbent upon the defendant to have filed a suit for specific performance of the contract within a period of three years from the date of the said notice and if such a suit had been filed by the defendant, it would have been open to the appellant to show that it was barred by the provision contained in Section 16 of the Specific Relief Act The defendant did not choose to adopt that course and remained content with defending the suit filed by the appellant for cancellation of the agreement to sell and for recovery of the possession of the property. Even if it is found that the appellant was not entitled to succeed in the said suit and the said suit is liable to be dismissed, it would not entitle the defendant to obtain a decree for specific performance of the contract in those proceedings.

In this case the major portion of the agreed price had been paid long time ago and the balance thereof to be paid at the time of execution of the documents was a sum of Rs. 75 only. Further, the possession of the pre­mises was with the appellant for all these years in part performance of the agreement. In those circumstances, the principle upon which the High Court refused to exercise its discretion was not applicable and such discretion was not proper. The High Court exercised discretion on wrong principles.

In view of the interpolation in the deed of the agreement by the vendor to defeat vendee’s claim for specific performance, who was always ready and willing to perform his part of the agreement, the decree for specific performance granted by the High Court was held justified having regard to the conduct of the vendor.

It is a case I of total inaction on the part of the plaintiff for 2½ years in clear violation of the term of agreement which required him to pay the balance, purchase the stamp papers and then ask for execution of sale- deed within six months. Further, the delay is coupled with substantial rise in prices. The delay has brought about a situation where it would be inequi­table to give the relief of specific performance to the plaintiff.

It will be unfair and inequitable not to grant a decree for specific relief in favour of the plaintiff-appellant herein because he is a bona fide pur­chaser and he has done everything which is possible, that he has purchased the stamp paper and was ready and willing to perform his part of the con­tract, that he went along-with defendant No. 1 to the Sub-Registrar’s Office for registration but somehow defendant No. 1 sneaked away from that place as he had already entered into another agreement to sell the present pre­mises, so much so that a sham suit was got filed by defendant No. 2 against defendant No. 1 and on the same day a compromise decree was obtained. These facts go to show that there is not much equity left in favour of defen­dant No. 2 as it appears that the suit by defendant No. 2 was a pre-arranged affair with connivance with defendant No. 1. Otherwise that suit would not have been filed on the same day and a compromise decree would not have been obtained the very same day. This shows that there was a pre-conceived agreement between defendants Hos. 1 & 2 in order to cheat the plaintiff-appellant herein. Therefore, we are of opinion that the discretion­ary power exercised by learned single Judge of the High Court was not correct. In fact, it appears that defendant No. 2 has purchased the litigation and therefore, there is no equity in his favour.

Hence, the Supreme Court allow this appeal and set aside the impugned order of the learned single Judge of the High Court of Karnataka passed in R.S.A. No. 68 of 1994, affirm the decree of the trial Court as well as the first appellant Court and grant a decree for specific performance of the agree­ment to sell against defendant No. 1. However, so far as the question of granting possession of the suit premises in concerned, that order we are not passing for the reason that defendant No. 2 is in possession of the premises for a long time and the plaintiff-appellant herein has to execute a formal agreement of purchase with defendant No. 1. However, it would be open for the plaintiff to take appropriate proceedings for eviction of defen­dant No. 2 and take possession of the suit premises in accordance with law. It will be open to defendant No. 2 to file a suit against defendant No. 1 to recover his money in accordance with law.

Only life interest was sold to the subsequent vendee for higher price. Out of the agreed sale consideration, major portion of money was directly paid by the subsequent vendee to satisfy dues and taxes of public authori­ties. The notice served for terminating the contract .anticipating remote prospect of grant of sanction by the Court within a reasonable period and after waiting for two years from date of the contract, cannot be termed to be a breach to justify grant of any specific relief to the vendee.

Relief in suit for specific performance is discretionary. Where relief was found to be unrealistic, direction given for Court, granting alternative relief in the facts and circumstances of the case.

Section 20 (1) of the Specific Relief Act, 1963 provides that 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. The rant of relief of specific performance is discretionary. The circumstances speci­fied in Section 20 are only illustrative and not exhaustive. The Court would take into consideration the circumstances in each case, the conduct of the parties and the respective interest under the contract.

Since the appellant was not in a position to pay the amount due on the promissory note, he entered into the agreement to sale the property and the agreement was sought to be enforced. Though the appellant had agreed to sell the property to respondents, the predominant object thereby would be for recovery of the dues with interest. He who demands equity must do equity, Court has discretion. Court is not bound to grant specific perfor­mance. It depends on facts and circumstances in each case.

The respondent had claimed in his suit alternative relief for the recov­ery of Rs, 21.000/- with interest thereon @ 12% per annum. Rupees 21,000/ – is inclusive of interest accrued on Rs. 15,500/- @ 12% per annum. There­fore, in view of the facts of this case, justice would be met by granting the alternative relief sought for in the suit, namely, the decree for refund of the money due to him with simple interest @ 12% per annum, as claimed by him. The decree of the Courts below is accordingly modified and there shall be a money decree for Rs. 21,000/- with interest @ 12% from the date of the suit till the date of recovery.

The Court not bound to grant such relief merely because it is lawful to do so. Court should exercise its discretion on the basis of judicial principles of law which is capable of correction by the higher Court.

The delay was coupled with substantial rise in price has brought about a situation where it would be inequitable to give the relief of specific perfor­mance to the plaintiff.

The grant of general relief on the basis of an agreement of sale-deed dated 28.4.1998 even if proved will be doing violence to the language in the plaint to the effect that the parties concluded an agreement on 25.1.1984.

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.

The ordinary rule is that specific performance should be granted and it ought to be denied only when equitable considerations point to its refusal and in the circumstances show that damages would cause adequate relief. In the case before the Apex Court, it was found that the conduct of the appellant had not been such as to disentitle him to the relief of specific performance.

The ordinary rule is that specific performance should be granted it ought to be denied only when equitable considerations point to its refusal and the circumstances show that the damages would constitute an adequate relief.

The plaintiff filed the suit almost after six years from the date of enter­ing into the agreement to sell. He did not bring any material on records to show that he had ever asked defendant No. 1, the owner of the property, to execute a deed of sale. He filed a suit only after he came to know that the suit land had already been sold by her in favour of the appellant herein. Furthermore, it was obligatory on the part of the plaintiff for obtaining a discretionary relief having regard to Section 20 of the Act to approach the Court within a reasonable time. Having regard to his conduct, the plaintiff was not entitled to a discretionary relief.

The readiness and willingness of plaintiff to perform his part of con­tract can be ascertained from pleadings as well as from attending circum­stances where plaintiff not having sufficient fund to pay consideration amount it cannot be said that he was willing to perform his part of contract. Hence, plaintiff was not entitled to decree for specific performance of contract.

The Trial Court while deciding the suit for specific performance on the basis of a Finding that the parties had entered into an agreement and the respondents failed to perform this part granted the relief sought for in the suit. The Lower Appellate Court, however, examined the materials on record and came to the positive conclusion that the agreement neither contains the exact area of the land to be sold, nor the boundaries thereof, tie further found that no length or breadth of the land has been given and it does not pinpoint the place from where it was to be measured and though purchaser had claimed right from Khasra Nos. 435 and 436 but the said Khasra Nos. had not been given in the agreement.

The Lower Appellate Court also found that the parties entered into an agreement to save stamp duty and registration-fee and the said agreement is thus opposed to the public policy and relief of specific performance cannot be claimed.

Where in suit for specific performance of contract, there was no con­cluded contract but High Court gave opportunity to plaintiff to amend the plaint and plead concluded contract, no relief can be granted on the basis of second agreement in view of refusal of plaintiff to amend plaint.

Where, area, length, breadth or boundaries of land was not given in the agreement and khasra number was also not mentioned in agreement the property was not identifiable. Therefore, decree for specific performance refused.

55. Ground for refusal:

In England mere delay or laches may be a ground for refusing to give a relief of specific performance but in India mere delay without such conduct on the part of the plaintiff as would cause preju­dice to the defendant does not empower a Court to refuse such a relief.

56. Importance of:

The doctrine of specific performance was evolved to ensure that justice is done to the aggrieved party, and so the Equity Courts started giving specific performance instead of damages, directing the party in default to do the very thing which he contracted to do. The decisions of English Equity Courts have been generally applied in India under the Specific Relief Act, 1877 as principles of equity, justice and good conscience. The law on the subject has now been broadly incorporated under the Specific Relief Act, 1963 which is one of the most important pieces of legislation. This Act has provided certain guidelines to Courts as to when specific performance could be ordered and when not. However, it appears that this enactment is not exhaustive.

57. Intention about:

If it is intended by the parties that time is the essence of the contract, such intention to make time the essence if ex­pressed in writing, must be in language, which is clear and unmistakable, but that it may also be inferred from the nature of the property agreed to be sold, conduct of the parties and the surrounding circumstances at or before the contract. It was also further pointed out that intention to make time the essence of the contract may be evidenced by either express stipulation or by circumstances sufficiently strong to displace the ordinary presumption that in a contract of sale of land, stipulation as to the time, is not the es­sence of the contract.

58. Interpretation of:

The words ‘subject to ratification by co-heirs’ must be interpreted in the context that restrictive covenant was not in­serted for benefit of defendant executor. If the agreement was entered into by him only as an executor of the Will, it was not necessary for him to write that the same was being executed for self as well as an executor. He, there­fore, wanted to convey the property also as a legatee.

The draft sale deed also prepared by plaintiff purchaser would clearly demonstrate the inten­tion of the parties was that the executor defendant would not alienate the property in suit as executor of his mother’s Will. Therefore when an agree­ment is entered into subject to ratification by others, a concluded contract is not arrived at. Whenever ratification by some other persons, who are not parties to the agreement is required, such a clause must be held to be a condition precedent for coming into force of a concluded contract.

The agreement of sale in question cannot be specifically enforced and in that view of the matter the question is as to whether the defendant executor had an absolute right to dispose of the property in question in exercise of his power as an executor of the Will or not takes a back seat though it is be­yond any cavil that in terms of Sections 211 (1) and 307 (1) of the Indian Succession Act, the executor of a Will has an absolute right to transfer the property having regard to the facts and circumstances of this case and in particular the subsequent events as well the conduct of plaintiff it is not a fit case where a discretionary jurisdiction of this Court in terms of Section 20 of the Specific Relief Act, 1963 should be exercised.

59. Judicial principles for:

It is well to remember that there is an initial presumption that specific performance is the proper remedy on a contract to convey immovable property; in other words, usually specific performance is allowed in the case of an agreement to sell immovable prop­erty; but such a presumption is not absolute and is liable to be rebutted. It is also well-settled that no one can claim this equitable relief as a matter of right nor the Court would grant it as a matter of course.

Section 20 of the Specific Relief Act lays down at the outset, that 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. Such discretion has to be exercised for valid and sound reasons guided by judicial principles. One of the grounds on which this equitable relief is sometimes denied is ‘delay’.

Even there, it is only where it would be practically unjust to give a remedy either because the party has, by his conduct, done that which might fully be equivalent to waiver of it or had put the other party in a situation prejudicial or inequitable to his interest.

60. Jurisdiction of Court:

The jurisdiction of the Court in specific performance is discretionary. Fry in his Specific Performance (6th End., p. 19) said:

“There is an observation often made with regard to the jurisdiction in specific performance which remains to be noticed. It is said to be in the discretion of the Court. The meaning of this proposition is not that the Court may arbitrarily or capriciously perform on contract and refuse to perform another, but that the Court has regard to the conduct of the plaintiff and to circumstances outside the contract itself, and that the mere fact of the existence of a valid contract is not conclusive in the plaintiffs favour. If the defendant’, said Plumer V.C. “can show any circumstances de hors, independent of the writ­ing, making it inequitable to interpose for the purpose of a specific performance, a Court of Equity, having satisfactory information upon that subject, will not interpose.”

The author goes on to say that of the circumstances calling for the exercise of this discretion,

“The Court judges by settled and fixed rules; hence, the discretion is said to be not arbitrary or capricious but judicial; hence, also, if the contract has been entered into by a competent party, and is unob­jectionable in its nature and circumstances, specific performance is as much a matter of course, and, therefore, of right, as are dam­ages. The mere hardship of the results will not affect the discretion of the Court.

The party who makes false allegations does not come with clean hands and is not entitled to the equitable relief. The third respondent had no knowledge whatever of the plaintiffs agreement and, therefore, he was a bona fide purchaser for value without notice. This is a concurrent finding of fact after appreciation of evidence. It would thus be seen that the Courts below rightly refused to exercise the discretion on legal principles to grant specific performance. It does not, therefore, warrant interference.

61. Jurisdiction:

The competent Courts of justice, which exercise not only statutory powers, but exercise jurisdiction in equity, should not be a mere onlooker of an attempt by one of the party to unreasonably, unjustifi­ably and unethically try to evade specific performance in order to make profit at the expense of the other party to the contract.

The jurisdiction of the Court to decree specific relief is discretionary and must be exercised on sound and reasonable grounds “guided by judi­cial principles and capable of correction by a Court of appeal. This jurisdic­tion cannot be curtailed or taken away by merely fixing a sum even as liquidated damages. It is made perfectly clear by the provision of Section 20 of the Old Act (corresponding to Section 23 of the Act of 1963) so that the Court has to determine, on the facts and circumstances of each case before it, whether specific performance of act contract to covey a property ought to be granted.”

The Supreme Court on aspects of equitable jurisdiction observed as follows:

“2. 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 makes false allegations does not come with clean hands and is not entitled to the equitable relief…”

62. Kinds of contract:

The Supreme Court discuss about kinds of contracts in following words:

“From what has been said it will be gathered that contracts of the kind now under discussion are divisible into three clauses:

(i) Where the sum mentioned is strictly a penalty—a sum named by way of securing the performance of the contract, as the penalty is a bond;

(ii) Where the sum named is to be paid as liquidated damages for a breach of the contract;

(iii) Where the sum named is an amount the payment of which may be deducted for the performance of the act at the election of the person by whom the money is to be paid or the act done.

Where the stipulated payment comes under either of the two first mentioned heads the Court will enforce the contract, if in other re­spects it can and ought to be enforced, just in the same way as a contract not to do a particular act, with a penalty added to secure its performance or a sum named as liquidated damages, may be spe­cifically enforced by means of an injunction against breaking it. On the other hand, where the contract comes under the third head, it is satisfied by the payment of the money, and there is no ground for the Court to compel the specific performance of the other alterna­tive of the contract.”

63. Laches and delay:

The doctrine of laches in Courts of equity is not an arbitrary or technical doctrine. Where it would be practically unjust to give a remedy either because the party has by his conduct done that which might fairly be regarded as an equivalent to a waiver of it, or where by his conduct and neglect he has, though perhaps not waiving that remedy put the other party in a situation in which it would not be reasonable to place him if the remedy were afterwards to be asserted, in either of these cases lapse of time and delay are most material.

64. Lawful:

It is not possible or desirable to lay down the circum­stances under which a Court can exercise its discretion against the plaintiff. But they must be such that the representation by or the conduct or neglect of the plaintiff is directly responsible in inducing the defendant to change his position to his prejudice, or such as to bring about a situation when it would be inequitable to give him such a relief.

The Court should meticulously consider all facts and circumstances of the case. The Court is not bound to grant specific performance merely be­cause it is lawful to do so. The motive behind the litigation should also enter into the judicial verdict. The Court should take care to see that it is not used as an instrument of oppression to have an unfair advantage to the plaintiff.

65. Legality of:

It is not possible to entertain the contention that the orders extending the time to deposit the balance of consideration would result in amending the decree and as the appeal is preferred after such last amendment the appeal would be in time.

It is true that the rise in prices of the property during the pendency of the suit may not be the sole consideration for refusing to decree the suit for specific performance. But it is equally settled law that granting decree for specific performance of a contract of immovable property is not automatic. It is one of discretion to be exercised on sound principles.

When the Court gets into equity jurisdiction, it would be guided by justice, equity, good conscience and fairness to both the parties. Considered from this perspec­tive, in view of the fact that the respondent himself had claimed alternative relief for damages. It appears that the Courts would have been well justified in granting alternative decree for damages instead of ordering specific per­formance which would be unrealistic and unfair.

It was open to either party to make time essential by intimating the other party after a reasonable period about it after expressing its or his readiness and willingness to perform its or his obligation under the con­tract. That liberty was not taken away because a decree has been passed for specific performance of the contract without fixing the time for the per­formance.

The fact that the decree did not fix a time for completing the contract did not prevent either party from demanding performance from other party within a reasonable time and thus make time essential, as the parties had that liberty before the decree was passed and the decree did not abrogate that liberty in any way.

Refusal of relief of specific performance on the ground that price of land has risen astronomically not proper.

The institution of the suit after two years does not appear to have caused any disadvantage to ‘B’. There is no such allegation in his written statement nor is there any evidence to that effect. ‘B’ has admitted in his cross-exami­nation that the prices of properties started depreciating in or about October 1962 when there was Chinese aggression on India. The suit was instituted after the Chinese aggression. So it cannot be said that the specific perfor­mance of the agreement was likely to cause any prejudice to “B” on the date of institution of the suit. The suit cannot accordingly be dismissed on account of delay.

Where lower Courts accepted the case of the plaintiff and decreed suit for specific performance, interference by High Court taking the view that subsequent addition marginal witnesses to suit agreement have rendered the document ab initio void was held not proper.

Where the respondents have complied with the original discretion con­tained in the decree it was held that the Courts below, have rightly exer­cised the discretion in extending the time, for compliance.

66. Meaning of:

The dictionary meaning of the ‘reasonable time’ is to be so much time as is necessary, under the circumstances, to do conve­niently what the contract or duty requires should be done in a particular case. In other words, it means as soon as circumstances permit. In Law Lexicon it is defined to mean “A reasonable time, looking at all the circum­stances of the case; a reasonable time under ordinary circumstances; as soon as circumstance will permit; so much time as is necessary under the circumstances, conveniently to do what the contract requires should be done,- some more protracted space than ‘directly’; such length of time as may fairly, and properly, and reasonably be allowed or required, having regard to the nature of the act or duty and to the attending circumstances; all these convey more or less the same idea.

67. Misconduct of:

The agreement was entered into on 26.6.1976. The reversioner opposed sanction by filing written statements on 16.1.1978. It is long after, on 11.9.1979 by lawyer’s notice, the vendor terminated the contract. The sanction suit was pending from 26.6.1976. Even after two years, the sanction was not granted. The question is whether the agreement contemplated that the vendor should have waited for grant of sanction by the Court for an indefinite period of time.

The recitals of the agreement of sale clearly mention the necessity of sale arising from the pressure of pub- lie dues and taxes. The vendor could not have waited for an unreasonably long period of pendency of sanction suit when commencement or recovery proceedings for public dues and taxes could have commenced any time.

There is no period fixed in the terms of the contract for obtaining sanction of the Court, but keeping in view of the other terms of the contract and the pressing requirement for sale of the property to clear public dues, it has to be held that obtaining of Court’s sanction within a reasonable period and in any case within a period well before commencement of recovery proceed­ings for public dues and taxes could have commenced any time.

There is no period fixed in the terms of the contract for obtaining sanction of the Court, but keeping in view the other terms of the contract and the pressing requirement for sale of the property to clear public dues, it was to be held that obtaining of Court’s sanction within a reasonable period and in any case within a period well before commencement of recovery proceedings for dues and taxes, was in contemplation of the parties as an implied term, notice served for terminating the contract, after waiting for two years for sanction by the Court, cannot be held to be a breach of the contract on the part of the vendor.

The argument that the vendor rescinded the contract only because he had entered into secret negotiations with the subsequent vendee to obtain higher price for the property is not borne out form the evidence. We cannot attach too much importance to the fact of initial at­tempt made by subsequent vendee to conceal knowledge of the existing contract with the vendee when sale-deed was obtained by the former.

For the misconduct of misrepresentation and attempt to mislead the Court, the Division Bench of the High Court has rightly deducted a sum of Rs. 5.5 lacs from the rental income found payable to the subsequent vendee. We pro­posed not to disturb the same. But the aforesaid misconduct of subsequent vendee does not render the act of vendor in rescinding the contract to be an act of breach of contract which can be said to have committed solely with desire to obtain higher price of the property.

68. Modification of:

Agreement to sell executed as a collateral secu­rity to promissory note. The predominant object of the vendee was recov­ery of dues with interest which he claimed as an alternative relief in the suit. Relief of specific performance is a discretionary relief. Thus, decree for specific performance modified by granting alternate relief sought by the plaintiff.

69. Motive behind the litigation:

Section 20 of the Specific Relief Act, 1963 preserves judicial discretion to Courts as to decreeing specific perfor­mance. The Court should meticulously consider all facts and circumstances of the case. The Court is not bound to grant specific performance merely because it is lawful to do so. The motive behind the litigation should also enter in the judicial verdict. The Court should take care to see that it is not used as an instrument of oppression to have an unfair advantage to the plaintiff.

Grant of a decree for specific performance of contract is not automatic and is one of the discretions of the Court and the Court has to consider whether it would be fair, just and equitable. The Court is guided by the principles of justice, equity and good conscience.

Granting of specific performance is an equitable relief, though the same is now governed by the statutory provisions of the Specific Relief Act, 1963. These equitable principles are nicely incorporated in Section 20 of the Act. While granting a decree for specific performance, these salutary guidelines shall be in the forefront of the mind of the Court. The trial Court which had the added advantage of recording the evidence and seeing the demeanour of the witnesses considered the relevant facts and reached a conclusion. The appellate Court should not have reversed that decision disregarding these facts and, in our view, the appellate Court seriously flawed in its decision. Therefore, we hold that the respondent is not entitled to a decree of specific performance of the contract.

70. Nature of:

The grant of decree for specific performance is a mat­ter of discretion under Section 20 of the Specific Relief Act, 1963. The Court is not bound to grant such relief merely because it is lawful to do so but the discretion is not required to be exercised arbitrarily. It is to be exercised on sound and settled judicial principles. One of the grounds on which the Court may decline to decree specific performance is where it would be inequitable to enforce specific performance.

The relief of specific performance of contract is an equitable relief and it cannot be given to a person who is trying to be so technical in his ap­proach.

71. Necessity of:

An agreement must have two parties and both are to sign the same. Only then it is an agreement. For this basic necessity, there may be exceptions under exceptional circumstances.

Merely because a suit is filed within the prescribed period of limitation does not absolve the vendee-plaintiff from showing as to whether he was ready and willing to perform his part of agreement and if there was non­performance was that on account of any obstacle put by the vendor or otherwise. Provisions to grant specific performance of an agreement are quite stringent. Equitable considerations come into play. Court has to see all the attendant circumstances including if the vendee has conducted him­self in a reasonable manner under the contract of sale.

72. Obligation on Court:

The Court is not bound to grant specific performance merely because it is lawful to do so. Care should be taken that the judicial verdict is not used as instrument of oppression for an unfair advantage.

73. Onus of proof:

Even if the burden of proof does not lie on a party, the Court may draw an adverse inference if he withholds important documents in his possession, which throw light on the facts at issue and it is not sound practice for those desiring to rely upon a certain state of facts to withhold from the Court the best evidence which is in their possession which could throw light upon the issues in controversy and to rely upon the abstract doctrine of onus of proof.

74. Payment of consideration:

If it is true sale transaction and the respondent being a businessmen and having purported to have paid Rs. 48.000/-, one would expect that he would seek possession or he would pay the balance consideration and request for execution of the sale-deed.

Instead, he kept quiet for full 3 years, be that as it may, it would appear that there was money transaction between the appellant and the respon­dent and the respondent, being money-lender, was taking documents, pur­porting to be an agreement of sale, from the loanees.

Under these circumstances, the ends of justice would be met if the conclusion reached by the High Court that a sum of Rs. 48,000/- was paid by the respondent to the appellant, is confirmed.

75. Period of limitation:

In the case, the contract of sale was in re­spect of a house. The house was under mortgage. The defendant-seller under the contract had agreed to execute a deed of sale on the day the purchaser redeemed the mortgage. No specific date had been fixed for performance of the contract of sale but the redemption of mortgage took place in 1970 and the suit had been filed after more than 14 years. The suit was to be within limitation on the basis that plaintiff had served a notice in July 1984 demanding specific performance of the contract and specific performance had not been made. It was contended on behalf of the defendant-appellant that since the alleged agreement was executed in June, 1965, the suit was barred by limitation and alternatively, even counting the period of limitation from the alleged redemption in 1970, the suit was barred by limitation under Article 54 of the Indian Limitation Act.

Limitation in case of suit for specific performance of contract starts from date of refusal to perform part of the contract. The suit filed beyond period of three years from such date is barred by limitation.

The period of limitation prescribed for a suit for specific performance is three years which runs from the date when the cause of action accrues.

76. Pleadings and proof:

While normally, it is permissible to grant relief on the basis of what emerges from the evidence, even if not pleaded, provided there is no prejudice to the opposite party, such a principle is not applied in suits relating to specific performance. Other relief i.e., general relief to be granted must be consistent with both pleading and proof, in suits for specific performance.

Where in a suit for specific performance of contract, the contract on which relief was based was found to be not a concluded contract the relief cannot be given on basis of another contract alleged by plaintiff to be concluded contract when it was not proved that it was a fresh or independent contract.

In such a case the grant of any general relief on the basis of an agreement of sale for second time even if proved will be doing violence to the language in the plaint to the effect that the parties concluded an agreement on previous occasion as aforesaid which was not found to be concluded contract.

77. Pleadings:

The controversy before the Apex Court was with re­gard to a contract of sale of a plot granted by the Government and the term of one of the clauses of the contract between the parties was that the ven­dor was to obtain necessary permission from the competent authority be­fore sale and the vendor moved application for permission while the time was not essence of the contract yet it was held that specific performance was enforceable.

It was further observed that the contract was not a contin­gent contract and the parties had agreed to bind themselves by the terms of the document executed between them and the Court had got to enforce the terms of the contract and to enjoin upon the vendor to make the necessary application for permission.

It was also observed that in the event of permis­sion being refused, the vendee shall be entitled to damages. In appeal before the Apex Court arising out of a suit for specific performance of a contract, the plea that it was not a fit case in which specific performance of contract should be enforced by the Court was not allowed to be raised for the first time when it was not specifically raised in the High Court and the necessary facts were not pleaded in the pleadings.

78. Presumption:

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:

(i) From the express terms of the contract;

(ii) From the nature of the property; and

(iii) From the surrounding circumstances, for example, the object of making the contract.

Even if time is not of the essence of contract, the Court may infer that it is to be performed in a reasonable time if the conditions are (i) from the express terms of the contract; (ii) from the nature of the property; and (iii) from the surroundings circumstances, for example, the object of making the contract. For the purposes of granting relief, reasonable time has to be ascertained from all the facts and circumstances of the case.

79. Principle of justice:

The grant of a decree for specific performance of contract is not automatic and is one of the discretions of the Court and the Court has to consider whether it would be fair, just and equitable. The Court is guided by the principles of justice, equity and good conscience.

80. Probative value of recitals:

In an election case, the Supreme Court while considering the probative value of the recitals in the statement of expenses which a candidate has to file under the Representation of the People Act, 1951, made the general observation (which is no doubt appo­site to the present case) thus:

“Once a document is properly admitted the contents of that docu­ment “X are also admitted in evidence though those contents may not be conclusive evidence.”

81. Proof of:

If there is nothing on record to suggest that defendants have shown their readiness and willingness to perform their part of the contracts or that they have called upon the plaintiff to get the sale-deed executed in his favour or to do the needful, therefore, it cannot be said that the Court erred in giving finding in favour of the plaintiff that he was ready and willing to perform his part of contract. So, he is entitled for equitable relief.

In the instant case, the agreement provided that in the event of the premises, which is the subject-matter of sale not being vacated by the In­come-tax Authorities or is subsequently requisitioned by the Government prior to the registration of the sale-deed the vendor shall refund to the purchaser the sum of Rs. 10,000/- received by the vendor as earnest money plus interest at the rate of 6 per cent per annum. It was held that there was a concluded contract between the parties.

It appears from the records that the defendant herself did not produce the original documents nor redeemed the mortgage. If the mortgage was not redeemed and the original documents were not produced, the sale deed could not have been executed and in that view of the matter the question of plaintiffs readiness and willingness to perform his part of con­tract would not arise.

In August, 1981 the defendant accepted a sum of Rs. 20.000/- from the plaintiff. The contention raised on behalf of the appellant to the effect that the plaintiff has failed to show his readiness and willingness to perform his part of contract by 5.12.1978 is stated to be rejected inasmuch as the defendant himself had revived the contract at a later stage. He as would appear from the findings recorded by the High Court, even sought for ex­tension of time for registering the sale deed till 31.12.1981. It is, therefore, too late in the day for the defendant now to contend that it was obligatory on the part of plaintiff to show readiness and willingness as far back on 5.12.1978.

Time, having regard to the fact situation obtaining herein, cannot, thus, be said to be of the essence of the contract. In any event, the defendant consciously waived his right. He, therefore, now cannot turn round and contend that the time was of the essence of the contract and the plaintiff was not ready and willing to perform her part of the contract in December, 1978.

It is not a case where the defendant did not foresee the hardship. It is furthermore not a case that non-performance of the agreement would not cause any hardship to the plaintiff. The defendant was a landlord of the plaintiff. He had accepted part payments from the plaintiff from time to time without any demur whatsoever. He redeemed the mortgage only upon receipt of requisite payment from the plaintiff. Even in August, 1981, i.e. just two months prior to the institution of suit, he had accepted Rs. 20,000/ – from the plaintiff. It is, therefore, too late for the appellant now to suggest that having regard to the escalation in price, the respondent should be denied the benefit of the decree passed in his favour. Explanation I ap­pended to Section 20 clearly stipulates that merely inadequacy of consideration or the mere fact that the contract is onerous to the defendant or improvident in its nature would not constitute an unfair advantage within the meaning of sub-section (2) of Section 20.

Mere on failure of the plaintiff to deposit sufficient court-fee, inference cannot be drawn that the plaintiff was not ready and willing to perform his part of the contract.

To prove himself ready and willing, a purchaser has not necessarily to produce the money or the vouch a concluded scheme for financing the transaction.

82. Question of:

Mere delay is not bar to the granting of specific per­formance when it is not accompanied by such conduct on the part of the plaintiff as has caused prejudice to the defendant. The rule is that a Court cannot decline to grant specific relief solely on the ground of delay.

The law is well-settled that in transactions of sale of immovable proper­ties, time is not the essence of the contract. Whether or not time was the essence of the contract would have also to be judged in the context and circumstances of the case. In a given case, the vendor can go away from his usual place of residence or business or go aboard without leaving his ad­dress. If time were to be treated as the essence in such a contract the rightful claim of the vendee could always be defeated by going away at the material time so that the vendee could not enforce his claim.

The law is well-settled that in transactions of sale of immovable proper ties, time is not the essence of the Contract.

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:

(i) From the express terms of the contract;

(ii) From the nature of the property; and

(iii) From the surrounding circumstances, for example; the object of making the contract.”

The possession of the mortgage property is of fiduciary character and not adverse possession.

The relief of specific performance cannot be claimed as a matter of right nor is it granted as a matter of course. It is an equitable relief, the grand of which lies entirely in the discretion of the Court. It must, however, be remembered that the discretion has to be exercised judicially and in accor­dance with the principles laid down in that behalf.

The rise in prices of the property during the pendency of the suit may not be the sole consideration of refusing to decree the suit for specific performance. But it is equally settled-law that granting decree for specific performance of a contract of immovable property is not automatic. It is one of discretion to be exercised on sound principles. When the Court gets into equity jurisdiction, it would be guided by justice, equity, good conscience and fairness to both the parties.

Where 33 years was spent in disposal off the case, it cannot be a ground for denial of the discretionary relief of specific performance of contract.

Where a party to a contract commits an anticipatory breach of the con­tract, the other party to the contract may treat the breach as putting an end to the contract and sue for damages, but in that event he cannot ask for specific performance. The other option open to the other party, namely, the aggrieved party, is that he may choose to keep the contract alive till the time for performance and claim specific performance but, in that event, he cannot claim specific performance of the contract unless he shows his readi­ness and willingness to perform the contract.

Where the Court was considering whether or not to grant a decree for specific performance for the first time, the rise in the price of the land agreed to be conveyed may be a relevant factor in denying the relief of specific performance.

83. Readiness and willingness:

It is settled law that remedy for spe­cific performance is an equitable remedy and is in the discretion of the Court, which discretion requires to be exercised according to settled prin­ciples of law and not arbitrarily as adumbrated under Section 20 of the Specific Relief Act, 1963. Under Section 20, the Court is not bound to grant the relief just because there was valid agreement of sale. Section 16 (c) of the Act envisages that plaintiff 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 plaintiff is a condi­tion precedent to grant the relief of specific performance.

The trial Judge had pointed out that on an application filed by the defendants, a direction was given to the plaintiff to deposit the amount of Rs. 2,00,000/- or furnish Bank guarantee giving time. He neither deposited the amount nor has given Bank guarantees. It was also found that the plain­tiff was dabbling in real estate business. He has house on hire-purchase agreement with the T.N. Housing Board. He paid only Rs. 7,750/ – up to 1980. A sum of Rs. 29,665/- was further payable. These circumstances were taken into consideration by the trial Judge as well as the Division Bench in concluding that the plaintiff was not ready and willing to perform his part of the contract.

Thus the finding is well-supported from the facts and circumstances and being a finding of fact. There is no infirmity in the judgment warranting granting of leave. 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 plaintiff was always ready and willing to perform his part of con­tract.

Plaintiff established that he has necessary money for payment on reconveyance. Mere fact that he could not produce pass-book of Bank is not enough for holding that he was not willing to perform his part of agree­ment. Hence, Supreme Court directed for reconveyance.

Plaintiff must state in the plaint that he is and has always been ready and willing to perform the terms of his part of agreement. Failure to state and prove this fact gives power, to the Court to dismiss suit. Continuous readiness and willingness on the part of plaintiff is a condition precedent to grant of relief of specific performance. Court may infer from the facts and circumstances as to whether plaintiff is ready and always ready and willing to perform his part of agreement.

84. Reasonable time:

In this case, Court held that though time is not essence of contract the plaintiff is required to approach within reasonable time to seek discretionary relief of specific performance of contract.

85. Reasonable—Interpretation of:

The Supreme Court while inter­preting the word “reasonable” held as follows:

Even where time is not of the essence of the contract, the plaintiff must perform this part of the contract, the plaintiff must perform this part of the contract within a reasonable time and reasonable time should be deter­mined by looking at all the surrounding circumstances including the ex­press terms of the contract and the nature of the property.

“13. The word “reasonable” has in law prima facie meaning of rea­sonable in regard to those circumstances of which the person con­cerned in called upon to act reasonably knows or ought to know as to what was reasonable. It may be unreasonable to give an exact definition of the word “reasonable”. The reasons varies in its con­clusion according to idiosyncrasy of the individual and the time and circumstances in which he thinks. The dictionary meaning of the “reasonable time” is to be so much time as is necessary, under the circumstances, to do conveniently what the contract or duty requires should be done in a particular case. In other words it means as soon as circumstances permit. In P. Ramanatha Aiyar’s The Law Lexicon it is defined to mean:

“A reasonable time, looking at all the circumstances of the case; a reasonable time under ordinary circumstances; as soon as circum­stances will permit; so much time as is necessary under the circum­stances, conveniently to do what the contract requires should be done; some more protracted space than ‘directly’; such length of time as may fairly, and properly, and reasonably be allowed or re­quired, having regard to the nature of the act or duty and to the attending circumstances; all these convey more or less the same idea.”

86. Recession of contract:

On duly appreciating of the evidence on record, construing specific terms of the contract and considering the con­duct of the parties, the recession of the contract, due to non-grant of sanc­tion by the Court within two years after execution of the contract and filing of the suit for sanction was not an act of breach of contract on the part of the vendor to justify grant of relief of specific performance of the contract to the prior vendee?

87. Refund of advance:

The appellant was already having the the­atres. He was not serious about purchasing the theatre. But since he had offered to sell the theatre to him, he had agreed to purchase the property. It is seen that the cinema theatre is a joint property between the first re­spondent and her minor son. Considered from this perspective and in view of the finding recorded by the High Court on appreciation of the evidence it appears that the High Court has not committed any error of law in declining to exercise the discretion in favour of the appellant by granting decree for specific performance. Instead, it granted decree for refund of the amount advanced by the appellant to discharge the decree debt which she owed to salvage the theatre from being confirmed in the Court auction.

88. Refund of earnest amount:

Conduct of plaintiff therein was such which precluded him from obtaining a decree for specific performance of contract. It was held that recession of contract due to non-grant of sanction by the Court within the stipulated period was not an act of breach of con­tract on the part of the vendor. The said decision has no application in the facts and circumstances of this case.

In Dalsukh M. Pancholi, AIR 1947 PC 182, two questions were posed by the Court: (a) was the term “subject to the Court’s approval” an essen­tial term of the agreement? And (b) if it was essential, by whose default did it fail? Therein, in the facts of the case, the Privy Council opined that the approval of the attaching Court was insisted on as a necessary condition for effecting the sale, for without it the title to the property was not at all safe Once such condition was found to be essential one, the contract was held to be a composite contract. However, in that case, the vendor there n was not in a position to convey his own interest in the property without the Court’s sanction and the contract.

Even otherwise it has not been shown, having regard to the conduct of the parties, as to why such a discretionary jurisdiction should not be exer­cised. An alternative plea of refund of earnest amount and damage cannot itself be a bar to claim a decree for specific performance of contract.

In view of Section 22(1) (a) of the Act a decree for partition and sepa­rate possession of the property can be granted in addition to a decree for specific performance of contract. As in this case, the appellant herein in view of amended prayer ‘C’ relinquished his claim in respect of the property belonging to the minor – respondent No. 4, he also prayed having been allowed, no exception thereto can be taken. In any event, the said question has not been raised by the respondents before the High Court at all.

The said decree for partition, therefore, has attained finality. No decree for specific performance of contract, however, has been passed as against the respondent Hos. 4 and 5. They are, however, otherwise brand by the decree passed by the trial Judge. Therefore, they are also proper parties, though not necessary parties.

89. Refund of earnest money:

Where the plaintiff upon granting of alternative relief of damages or refund of earnest money files execution thereof does not lose his right in law to claim specific performance and it will be no ground to decline the relief of specific performance to that plain­tiff by appellate Court. It was further held as under:

“An appeal was in fact preferred and seriously pressed before the High Court on the relief relating to specific performance. This relief is discretionary but not arbitrary and discretion must be exercised in accordance with the sound and reasonable judicial principles. It was held that the conduct of the appellant which is always an impor­tant for consideration was such that it precluded from obtaining a decree of specific performance.”

90. Refusal of:

Where issue about falsity of plaintiff’s claim was not raised before the trial Court or first appellate Court, the denial of relief of specific performance by second appellate Court on ground that plaintiff had not come to Court with clean hands since he had falsely claimed that he had not received any amount under the first deed of sale from the seller was not proper, as such a question was not relevant to the suit.

Facts showed that there was possibility of renewal of lease and revalidation of building plan. As the purchaser was ready to perform her part of contract relief of specific performance could not be refused to her.

Specific performance of a contract cannot be refused merely on the ground that price of property in question has risen during pendency of litigation.

The Apex Court refused to grant a decree for specific performance on the basis of an oral agreement since there was no clear cut evidence for proving the terms of the oral agreement.

Where defence was raised that purchaser had obtained thumb on plain paper and only part of amount was paid by him as earnest money, specific performance of contract could be refused. He would however, be entitled to refund of earnest money.

While the prayer for specific performance is refused, there will be a decree for payment of the mortgage money which really was intended to be a mode of application and appropriation of the sale price and was, in that sense, a part of the same transaction. It is appropriate that the petitioner should not be driven to separate suit to enforce the obligations which must, in the circumstances of this case, be held to be a part of the same transac­tion court, accordingly, direct that while there be a decree of dismissal of the suit for specific performance, there should however, be a decree for the repayment of the monies paid on the assignment of the mortgage together with accrued interest thereon. In this case, as the money so laid out is on mortgage the relief must take the form of a preliminary decree for sale on mortgage with two years’ time to the respondents to deposit in the trial Court the mortgage money and accrued interest till date of deposit. If the mortgage amount is not deposited within two years from today, the peti­tioner shall be entitled to seek a final decree to be made in the same suit in the trial Court, in furtherance of the preliminary decree we have now di­rected to be drawn up in the suit.

91. Relief of compensation:

Petitioner always ready and willing to perform his part of agreement but respondent not abiding with agreement. Therefore, suit filed by petitioner against respondents and persons who purchased that land was rightly decreed refusing alternative relief of com­pensation.

92. Relief:

Where structures were already built on the land in ques­tion by the Vendor, specific performance likely to result in special hardship. Therefore the relief of specific performance substituted with the relief of damages.

93. Rescission of decree:

As the Court retained control over the mat­ter, despite the decree, it was open to the Court, when it was alleged that the party moved against has positively refused to complete the contract to entertain the application and order rescission of the decree if the allegation was proved.

94. Right of vendee:

The act of rescinding contract, pending suit for sanction of the Court and selling the property with only life interest to the subsequent vendee, who later on, obtained surrender deeds from the re­versioners by independently paying them, were acts done in conspiracy between vendor and the subsequent vendee. They were self-induced ac­tions to render the suit for seeking sanction as infructuous and frustrate the contract. It is contended that in such a situation, the prior vendee can take recourse to Section 90 read with Sections 91 and 92 of the Indian Trusts Act, and is entitled to seek specific performance of the contract of full rights of the property i.e., life interest of the vendor and spes successionis of the reversioners. To give effect to the right of the vendee to specific perfor­mance – the vendor, reversioners and subsequent vendee can be compelled in law to convey full title of the property to the plaintiff.

95. Sale deed:

Where vendor committed breach of contract by not executing sale deed in favour of purchaser who had paid advance, vendor was directed to execute sale-deed in favour of purchaser.

96. Sale of property:

If the vendor agrees to sell the property which can be transferred only with the sanction of some Government authority, the Court has jurisdiction to order the vendor to apply to the authority within a specified period, and if the sanction is forthcoming to convey to the purchaser within a certain time.

97. Sale of residential house:

Terms which obviate the sale conceive that there could be any complication in getting sale-deed of house regis­tered in the name of vendee. There could be any difficulty in getting the sale-deed of house registered in the name of vendee. Appellant getting a suitable accommodation before she could be asked to specifically perform contract of sale and in case of a genuine difficulty arising to opt for return­ing earnest money with interest. Further held, that she could not in the present set of facts be obliged to part with her property by effecting a sale.

98. Scope of:

Section 20 preserves judicial discretion to Courts as to decreeing specific performance. The Court should meticulously consider all facts and circumstances of the case. The Court is not bound to grant specific performance merely because it is lawful to do so. The motive be­hind the litigation should also enter into the judicial verdict. The Court should take care to see that it is not used as an instrument of oppression to have an unfair advantage to the plaintiff.

99. Second appeal:

A perusal of Section clearly indicates that the high Court had the jurisdiction to interfere only when a substantial ques­tion of law is involved and even then it is expected that such a question shall be so framed although the Court is not bound by that question as the proviso indicates. There may be some other substantial questions of law which may need decision and which can be so decided.

100. Specific performance:

A relief for specific performance is an equitable relief under Section 20 of the Specific Relief Act. 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.

Although by lawyer’s notice, the vendor terminated the contract and instructed his lawyer to withdraw the suit for sanction, but in fact, the suit was not withdrawn. The vendee opt himself impleaded initially as defendant to the suit and then sought his transposition as co-plaintiff. That part of the action of the vendee cannot be castigated as self-defeating because he was naturally interested in prosecuting the suit for sanction diligently to obtain conveyance of full rights in the property.

However, the further act on the part of the vendee of filing an affidavit restricting his claim only to life inter­est resulted in dismissal of the suit for sanction as infructuous. The learned Single Judge trying jointly the two suits came to the conclusion that as the vendee gave up his claim for transfer of interest of the reversioners. The Court’s sanction was not required. He dismissed the suit for sanction as infructuous.

It is in the discretion of the Court, depending on the facts and circum­stances of the case, whether or not to require a plaintiff to deposit the consideration as a condition of grant of an injunction in a suit for specific performance. As a rule such an order of deposit ought not to be passed where the Court is satisfied with the merits of the plaintiff’s case and sees no reason to test the bona fides of the plaintiff.

For instance such a course could be resorted to in cases where the plaintiff is put in possession of and granted the full benefit of the agreement of which specific performance is sought at the interim stage. Even in such a case such an order would not follow as a matter of course, as an inflexible rule.

101. Specific performance of contract:

In terms of Article 54 of the Limitation Act the period prescribed therein shall begin from the date fixed for the performance of the contract. The contract is to be performed by both the parties to the agreement. In this case, the first respondent was to offer the balance amount to the company, which would be subject to its showing that it had a perfect title over the property. Extension of contract is not necessarily to be inferred from written document.

It could be implied also. The conduct of the parties in this behalf is relevant. Once a finding of fact has been arrived at, that the time for performance of the said contract had been extended by the parties, the time of file a suit shall be deemed to start running only when the plaintiff had notice that performance had been re­fused. Performance of the said contract was refused by the company only. The suit was filed soon thereafter.

The plea had never been raised before the Courts below. Had such a plea been raised, an appropriate issue could have been raised an appropriate issue could have been framed. The parties could have adduced evidence thereupon. Such a plea for the first time before this Court cannot be al­lowed to be raised. Even otherwise it does not appear that it was intended by the parties that the limitation would begin to run from the date of perfec­tion of title.

The plaint contains not only a prayer for specific performance but also a prayer for perpetual injunction restraining the defendants from interfering with the possession of the plaintiffs and from creating any documents or entering into any transaction in respect of the suit property.

Whether the plaintiffs are able to prove that they are in possession of the suit property as on the date of suit and establish that they are entitled to the injunction prayed for, is a different matter from the maintainability or tenability of their case for specific performance.

There is also the question whether the relief of injunction can be treated as being only a relief consequential to the relief of specific performance and the denial of one would automatically lead to the denial of the other, or whether it is an independent relief in itself and even if the plaintiffs are not entitled to a decree for specific performance they would still be entitled to a decree for injunction, a relief the grant of which is, of course, in the discre­tion of the Court.

It may be noticed that a suit for injunction would be governed by the residuary article, Article 113 of the Limitation Act and the cause of action for the said relief arises when the right to sue accrues. That would depend upon the Court deciding when the right accrued, on the pleadings and the evidence in the case.

Therefore, the suit insofar as it relates to the prayer for a decree for perpetual injunction cannot be held to be barred by limitation at this preliminary stage. In any event, therefore, the dismissal of the suit as a whole as not maintainable, could not be justified or said to be correct.

In such a situation, when the whole matter requires reconsideration it would not be proper to go into the various arguments urged by the counsel in this case. The interests of justice would be sub-served by setting aside the finding by the Courts below that the suit is barred by limitation, even while upholding the finding that the trial Court had the jurisdiction to try the suit and remanding the suit to the trial Court for a decision of all the issues arising therein, including the issue of limitation, in accordance with law after giving the parties an opportunity to adduce evidence in support of their respective cases.

102. Sustainability of:

The decree for specific performance of the suit agreement passed by the trial Court and affirmed in appeal by the lower Appellate Court cannot be sustained in law. It has to be set aside in this appeal.

103. Tax liabilities:

It was clearly recited in the agreement that the sale of the property was necessitated because of the pressing demands of public authorities towards, dues and tax liabilities on the estate and likeli­hood of coercive recovery of public dues by attachment and sale by public auction. The vendor, therefore, agreed to sell and the purchaser agreed to purchase the entire interest in the suit property inclusive, of life interest of the vendor and the interest of the reversioners free from all encumbrances. A sum of Rs. 25,000/- was paid as advance.

The balance of the sale consid­eration was to be paid by the purchaser by Bank drafts in favour of the concerned public authorities for discharging the public dues and taxes. The vendor agreed to obtain at his own cost and expense the sanction of the High Court for sale of his life interest and interest of the remainder men (reversioners) in the property.

The agreement further provided that in case the sanction of the Court was not accorded for the sale, the agreement shall forthwith stand cancelled and the vendor shall return the advance amount to the purchaser. The vendor instituted a suit for permission to sell the entire interest in property. The permission was objected to by the rever­sioners.

The vendor after waiting for 2 years to get the required Court per­mission, by legal notice terminated the contract. He thereafter also asked his lawyer to withdraw the suit. The vendor thereafter sold his life interest in the property to subsequent vendee at higher price. Substantial part of the sale consideration was paid directly by subsequent vendee to the public authorities towards outstanding taxes.

The plaintiff alleging that vendor had committed breach of contract filed suit for specific performance. It was alleged that during pendency of suit for sanction, actions on the part of the vendor such as terminating the contract by sending a lawyer’s notice and instructing his lawyer to withdraw the suit for sanction, amounted to com­mitting breach of the contract.

104. Third party interest:

In case of transfer of property to third party who found to be a bona fide purchaser for value without notice the discre­tionary relief of specific performance rightly refused.

105. Unfair advantage:

Explanation-I appended to Section 20 clearly stipulates that mere fact that the contract is onerous to the defendant or improvident in its nature would not constitute an unfair advantage within the meaning of Section 20 (2).

The appellant is in no way responsible for the delay at any stage of the proceeding. It is the respondents who have always been and are trying to wriggle out of the contract. The respondents cannot take advantage of their own wrong and then plead that the grant of decree of specific performance would amount to an unfair advantage to the appellant.

106. Validity of contracts:

Rule 8 of Order VI of the Code of Civil Procedure lays down that where a contract is alleged in any pleading, a bare denial of the same by the opposite party shall be construed only as a denial in fact of the express contract alleged or of the matters of fact from which the same may be implied and not as a denial of the legality or sufficiency in law of such contract.

Rule 2 of Order VIII requires that the defendant must raise by his pleadings all matters which show the suit not to be maintain­able, or that the transaction was either void or voidable in point of law, and all such grounds of defence as, if not raised, would be likely to take the opposite party by surprise, or would raise issues of fact not arising out of the plaint, as for instance, fraud, limitation, release, payment, performance or facts showing illegality.

These provisions leave no doubt that the party denying, merely, the factum of the contract and not alleging its unenforceability in law must be held bound by the pleadings and be pre­cluded from raising the legality or validity of the contract.

107. Validity of:

A plaint reading of the provisions contained in sub-­clauses (2) and (3) of Section 20 clearly go to show that agreement to sell has not been included in the restrictions which have been imposed on the right of debtor. The terms used clearly go to show that the prohibition is pertaining to the transfer (where rights in immovable property are trans­ferred). Admittedly an agreement to sell is not a transfer of any rights in immovable property and, therefore, the agreement could not be held to be bad in law.

108. Waiver:

Waiver in its legally accepted sense is contract and may constitute a cause of action. It is an agreement to release or not to assert a right.