Case Note & Summary
The appellant, Smt. Rosalie Roy, was the owner of a flat in Pune which she agreed to sell to the respondents, Balasaheb Bapurao Tupe and another, for a total consideration of Rs.10 lacs. A registered agreement for sale was executed on 30th November 2005, under which the respondents paid Rs.2 lacs as earnest money and agreed to pay the balance of Rs.8 lacs within one month, i.e., by 30th December 2005. The agreement provided that if the respondents failed to pay within the stipulated period, the appellant could cancel the agreement and return the earnest money without interest. The respondents alleged that the appellant had mortgaged the flat with Canara Bank for a loan of Rs.5 lacs, which she failed to disclose, and that she did not clear the encumbrance within 30 days as agreed. The respondents filed a suit for specific performance, claiming they were ready and willing to pay the balance amount. The trial court decreed the suit, directing the appellant to execute the sale deed within 30 days and, upon failure, the court would execute it, with the respondents depositing Rs.8 lacs in court. The appellant appealed. The High Court held that the respondents had not paid the balance consideration within the stipulated time or even within a reasonable extended period, and that the appellant's mortgage did not prevent the respondents from performing their part. The court noted that the respondents did not object to the mortgage until after filing the suit and that the appellant had offered to return the earnest money. The court found that the respondents were not ready and willing to perform their part and that specific performance was a discretionary remedy which should not be granted in their favor. The High Court allowed the appeal, set aside the trial court's decree, and directed the appellant to refund the earnest money of Rs.2 lacs with interest at 6% per annum from the date of the suit till payment.
Headnote
A) Specific Relief Act, 1963 - Section 20 - Discretionary Relief - Specific performance is a discretionary remedy and not a matter of right - Court must consider conduct of parties, hardship, and whether plaintiff has performed his part - Held that where plaintiff failed to pay balance consideration and defendant had encumbered property, decree for specific performance was not justified (Paras 10-12). B) Contract Act, 1872 - Section 55 - Time for Performance - Time not essence of contract in sale of immovable property unless expressly stipulated - However, where agreement provides for payment within fixed period and consequences of default, court may consider delay - Held that plaintiffs' failure to pay within one month and extended period disentitled them to specific performance (Paras 6-9). C) Specific Relief Act, 1963 - Section 20 - Conduct of Parties - Plaintiff must come with clean hands and show readiness and willingness - Held that plaintiffs failed to prove readiness and willingness as they did not pay balance consideration and did not object to mortgage until after suit (Paras 10-12).
Issue of Consideration
Whether the plaintiffs are entitled to specific performance of the agreement for sale when they failed to pay the balance consideration within the stipulated time and the defendant had mortgaged the property without disclosing it.
Final Decision
Appeal allowed. Judgment and decree dated 15th March 2010 set aside. Suit for specific performance dismissed. Appellant to refund Rs.2 lacs with interest at 6% per annum from date of suit till payment within eight weeks.
Law Points
- Specific performance
- agreement for sale
- balance consideration
- encumbrance
- mortgage
- time not essence
- discretion of court
- Section 20 Specific Relief Act
- 1963
