Case Note & Summary
The original appellant, Leeladhar, entered into a registered agreement to sell 18 bighas of land to Deshraj for Rs.40,000 on 15.02.1985, receiving Rs.35,000 as advance. On 26.03.1985, another document recorded payment of the balance Rs.5,000 and delivery of possession. Deshraj issued a legal notice on 20.01.1988 calling for execution of the sale deed, but Leeladhar did not appear. After Deshraj's death, his legal representatives (respondents) filed a suit for specific performance or alternatively refund of Rs.40,000 with interest. Leeladhar defended that the agreement was a sham document to secure a loan from Deshraj, who was an unlicensed moneylender, and that the loan had been repaid. The trial court decreed the suit. The first appellate court partly allowed the appeal, denying specific performance but granting refund. The High Court set aside that order and remanded for fresh consideration under Section 20(2)(c) of the Specific Relief Act, 1963. After remand, the first appellate court upheld the trial court's decree. The High Court dismissed the second appeal. The Supreme Court held that concurrent findings of fact established the document as a genuine agreement to sell, full consideration was paid, and possession was transferred. The Court found no delay in filing the suit and rejected the sham transaction plea. It held that Section 20(2)(c) requires the defendant to show circumstances making it inequitable to enforce specific performance, which was not established. The appeal was dismissed with no order as to costs.
Headnote
A) Specific Relief Act - Specific Performance - Section 20(2)(c) - Discretion to refuse specific performance - The defendant must show that he entered into the contract under circumstances which, though not rendering it voidable, make it inequitable to enforce specific performance - Where the agreement is found to be a genuine agreement to sell and full consideration paid and possession delivered, no discretion to refuse specific performance arises (Paras 5-7).
Issue of Consideration
Whether the decree of specific performance should be denied under Section 20(2)(c) of the Specific Relief Act, 1963 on the ground that the agreement was a sham document executed to secure a loan.
Final Decision
The Supreme Court dismissed the appeal with no order as to costs, upholding the decree of specific performance granted by the courts below.
Law Points
- Specific performance
- Discretionary relief
- Section 20 Specific Relief Act 1963
- Agreement to sell
- Concurrent findings of fact
Case Details
Civil Appeal No. 7282 of 2009
Deepak Gupta, Aniruddha Bose
Vikas Singh (for appellants), P.K. Jain (for respondents)
Vijay Kumar (D) Thr. Lrs. & Ors.
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Nature of Litigation
Civil suit for specific performance of an agreement to sell land.
Remedy Sought
Decree of specific performance of the agreement to sell 18 bighas of land, or alternatively refund of Rs.40,000 with interest.
Filing Reason
Defendant failed to execute the sale deed despite receiving full consideration and delivering possession.
Previous Decisions
Trial court decreed the suit; first appellate court partly allowed appeal denying specific performance; High Court remanded for fresh consideration under Section 20(2)(c); after remand, first appellate court upheld trial court decree; High Court dismissed second appeal.
Issues
Whether the agreement to sell was a sham document executed to secure a loan.
Whether the decree of specific performance should be denied under Section 20(2)(c) of the Specific Relief Act, 1963.
Submissions/Arguments
Appellants argued that the agreement was a sham document to secure a loan from an unlicensed moneylender, and that possession was not with plaintiffs; discretion should be exercised against specific performance.
Respondents argued that concurrent findings established a genuine agreement to sell, full consideration paid, and possession transferred; no ground to refuse specific performance.
Ratio Decidendi
Where concurrent findings of fact establish that a registered agreement to sell is genuine, full consideration has been paid, and possession has been delivered, the defendant cannot claim that the agreement was a sham transaction or that it would be inequitable to enforce specific performance under Section 20(2)(c) of the Specific Relief Act, 1963. The discretion to refuse specific performance under that provision arises only if the defendant shows circumstances making enforcement inequitable, which was not established.
Judgment Excerpts
To take benefit of clause (c) of subsection (2) of Section 20 of the Specific Relief Act, the defendant in a suit for specific performance must show that he entered into the contract under the circumstances which though rendering the contract voidable, make it inequitable.
once we come to the conclusion that the agreement was an agreement to sell and after entering into the agreement to sell, Leeladhar received the full sale consideration and handed over the possession to Deshraj, the question of exercising any discretionary favour to the appellant does not arise.
Procedural History
Original suit filed in Court of Civil Judge, Nainital, decreed. First appeal partly allowed by first appellate court. Second appeal allowed by High Court and remanded. After remand, first appellate court dismissed appeal. Second appeal dismissed by High Court. Appeal to Supreme Court.
Acts & Sections
- Specific Relief Act, 1963: 20, 20(2)(c)
