Case Note & Summary
The appellants, original plaintiffs, filed a suit for specific performance of an oral agreement of lease and possession of a shop premises in Pune. They claimed that an oral agreement was entered into with the respondent (defendant No.1) whereby the appellants would pay an advance of Rs.51,300 as a construction loan, and in lieu, the respondent would let out the suit premises on a monthly rent of Rs.850. A part payment of Rs.25,001 was made by cheque on 15th October 1978, which was encashed. The lease was to be for 9 years with renewal option, and Rs.475 per month was to be deducted from rent towards loan repayment. The respondent refused to execute the lease. The trial court dismissed the suit, but the first appellate court partly decreed the suit, granting refund of Rs.25,001 with 6% interest from suit date. The appellants appealed against the denial of specific performance. The High Court upheld the first appellate court's decision, finding that the oral agreement was not specifically enforceable as the suit was barred by limitation and there was no written agreement. The court held that the respondent had received the advance and failed to perform, thus the appellants were entitled to refund with interest. The appeal was dismissed.
Headnote
A) Specific Performance - Oral Agreement of Lease - Refund of Advance - The appellants sought specific performance of an oral agreement for lease of a shop, claiming payment of Rs.25,001 as advance. The court held that the oral agreement was not specifically enforceable due to lack of written evidence and the suit being barred by limitation. However, the court allowed refund of the advance amount with interest at 6% per annum from the date of suit till realization, as the respondent had failed to perform his part of the contract. (Paras 2-16)
Issue of Consideration
Whether the appellants are entitled to specific performance of an oral agreement of lease and, if not, whether they are entitled to refund of the advance amount paid.
Final Decision
The appeal is dismissed. The judgment and order dated 25th September 1998 passed in First Appeal No.563/1982 is confirmed. The appellants are entitled to refund of Rs.25,001 with interest at 6% per annum from the date of suit till realization.
Law Points
- Specific performance of oral agreement
- Refund of advance
- Interest on refund
- Limitation for specific performance
Case Details
2015 LawText (BOM) (09) 84
Letters Patent Appeal No. 143 of 1999
Naresh H. Patil, S.B. Shukre
Ms.Chandana Salgaonkar for the appellants; Aashish Agarwal i/b. Mrs.Anita Agarwal for the respondent
Shri Kharatilal Haveliram Kalra (since deceased) by his legal heirs and representatives: Shri Anil Kharatilal Kalra, Shri Sunil Kharatilal Kalra, Mrs.Poonam Ashok Handa, Mrs.Kiran Harish Chhabra; Shri Anil Kharatilal Kalra; Shri Sunil Kharatilal Kalra
Shri Jagdish Rajaram Shah
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Nature of Litigation
Appeal against judgment and order in First Appeal No.563/1982, which partly decreed the suit for refund of advance with interest, denying specific performance of oral agreement of lease.
Remedy Sought
Appellants sought specific performance of oral agreement of lease and possession of suit premises, or in the alternative, refund of advance amount with interest.
Filing Reason
Respondent refused to execute the lease agreement after receiving advance payment of Rs.25,001.
Previous Decisions
Trial court dismissed the suit; First Appellate Court partly decreed the suit granting refund of Rs.25,001 with 6% interest from date of suit till realization.
Issues
Whether the oral agreement of lease is specifically enforceable?
Whether the appellants are entitled to refund of the advance amount with interest?
Submissions/Arguments
Appellants argued that they were always ready and willing to perform their part of the contract and that the respondent had received the advance but refused to execute the lease.
Respondent contended that the oral agreement was not capable of enforcement and that the suit was barred by limitation.
Ratio Decidendi
An oral agreement for lease cannot be specifically enforced if the suit is barred by limitation and there is no written agreement. However, the advance paid under such an agreement must be refunded with interest when the recipient fails to perform his part of the contract.
Judgment Excerpts
This is an appeal preferred against the judgment and order dated 25th September 1998 passed in First Appeal No.563/1982 thereby allowing the appeal and partly decreeing the suit of the appellants by declaring that they are entitled to refund of Rs.25,001/ together with interest at the rate of 6% per annum from the date of suit till the date of realization of the amount from the respondent.
Procedural History
Original suit filed by appellants for specific performance and possession. Trial court dismissed the suit. First Appeal No.563/1982 was filed, which was allowed partly, granting refund with interest. The present Letters Patent Appeal No.143 of 1999 was filed against that judgment.
Acts & Sections
- Specific Relief Act, 1963:
- Indian Contract Act, 1872:
