IN THE HIGH COURT OF HIMACHAL PRADESH SHIMLA RSA No.39 of 1997 along with RSA No.132 of 1997. Judgment reserved on:19.11.2009. Date of Decision: 8.1.2010. RSA No.39 of 1997: M/s.Raj Kumar Khanna and another ..Appellants Versus Gurcharan Singh Gulati and others ..Respondents RSA No.132 of 1997: Gurcharan Singh Gulati ..Appellant Versus M/s.Raj Kumar Khanna and another ...Respondents Coram: The Hon’ble Mr. Justice Deepak Gupta, Judge. Whether approved for Reporting? No For the Appellant(s): Mr.Ajay Kumar, counsel for the appellants in RSA No.39 of 1997 Mr.Gian Chand Gupta, Senior Advocate with Mr.Mohinder Gautam, counsel for the appellant in RSA No.132 of 1997. For the Respondent(s): Mr.Ajay Kumar, counsel for the respondents 1&2 in RSA No.132 of 1997. Mr.K.D. Sood, counsel for R-3 in RSA 132 of 97 And for respondent No.2 in RSA No.39 of 1997. Mr.Gian Chand Gupta, Senior Advocate with Mr.Mohinder Gautam, counsel for the respondent No.1 in RSA No.39 of 1997. Deepak Gupta, J. These two appeals are being disposed of by one judgment since they arise out of one suit. - 2 - The undisputed facts are that one Mr.C. Baljees (hereinafter referred to as the defendant No.2) was the owner of building known as Wenger building bearing Nos.62 to 66, the Mall Shimla. There were a number of tenants in this building and the owner had filed various eviction proceedings against the tenants. Sh.G.S. Gulati (hereinafter referred to as the defendant No.1) was the attorney of some of the tenants. An agreement to sell was entered into on 2nd November, 1983 between Sh.C. Baljees and Sh.G.S. Gulati whereby the owner agreed to sell the entire five storey building known as Wenger building to Sh.G.S. Gulati for a sum of Rs.twenty lakhs. The sale deed was to be got registered by 31.1.1984. A sum of Rs.two lakhs were paid in advance. Clause 8 of the agreement is relevant for our purpose and read as follows: “8.That the purchaser shall be entitled to get the registration done in his own name or in favour of his nominee or nominees. However, the seller shall not be in any way liable in respect of the terms and conditions settled between the purchaser and his nominee or nominees. It is further agreed that in any event, all the registrations of sale deeds shall be made on the same date and the balance of sale consideration shall be received in lump-sum by the seller.” Sh.G.S. Gulati in turn entered into a further agreement to sell (Ext.P-1) on 7/11/1983 with Sh.Raj - 3 - Kumar Khanna (hereinafter referred to as the plaintiff) whereby he agreed to sell a three room set on the first floor i.e. eastern side of Wenger building in which the plaintiff was a tenant to him for a sum of Rs.1,35,000/-. It appears that Sh.Gulati had entered into similar agreements with other tenants also. It is also not disputed that in the eviction petitions filed by Mr.Baljees against various tenants compromises were arrived at in most of the cases. The tenants vacated the premises and thereafter some premises were sold or rented to the tenants. The plaintiff on 27th July, 1984 sent a notice through his counsel (Ext.P8) to Sh.C. Baljees in which he stated that he along with many other tenants had entered into an agreement with Sh.G.S. Gulati defendant No.1 in November, 1983 to purchase portions of Wenger building. It was alleged that the plaintiff had paid a sum of Rs.21,000/- to Sh.Gulati and that Sh.Gulati is not performing his part of the contract. It was further alleged in this notice that the plaintiff understood that the amount had been paid by defendant No.1 to defendant No.2 and therefore defendant No.2 was requested not to return the amount to Sh.Gulati. - 4 - On 21st March, 1986 the defendants 1&2 entered into another agreement whereby the defendant No.1 as attorney of certain tenants agreed to handover vacant possession of certain portions of the tenanted premises in respect of which eviction orders had been passed to the defendant No.2. He also agreed not to resist the execution of the ejectment orders passed in respect of certain other premises where also he was the power of attorney holder on behalf of the tenants. The defendant No.1 was also allotted certain property under this agreement free of cost and was also paid some amounts therein. The earlier agreement to sell was revoked by this agreement. The plaintiff alleges that he was always ready and willing to perform his part of the agreement. He initially filed a suit on 20.5.1986 against defendant No.1 only. In this suit he only prayed that a decree for Rs.42,000/- be passed in his favour i.e. Rs.21,000/- as the earnest money paid by him and Rs.21,000/- as damages in terms of the agreement. The plaintiff did not pray for specific performance of the contract but the only relief prayed was for recovery of the amount paid and damages. - 5 - The defendants filed reply and contested the suit on various grounds. Thereafter, an application for amendment was filed on 19.9.1986 whereby defendant No.2 was sought to be added as party and it was alleged that in fact the said agreement had been made with the consent of Sh.C. Baljees and he was also bound by the same. It was alleged that both the defendants were conniving with each other. This amendment application was allowed on 24.3.1987. In the amended plaint the plaintiff also sought specific performance of the contract. The defendants contested the suit on various grounds. The main ground being that the contract of sale dated 8.11.1983 was no longer enforceable since the original agreement entered into between the defendants themselves had been revoked and rescinded. A number of issues were framed in the case. The trial Court held that though the plaintiff had entered into an agreement with defendant No.1 this was not with the consent of defendant No.2 and therefore there was no privity of contract between the plaintiff and defendant No.2 and hence no relief could be claimed against the said defendant. However, the learned trial Court held that in terms of the agreement the plaintiff was entitled to - 6 - recover a sum of Rs.42,000/- from defendant No.1. Therefore, a decree of this amount along with interest @ 12% p.a. was passed against the defendant No.1. Both the plaintiff and defendant No.1 filed appeals against the said judgment. The learned lower Appellate Court dismissed both the appeals. Hence, the present appeals. There are two issues which arise in this appeal; (1) whether the plaintiff is entitled to obtain a decree of specific performance against defendant No.2 and (2) whether the courts below could have passed a decree of Rs.42,000/- in favour of the plaintiff. The facts have already been detailed hereinabove. It is not necessary to refer to the entire evidence on record. It would be suffice to say that it appears that other than the plaintiff most of the other tenants either vacated the premises or purchased certain portions in the new building after entering into an agreement with defendant No.2. Once eviction orders were passed and the entire building was vacated the same was reconstructed and a new building came into being. In this building a number of shops/flats were sold to the old tenants and some new owners etc. were also inducted. - 7 - However, the portion of the building which was in occupation of the plaintiff is still in the ownership of defendant No.2 but after reconstruction has been leased out to some other person. It is apparent that in 1984 itself the plaintiff was aware that Sh.G.S. Gulati is trying to back out from the agreement. This is evident from the notice Ext. P8 referred to above. He in fact requested defendant No.2 not to handover the money to defendant No.1. There is no explanation as to why when the suit was initially filed, it was only filed against defendant No.1 and not against defendant No.2. The amendment was allowed only in the year 1987. Sh.C. Baljees was added as party only vide order dated 24.3.1987. During this period many changes had taken place. I am not in agreement with the findings given by both the Courts below that C.Baljees was not bound by the agreement entered into between G.S. Gulati and the plaintiff. Sh.Baljees had given a right in the original agreement in terms of Clause 8 reproduced above to the defendant No.1 to sell off the property to various persons. It is apparent that defendant No.1 with the consent of defendant No.2 had entered into agreements with the tenants. To this extent the finding of the learned Courts - 8 - below that defendant No.2 was not bound by the agreement in my opinion does not appear to be correct and is set-aside. Having held so, the question which arises is whether a decree for specific performance of contract can be passed in favour of the plaintiff or not. Admittedly the original agreement was entered into on 7.11.1983. As per this agreement the sale deed was to be executed by 31st January, 1984. The agreement was entered into in the year 1983. The plaintiff originally only filed a suit for recovery of amount. The defendant No.2 was added as a party only in the year 1987. In the meantime the building has been totally reconstructed. What was agreed to be sold to the plaintiff by defendant No.1 was the premises which were in a dilapidated condition. These premises no longer exist in that condition. Admittedly eviction orders were passed against all the tenants and thereafter a new building has been constructed. There is no way to determine the cost of construction of the area agreed to be sold in the new building. By subsequent events the rights of the plaintiff have been frustrated. - 9 - The plaintiff himself is also to blame. It may be true that he may have filed the suit within limitation but he should have been more vigorous and earnest in pursuing his matter. For almost 3 years the plaintiff kept silent and when he filed the suit it was only for recovery of the amount. This despite the fact that he had sent a notice Ext.P8 on 22.7.1984. The learned trial Court had not granted any temporary injunction in favour of the plaintiff. Thereafter, appeal was carried out to this Court on 7.2.1988. An order was passed permitting the defendant No.2 to raise construction subject to the condition that the portion of the building which was subject matter of the appeal would not be alienated, transferred etc. This order was passed on 16.7.1988. The building was reconstructed. Thereafter, the defendant No.2 applied for modification of the order and was permitted to lease out the same. In fact the defendant No.2 at that stage offered that in case the plaintiff is willing to pay the amount of monthly rent the owner would keep it empty otherwise he may be permitted to rent out the same. Thereafter, the defendant No.2 rented out the premises. Third party rights have now been created and at this stage no decree for - 10 - specific performance can be passed. It is settled law that it is the discretion of the Court whether to grant such a decree or not. Reliance in this behalf may be placed on the judgment of the Apex court in Shyam Singh vs. Daryao Singh (dead) by LRs and others, AIR 2004 SC 348 wherein it was held as follows: “10. As is to be seen from the provisions of Section 15(b) of the Specific Relief Act, 1963, specific performance of the contract may be obtained by 'any party thereto' or 'their representative in interest'. This expression clearly includes the transferees and assignees from the contracting party in whose favour the right exists. Such right of seeking specific performance would, however, be not available in terms of proviso below clause (b) where "the contract provides that the 'interest shall not be assigned'.” In Bal Krishna and another vs. Bhagwan Das (Dead) by LRs and others, (2008) 12 SCC 145, the Apex court held as follows: “14. It is also settled by various decisions of this Court that by virtue of Section 20 of the Act, the relief for specific performance lies in the discretion of the court and the court is not bound to grant such relief merely because it is lawful to do so. The exercise of the discretion to order specific performance would require the court to satisfy itself that the circumstances are such that it is equitable to grant decree for specific performance of the contract. While exercising the discretion, the court would take into consideration the circumstances of the case, the conduct of parties, and their respective interests under the contract. No specific performance of a contract, though it is not vitiated by fraud or misrepresentation, can be granted if it would give an unfair advantage to the plaintiff and where the performance of the contract would involve some hardship on the defendant, which he did not foresee. In other words, the court's discretion to grant specific performance is not exercised if the contract is not equal and fair, although the contract is not void.” - 11 - In view of the aforesaid law and the peculiar facts of this case, I am of the considered opinion that the plaintiff is not entitled to a decree for specific performance and his appeal is accordingly dismissed. Sh.G.C. Gupta, learned senior counsel for defendant No.1 in his appeal urges that merely because the agreement to sell provided that liquidated damages of Rs.21,000/- were payable this amount does not became payable and the plaintiff must show that he had actually suffered such damages. In support of this submission he has relied upon a judgment of the Calcutta High Court in Sushil Kumar Khan vs. M/s.Food Corporation of India, 2001(3) ICC 75. In my opinion this judgment is not applicable to the facts of the case. In fact the loss suffered by the plaintiff may be higher since he has been denied the right to get the property transferred to his name. However, since his claim was limited to Rs.42,000/- he cannot be awarded anything more. In view of the above discussion, I find no merit in both the appeals which are accordingly dismissed. No costs. January 8, 2010. ( Deepak Gupta ), J. PV