[2015] 10 S.C.R. 604

RAMESH CHAND (DEAD) THROUGH L.RS.

ASRUDDIN (DEAD) THROUGH LRSANDANOTHER

(Civil Appeal No. 8427 of2014)

OCTOBER 06, 2015

[DIPAK MISRA AND PRAFULLA C. PANT, JJ.]

Specific Relief Act, 1963: s. 20- Jurisdiction under; scope

- In the instant case, plaintiff's case was that he entered into C an agreement with defendaTJt no. 1 on 21.06.2004 to purchase land for Rs. 6 lacs- Defendant no. 1 accepted Rs. 4 lacs as earnest money- It was agreed that suit land which was mortgaged with defendant no. 2 would be redeemed by D defendant no. 1 before execution of the sale deed - Non-execution of sale deed by defendant no. 1 - Suit for specific performance of contract - Defendant no. 1 denied the execution of agreement dated 21. 06.2004 on the ground that he had already executed agreement dated 07.05.2004 E to sell the suit land in favour of one 'P' after receiving Rs.

1. 20 lacs as earnest money, therefore there was no occasion to enter into agreement with defendant no. 1 to sell the same land; that defendant no. 1 was in need of money and had taken loan of Rs. 1.50 lacs from the plaintiff on 21.06.2004 F and when plaintiff made demand, defendant no. 1 asked 'P' to make payment of Rs. 1. 80 lacs to the plaintiff-After said payment by 'P', the alleged agreement dated 21.06.2004 stood cancelled - Trial Court held that it was not a fit case for specific performance of contract and directed defendant no.

G 1 to pay back earnest money of Rs. 4 lacs - First appellate court decreed the suit for specific performance of contract directing defendant no. 1 to execute the sale deed in terms of agreement dated 21. 06. 2004 after accepting balance Rs. 2 lacs from the plaintiff- High Court dismissed the appeal - H Held: Though execution of agreement datecf 21.06.2004

RAMESH CHAND (DEAD) THROUGH L.RS. v. ASRUDDIN 605

(DEAD) THROUGH LRS

between the parties was proved, but it was no where pleaded A or proved by the plaintiff that he got redeemed the mortgaged land in favour of defendant no.2 in terms of the agreement nor was it specifically pleaded that he was ready and willing to get the property redeemed from the mortgage - It is a fit case where instead of granting decree of specific B performance, the plaintiff can be compensatea by directing the appellant to pay a reasonable and sufficient amount to him - It would be just and appropriate to direct the appellants to repay Rs. 4 lacs along with interest @ 18% p.a. from

21. 06. 2004 - If they do so, the decree of specific performance C shall stand set aside.

Disposing of the appeal, the Court

HELD: 1. Section 20 of Specific Relief Act, 1963, D 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.

However, the discretion of the court is not arbitrary but sound and reasonable, guided by judicial principles. E Sub-section (2) of Section 20 of the Act provides the three situations in which the court may exercise discretion not to decree specific performance. One of such situation is contained in clause {a) of sub-section (2) of the Section which provides that where the terms of the contract or F the conduct of the parties at the time of entering into the contract or the other circumstances under which the contract was entered into or such that the contract though not voidable, gives the plaintiff an unfair advantage over the defendant, the decree of specific G performance need not be passed. In the present case, though execution of agreement dated 21.06.2004 between the parties is proved, but it is no where pleaded or proved by the plaintiff that he got redeemed the H

A mortgaged land in favour of defendant No. 2 in terms of the agreement, nor is it specifically pleaded that he was ready and willing to get the property redeemed from the mortgage. Mere refund of rupees four lacs with interest at the rate of 8% per annum, as directed by the trial court, B would be highly insufficient. It would be just and appropriate to direct the appellants (Legal Representatives of original defendant No.1, since died) to repay rupees four lacs along with interest at the rate of 18% per annum from 21.06.2004. If they do so, the C decree of specific performance shall stand set aside. [Paras 8, 9] [609-E-H; 610-A, C-E]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 8427 of 2014.

From the Judgment and Order dated 22.01.2014 of the High Court of Punjab and Haryana at Chandigarh in RSA No. 1344 of 2011.

E Jay Kish or Singh for the Appellants.

Manan Kumar Mishra, Anjul Dwivedi, Anjani Kumar Mishra forthe Respondents.

The Judgment of the Court was delivered by

PRAFULLA C. PANT, J. 1. This appeal is directed against judgment and order dated 22.01.2014, passed by the High Court of Punjab and. Haryana in Regular Second Appeal No. 1344 of 2011 (O&M) whereby said court has dismissed G the appeal, and affirmed the decree passed by the first

appellate court regarding specific performance of contract, in a suit filed by the plaintiff/respondent No.1.

2. We have heard learned counsel for the parties and H perused the papers on record.

3. Brief facts of the case are that plaintiff/respondent No.1 A Asaruddin entered into an agreement with defendant No. 1/ appellant Ramesh Chand on 21.06.2004, whereby the appellant agreed to sell his land measuring 12 kanals, 16 marlas, situated in Village Mohammed Nagar, Tehsil Ferozpur Jhirka, District Gurgaon, to the respondent No. 1 for an amount B of rupees six lacs. An agreement for sale was executed between the parties after the appellant accepted rupees four lacs as a part of consideration. It was further agreed between the parties that the land in suit, mortgaged with defendant No. 2/respondent No. 2 Gurgaon Gramin Bank, Nagina, would be C redeemed by the appellant before execution of the sale deed.

It is pleaded by the plaintiff/respondent No. 1 that he was and is always ready and willing to perform his part of contract. The plaintiff/resppndent No. 1 gave notice to the appellant to 0 execute the sale deed on 30.11.2004, and remained present with the balance amount of consideration in the Office of Sub Registrar, Nagina, and got his presence marked. But the appellant failed to turn up to execute the sale deed, as agreed between him and the respondent No. 1. Hence the suit for E specific performance of contract.

4. The appellant-defendant No.1 contested the suit and filed the written statement before the trial court. He denied the execution of the agreement dated 21.06.2004 to sell his land.

F It is pleaded by the appellant before the trial court that he had already executed agreement dated 07.05.2004 to sell the land in favour of one Pravin Kumar, resident ofTauru for an amount of Rs. 7 ,62,200/- after receiving Rs.1,20,000/- as earnest money. In the circumstances, there was no occasion to enter G into agreement with the respondent No.1 to sell the same land.

It is further pleaded that since the answering defendant was in the need of money, he had taken loan of Rs.1,50,000/- from the plaintiff on 21.06.2004, on interest at the rate of 1.5% per month. The appellant specifically denied having received H

A rupees four lacs, as alleged by the plaintiff. It is further pleaded that when respondent No. 1 made demand for repayment of

Rs.1,50,000/- with interest, and created pressure, the answering defendant asked Pravin Kumar tc; i make payment of Rs.1,80,000/- to the plaintiff. It is further alleged that after B said payment was made to the plaintiff on 10.11.2005 by Pravin

Kumar, the alleged agreement dated 21.0Ei.2004, which was a kind of security, stood cancelled. And respondent No. 1 should have returned the document to the plaintiff.

5. On the basis of the pleadings of the parties, the Civil Judge (Jr. Division), Ferozpur Jhirka, fram13d as many as ten issues on 06.09.2005, After recording oral testimony of witnesses of the parties, and considering the documentary evidence on record, the trial court came to the conclusion that D it is not a fit case for specific performance of contract, and disposed of the suit with a finding that the ag1reement executed between the plaintiff and defendant No. 1 was in substance an agreement of security for repayment of loan and directed the defendant No. 1 to pay back earnest money of rupees four E lacs with 8% interest per annum from 21.0fi.2004 till payment is made to the plaintiff.

6. Aggrieved by the decree passed by the trial court, plaintiff filed Civil Appeal No. 51 of 2010 before the first F appellate court. After hearing the parties, !:he appellate court (Additional District Judge, Nuh) vide judgmEnt and order dated 14.02.2011, allowed the appeal, and decreed the suit for specific performance of contract, directing the defendant No. 1 to execute the sale deed in terms of the agreement dated G 21.06.2004, after accepting balance rupees two lacs from the plaintiff. This made defendant No. 1 Ramesh Chand to file Regular Second Appeal No. 1344 of 2011 before the High Court. During the Second Appeal, defendant No. 1 appears H to have died, and his legal heirs prosecuted the appeal. After

hearing the parties, the High Court dismissed the appeal A upholding the order passed by the first appellate court. Hence this appeal before us through special leave. During this appeal the plaintiff/respondent No.1 also expired, and his legal heirs got substituted.

7. Learned counsel for the appellant argued before us that the first appellate court and the High Court have erred in law in not considering the fact that the appellant had already executed

an agreement of sale on 07.05.2004 in favour of one Pravin Kumar, and the decree of specific performance of contract in C the subsequent agreement, if any, in favour of respondent No.1 was not at all desirable. On the other hand, on behalf of respondent No.1 it is contended that he cannot be denied the fruits of decree of specific performance after the findings recorded by the first appellant court which stood affirmed by D the High Court.

8. Section 20 of Specific Relief Act, 1963, provides that the jurisdiction to decree specific performanee is discretionary, and the court is not bound to grant such relief merely because E it is lawful to do so. However, the discretion of the court is not arbitrary but sound and reasonable, guided by judicial principles. Sub-section (2) of Section 20 of the Act provides the three situations in which the court r.nay exercise discretion not to decree specific performance. One of such situation is F contained in clause (a) of sub-section (2) of the Section which provides that where the terms of the contract or the conduct of the parties at the time of entering into the contract or the other circumstances under which the contract was entered into or such that the contract though not voidable, gives the plaintiff G an unfair advantage over the defendant, the decree of specific performance need not be passed. It is pertinent to mention here that in the present case, though execution of agreement dated 21.06.2004 between the parties is proved, but it is no H

A where pleaded or proved by the plaintiff that he got redeemed the mortgaged land in favour of defendant No. 2 in terms of the agreement, nor.is it specifically pleaded that he was ready and willing to get the property redeemed from the mortgage.

9. In the above facts and circumstances of the case and the judicial principle discussed above, we are of the opinion that it is a fit case where instead of granting decree of specific performance, the plaintiff can be compensated by directing the appellant to pay a reasonable and sufficient amount to him.

C We are of the view that mere refund of rupees four lacs with interest at the rate of 8% per annum, as directed by the trial court, would be highly insufficient. In our considered opfnion, it would be just and appropriate to direct the appellants (Legal Representatives of original defendant No. 1, since died) to D repay rupees four lacs along with interest at the rate of 18% per annum from 21.06.2004 till date within a period of three months from today to the LRs. of respondent No. 1 (mentioned in I.A No._ of 2015 dated 07.09.20'15). If they do so, the decree of specific performance shall stand set aside. We clarify E that if the amount is not paid or deposited before the trial court in favour of the LRs. of respondent No. 1 within a period of three months, as directed above, the decree of specific performance shall stand affirmed. We order accordingly.

10. The appeal stands disposed of. Pending l.A(s) also stand disposed of. No order as to costs.

Devika Gujral Appeal disposed of.