1 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JAIPUR BENCH, JAIPUR. D.B.CIVIL SPECIAL APPEAL No.1/1991 in S.B.CIVIL REGULAR FIRST APPEAL No.19/1976 Sumat Prakash Jain vs. Smt.Laxmi 05.03.2009 PRESENT HON'BLE MR.JUSTICE ASHOK PARIHAR HON'BLE MR. JUSTICE G.S. SARRAF Mr.A.K. Bhandari, Sr.Advocate with Mr.Kinsukh, for appellant. Mr.S.M. Mehta, Sr.Advocate with Mr.Anil Mehta, for respondent. *** (Per Hon'ble G.S. Sarraf, J) Reportable This D.B.Civil Special Appeal has been preferred by the defendant against the judgment and decree dated 12.11.1990 of learned Single Judge of this Court. The defendant appellant purchased a plot No.D-2, Raman Marg, Tilak Nagar, Jaipur from the then Urban Improvement Trust, Jaipur and constructed a house over it after taking a loan of Rs.25,000/- from the Government of Rajasthan. The house was then given on rent to the Reserve Bank of India. The defendant appellant entered into an agreement (Ex.2) with the plaintiff-respondent on 17.10.1972 for the sale of the above plot along with all the constructions for Rs.75,000/- and towards that transaction the plaintiff-respondent paid an advance of Rs.10,000/- to the defendant appellant. The sale deed was to be executed within three months from 17.10.1972 and the balance of the sale price was to be paid at the time of registration of the sale-deed. It was also agreed that the vendor and the purchaser would not be entitled to refuse to sell or buy the property and if the vendor refused to sell then he would pay double the advance money to the purchaser and if the purchaser refused to buy then the vendor would be entitled to forfeit the advance money as damages. The sale deed could not be executed within the stipulated time and, therefore, the plaintiff respondent filed the present suit for specific performance of the contract. On the pleadings of the parties, following issues were framed:- 1. Whether the plaintiff was always prepared to perform his part of the contract? 2. Whether the defendant could execute the sale deed even without obtaining the Patta from the 2 U.I.t. and he had shown the available title deeds to the plaintiff ? 3. Whether the plaintiff is not entitled to seek the specific performance from the defendant as damages have been provided in case of breach of agreement ? 4. Whether the period of three months was essence of agreement ? 5. Whether the suit for specific performance is not maintainable in view of the allegations in paras 5 and 6 of the written statement. 6. Relief. Learned trial court decided all the issues in favour of the plaintiff respondent and decreed the suit on 17.11.1975 granting a decree for specific performance of the contract. The defendant appellant filed an appeal before the High Court. Learned Single Judge of this Court dismissed the appeal and confirmed the judgment and decree of the trial Court vide judgment dated 12.11.1990. It is against this judgment that the present D.B.Civil Special Appeal has been filed by the defendant- appellant. Mr.A.K. Bhandari, Senior Advocate for the defendant appellant, has contended that the defendant was not having a marketable title and in such a situation the contract was not enforceable. He has further contended that the defendant appellant was in difficulty and distress at the time of entering into the contract and, therefore, the contract should not have been specifically enforced. He has also contended that since there is a provision for damages in the agreement and the plaintiff respondent has also made a prayer for alternative relief in the plaint as such the suit for specific performance of the contract should not have been decreed and only alternative relief should have been granted. He has placed reliance on 1996 (4) SCC 593. Mr.S.M. Mehta, Senior Advocate for the plaintiff respondent has submitted that the vendor cannot set up defect in his own title as a defence in a suit for specific performance by the purchaser. He has submitted that the ground of distress and difficulty of the defendant appellant was not taken in the written-statement and no issue was framed or evidence led with respect to that and, therefore, the defendant appellant cannot raise this argument at the stage of special appeal. He has also submitted that the term regarding damages was incorporated in 3 the agreement for securing the performance of the contract and, therefore, it is not correct to say that because of such a clause a suit for specific performance of the contract is not maintainable. He has placed reliance on (2004) 6 SCC 649 & AIR 1973 SC 2457. It is not disputed that the defendant appellant purchased the disputed plot from the then Urban Improvement Trust, Jaipur and thereafter he constructed a house thereon after taking a loan of Rs.25,000/- from the Rajasthan Government. Thus, there does not appear any defect in the title. Moreover, the vendor is not entitled, in a suit for specific performance by the purchaser, to the defence that the vendor had no title or had defective title. There is no pleading to the effect that the defendant appellant was in distress and difficulty at the time of entering into the contract. Neither any issue has been framed nor evidence has been led regarding distress and difficulty of the defendant appellant.. Under these circumstances learned counsel for the defendant appellant is not entitled to raise a contention regarding difficulty and distress of the defendant appellant at this belated stage. It is settled law that granting decree for specific performance of a contract of immovable property is not automatic but it is discretionary and the discretion is to be exercised on sound principles. The test to determine whether there is an alternative contract or not is whether the defendant had an alternative choice either to sell the disputed property or to pay the damages and if this is not so and if the agreement points out that the sum mentioned as damages is in the nature of security for the performance of the contract then specific performance of the contract cannot be refused. In M.L. Devender Singh & Ors. vs. Syed Khaja A.I.R. 1973 SC 2457, the following statement of law has been quoted from Sir Edward Fry's 'Treatise on the Specific Performance of Contracts' (Sixth Edn. At p.65):- “The question always is: What is the contract? Is it that one certain act shall be done, with a sum annexed, whether by way of penalty or damages, to secure the performance of this very act? Or, is it that one of the two things shall be done at the election of the party who has to perform the contract, namely, the performance of the act or the payment of the sum of money? If the former, the fact of the penal or other like sum being annexed will not prevent the Court's enforcing performance of the very act, and thus carrying into execution the intention of the 4 parties; if the latter, the contract is satisfied by the payment of a sum of money, and there is no ground for proceeding against the party having the election to compel the performance of the other alternative. From what has been said it will be gathered that contracts of the kind now under discussion are divisible into three classes:- (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 substituted 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”. In this case, there is a stipulation in the agreement (Ex.2) that the vendor and the purchaser would not be entitled to refuse to sell or buy the disputed property. This clearly shows that the intention of the parties is to perform the contract and thus notwithstanding the penal clause relating to payment by the vendor of double the advance money to the purchaser specific performance of the contract ought to be enforced. Thus, having regard to the terms of the agreement (Ex.2) and other attending circumstances we are satisfied that the sum was named in the contract as the amount to be paid in case of its breach only for the purpose of securing performance of the contract and not for the purpose of giving to the vendor an option of paying money in lieu of specific performance. In (1996) 4 SCC 593 in the facts and circumstances of the case and in the background of an undertaking of learned counsel for the vendor appellant to pay a sum of rupees ten lakhs to the purchaser, Hon'ble Apex Court found justified granting alternative decree for damages but, in our opinion, in this case a decree for specific performance of the contract is neither unfair nor unrealistic. 5 For the reasons stated above, we find no merit in this special appeal. The special appeal stands dismissed accordingly. It is made clear that all the interim orders passed during the pendency of this appeal shall stand merged into this judgment. No order as to costs. (G.S. SARRAF), J. (ASHOK PARIHAR), J Sanjay