Case Note & Summary
The appellants, original defendants, were the owners of a property in Pune. They executed a development agreement dated 18th October 2007 in favor of the respondents, original plaintiffs, for a total consideration of Rs.1,10,00,000. The plaintiffs paid Rs.90,00,000 out of the agreed consideration. The agreement was styled as a development agreement but essentially provided for sale of the suit property. The plaintiffs filed a suit for specific performance of the agreement. The trial court decreed the suit in favor of the plaintiffs, directing the defendants to execute the sale deed upon payment of the balance consideration. The defendants appealed. The High Court upheld the trial court's judgment, holding that the agreement was indeed an agreement for sale and that the plaintiffs were ready and willing to perform their part. The court noted that the defendants had received substantial consideration and could not avoid performance. The appeal was dismissed with costs.
Headnote
A) Specific Relief Act, 1963 - Section 16(c) - Readiness and Willingness - Agreement for Sale - Development Agreement - The plaintiffs paid Rs.90 lakhs out of Rs.1.10 crore consideration and filed suit for specific performance. The court held that the plaintiffs were ready and willing to perform their part of the contract as they had paid substantial consideration and were always ready to pay the balance. The defendants failed to execute the sale deed despite receipt of major consideration. (Paras 1-10)
B) Transfer of Property Act, 1882 - Section 55(1)(g) - Agreement for Sale - Development Agreement - The agreement styled as a development agreement was held to be an agreement for sale of immovable property as the essential terms included transfer of ownership of the suit property for a fixed consideration. The court relied on the fact that the defendants agreed to sell the property and the plaintiffs paid substantial consideration. (Paras 2-5)
C) Specific Relief Act, 1963 - Section 20 - Discretionary Relief - Time Not Essence - The court held that time was not the essence of the contract as the agreement did not specify a date for execution of the sale deed and the plaintiffs had paid substantial consideration. The defendants could not avoid specific performance on the ground of delay. (Paras 6-8)
Issue of Consideration
Whether the development agreement dated 18th October, 2007 is an agreement for sale of immovable property and whether the plaintiffs are entitled to specific performance thereof.
Final Decision
The appeal is dismissed with costs. The judgment and decree of the trial court dated 7th April 2011 is confirmed. The defendants are directed to execute the sale deed in favor of the plaintiffs upon payment of the balance consideration of Rs.20,00,000 within a period of three months.
Law Points
- Specific performance
- Development agreement
- Agreement for sale
- Readiness and willingness
- Time is not essence
- Section 16(c) Specific Relief Act
- 1963
- Section 55(1)(g) Transfer of Property Act
- 1882
Case Details
2012 LawText (BOM) (07) 98
First Appeal No. 1653 of 2011
A. S. Oka, Shrihari P. Davare
Mr.G.S.Godbole with Mr.Manoj S. Mhambrey for appellants, Mr.Prashant P. Chavan a/with Mr.Prabhakar M. Jadhav and Mr.Ravindra Chile for respondents
Shri Pradeep Shankar Walvekar, Mrs.Sona Pradeep Walvekar, Miss Tejasvini Pradeep Walvekar, Shri Pavitra Pradeep Walvekar
Shri Anil Narsinha Annachhatre, Shri Archis Anil Annachhatre
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Nature of Litigation
Civil suit for specific performance of a development agreement treated as an agreement for sale of immovable property.
Remedy Sought
The plaintiffs sought specific performance of the agreement dated 18th October 2007, directing the defendants to execute a sale deed of the suit property upon payment of the balance consideration.
Filing Reason
The defendants failed to execute the sale deed despite receiving substantial consideration of Rs.90,00,000 out of the total agreed consideration of Rs.1,10,00,000.
Previous Decisions
The trial court (Joint Civil Judge, Senior Division, Pune) decreed the suit in favor of the plaintiffs on 7th April 2011, directing the defendants to execute the sale deed. The defendants appealed against that judgment and decree.
Issues
Whether the development agreement dated 18th October 2007 is an agreement for sale of immovable property?
Whether the plaintiffs were ready and willing to perform their part of the contract?
Whether the plaintiffs are entitled to the discretionary relief of specific performance?
Submissions/Arguments
Appellants argued that the agreement was a development agreement and not an agreement for sale, and that the plaintiffs were not ready and willing to perform.
Respondents argued that the agreement was essentially for sale of the property, they had paid substantial consideration, and were always ready to pay the balance.
Ratio Decidendi
A development agreement where the essential terms constitute transfer of ownership for a fixed consideration is an agreement for sale of immovable property. The plaintiffs who paid substantial consideration and were ready to pay the balance are entitled to specific performance. Time is not the essence of the contract in such cases.
Judgment Excerpts
The respondents/plaintiffs who had admittedly paid a consideration of Rs.90,00,000/- out of the agreed consideration of Rs.1,10,00,000/- filed a suit for specific performance of the agreement dated 18th October, 2007 which was styled as an agreement of development or a development agreement.
The said agreement was executed by the present appellants in favour of the respondents.
Procedural History
The respondents/plaintiffs filed a suit for specific performance in the court of Joint Civil Judge, Senior Division, Pune. The trial court decreed the suit on 7th April 2011. The appellants/defendants filed First Appeal No. 1653 of 2011 in the High Court of Bombay against that judgment and decree. The High Court heard the appeal and dismissed it on 18th July 2012.
Acts & Sections
- Specific Relief Act, 1963: Section 16(c), Section 20
- Transfer of Property Act, 1882: Section 55(1)(g)
