Supreme Court: Enhancement of Compensation cannot be Employed as a device to allow Specific Performance where Plaintiff has not performed his obligations

Supreme Court: Enhancement of Compensation cannot be Employed as a device to allow Specific Performance where Plaintiff has not performed his obligations

The Supreme Court by its division bench comprising of Justices M.R. Shah and B.V. Nagarathna delivered a split verdict in a civil appeal arising out of a suit seeking specific performance of an agreement of sale and ruled that enhancement of compensation cannot be employed as a device to allow specific performance in cases where the plaintiff has not performed his obligations under the contract.

The appellant/plaintiff- C. Haridasan and the respondent/defendants- Anappath Parakkattu Vasudeva Kurup and Others had entered into an agreement to sell dated 7 August, 2005 under which the defendants had agreed to sell their land for a consideration of Rs. 8,750/- per cent. The plaintiff paid an amount of Rs. 10,000 as advance towards the part sale consideration amount. This amount was four per cent of the total consideration amount. The balance consideration was agreed to be paid by the plaintiff within six months from the date after measuring the property provided the defendants make available the documents of title including the purchase certificate under the Kerala Land Reforms Act.

Thereafter, plaintiff served a legal notice dated 2 November, 2006 upon the defendants to execute the sale deed to which the defendants sent reply and refused to execute the sale deed and cancelled the agreement to sell. Therefore, the appellant instituted a suit before the Trial Court for Specific performance of agreement to sell and in the alternative return of the plaintiff's amount with interest.

The defendants opposed to the fact that the plaintiff was ever ready d willing to perform his part of the contract. It was also submitted that the suit was filed after one year from the date of expiry of the agreement. Even though the defendants had approached the plaintiff to pay some more money, plaintiff was not prepared for the same, thereby defendants had been compelled to sell the gold ornaments and clear the liabilities. It was submitted that the defendants were always ready and willing to perform their part of the agreement.

The learned Trial Court framed the following issues:

1. Whether plaintiff had performed his part of the contract, thereby entitling him for specific performance of the agreement?

2. Whether plaintiff has got any cause of action against defendants?

3. Whether the plaintiff is entitled to the reliefs sought?

4. Relief and costs?

Justice M.R. Shah held that the learned Trial Court was absolutely justified in compensating the defendants by paying some more amount while passing a decree for specific performance. Therefore, in the facts and circumstances of the case and more particularly when the learned Trial Court exercised the discretion in favor of the plaintiff after having observed and recorded the findings on the execution of the agreement to sell by the defendants and that the part sale consideration was paid by the plaintiff which was accepted by the defendants and thereafter the finding that the plaintiff was always ready and willing to perform his part of the contract.

Further according to him, the High Court, did not commented upon and/or set aside any of the findings recorded by the learned Trial Court, recorded while passing a decree for specific performance. The High Court has considered Section 20 of the Specific Relief Act (hereinafter referred to as 'the Act') and has observed that by enhancing the amount of sale consideration, the learned Trial Court has wrongly exercised the discretion in favor of the plaintiff. The High Court has commented upon the order passed by the learned Trial Court enhancing the amount of sale consideration and directing the plaintiff to pay more amount than the sale consideration mentioned in the agreement to sell, stated in its observation.

Justice Nagarathna, in her dissenting observation stated, "even in the absence of discretionary power under Section 20 to deny the relief of specific performance, the plaintiff was not entitled to claim such relief as a matter of right. The position of law, even following the amendment of 2018 remains that the provisions of Section 16 of the Act must be mandatorily complied with by the party seeking the relief of specific performance. The relief of specific performance cannot be granted in favor of a party who has not performed his obligations under the contract. It is therefore necessary to ascertain whether, the plaintiff had complied with the statutory prerequisites under Section 16 (c) of the Act, before claiming the relief of specific performance."

Lastly, the Apex Court concluded that the appeal was not decided in light of Section 20 of the Act, as it stood prior to the Amendment Act of 2018. The question as to applicability of the provision of Section 20 of the Act as it stood prior to its amendment in 2018, on transactions entered prior to the date on which the Amendment Act of 2018, was thus kept open.