Unilateral Cancellation of Agreement to Sell – Not required to be challenged separately to maintain suit for specific performance. It is not even a valid defence in a suit for specific performance: Punjab and Haryana High Court

RSA No. 29417 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH RSA No. 29417whereby he had terminated the agreement in question. Therefore the finding recorded by the lower Appellate Court are incomplete if not perverse. Still further learned counsel for the defendant has argued that once the agreement stands terminated then unless the same is challenged by the plaintiff and a declaration of termination as illegal is sought by him and granted by the Court he cannot file a suit for specific performance. To support his argument learned counsel relies upon the judgment of the Hon ble Supreme Court rendered in 2013SCC 27 titled as I.S. Sikandarby LRs. vs K. Subramani and Ors To buttress his plea regarding the termination of the agreement the counsel submits that he had put suggestions to the witnesses as well as to the plaintiff in this regard. Therefore this should be construed that this plea has been duly raised and argued before the Court. The next argument of the learned counsel for the appellant is that he is having only one house and if even this is given to the plaintiff by way of specific performance this would cause undue hardship to the defendant. Therefore the counsel prays that Section 20 of the Specific Relief Act should be resorted to and the RSA No. 29417 plaintiff should be granted the alternate relief of return of money as has been claimed also by him in his plaint. Further the counsel submits that the agreement was only a security document for repayment of loan Heard the learned counsel for the parties After hearing the counsel for the parties and perusing the record with the able assistance of the counsel for the parties this Court is of the considered opinion that the argument raised by the defendant appellant do not deserve acceptance. The agreement in question has been duly proved by the plaintiff by examining the attesting witnesses as well as the scribes. The plaintiff could have done only this much to prove his claim before the Court to show that it was an agreement intended to be as it has been recorded. This onus he has fully discharged. Even the counsel for the appellant defendant could not dispute this fact that he has been able to prove the agreement by examining the attesting witness. To prove the plea that the agreement was meant to be a document of security of loan which he had taken at the rate of 2% per month the defendant has not led any evidence. He has not disclosed even the purpose for which he required this loan. On the contrary he has admitted that the amount of Rs.10 lacs taken by him from the plaintiff was lying in the Saving Bank Account of the defendant. He has also not led any evidence to prove that he ever paid the monthly interest to the plaintiff at the rate of 2% as claimed by him. So the defendant has miserably failed to prove his plea that the agreement in question was only a security document for repayment of loan available by him. However the next argument of the defendant that the agreement stands terminated though much stressed upon by the learned counsel but the same is not found to be established as per the record. It has RSA No. 29417 come on record by way of Ex.D1 that the defendant claimed to have sent a legal notice to the plaintiff on 17.04.2012 and for that purpose even the postal receipt has been placed on record as Ex.D3 and Ex.D4. However besides these documents nothing has been led in evidence to prove either the receipt of this notice by the plaintiff or the contents of the legal notice allegedly sent by the plaintiff. So far as the postal receipt is concerned there is no dispute that once postal receipt of registered letter is proved on record it is a valid proof of service upon the opposite side. However a perusal of the receipt in the present case shows that it does not contain the address of the addressee. It only mentions the name of the plaintiff and name of the city. This in the opinion of this Court would not be a proof of a proper service upon the plaintiff. Possibility of there being so many persons of the same name in such a big city can not be ruled out. Hence production of receipt in the present case is not the proof of the fact that this notice has been sent by the defendant to the plaintiff. Otherwise also the receipt of this notice has been denied by the plaintiff. Despite the questions being put to the plaintiff in his cross examination nothing could be extracted from him in the form of his admission that he ever received this notice. Therefore the cancellation of agreement as such is not proved on record. However otherwise also the defendant could not have unilaterally cancelled the agreement in question. Unilateral cancellation of agreement to sell by one party is not permissible in law except where the agreement is determinable in terms of Section 14 of this Specific Relief Act Such cancellation cannot be raised as a defence in a suit for specific performance. If any such a plea of cancellation termination is raised by the defendant than the Court can just ignore this and the plaintiff need not RSA No. 29417 challenge such an alleged cancellation. If such unilateral cancellation of non determinable agreement is permitted as a defence then virtually every suit for specific performance can be frustrated by the defendant. Therefore the Specific Reliefs Act has made detailed provisions for this aspect. The bare perusal of the provisions of the Specific Relief Act shows that once a party claims the right of revocation or rescission of the agreement then such a party is required to seek a declaration from the Court regarding the validity of revocation or rescission as the case may be. In the present case also it was not the duty cast upon the plaintiff to challenge the alleged cancellation of agreement which otherwise also is not proved on record On the contrary if the defendant so claimed that he had valid reasons to terminate the contract or rescind the contract then he should have sought a declaration from the competent Court as required under Sections 27 and 31 of Specific Relief Act. Hence the plea of termination of agreement raised by the defendant has rightly not been accepted by the Courts below So far as the judgement of the Hon ble Supreme Court in case of I.S. Sikandar is concerned there is no dispute regarding the proposition laid down by the Hon ble Supreme Court. However that judgement is distinguishable on the facts of the present case. In the case before the Hon ble Supreme Court the defendant had in fact asked the plaintiff to make the payment of the money and to get the sale deed executed. On failure of the plaintiff to make the payment the agreement had become determinable and the defendant had terminated the contract by specific communication. This action of the defendant was within the realm of the Contract Act as provided under Sections 38 and 51 of the Contract Act and Section 14 of Specific Relief Act which provides that in case of the performance which was required of the plaintiff promisee is refused by him RSA No. 29417 then the defendant promisor need not perform his part of the agreement. In the present case the appellant had not offered the performance on his part Still further in the present case the termination as such has also not been proved on record as has been held above Even on the plea of hardship the defendant could not substantiate his claim. The plea of hardship itself is not sustainable in the present case. The genesis of the plea of the hardship claimed by the defendant goes to his plea whereby he claimed the agreement to be a security document for repayment of the loan. However as held above the defendant has not even disclosed as to what was the circumstance or the purposes for which he had to avail this loan. Rather he admitted that the earnest money got by him was kept in Bank account. Hence no hardship to defendant is proved on record. Otherwise also he has come on record that no such hardship would be caused to the defendant because it has come in his cross examination that he is already having another house in the same city where he can reside. No other argument was raised In view of the above the present appeal fails and the same is dismissed being devoid of any merits 6th November 2017 Whether speaking reasoned Whether reportable [RAJBIR SEHRAWAT JUDGE

Summary: It appeared that the defendant could not substantiate his claim. The plea of hardship itself is not sustainable in this case. The genesis of the plea of the hardship claimed by the defendant goes to his plea, whereby he claimed the agreement to be a security document for repayment of the loan. However, as held above, the defendant has not even disclosed as to what was the circumstance or the purposes for which he had to avail of this loan. Rather he admitted that the earnest money got by him was kept in a Bank account. Hence no hardship to the defendant is proved on record held by Hon’ble Justice Rajbir Sehrawat in Brahm Dutt versus Sarabjit Singh [RSA No. 2943 of 2017 (O&amp;M)].  The facts leading to this case related to the suit was filed by the plaintiff claiming that the defendant had entered into an agreement dated14.02.2011 with him Click here to read the judgementfor the sale of a house, as detailed in the headnote in the plaint, measuring 23 marlas. The sale consideration was fixed at Rs.40, 50,000/-. Out of that Rs.10, 00,000/- were received by the defendant as earnest money. The target date for the execution of the sale deed was fixed as 20.04.2012. It was further claimed that on 20.04.2012 the plaintiff remained present in the office of the Sub Registrar with the balance sale consideration. But, the defendant did not reach there, to execute the sale deed. So, on the target date, the sale deed could not be executed. After that, he sent a legal notice dated 30.04.2012 informing the defendant that he could come to the office of the Sub-Registrar on 10.05.2012 for the execution of the sale deed. But, again on this date, the defendant did not turn up. Therefore, the plaintiff filed a suit. On notice, the defendant filed a written statement that he had sent a legal notice dated 17.04.2012 informing the plaintiff that the agreement in question was not intended to be an agreement to sell and that this was signed only as a security for repayment of the amount which, according to the defendant, was taken as a loan @ 2% per month. Therefore, the defendant claims that this legal notice would be tantamount to the termination of the agreement. Still, further, the defendant denied the pleading of the plaintiff that the agreement was intended to be an agreement to sell. However, the receipt of Rs.10 lac was admitted in the written statement itself. Still further, the signatures on the agreement were also admitted. Still, further, the defendant claimed the hardship to him, in case a decree of specific performance is passed in the suit. To prove the agreement to sell, the plaintiff examined the attesting witnesses. On the other hand, the defendant examined himself and also examined Gurjeet Singh to substantiate his plea regarding the agreement; being a document of security for the repayment of the loan. After hearing the parties and appreciating the evidence, the trialCourt decreed the suit filed by the plaintiff. Hence, the trial Court held that the agreement to sell stands proved as per the requirement of law. The defendant has not been able to extract anything from any of the witnesses of the plaintiff to show that the agreement was intended to be a security document for repayment of the loan. The learned senior counsel for the defendant/appellant has submitted that the lower Appellate Court has gone wrong in law, in so far as it has not even dealt with the evidence pertaining to the legal notice sent by the defendant on 17.04.2012, whereby he had terminated the agreement in question. Therefore, the finding recorded by the lower Appellate Court are incomplete, if not perverse. Still, further, learned counsel for the defendant has argued that once the agreement stands terminated, then unless the same is challenged by the plaintiff and a declaration of termination as illegal is sought by him and granted by the court, he cannot file a suit for specific performance.