Case Note & Summary
The appellants, original plaintiffs, filed an appeal against the judgment and order dated 6th March 1999 passed by the Additional Civil Judge, Senior Division, Margao in Special Civil Suit No.2/84, which rejected their prayer for specific performance of an agreement to sell property but granted alternative relief directing the defendant to pay Rs.1,97,500/- with interest at 12% per annum on Rs.1,35,000/- from 6.1.1984 and on the balance amount from the date of filing of the suit. The plaintiffs had entered into an agreement dated 24.6.1982 with the defendant for purchase and development of her property. The plaintiffs paid Rs.1,35,000/- as earnest money and the balance was to be paid within one year. The agreement was contingent on the plaintiffs obtaining development permission from the authorities. The plaintiffs failed to obtain the permission and also failed to pay the balance amount. The trial court found that the plaintiffs were not ready and willing to perform their part of the contract and refused specific performance. However, it granted alternative relief of refund of the amount paid with interest. The appellate court upheld the trial court's decision, finding no error in the exercise of discretion. The court noted that the plaintiffs did not have sufficient funds and the agreement was contingent on development permission which was not obtained. The defendant's claim for forfeiture of earnest money was rejected as the plaintiffs were not in breach. The appeal was dismissed with no order as to costs.
Headnote
A) Specific Relief Act, 1963 - Section 20 - Specific Performance - Discretionary Relief - The court has discretion to grant or refuse specific performance. In this case, the trial court refused specific performance as the plaintiffs failed to prove readiness and willingness to perform their part of the contract. The appellate court upheld this finding, noting that the plaintiffs did not have sufficient funds and the agreement was contingent on development permission. (Paras 2-5)
B) Specific Relief Act, 1963 - Section 21 - Alternative Relief - Refund of Earnest Money - When specific performance is refused, the court may grant alternative relief of refund of the amount paid with interest. The trial court directed refund of Rs.1,97,500/- with 12% interest. The appellate court affirmed this, finding no error in the exercise of discretion. (Paras 6-8)
C) Contract Act, 1872 - Section 74 - Earnest Money - Forfeiture - The defendant's claim for forfeiture of earnest money was rejected as the plaintiffs were not in breach; the agreement was contingent on development permission which was not obtained. (Para 7)
Issue of Consideration
Whether the plaintiffs were entitled to specific performance of the agreement to sell the property, and if not, whether the trial court correctly granted alternative relief of refund of the amount paid with interest.
Final Decision
The appeal is dismissed. The judgment and order of the trial court are upheld. No order as to costs.
Law Points
- Specific performance
- Readiness and willingness
- Alternative relief
- Refund of earnest money
- Interest
Case Details
2005 LawText (BOM) (06) 4
First Appeal No. 130 of 1999
Mr. M.S. Usgaonkar, Sr. Advocate with Mr. Sudesh Usgaonkar, Advocate for the appellants; Mr. C. Fereira, with Shri R. Soares, Advocates for the respondent
Smt. Mary D'Silva and others
Smt. Maria Francisca Raimunda Fernandes Pereira
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Nature of Litigation
Appeal against judgment and order in a suit for specific performance of an agreement to sell property.
Remedy Sought
The appellants (original plaintiffs) sought specific performance of the agreement to sell the property, and in the alternative, refund of the amount paid with interest.
Filing Reason
The plaintiffs entered into an agreement to purchase and develop the defendant's property, paid earnest money, but the agreement was contingent on obtaining development permission which was not obtained. The plaintiffs failed to pay the balance amount and sought specific performance.
Previous Decisions
The trial court (Addl. Civil Judge, Sr. Division, Margao) in Special Civil Suit No.2/84 rejected the prayer for specific performance but granted alternative relief of refund of Rs.1,97,500/- with 12% interest.
Issues
Whether the plaintiffs were entitled to specific performance of the agreement to sell the property.
Whether the trial court correctly granted alternative relief of refund of the amount paid with interest.
Submissions/Arguments
Appellants argued that they were ready and willing to perform their part of the contract and that the trial court erred in refusing specific performance.
Respondent argued that the plaintiffs failed to prove readiness and willingness and that the trial court correctly exercised its discretion to refuse specific performance and grant alternative relief.
Ratio Decidendi
The court held that the trial court's discretion to refuse specific performance was justified as the plaintiffs failed to prove readiness and willingness to perform their part of the contract. The alternative relief of refund with interest was correctly granted as the plaintiffs were not in breach and the agreement was contingent on development permission which was not obtained.
Judgment Excerpts
This is an appeal filed by the original plaintiffs impugning the Judgment and Order dated 6th March, 1999 passed by the Addl. Civil Judge, Sr. Division, Margao in Special Civil Suit No.2/84, rejecting the prayer for specific performance of the agreement to sell the property, but granting alternate prayer, directing the defendant to pay to the plaintiffs a sum of Rs.1,97,500/- with interest at the rate of 12% per annum on Rs.1,35,000/- from 6.1.1984 and interest at the rate of 12% on the balance amount from the date of filing of the suit, i.e. 6.1.1984 till payment.
The appellants/plaintiffs had entered into an Agreement dated 24.6.1982 with the defendant for the purchase and development of her property.
Procedural History
The original plaintiffs filed Special Civil Suit No.2/84 in the court of Addl. Civil Judge, Sr. Division, Margao seeking specific performance of an agreement to sell property dated 24.6.1982. The trial court passed judgment and order on 6th March 1999, refusing specific performance but granting alternative relief of refund with interest. The plaintiffs appealed to the High Court of Bombay at Goa by filing First Appeal No. 130 of 1999. The High Court dismissed the appeal on 9th June 2005.
Acts & Sections
- Specific Relief Act, 1963: 20, 21
- Contract Act, 1872: 74
