Case Note & Summary
The dispute arose from an agreement of sale dated April 7, 1969, by which the appellant agreed to convey a plot of land admeasuring 100 square yards situated in Dayanand Colony, Lajpat Nagar, New Delhi, for a total consideration of Rs.16,000, of which Rs.2,500 was paid as earnest money. The respondent filed a suit on July 13, 1970 seeking specific performance of the agreement and, in the alternative, damages of Rs.12,000 with interest. The trial court and the Delhi High Court granted a decree for specific performance, leading to the present appeal by special leave to the Supreme Court. The appellant contended that specific performance is a discretionary remedy and not a matter of course. He argued that courts should exercise discretion on sound principles of law and, where equities demand, grant alternative relief instead of specific performance. He relied on S. Rangaraju Naidu v. S. Thiruvarakkarasu, AIR 1995 SC 1769, and submitted that he was prepared to pay Rs.10 lakhs as alternative relief, which would be more appropriate given the long lapse of time since the agreement and the rise in property prices, making specific performance unjust, inequitable and unfair. The respondent argued that he had secured the balance money, was always ready and willing to perform his part of the contract, and that both courts below had affirmed this finding; the appellant had avoided execution of the sale deed, and therefore the decree for specific performance should not be interfered with. The Supreme Court framed the question whether it would be just, fair and equitable to grant the decree for specific performance. It observed that while the rise in prices of the property during the pendency of the suit may not be the sole consideration for refusing to decree the suit for specific performance, it is equally settled law that granting a decree for specific performance of a contract of immovable property is not automatic; it is one of discretion to be exercised on sound principles. When the court gets into equity jurisdiction, it is guided by justice, equity, good conscience and fairness to both parties. Considering that the respondent himself had claimed alternative relief for damages, the Court found that the courts below would have been well justified in granting alternative decree for damages instead of ordering specific performance which would be unrealistic and unfair. Accordingly, the Court held that the decree for specific performance was inequitable and unjust to the appellant. The Supreme Court allowed the appeal, set aside the decree for specific performance, and directed that the appellant shall not sell the property for five years. It further directed that the respondents be paid a sum of Rs.10 lakhs within three months; if the respondents avoided receipt, the appellant could deposit the amount to the credit of the plaintiff in the trial court. In case of default, the decree for specific performance would stand confirmed. No costs were awarded.
Headnote
A) Specific Performance - Discretionary Relief - Not mentioned - The Supreme Court considered whether specific performance of an agreement to sell immovable property should be granted when the plaintiff had also claimed alternative damages and there had been a long lapse of time and a rise in property prices. The appellant argued that specific performance is discretionary and should not be granted when it would be inequitable; the respondent argued that he was always ready and willing to perform and the courts below had rightly granted the decree. Held that granting specific performance of a contract of immovable property is not automatic but discretionary, to be exercised on sound principles; when the court gets into equity jurisdiction, it is guided by justice, equity, good conscience and fairness to both parties; rise in prices during pendency of the suit is not the sole consideration; since the respondent himself claimed alternative damages, the court held the decree for specific performance inequitable and unjust, allowed the appeal, directed the appellant not to sell the property for five years and to pay Rs.10 lakhs within three months, failing which the decree would stand confirmed
Issue of Consideration
Whether it would be just, fair and equitable to grant the decree for specific performance of the agreement of sale dated April 7, 1969, particularly when the plaintiff himself claimed alternative damages and there had been a lapse of time and rise in property prices
Final Decision
The Supreme Court allowed the appeal, set aside the decree for specific performance, and directed that the appellant shall not sell the property for five years; respondents to be paid Rs.10 lakhs within three months; if respondents avoid receipt, appellant may deposit in trial court; in case of default, the decree for specific performance would stand confirmed; no costs.
Law Points
- Specific performance of contract is discretionary and not a matter of course
- courts must exercise discretion on sound principles of law
- when court gets into equity jurisdiction
- it is guided by justice
- equity
- good conscience and fairness to both parties
- rise in prices during pendency of suit is not sole consideration for refusing specific performance
- alternative relief can be granted when specific performance would be unrealistic and unfair
