Full Judgment Text
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CASE NO.:
Appeal (civil) 574 of 1988
PETITIONER:
NIRMALA ANAND APPELLANT
Vs.
RESPONDENT:
ADVENT CORPORATION PVT. LTD. & ORS. RESPONDENTS
DATE OF JUDGMENT: 10/05/2002
BENCH:
Doraiswamy Raju
JUDGMENT:
RAJU, J.
The above appeal has been filed against the judgment and decree dated
15.7.1987 of a Division Bench of the Bombay High Court in Appeal No.204 of
1981, whereunder the judgment and decree dated 23.3.1981 passed by a
learned Single Judge in Suit No.744 of 1969 came to be confirmed. The fourth
plaintiff in the Suit, who was the first appellant in the appeal before the High
Court, is the appellant in this appeal. The Suit came to be filed jointly by more
than one agreement-holders praying for a declaration that the scheme and the
flat purchase agreement entered into between parties are valid and subsisting
and the plaintiffs are entitled to specific performance of the same; that
defendants 1 to 7 are promoters within the meaning of the Maharashtra
Ownership Flats Act, 1963 and thereby they are trustees or occupy a fiduciary
position qua the plaintiffs; that the defendants 1 to 8 and all other purchasers of
flats are participants in the scheme; that defendants 1 to 8 and, in particular,
defendants 1 and/or 2, may be ordered and decreed to forthwith specifically
perform their respective obligations under the said agreements for sale by
resuming or allowing to be resumed the construction of the building, by
completing the same, by handing over possession thereof to the respective flat
purchasers and by conveying or agreeing to convey the land in suit and the two
buildings to an entity representing all the purchasers of flats in both the buildings;
that defendants 1 to 8 be ordered to give the plaintiffs vacant possession of the
incomplete flats agreed to be sold to them and in the alternative and without
prejudice to the other prayers and in the event of the Court not decreeing specific
performance, direct the payment of damages for breach of the scheme and the
agreements, repayment of the purchase price paid by each of them and a charge
on the properties specified to secure the same, etc..
The sum and substance of the claim of the plaintiffs was that the Municipal
Corporation of Greater Bombay is the owner of a large plot of land situated at
Foreshore Road, admeasuring about 4444 4/9 square yards and bearing new
Survey No.9/8426, which came to be leased out on 21.12.1899 in favour of the
predecessors of defendants 4 to 7 for a period of 50 years, which, in due course
of time, came to be renewed on 21.12.1949 for a further duration of 49 years,
subject to payment of the ground rent and complying with other conditions more
fully stipulated therein; that subsequently on 23.10.1959 defendants 4 to 7
entered into an agreement with the original defendant No.1, a Company
registered under the Companies Act, and carrying on business of constructing
building and selling flats to members of the public on ownership basis, to develop
the land by construction of two buildings and that under the said agreement the
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first defendant company, of which defendant No. 2 was a Promoter and Director,
sought permission from the Corporation to develop the property by construction
of buildings and the said permission was also granted on 28.3.1961 on condition
that the ground rent payable would be Rs.30,185/- per annum. It is further stated
that the defendant No.1 completed the construction of one building named as
"Advent" in October, 1962, which came to be occupied by about 30 members
forming themselves into a Co-operative Housing Society known as "Foreshore
Co-operative Housing Society Limited" shown as 8th defendant. It is also stated
that in February 1962, the first defendant made an advertisement in the
Newspaper in respect of the proposed construction of the second building to be
named as "Divya Prabha", inviting applications for residential flats to be
constructed in accordance with the advertisement, pursuant to which the
plaintiffs, eight in number, and defendants 9 to 25 were said to have approached
the first defendant and entered into various agreements for purchase of such
plots to be constructed. So far as the appellant (plaintiff No.4) is concerned, the
agreement so entered into was said to have been on 8.9.1966 for purchase of
flat bearing No.71 on the seventh floor of the building with the area of the flat
approximately at 1250 sq. ft. The price agreed to be paid by the appellant was
said to be Rs.60,000/- and the first defendant also seems to have secured the
commencement certificate from the Corporation in the month of July, 1966, since
the terms of agreement entered into envisaged the completion of the building and
possession thereof to be handed over by June 30, 1969. While so, the Municipal
Corporation seems to have called upon the lessees from time to time to pay the
arrears of lease rent as well as the taxes payable in respect of the building
already constructed, but neither the lessees nor the Society seems to have paid
the same, resulting in accumulation of such arrears by the end of May, 1969 to
Rs.1,75,004, resulting, in turn, in the service of a Notice dated 27.6.1969 upon
the lessees terminating the lease in accordance with the provisions contained in
Section 527 of the Bombay Municipal Corporation Act on account of the default
committed by the lessees in the payment of lease rent and the violation of other
terms of the lease. Notional possession of the entire plot was also said to have
been secured by the Corporation on 4.8.1969 and as a matter of fact, it appears
that from June, 1969 onwards, the construction activities in respect of building
"Divya Prabha" ceased and the building permission granted by the Corporation
also not having been renewed thereafter. The appellant was said to have paid
altogether a sum of Rs.35,000/- till June, 1969. It may be incidentally noticed,
among other things, that one of the grounds of dispute raised by the Municipal
Corporation is with reference to the construction of 9th floor in contravention of
the approved plan. Several proceedings seem to have resulted, also between
more than one or other parties concerned, in the Bombay City Civil Court as a
result of which also the completion of the building could not be made as originally
planned. The present Suit culminating in the above appeal came to be instituted
on 30.7.1969 by eight prospective purchasers, impleading the Advent
Corporation (P) Ltd. and its Director as defendants 1 and 2, the Municipal
Corporation being joined as defendant No.3, and the lessees of the plot being
defendants 4 to 7 with Foreshore Co-operative Housing Society as defendant
No.8 and defendants 9 to 25, the prospective purchasers, other than the
plaintiffs, of flats in the building "Divya Prabha".
The defendants 1 and 2 resisted the Suit claiming that the building could
not be completed for circumstances beyond their control; that the occupants of
building "Advent" started using the premises for commercial purpose in violation
of the lease agreement, resulting in the termination of the lease by the
Corporation and that in the absence of renewal/revival of the lease agreement
and renewal of the building permission, it was impossible for completing the
construction or the performance of the contract with the plaintiffs. After Issues
were framed, the suit was taken up for trial and plaintiff No.4, the appellant
herein, and plaintiff No.7 were said to have entered into the witness box to
depose in support of their claims. The defendants did not seem to have let in
any oral evidence, but on both sides, various documents, which were not in
dispute, seem to have been marked. After conclusion of recording of the
evidence, the third defendant-Corporation was said to have been deleted from
the array of the defendants on the application of the plaintiff’s Advocate. The
Suit was said to have been not pressed as against defendant No.8 also and
before the arguments commenced, all the plaintiffs, except plaintiffs 4 and 7 and
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defendants 9 to 25, had settled the dispute with defendant No.1, resulting in the
prosecution of the suit claim only by plaintiffs 4 and 7.
On an appreciation of the materials on record, the learned Trial Judge
came to the conclusion that plaintiff No.7 had also committed breach of the
agreement and, therefore, was not entitled to specific performance of the
agreement or for damages in lieu thereof, but only to get return of the purchase
price with interest and for a charge upon flat agreed to be sold to him. So far as
the appellant is concerned, the learned Trial Judge held that she was always
ready and willing to perform her part of the contract and it was the first defendant
who committed breach in not carrying out the terms of the agreement. In spite of
recording such a finding, the learned Single Judge, while considering the
question as to whether the appellant was entitled to a decree for specific
performance, was of the view that granting of specific performance being a
discretionary remedy in equity, the Court may take into account, in exercise of
such discretion, even factors other than the plaintiff’s conduct and taking into
account the several and serious imponderabilities as they were, in his opinion,
and that further huge sums may be required to complete the proposed building,
which cannot properly be assessed, arrived at the conclusion that the case on
hand cannot be said to be one, wherein the grant of compensation in lieu of
specific performance cannot be said to give the plaintiff an adequate relief.
Consequently, while denying the relief of specific performance, the first
defendant was ordered to pay to the appellant damages as assessed by the
Commissioner for taking accounts with interest at 6% p.a. from the date of the
decree till the date of payment/realization, in addition to ordering the repayment
of Rs.35,000/- with interest thereon at 9% p.a. from 4.10.1967 till the date of
decree and for the subsequent period, at 6% p.a. till the date of
payment/realization. A charge has also been created in favour of the appellant
on Flat bearing No.71 on the seventh floor in the incomplete building, for
payment of the said sum, with further liberty to execute the charge only on and
after 1.11.1981.
Aggrieved, the appellant herein as well as the seventh plaintiff, whose
claim for specific performance was also similarly rejected by granting different
reliefs, filed an appeal in Appeal No.204 of 1981. Defendants 1,2,4,6 and 7
alone were impleaded as respondents and even respondents 3 to 5 (defendants
4,6 & 7) were not got served with notice, resulting in the appeal against them
being dismissed for non-prosecution. The appeal was pursued only against
respondents 1 and 2 (defendants 1 & 2). The cross-objections said to have been
filed by respondents 1 and 2, came to be also dismissed for non-prosecution on
account of failure on their part in removing the objections of the Registry. The
learned Appellate Judges concurred with the nature of disposal given and the
judgment and decree passed by the learned Single Judge while rejecting the
appeal, resulting in the above appeal before this Court.
While granting special leave on 10.2.1988, this Court restrained the
respondents from transferring, alienating or parting with possession of Flat No.71
on the seventh floor of the building known as "Divya Prabha". When the
respondent brought to the notice of this Court that the building in question with all
the other rights and interest in the leasehold land has been subsequently sold,
the respondent was directed to place on record the document showing the
sale/assignment. Notice was also directed to be issued to the Bombay Municipal
Corporation. Subsequently, the Deed of Assignment dated 14.10.1994 was filed
in this Court and the applications filed for impleading the State of Maharashtra as
also the subsequent purchaser of the building and other rights and interest M/s
Gaurav Overseas (P) Ltd. under said Deed of Assignment, were allowed on
25.10.1999 and notice was directed to be served on the newly added parties,
who were also granted time subsequently for filing the Counter. On 13.3.2001,
the Counsel appearing for the State of Maharashtra stated that the Government
had already taken a decision for renewal of lease, but in individual cases lease
has not yet been renewed. In the light of promulgation of an Ordinance No.32 of
2001, it appears that the respondent had applied for renewal of the lease to the
Municipal Corporation of Greater Mumbai.
Shri Arunabh Choudhary, learned counsel for the appellant, contended
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that, having regard to the principles enshrined in Sections 10 and 20 of the
Specific Relief Act, 1963 and the law declared by this Court, the relief of specific
performance ought to have been granted as prayed for. According to the learned
counsel, there are no unsurmountable impediments in according such relief,
particularly when the appellant while giving evidence has stated in categorical
terms that she was prepared to take the flat agreed to be sold on "as is where is
condition" on such terms as may be fixed without seeking any reduction or
modification in the consideration for the sale and without making any claim
against the 1st or 2nd defendants for the amount she might have to spend to
complete the flat or for damages in that behalf and that the learned Judges in the
High Court, at any rate, ought to have held that the Award of money
compensation is no sufficient substitute or the only course to be adopted in this
case. Reliance has been placed on the decisions reported in Mrs. Chandnee
Widya Vati Madden Vs. Dr. C.L. Katial & Ors. [1964 (2) SCR 495]; Sardar
Singh Vs. Krishna Devi (Smt.) & Anr. [(1994)4 SCC 18]; Ajit Prashad Jain Vs.
N.K. Widhani & Ors. [AIR 1990 Delhi 42]; Gobind Ram Vs. Gian Chand
[(2000)7 SCC 548]; K. Narendra Vs. Riviera Apartments (P) Ltd. [(1999)5
SCC 77]; M.L. Devender Singh & Ors. Vs. Syed Khaja [1974(1) SCR 312 =
(1973)2 SCC 515] and Her Highness Maharani Shantidevi P. Gaikwad Vs.
Savjibhai Haribhai Patel & Ors. [(2001)5 SCC 101]. Before us, it has also
been not only reiterated that the appellant stands by such statements made
earlier, but further contended that the subsequent developments brought on
record in the form of the Deed of Assignment made by respondents 1 and 2 in
favour of the seventh respondent would belie the stand on behalf of the
respondents that the agreement is not capable of being specifically performed
due to any impediments in so doing, despite the preparedness and willingness,
to get such relief at her risk and responsibility. In the written submission, it is
stated that if the appellant is to be compensated by monetary
compensation/damages a sum of Rs.1,81,63,534/- would possibly allow some
kind of adequate relief to the appellant.
Per contra, Mr. P.P. Tripathi, learned Senior Counsel appearing for
respondents 1 and 2, while adopting the reasoning in the judgments of the
learned Single Judge and the Division Bench, forcefully contended that in the
light of the concurrent refusal to grant specific performance and the discretion
exercised in the matter to award only monetary compensation, in addition to the
return of the portion of the sale consideration paid by the appellant, this Court
may not be pleased to interfere with such exercise of discretion in this appeal.
Strong reliance has been placed in support thereof on the decisions reported in
Rajendrakumar Bhandari Vs. Poosammal & Ors. [AIR 1975 Madras 379]; K.
Narendra Vs. Riviera Apartments (P) Ltd. [(1999)5 SCC 77]; Matadin
Agarwal, etc. Vs. Syed Abdul Razack & Ors. [AIR 1997 Andhra Pradesh 103]
and Her Highness Maharani Shantidevi P. Gaikwad Vs. Savjibhai Haribhai
Patel & Ors. [(2001)5 SCC 101]. A technical objection has also been taken that
the dropping of Golwallas, the original lessees, who were impleaded initially in
the Suit and appeals, will have to necessarily result in the denial of the relief of
specific performance. Strong reliance has also been placed on Section 14,
particularly Clauses (b) & (d) of Sub-section (1) of Section 14 of the Specific
Relief Act, 1963, to justify the denial of the relief of specific performance and
inapplicability of Section 10 and Explanation (i) to the said provision of the said
Act. The very many possible impediments considered to be great imponderables
by the High Court have not only been reiterated but the subsequent filing of O.S.
No.2939 of 1999 by Foreshore Co-operative Housing Society Ltd., the Society
which owns the adjacent building "Advent" in the same premises, seeking a
declaration that the said Society is the owner of the land on which the building
"Divya Prabha" stands, with a further declaration that the said incomplete building
is dangerous and hazardous one and the interim order obtained in the said Suit,
noticed by the Division Bench in its judgment has been strongly relied upon to
dissuade us from acceding to the request on behalf of the appellant. It was also
contended that the broad approach adopted in some of the cases to decree or
grant the relief of specific performance, subject to obtaining of the necessary and
required permission in exceptional cases, cannot be applied in the present case
on hand, which, according to the learned counsel on the facts of this case,
amounts to seeking to sue or grant relief on what has really become a
‘speculative contract’ and that too, after such a long lapse of time of nearly 33
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years. An argument in the alternative indicated in general terms is found
elaborated in the written submissions made on behalf of the respondent 1 & 2,
that taking into consideration the lapse of time and fact that the full consideration
had not been paid by the appellant, a compensatory payment of Rs.50 lakhs by
the respondents 1 and 2 which, according to them, represents the value of the
flat today, may be awarded and if at all, any specific performance is to be
decreed, it has to be subject to the further proper adjustment of equities between
parties and satisfaction of the various monetary obligations imposed upon the
appellant under the Agreement dated 8.9.1966 entered into between the parties
as found elaborated in the Additional Affidavit dated 8.1.2002 filed in this Court.
Reference has also been made to the earlier offer while exploring the possibility
of settlement between parties, of a sum of Rs.60 lakhs, which the appellant
seems to have declined to accept. The learned counsel repeatedly submitted
that on the facts and circumstances of the case, there is no justification to direct
the specific performance of the agreement, particularly when the facts already
noticed by the High Court itself, renders it impossible to deliver possession even
under the Mahrashtra Apartments Act, 1963 unless and until Completion
Certificate is obtained from the competent authority. Shri C. Mukund, learned
counsel appearing for the seventh respondent, virtually adopted the submissions
of the learned Senior Counsel for respondents 1 and 2, in addition to inviting our
attention to the provisions contained in Sections 31 and 32 of the Indian Contract
Act to justify the stand that the contract in question cannot be directed to be
specifically performed the same, according to him being a mere contingent
contract.
The learned counsel appearing on either side elaborately took us through
the details of the findings of the learned Single Judge as well as the Division
Bench, some of the materials on record as also the Deed of Assignment dated
14.10.1994 brought on record on the directions of this Court, in addition to
inviting our attention to the principles laid down in the various decisions, noticed
supra. I have carefully considered the same and my conclusions shall be
recorded as and when necessary hereinafter, while dealing with the merits and
demerits of the same.
The plea that the suit for specific performance must necessarily fail on
account of the giving up of Golwallas, who were original defendants in the Suit
and respondents 3 to 5, has no merit and needs mention to be rejected, only.
The agreement sought to be enforced is indisputably with defendants 1 and 2,
respondents 1 and 2 herein. Even in the Suit Agreement dated 8.9.1966,
specific reference is made to the transfer of the rights, which subsisted in
Golwallas, the Advent Corporation Pvt. Ltd. and Praveen D. Desai, to the party of
the first part in the agreement, the specific performance of which is sought to be
enforced. Recitals were also specifically made in this agreement about the
satisfaction of the title of the party of the first part and the undertaking to accept
the title being derived from the said party to the building and the rights in the land
transferred to the Co-operative Society consisting the body of the purchasers of
the flats in the building in question. Likewise, it could be seen from the Deed of
Assignment dated 14.10.1994 (filed in this Court) that the same, which was
executed in respect of the entire building "Divya Prabha", excluding Flat No.71
agreed to be sold to the appellant, also refers to the fact that by an Agreement
dated 20.6.1967 the said Golwallas surrendered their rights, title and interest in
the land and building in favour of Advent Corporation Pvt. Ltd. In the teeth of
such admitted facts available on record, it does not lie in the mouth of the
respondents to raise such a plea. This objection, therefore, is rejected.
In Rojasara Ramjibhai Dahyabhai vs. Jani Narottamdas Lallubhai
(Dead) By LRs. & Anr. [1986(2) SCR 447], this Court held that from the mere
fact that the agreement contemplated the execution of the sale-deed after the
requisite permission was obtained from the Collector for use of the land as a
village site and not as agricultural land, it cannot be considered to be contingent
contract, there being in every contract to sell an implied covenant on the part of
the vendor to do all things necessary to give effect to the agreement, including
the obtaining of the permission for the transfer of the property. Relying upon
certain earlier decisions of this Court in Mrs. Chandnee Widyavati Maddein vs.
Dr. C.L.Katial [1964 (2) SCR 495] and Ramesh Chandra Chandiok & Another
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vs. Chuni Lal Sabharwal (dead) by LRs. & Others [1971 (2) SCR 573], it has
been observed that 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. Such principles apart, this Court in that case also took notice of the
subsequent fact about making of an application and obtaining the required
permission. The case reported in Rajendra Kumar Bhandari vs. Poosammal &
Others [AIR 1975 Mad. 379] is one wherein a Division Bench of the Madras High
Court refused to grant the relief of specific performance of an agreement entered
into by the plaintiff with a person who was not the owner of the property but a
mere tenant entitled to the protection of the city tenants protection with a privilege
or personal right which is only heritable but not transferable or saleable, when it
was found that even such right also he lost before it could fruition into a
transferable or assignable right and that too even before the plaintiff came to
court seeking for relief.
In Sardar Singh vs. Krishna Devi (Smt) and Another [1994 (4) SCC 18]
it was held that since Section 20 (1) of the Specific Relief Act, 1963 provides that
the jurisdiction to decree specific performance is discretionary, the Court is not
bound to grant such relief merely because it is lawful to do so observing at the
same time that the exercise of such discretion must not be arbitrary but sound
and reasonable guided by judicial principles and capable of correction by
Appellate Court. The circumstances specified in Section 20 were considered to
be illustrative and not exhaustive and that the Court should take into
consideration circumstances in each case, the conduct of the parties and the
respective interest under the contract. In K. Narendra vs. Riviera Apartments
(P) Ltd. [1999 (5) SCC 77], this Court dealt with the case of an agreement
followed by a supplementary agreement to sell a plot and the structure thereon
and where the agreement also envisaged the obtaining of permission for the
conveyance from the Land & Development Officer as well as approval for the
construction plan. Factually, the construction plan submitted was said to have
been rejected on more than one reason, and the building plan was also rejected
more than once. In respect of a portion of land hit by Urban Ceiling Law, only a
conditional exemption alone seems to have been granted. Under such
circumstances when the suit came to be filed seeking for annulment of the sale
agreement on the ground of impossible of performance and the other party filed a
suit for specific performance, this Court dealt with such claims in the light of
Section 20 of the Specific Relief Act and observed as follows:
"29. Section 20 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; 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.
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 improvident in its nature, shall not
constitute an unfair advantage to the plaintiff over the
defendant or unforeseeable hardship on the
defendant. The principle underlying Section 20 has
been summed up by this Court in Lourdu Mari David
v. Lous Chinnaya Arogiaswamy by stating that the
decree for specific performance is in the discretion of
the Court but the discretion should not be used
arbitrarily; the discretion should be exercised on
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sound principles of law capable of correction by an
appellate court."
Ultimately it was held that since at one point of time the contract was
rendered incapable of performance and stood frustrated with reference to
Section 56 of the Contract Act, the repeal of the Urban Ceiling Act after nearly 16
years is no ground to enforce the agreement and grant a decree for specific
performance.
In Her Highness Maharani Shantidevi P. Gaikwad vs. Savjibhai
Haribhai Patel & Others [2001 (5) SCC 101], this Court had an occasion to deal
with the scope of Section 20 of the Specific Relief Act, 1963, and the impact of
Section 14 (1) (c) and (d) in the matter exercising such discretion, in a given
case. Apart from the finding recorded that the contract by its very nature was
terminable and stood terminated as envisaged under Section 14 (1) (c) and was
also further not enforceable in view of the stipulation contained in Section 14 (1)
(d), this Court on the principles which should normally guide the exercise of
discretion under Section 20 by the Courts, observed as below:
"59. 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 present is clearly such a case. It
would be wholly inequitable to enforce specific
performance for (i) residential houses for weaker
sections of the society cannot be constructed in view
of the existing master plan and, thus, no benefit can
be given to the said section of the society; (ii) in any
case, it is extremely difficult, if not impossible, to
continuously supervise and monitor the construction
and thereafter allotment of such houses; (iii) the
decree is likely to result in uncalled-for bonanza to the
plaintiff; (iv) patent illegality of order dated 20.6.1998;
(v) absence of law or any authority to determine
excess vacant land after construction of 4356 dwelling
units; and (vi) agreement does not contemplate the
transfer of nearly 600 acres of land in favour of the
plaintiff for construction of 4356 units for which land
required is about 65 acres. The object of the Act was
to prevent concentration of urban land in the hands of
a few and also to prevent speculation and profiteering
therein. The object of Section 21 is to benefit weaker
sections of the society and not the owners. If none of
these objects can be achieved, which is the factual
position, it would be inequitable to still maintain
decree for specific performance."
In Gobind Ram vs. Gian Chand [2000 (7) SCC 548], this Court though
held, taking note of Section 10 Expl.(i) and Section 20 of the Specific Relief Act,
1963, that mere escalation of prices of real estate properties per se is no ground
to deny the relief of specific performance but at the same time emphasized that
the Court has to consider whether it will be fair, just and equitable to grant a
decree therefor, guided by principles of justice, equity and good conscience and
not automatically grant the relief for the asking of it. In the process of balancing
equities and in order to ensure justice to both parties, this Court directed deposit
of further sum for the benefit of the vendor, in addition to the consideration
stipulated in the agreement, even though the trial court itself decreed specific
performance, in terms of the agreement and the balance of consideration in full
has been deposited by the purchaser immediately after passing of the decree.
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In M.L. Devender Singh & Others vs. Syed Khaja [1973 (2) SCC 515],
this Court, while analyzing the provisions contained in Sections 10, 14, 22 and 23
of the Specific Relief Act, 1963, as well as the corresponding provisions viz.
Sections 12, 20, 21 & 22 of the Specific Relief Act, 1877, held that Section 23 of
the 1963 Act contains comprehensive statement of the principles to be kept into
consideration in construing a contract with a term specifying a sum of money to
be paid for breach of the contract when such a breach occurs. It was further held
that the jurisdiction and discretion of the Court to decree specific performance
cannot be considered to be curtailed in any manner or taken away by parties
merely fixing a sum, even as liquidated damages, payable by the party breaking
the contract.
On a careful consideration of the decisions brought to our notice, it can
safely be recorded that it is too late in the day to deny a claim for specific
performance of an agreement to sell an immovable property in existence or to be
brought into existence according to the specification agreed to merely because
the Vendor had to make applications or move the concerned and competent
authorities to obtain permission/sanction or consent of such authorities to make
the sale agreed to be made an effective and full-fledged one. The principles laid
down in the above decisions clearly indicate that unless the competent
authorities have been moved and the application for consent/permission/sanction
have been rejected once and for all and such rejection made finally became
irresolutely binding and rendered impossible the performance of the contract
resulting in frustration as envisaged under Section 56 of the Contract Act, the
relief cannot be refused for the mere pointing out of some obstacles. Since the
agreement to sell, in this case, relates to an immovable property, which
indisputably is of special value having regard to its location and special
importance of the area, it cannot be readily assumed or taken for granted that the
respondents opposing the claim of the appellant have discharged their burden to
displace the initial statutory presumption engrafted in the Explanation (i) to
Section 10 of the Specific Relief Act. Even the so-called imponderables noticed
both by the learned Single Judge and by the Division Bench of the High Court, if
could not stand in the way of or did not impede the assignment of the rights in the
building and the interests in the land in favour of the seventh respondent under
the Deed of Assignment dated 14.10.1994, it is beyond comprehension as to
what could legitimately be pleaded against for a similar or identical relief being
granted in the suit by compelling transfer of such and similar rights to and in
favour of the appellant in respect of flat No. 71 on the 7th floor, agreed to be sold
which she is prepared to receive and take upon herself at her risk and
responsibility even in the complete shape as it stands unless it is that
respondents 1 and 2 are trying to avoid their obligations and liabilities to suit their
own convenience, wishes and welfare taking advantage of the steep appreciation
in the value of the real estate in the locality in question. The competent Courts of
Justice, which exercise not only statutory powers, but 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, who, as concurrently
found by the learned Single Judge as well as the Division Bench of the High
Court, was always ready and willing to perform the remaining part of her contract.
Not only the respondents 1 and 2, who have agreed to sell, but also the
seventh respondent and others, particularly the State Government as well as the
Municipal Corporation, were heard. During the course of listing of the appeal for
hearing on several earlier occasions, it appears that representations have been
made that there is every possibility of the Government as well as the Municipality
respectively, renewing the lease and revalidating the building plans in question.
Apparently, having regard to such positive hopes and constructive moves as also
the possibility of such renewal of lease and revalidation of the plans, already
transfer of the entire building and the rights in the same as it stands as well as
the interests and rights in the land, except flat No.71 agreed to be sold to the
appellant, has been made to the seventh respondent, subject to the terms and
conditions as are stipulated in the Deed of Assignment dated 14.10.1994. The
claim of the appellant could not, therefore, be unceremoniously rejected merely
because in this case it is the Court, which has to order the specific performance.
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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. While granting such a
decree for specific performance, it can always be made conditional and
dependent upon the renewal of the lease and revalidation of the building plans.
In my view, there is no justification whatsoever in law or on facts on record to
deny the relief to the appellant when it could possibly and legitimately be directed
and rendered executable, subject to the competent authorities so according or
making the required orders in this regard, denying the right of execution of the
decree at the same time, if the competent and concerned authorities refused or
declined to grant renewal of the lease and/or revalidate the building plan
rendering it wholly impossible or performance of the contract by respondents 1
and 2. So much, on the position of law as to the powers of the competent court
to grant even a conditional decree by way of specific performance. But, at the
same time, this Court has also repeatedly reiterated the position of law that
courts are not bound to grant specific performance merely because it is lawful to
do unmindful of equities to be balanced and despite serious inequities that may
necessarily result by granting the same. These aspects have been highlighted
even in the judgments noticed supra.
In Sardar Singh vs. Krishna Devi (Smt.) & another (supra), this Court
held that Section 20 (1) declaring the jurisdiction of courts to decree specific
performance being discretionary, the court is not bound to grant such relief
merely because it is lawful to do so and that the discretion of the court is to be
exercised guided by sound and reasonable judicial principles, not arbitrarily. It
was also cautioned that the court has to also take into account the circumstance
of each case keeping in view the fact that the circumstances specified in Section
20 are illustrative and not exhaustive and that the plaintiff cannot succeed in
obtaining an order of specific performance unless he is able to show sufficiently
and clearly the existence of a contract that is valid and enforceable at law at the
time when the order is sought.
In K.Narendra Vs. Riviera Apartments (P) Ltd. (supra), this Court
reiterated that severe hardship may be a ground for refusing specific
performance, even though it results from circumstances, which arise after the
conclusion of this contract, which affect the person of the defendant and for
which the plaintiff is no way responsible. Adverting to inflationary increase in the
value of properties and the relevance of the same in denying or granting the relief
at paragraph 35 of the report, it was observed as hereunder:
"Added to all this is the factum of astronomical rise in
the value of the land which none of the parties would
have fore-contemplated at the time of entering into
the agreement. We are not in the least holding that
the consideration agreed upon between the parties
was inadequate on the date of the agreement. We
are only noticing the subsequent event.. Upon an
evaluation of the totality of circumstances, we are of
the opinion .. The contract though valid at the
time when it was entered, is engrossed in such
circumstances that the performance thereof cannot be
secured with precision. The present one is a case
where the discretionary jurisdiction to decree the
specific performance ought not to be exercised in
favour of the respondents."
In K. S. Vidyanadam & Others vs. Vairavan [1997 (3) SCC 1], B.P.
Jeevan Reddy, J., speaking for this Court, observed at Para 11 as hereunder:
"Shri Sivasubramaniam cited the decision of the
Madras High Court in S.V. Sankaralinga Nadar v.
P.T.S. Ratnaswami Nadar holding that mere rise in
prices is no ground for denying the specific
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performance. With great respect, we are unable to
agree if the said decision is understood as saying that
the said factor is not at all to be taken into account
while exercising the discretion vested in the court by
law. We cannot be oblivious to the reality - and the
reality is constant and continuous rise in the values of
urban properties fuelled by large-scale migration of
people from rural areas to urban centres and by
inflation"
In a recent pronouncement reported in V. Pechimuthu vs. Gowrammal
[2001 (7) SCC 617], this Court observed that where the court is 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. Reference has also been made above
to a decision of this Court in Gobind Ram vs. Gian Chand (supra) wherein, in
order to mitigate the hardship resulting to the vendor due to lapse of time and
escalation of prices of urban property, further compensatory amount was ordered
to be paid, even though in that case the trial court granted a decree for specific
performance for consideration recited in the document and the balance of
consideration was also deposited by the purchaser in full, thereon.
The subsequent developments and events noticed above and brought on
record, even dehors the legal principles considered above belies, at least for the
present, the claim of total impossibility of performance of the agreement entered
with the appellant by the respondents 1 and 2. At the same time, the entire fault
for the delay or default cannot be squarely attributed solely to 1st and 2nd
respondents since the volition and positive role of others as well as some public
authorities were found required to have the agreed things to be done, really
fulfilled and carried out. Certain lapses in carrying out the developmental
activities in accordance with the arrangements made and agreements entered
into with other parties and court proceedings also had their inevitable impact.
Consequently, while insisting upon the enforcement of her rights under the suit
agreement, the plaintiff/appellant also should be prepared to share a portion of
the expenses, monetary commitments and obligations to be satisfied in securing
the renewal of the lease and the revalidation of the building plan proportionate to
and commensurate with her share qua the flat No.71 agreed to be sold. During
the course of examination and particularly her cross-examination, the appellant
expressed her willingness to contribute her share viz. 1/36th of the arrears, and
later mentioned it to be 1/34th share. The appellant also seems to have stated
that she was prepared and willing to take possession of the incomplete flat
without claiming any reduction in purchase price and also further stated that she,
by accepting the incomplete flat, would not hold defendants 1 and 2 (respondents
1 and 2) liable for anything incomplete in the building. Attractive though it may
appear, ordinarily, she cannot be allowed to have for her alone, the entire benefit
of manifold mega increase of the value of real estate property in the locality.
Apparently, aware of the nebulous state of affairs, she also has stated that she
cannot say who would complete the rest of the building, if specific performance
was granted, as the building stands and that it would take several lakhs to
complete it. She also firmly stated that she will co-operate if the possession of
incomplete flat is given, to complete the same. As against the total consideration
of Rs.60,000/- agreed to under the suit agreement, a sum of Rs.35,000/- has
only been paid, as upto June, 1969 and even thereafter there was no occasion to
pay any part of the balance of consideration. Consequently, it would be not only
unreasonable but too inequitable for courts to make the appellant the sole
beneficiary of the escalation of real estate prices and the enhanced value of the
flat in question, preserved all along by respondent Nos. 1 and 2 by keeping alive
the issues pending with the Authorities of the Government and the Municipal
body. Specific performance being an equitable relief, balance of equities have
also to be struck taking into account all these relevant aspects of the matter,
including the lapses which occurred and parties respectively responsible therefor.
Before decreeing specific performance, it is obligatory for courts to consider
whether by doing so any unfair advantage would result for the plaintiff over the
defendant, the extent of hardship that may be caused to the defendant and if it
would render such enforcement inequitable, besides taking into the totality of
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circumstances of each case. The parties, while availing of the opportunities given
by this court to settle the matter, appear to have, so far as respondents No. 1 and
2 were concerned, prepared to pay upto sixty lakhs as against the demand of the
appellant to the tune of one and half crores, and subsequently, reduced upto 120
lakhs. Seeking to place reliance upon the details of consideration found
mentioned in the assignment deed dated 14.10.94, it has been stated in the
written submissions on behalf of the appellant that even a sum to the tune of
Rs.1,81,63,534/-, if paid, will be of some recompense only. Keeping in view, all
these aspects, in my view, interests of justice would be better served, dictates of
reason could be satisfied, and equities could, to some extent, be balanced only if
as a condition for decreeing specific performance or allowing the plaintiff to avail
of such relief, the appellant is directed to pay at least a sum of rupees forty lakhs
to the respondents No. 1 and 2, in addition to the amount already paid. The
appellant shall be entitled to have a decree for specific performance, only subject
to satisfaction/compliance with the said condition of further payment, as a
compensatory measure for the respondents No. 1 and 2.
The 7th respondent, in this appeal, the assignee/purchaser under the deed
of assignment dated 14.10.94, got the incomplete building except flat No.71 on
the 7th floor of the building "Divya Prabha" and the rights and interests in relation
to the land on which this building and the completed building ’Advent’ and other
constructions stand. This respondent had to necessarily take steps to obtain the
renewal of the lease in respect of the land and revalidation of the building plan,
as a whole, of which the flat agreed to be sold to the appellant is only a part. For
all purposes the benefits secured cannot be to the exclusion of the appellant,
since flat No.71 alone cannot be segregated or separated from the totality of the
scheme. Hence, it is but necessary for the appellant to engage the services of
the 7th respondent and inevitable for the said respondent also to take up the
cause of the flat No.71 also agreed to be sold to the appellant, on such terms as
they may mutually stipulate by consensus forgetting about the rancour of the
litigation or its side effects. If there is any difficulty in arriving at a consensus, the
parties shall be at liberty to approach the Commissioner for taking Accounts
who shall determine and fix the same, which determination shall be binding upon
parties.
The appellant should not be left without any remedy, if she is not prepared
to abide by and satisfy the condition as to the payment of a sum of rupees forty
lakhs, before getting the decree for specific performance, executed in her favour.
If the appellant fails to comply with the same, she shall not be entitled to the relief
of specific performance and her rights and entitlement shall be only to get
damages, as per the decree of the learned Single Judge in the suit, which was
affirmed by the Division Bench of the High Court, in terms of the sum to be fixed
by the Commissioner for taking accounts, as per the decree of the High Court,
and nothing more than that relief.
For all the reasons stated above, the appeal is allowed and the judgment
and decree dated 23.3.81 passed in suit No.744 of 1969 on the original side of
the High Court of Bombay, as affirmed by the Division Bench by its judgment
dated 15.7.1987 in Appeal No.204 of 1981, shall stand, modified and altered and
there shall be a decree in suit No.744 of 1969 on the file of the original side of the
High Court, Bombay in the following terms:
(i) There shall be conditional decree for specific
performance of the agreement dated 8.9.66 entered into
between the 4th plaintiff and defendants No. 1 and 2 and
defendants No.1 and 2 shall execute a sale deed as
envisaged in the agreement for sale of flat No.71 on 7th
floor of the building known as "Divya Prabha" situated at
No.12 A, Foreshore Road, Bombay, in "as is where is
condition";
(ii) That the appellant/4th plaintiff shall pay the
defendants/respondents 1 and 2, a sum of
Rs.40,00,000/- (Rupees Forty lakhs) in addition to the
sum already paid by them. The appellant shall be
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entitled to have the sale deed executed in her favour only
on prior compliance and satisfaction of this condition;
(iii) The rights and interest in the land shall be as agreed
to between parties and as per scheme and arrangement
contained in the agreement dated 8.9.1966;
(iv) The defendants 1 and 2 and/or the 7th respondent in
this appeal, viz., Gaurav Overseas Private Ltd., 92,
Maker Chambers, Nariman Point, Bombay-400020, as
and when they secure the necessary renewal of the
lease and revalidation of the building plan, the same shall
be for the benefit of the 4th plaintiff/appellant also, subject
to the condition that she shall contribute her share of the
monetary commitments and expenses incurred therefor,
on being intimated by any of them in writing within four
weeks from the date of such receipt of the intimation. In
case of dispute about the quantum, the same shall
be got determined and settled before the Commissioner
for taking accounts, on being moved by either of them.
The sum so determined shall be a charge on the property
comprised in flat No.71, till it is paid and shall be entitled
to be recovered, accordingly.
(v) The appellant and the 7th respondent shall be at
liberty to mutually agree for completion of the incomplete
building at such prevailing market rates as would be
applicable for the work and manner of its completion and
the mode of payment. If there can be no such mutual
agreement among the appellant and the 7th respondent in
this regard, as and when the sale deed is executed by
the 1st and 2nd defendant, as per this decree, the
appellant shall be at liberty to make her own arrangement
to have her flat completed through approved and
licensed Architects;
(vi) The sale/conveyance pursuant to the decree in the
suit shall be subject to all such rights and liabilities and
obligations of respective parties (the appellant, the
respondents 1, 2 & 7) under the suit agreement, as are
available to each of them against the others, had the sale
has been effected even without the intervention of this
court, by mutual agreement of parties;
(vii) The appellant failing to comply with the terms of the
conditional decree passed as above, shall stand denied
and lost her right and entitlement to get specific
performance of the agreement dated 8.9.66 in her favour
and consequently, the appeal shall stand dismissed with
the appellant’s rights secured as per the judgments and
decrees dated 23.3.81 and 15.7.87 firmly affirmed and
settled, and the rights to have them executed in the
manner known to law, alone surviving to the appellant.
(viii) Each party shall bear their respective costs in this
Court.
J.
[Doraiswamy Raju]
May 10, 2002.
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