Case: K. Narendra Vs. Riviera Apartments (P) Ltd

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. Possession over a meagre part of the property was delivered by the appellant to the respondents, not simultaneously with the agreement but subsequently at some point of time. To that extent, the recital in the agreement and the averments made in the plaint filed by the respondents are false. On a major part of the property, the appellant has continued to remain in possession. As opposed to this, the respondents have neither pleaded nor brought material on record to hold that they have acted in such a way as to render inequitable the denial of specific performance and to hold that theirs would be a case of greater hardship over the hardship of the appellant. Upon an evaluation of the totality ofthe circumstances, we are of the opinion that the performance of the contract would involve such hardship on the appellant as he did not foresee while the non- performance would not involve such hardship on the respondents. The contract though valid at the time when it was entered, is engrossed into 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. During the course of hearing the learned Senior Counsel for the respondents time and again emphasized and appealed to the Court that respondents were builders of repute and in the event of the specific performance being denied, they run a grave risk of loosing their reputation as their proposed building plan Girnar would not materialise and they will not be able to show their face to their prospective flat buyers. This is hardly a consideration which can weigh against the several circum stances which we have setout hereinabove. If a multi-storeyed complex cannot come up on the suit property, the respondents plans are going to fail in any case. 35. We have already held that until the repeal ofthe ULCRA in the year 1999 the property agreed to be transferred was incapable of being transferred for failure of the requisite permission under the ULCRA which situation continued to prevail for a period of about 16 years from the date of agreement until the repeal of ULCRA. In the facts and circumstances of the case we do not think it appropriate to extend the benefit of the subsequent event of repeal of ULCRA in favour of the respondent-plaintiffs after a lapse of 16years from the date of the contract. Permission for constructing a multi-storeyed complex on the premises was refused time and again by the NDMC until the suit for specific performance came to be decreed by the Trial Court. On none of the two events either of the parties had any control. We are clearly of the opinion that at one point of time the contract had stood frustrated by reference to Section 56 of the Contract Act. We do not think that the subsequent events can be pressed into service for so reviving the contract as to decree its specific performance. 36.The learned Counsel for the respondents submitted that in spite of a part area of the property agreed to be transferred having been rendered inalienable by the owner on account of its having been acquired by the State and part of the property having been found to be inalienable on account of being in excess of the ceiling limit provided by ULCRA, the respondents were prepared to have a sale deed executed of such remaining part of the property as is available to be transferred without insisting on a corresponding reduction in the price agreed to be paid. The learned Counsel for the respondents also submitted that the ULCRA having been repealed by the Urban Land Ceiling and Regulation (Repeal) Act, 1999, the hurdle of the land being in excess of the ceiling has been removed and this aspect of the matter has lost its relevance. We are not impressed by the submission. Though the respondents may on their part, in the changed circum-stances, be agreeable to have even lesser property being transferred to them, but in our opinion that is not permissible. The case of non-enforcement except with variation is statutorily covered by Section 18 of the Specific Relief Act, 1963. When the defendant sets up a variation then the plaintiff may have the contract specifically performed subject to the variation so set up only in cases of fraud, mistake of fact or misrepresentation or where the contract has failed to produce a certain legal result which the contract was intended to do or where the parties have subsequent to the execution of the contract varied its terms. Obviously, the case at hand is not covered by any of the situations contemplated by Section 18 abovesaid. 37. However, in our opinion the present one is a fit case where the respondents should be awarded some compensation in spite of its specific performance being refused. Section 21 of the Specific Relief Act provides for award of compensation either in addition to or in substitution of such performance. The explanation appended to the section expressly enacts that the Court is not precluded from exercising jurisdiction to award compensation even in a case where the contract has been rendered incapable of specific performance. Compensation to some extent is a matter of guess-work. An amount of Rs. 3,25,000, equivalent to the amount which was paid by the respondents to the appellant would be a reasonable amount of compensation in the facts and circumstances of the case which in our opinion deserves to be paid by the appellant to the respondents in substitution of the decree for specific performance. The respondents have also in their plaint claimed the relief of compensation in addition to other reliefs.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]34. In our opinion, there has been a default on the part of the respondents in performing their obligations under the contract. The period lost between 25.7.1972 (the date of the agreement) and the years 1979 and 1980 when the litigation commenced, cannot be termed a reasonable period for which the appellant could have waited awaiting performance by the respondents though there was not a definedt for performance laid down by the agreement. The agreement contemplated several sanctions and clearances which were certainly not within the power of the parties and both the parties knew it well that they were the respondents who were being depended on for securing such sanctions/clearances. Part of the land formingr of the agreement was an excess land within the meaning of ULCRA and hence could not have been sold. Part of the land has been acquired by the State and to that extent the agreement has been rendered incapable of performance. The feasibility of ad complex as is proposed and planned by the respondents appears to be an impracticality. If the respondents would not be able to construct and deliver to the appellant some of the flats and contemplated by the novated agreement how and in what manner the remaining part of consideration shall be offered/paid by the respondents to the appellant is a question that defies answer on the material available on record. 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. Possession over a meagre part of the property was delivered by the appellant to the respondents, not simultaneously with the agreement but subsequently at some point of time. To that extent, the recital in the agreement and the averments made in the plaint filed by the respondents are false. On a major part of the property, the appellant has continued to remain in possession. As opposed to this, the respondents have neither pleaded nor brought material on record to hold that they have acted in such a way as to render inequitable the denial of specific performance and to hold that theirs would be a case of greater hardship over the hardship of the appellant. Upon an evaluation of the totality ofthe circumstances, we are of the opinion that the performance of the contract would involve such hardship on the appellant as he did not foresee while the nonperformance would not involve such hardship on the respondents. The contract though valid at the time when it was entered, is engrossed into 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. During the course of hearing the learned Senior Counsel for the respondents time and again emphasized and appealed to the Court that respondents were builders of repute and in the event of the specific performance being denied, they run a grave risk of loosing their reputation as their proposed building plan Girnar would not materialise and they will not be able to show their face to their prospective flat buyers. This is hardly a consideration which can weigh against the several circum stances which we have setout hereinabove. If ad complex cannot come up on the suit property, the respondents plans are going to fail in any case35. We have already held that until the repeal ofthe ULCRA in the year 1999 the property agreed to be transferred was incapable of being transferred for failure of the requisite permission under the ULCRA which situation continued to prevail for a period of about 16 years from the date of agreement until the repeal of ULCRA. In the facts and circumstances of the case we do not think it appropriate to extend the benefit of the subsequent event of repeal of ULCRA in favour of thes after a lapse of 16years from the date of the contract. Permission for constructing ad complex on the premises was refused time and again by the NDMC until the suit for specific performance came to be decreed by the Trial Court. On none of the two events either of the parties had any control. We are clearly of the opinion that at one point of time the contract had stood frustrated by reference to Section 56 of the Contract Act. We do not think that the subsequent events can be pressed into service for so reviving the contract as to decree its specific performance36.The learned Counsel for the respondents submitted that in spite of a part area of the property agreed to be transferred having been rendered inalienable by the owner on account of its having been acquired by the State and part of the property having been found to be inalienable on account of being in excess of the ceiling limit provided by ULCRA, the respondents were prepared to have a sale deed executed of such remaining part of the property as is available to be transferred without insisting on a corresponding reduction in the price agreed to be paid. The learned Counsel for the respondents also submitted that the ULCRA having been repealed by the Urban Land Ceiling and Regulation (Repeal) Act, 1999, the hurdle of the land being in excess of the ceiling has been removed and this aspect of the matter has lost its relevance. We are not impressed by the submission. Though the respondents may on their part, in the changedbe agreeable to have even lesser property being transferred to them, but in our opinion that is not permissible. The case oft except with variation is statutorily covered by Section 18 of the Specific Relief Act, 1963. When the defendant sets up a variation then the plaintiff may have the contract specifically performed subject to the variation so set up only in cases of fraud, mistake of fact or misrepresentation or where the contract has failed to produce a certain legal result which the contract was intended to do or where the parties have subsequent to the execution of the contract varied its terms. Obviously, the case at hand is not covered by any of the situations contemplated by Section 18 abovesaid37. However, in our opinion the present one is a fit case where the respondents should be awarded some compensation in spite of its specific performance being refused. Section 21 of the Specific Relief Act provides for award of compensation either in addition to or in substitution of such performance. The explanation appended to the section expressly enacts that the Court is not precluded from exercising jurisdiction to award compensation even in a case where the contract has been rendered incapable of specific performance. Compensation to some extent is a matter of. An amount of Rs. 3,25,000, equivalent to the amount which was paid by the respondents to the appellant would be a reasonable amount of compensation in the facts and circumstances of the case which in our opinion deserves to be paid by the appellant to the respondents in substitution of the decree for specific performance. The respondents have also in their plaint claimed the relief of compensation in addition to other reliefs.