Cases in which Specific Performance of Contract Enforceable – Section 10 | Specific Relief Act

Section 10 of the Specific Relief Act, 1963 Provides that:

1. Agreement:

It is a well-settled legal position that in the matter of enforcement of the agreement or agreement of reconveyance, time is not always the essence of the contract unless the agreement specifically stipulates and there are special facts and circumstances in support thereof.

When the absentee vendor, for some reasons or the other, refused to accept the agreement, there is no reason why the agreement should not be enforced against the vendor who had signed it and whose property is iden­tifiable by his specific share.

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2. Agreement for sale:

ADVERTISEMENTS:

No relief can be given in suit for specific per­formance of agreement for sale of house unless it is specific and consistent with pleadings and proof. Since, amendment was not incorporated by plain­tiff hence no relief on the point of amendment was permitted.

3. Agreement for specific performance—Time is not the essence of contract:

It is a well settled principle that time is not the essence of the contract with respect to an agreement for specific performance, as has been held yet it has to be held that even if time is not essence of the contract, the Court may infer that it has to be performed within a reason­able time.

4. Agreement of reconveyance:

Where suit for specific performance of agreement of reconveyance of property was filed after payment of loan taken by plaintiff it was held that after receiving back amount given as loan, defendant was bound to perform the terms of agreement of reconveyance.

5. Agreement of sale:

ADVERTISEMENTS:

Specific performance was refused by High Court by determining the agreement of sale as invalid, on the ground that the provisions of Section 33 of Karnataka Co-operative Societies Act, 1959, invalidates such agreement of sale, because the suit properties were sub­ject to charge on the date of sale, since the seller had taken a loan on security of goods.

This plea making a ground to challenge specific performance is taken for the first time before Supreme Court and was not raised before Appellate Court. There is no evidence on record to prove that such loan was taken by the seller as alleged by purchaser. Therefore, it was held that agreement of sale is valid and specific performance could be granted.

6. Agreement to sell:

Everybody concerned in the matter proceeded on the assumption that there were two houses, one occupied by defen­dants and another in the occupation of the tenants. The agreement men­tions the house in which the defendants were living as the subject matter of the agreement.

The words ‘entire house’ cannot in any way militate against this fact. It will only be the entire house in which the defendants were living. As we stated earlier, the plaintiff was aware of the fact that there was a portion of the premises which was referred to and understood as a separate house by all those concerned and which was in the occupation of the ten­ants. If the agreement was to include that portion also it was his duty to have it specifically mentioned in the agreement. Hot having done so he has got to fail in his claim regarding that portion of the house.

7. Agreement to sell—Execution of:

ADVERTISEMENTS:

The plaintiffs were willing and ready to perform their part of the contract and plaintiffs were not required to aver or prove that they have tendered balance amount of Rs. 5,000/- to the defendants at any point of time. In view of the above, substantial question of law formulated above, is decided in favour of plaintiffs appel­lants.

8. Allowability of:

In absence any stipulation that time is essence of agreement of absence of any plea in written statement that time is essence of agreement and also in absence of any issue on this point the new plea by defendant on this point was not to be allowed.

Since the application for amendment of the plaint came to be filed after the expiry of there years certainly it changed the cause of action. Cause of action was sought to be amended. Amendment was rightly re­jected.

9. Amendment:

The suit is required to be filed within three years from the date fixed by the parties under the contract. Since the application for amendment of the plaint came to be filed after the expiry of three years, certainly it changed the cause of action as required to be specified in the plaint. The suit for mandatory injunction is field and the specific perfor­mance was sought for by way of an amendment. The cause of action is required to be stated initially in the plaint but it was not pleaded.

It was sought to be amended, along-with an application for specific performance which was rejected. Under these circumstances, even by the date of filing of the application, namely, 5.11.1992, the suit was barred by limitation. The High Court, therefore, was right in refusing to permit the amendment of the plaint.

10. Applicability of:

In case of interim injunction against transfer of suit property on the condition that plaintiff will provide the Bank guarantee, non-compliance of the condition does not disturb the applicability of the rule of lis pendens.

This doctrine has been applied mostly in the sphere of administrative law to enforce the assurance held out to grant tax concessions and such other benefits; these cases do not involve the difficulties which deter the Courts from specifically enforcing the terms of a building contract; in these cases (when doctrine of promissory estoppel are applied), there is no other remedy to the aggrieved person such as obtaining compensation from the Government or its agencies.

11. Basis of:

Doctrine of promissory estoppel has certain special fea­tures, it is based on the conduct of the Government and its agencies as against the conduct of those who acted upon the assurance held out by the Government and its agencies; the alteration of position by the party is the indispensable requirement of the doctrine and it is not necessary to prove, further, any damage, detriment or prejudice to the party asserting the es­toppel.

“The basis of this doctrine is the interposition of equity which has always, true to its form, stepped in to mitigate the rigour of strict law.”

12. Contractual right:

The contractual right is a property right and it cannot be affected by an adverse executive order. There was an enacted law by which all the existing rights of the petitioners under the contracts granted by the State Government were terminated and monopoly was cre­ated. Said law was challenged. The effect of the impugned law and the contentions were referred to by the Supreme Court:

“It is not in dispute that by the provisions of this Act all the existing contracts between parties and the State and existing grants in re­spect of collection, transport, storage and otherwise dealing with resin have come to forthwith terminate and a monopoly situation has been created qua these operations in resin in favour of the Government Company. The Act does not provide for any compen­sation and the petitioners maintain that the existing rights in their favour amounted to property and could not have been expropriated in contravention of the guarantee in Part III of the Constitution. It is the stand of the State that the benefits and privileges conferred on the three petitioner either under contract or under Government or­ders did not constitute property and by the provisions of the Act no transfer of such property has taken place.”

In the next paragraph, the Supreme Court pointed out that Articles 19 (1) (f) and 31 of the Constitution continued to operate in State of Jammu & Kashmir, since the 44th amendment to the Constitution was inapplicable to the said State. After referring to certain decisions, Supreme Court found that:

“…..the interests which are in dispute before us do constitute property entitled to protection under Article 19 (1) (f) and are covered by Article 31 (2) of the Constitution.”

The impugned Act did not provide for payment of any compensation. Further, a few of the petitioners were entitled to invoke the doctrine of promissory estoppel. After referring to this doctrine, the Court said:

“Where inclined to agree with the submissions made on behalf of the petitioners that the circumstances gave rise to a fact situation of estoppel, it is true that there is no estoppel against the Legislature and the vires of the Act cannot be tested by invoking the plea but so far as the State Government is concerned the rule of estoppel does apply and the precedents of this Court are clear. It is unnecessary go to into that aspect of the matter as in our considered opinion the impugned Act suffers from the vice of taking away rights to property without providing for compensation at all and is hit by Article 31 (2) of the Constitution.”

13. Denial of:

It is too late in the day to deny a claim for specific performance of an agreement to sell an immovable property in existence or to be brought into existence according to the specification agreed to merely because the Vendor had to make applications or move the concerned and competent authorities to obtain permission/sanction or consent of such authorities to make the sale agreed to be made an effective and full-fledged one.

It can always be made conditional and dependent upon the renewal of the lease and revalidation of the building plans. There is no justification whatsoever in law or on facts on record to deny the relief to the appellants where it could possibly and legitimately be directed and rendered execut­able. Subject to the competent authorities so according or making the re­quired orders in this regard.

14. Determination:

In agreement to sell the time is not always es­sence of contract, unless the contract itself stipulates a date for its perfor­mance.

15. Effect of:

There was delay in seeking performance in-spite of fixed time limit for performance. Enhancement in prices of properties should be considered while exercising discretion grant relief of specific performance. When rights of third parties came into existence then in the face of such circumstance, relief of specific performance was rightly declined.

Where new plea was not raised before the Courts below and no evidence in support of such plea was produced before the Courts below it was held that the High Court erred in law in recording a finding on the basis of such plea.

16. Family settlement:

Where in a suit for enforcement of family settle­ment by wife, interim order was passed to pay interim maintenance, arrears and schools fees of daughter etc., and provide separate resident to her, no interference with order called for as same being discretionary order. How­ever, having legal to serious challenge to validity of settlement Trial Court directed to dispose off suit expeditiously.

17. Fixation of period:

The Trial Court relied upon three circumstances in support of its conclusion that time was of the essence of the contract of sale:

(i) Though no time was prescribed by the oral agreement, in the agreements in writing, there were definite stipulations Fixing dates for performance of the contract;

(ii) That the second and the third agreements contained clauses which imposed penalties upon the party guilty of default; and

(iii) That appellant Nos. 1 and 2 were in urgent need of money and it was to meet their pressing need that they desired to effect sale of the property. But the agreements do not express in unmistak­able language that time was to be of the essence and existence of the default clause will not necessarily evidence such inten­tion.

Fixation of the period within which the contract is to be performed does not make the stipulation as to time of the essence of the contract.

It is true that appellant Nos. 1 and 2 were badly in need of money, but they had secured Rs. 3,006/- from the respondent to presumably tide over their difficulties at least temporarily. There is no evidence that when the respondent did not advance the full consideration they made other arrangement Intention to make time of the essence of the contract may be evi­denced by either express stipulations or by circumstances which are suffi­ciently strong to displace the ordinary presumption that in a contract of sale of land stipulations as to time are not of the essence.

In the present case, there is no express stipulation, and the circumstances are not such as to indicate that it was the intention of the parties that time was intended to be of the essence of the contract. It is true that even if time was not originally of the essence, the appellants could by notice served upon the respondent call upon him to take the conveyance within the time fixed and intimate that in default of compliance with the requisition the contract will be treated as cancelled.

As observed in Stickney v. Keeble, 1915 AC 386, where in a contract for the sale of land the time fixed for completion is not made of the essence of the contract, but the vendor has been guilty of unnecessary delay, the purchaser may serve upon the vendor a notice limiting a time at the expiration of which he will treat the contract as at an end.

The Supreme Court observed that fixation of the period within which the contract is to be performed does not make the stipulation as time being the essence of the contract. If the time was not originally the essence, it was open to the appellant to call upon the other party for performance of his part of the contract and to take conveyance within the time fixed by paying the sale consideration.

18. Grant of:

The clause relating to payment of various amounts un­der the contract including the sum of Rs. 4 lakhs states that the time is the essence. Moreover, by his letter, also the appellant has made payment of Rs. 4 lakhs within a period of seven days from the date of notice of the essence of the contract pointing but the circumstances which require pay­ment of Rs. 4 lakhs within a reasonable time. As the respondent did not comply and was unwilling and/ or unable to supply with this term of the agreement, he cannot be considered as ready and willing to perform his part of the contract.

In the present case, the right of the appellant to purchase suitable residential accommodation is seriously affected by non-payment of Rs. 4 lakhs within a reasonable time. The respondent had failed to comply with the term of the agreement relating to payment of this amount. In these circumstances, in any case, a decree for specific performance cannot be granted as it would be unfair and unreasonable to do so. The High Court, therefore, was not right in setting aside the judgment and order of the trial Court.

The Court in its discretion can impose any reasonable condition includ­ing payment of an additional amount by one party to the other while grant­ing or refusing decree of specific performance. Whether the purchaser shall be directed to pay an additional amount to the seller or converse would depend upon the facts and circumstances of a case.

Ordinarily, the plaintiff is not to be denied the relief of specific performance only on account of the phenomenal increase of price during the pendency of litigation. That may be in a given case one of the considerations besides many others to be taken into consideration for refusing the decree of specific performance.

Where the respondent had failed to comply with the term of the agree­ment relating to payment of the amount, the decree for specific perfor­mance held not to be granted.

19. Jurisdiction of Court:

Provision of contract providing for liqui­dated damages, does not bar jurisdiction of the Court to grant decree of specific performance.

20. Legality of:

Decree of specific performance reversed on the ground that the plaintiff was not willing to perform his part of contract as no such averment was made in the plaint by him. Therefore reversal of decree in second appeal held to be improper.

Ordinarily, the plaintiff is not to be denied the relief of specific perfor­mance only on account of the phenomenal increase of price during the pendency of litigation. That may be, in a given case, one of the consider­ations besides many others to be taken into consideration for refusing the decree of specific performance. As a general rule, it cannot be held that ordinarily the plaintiff cannot be allowed to have, for her alone, the entire benefit of phenomenal increase of the value of the property during the pendency of the litigation.

21. Limitation:

Where cause of action arose on expiry of eight years from the date of execution of later sale-deed i.e., 20.7.1973, and appellant by conduct refused to execute the sale-deed on 19.7.1976, the suit filed on 20.7.1976 was within limitation from the date of refusal i.e., 19.71976 i.e., next day.

22. Permissibility of:

Joint application was made by plaintiff and de­fendant in Court setting up agreement for sale with option to repurchase. Court permitted the sale and sale-deed was also executed. There was no mention of agreement of repurchase in the order or in the sale-deed nor detailed plea as to novation was made. Therefore, inference of giving up of original agreement of repurchase does not arise and agreement still exists.

23. Presumption:

The fixation of period within the contract has to be performed does not make the stipulation as to time being the essence of the contract, when a contract relates to sale of immovable property, it will normally be presumed that the time is not the essence of the contract.

24. Promissory estoppel:

The true principle of promissory estoppel seems to be that where, one party has by his words or conduct made to other a clear and unequivocal promise which is intended to create legal relations or affect a legal relationship to arise in the future, knowing or intending that it would be acted upon by the other party to whom the prom­ise is made and it is in fact so acted upon by the other party, the promise would be binding on the party making it and he would not be entitled to go back upon it, if it would be inequitable to allow him to do so having regard to the dealings which have taken place between the parties, and this would be so irrespective of whether there is any preexisting relationship between the parties or not.

The doctrine of promissory estoppel need not be inhib­ited by the same limitation as estoppel in the strict sense of the term. It is an equitable principle evolved by the Courts for doing justice and there is no reason why it should be given only a limited application by way of de­fence.

There is no reason in logic or principle why promissory estoppel should also not be available as a cause of action, if necessary to satisfy the equity. It is not necessary, in order to attract the applicability of the doctrine of promissory estoppel, that the promises, acting in reliance on the prom­ise, should suffer any detriment. What is necessary is only that the prom­isee should have altered his position in reliance on the promise.

But if by detriment we mean injustice to the promisee which would result if the promi­sor were the recede from his promise, then detriment would certainly come in as a necessary ingredient. The detriment in such a case is not some prejudice suffered by the promisee by acting on the promise, but the preju­dice would be caused to the promisee, if the promisor were allowed to go back from the promise.

If specific performance of a contract is not enforceable under the pro­visions of the Specific Relief Act, said disability cannot be overcome by resort to the doctrine of promissory estoppel. Enforceability of a contract depends upon its terms and non-availability of any other remedy; enforce­ment of an assurance under the doctrine of promissory estoppel is based not on terms of the contract, but the nature of the assurance held out which is acted upon by others to whom assurance is held out and by such action, the assured persons altered their position.

25. Question of:

Where the contract was quite clear and definite the fact that the vendee was asked to consult his pleader and get pacci receipt executed did not make the contract dependent upon the vendee consulting his pleader and getting the pacci receipt.

26. Question of title:

In this case, the parties to the suit went on trial of the suit only on the issue whether the relief for specific performance of the agreement for sale could be granted in the suit. In absence of such an issue, it is not open to appellant who claims to be the purchaser from defendant, to contend that defendant has title to the land.

27. Reconveyance of property covered by the sale deed:

In this case, the suit was filed by the plaintiff-appellant seeking reconveyance of the property covered by the sale-deed executed by the plaintiff in favour of the defendant and requiring the defendant to perform the agreement of Reconveyance specifically as entered into in the joint application of the plaintiff and the defendant. The defendant, having got the sale-deed only upon implementation of the obligation covered by the agreement of sale cannot approbate and reprobate and contend that the other part of the agreement regarding reconveyance need not be implemented. Unless there is a detailed plea and also evidence that before execution of the sale-deed there was novation and the parties expressly agreed to give a go-by to the agreement of reconveyance, no inference could be drawn that the agree­ment of reconveyance contained in the agreement of sale which preceded the sale-deed was given a go-by.

28. Registration:

Suit was filed under Section 10 of S.R. Act, seeking relief of direction to defendant to present sale-deed executed by him for registration. Since, alternative remedy under Section 77 is not a bar against the suit, hence, suit was maintainable and agreement to sell can be en­forced, when various steps contemplated by Section 77 are not taken.

29. Specific performance:

In the instance case special leave was granted against the decision of Madras High Court to appeal to Supreme Court.

‘A’ and his mother ‘R’ sold their agricultural lands, measuring 3 acres and 25 acres in consideration of Rs. 10,000/- and Rs. 75,000/-, to ‘S’ and his father ‘M’ under two sale-deeds, dated 17.4.1962. Rs. 500/- were taken back from the vendees and again two separate agreements were made giv­ing a right of repurchase of property to venders to be exercised between 17.4.1969 to 16.4.19.72.

‘R’ and ‘A’ executed agreement of sale of the same property to T on dated 4.1.1963 for a consideration of Rs. 1, 30,000/-. Appellant paid Rs. 30,000/- from time to time till April 1963, to ‘A’ and ‘R’. Agreement of sale dated 16.4.1963 and dated 15.3.1963 were executed and registered by ‘R’ and ‘A’ respectively for Rs. 87,500/- and Rs. 12.500/- respectively for the payment of balance sum by appellant. Appellant further paid Rs. 4,000/- and Rs. 1,000/- were handed over to appellant. ‘M’ died leaving behind his widow and ‘S’ his son as his legal representative. The legal representa­tive of ‘M’ and ‘S’ refused to execute reconveyance deed. Appellant T filed two suits for specific performance of reconveyance agreements.

Appellant deposited amount of Rs. 9,900/- in the Court to be paid to ‘S’ and ‘?’ and Rs. 1,600/- for payment to ‘A’. Appellant deposited Rs. 74,500/ – for payment to ‘S’ and ‘P’ and Rs. 9.000/- to ‘R’.

Both the suits were decreed ex parte on 7.1.1974. ‘R’ and ‘A’ did not file application for setting aside the ex parte decree. On application of ‘S’ and ‘P’ ex parte decree was set aside and applicants were allowed to con­test suit on merits. Trial Court decreed the suit against ‘S’ and ‘P’ against which appeals were preferred in High Court which set aside decision of Trial Court and dismissed both the suits. T’ filed two appeals challenging deci­sion of High Court.

The above facts were almost admitted with regard, all exhibits High Court was of the view that rights of reconveyances were not assigned by ‘A’ and ‘R’ in favour of appellant, ‘T’.

High Court further observed that no privity of contracts could be in­tended or existed between ‘S’ and ‘P’ and plaintiff T’. Exhibits do not imply any right of assignments. Agreements are deeds of resale by ‘M’ and ‘?’ in favour of ‘A’ and ‘R’. Resale was contemplated at any time after 7 years upto 10 years on receipt of consideration of Rs. 74,500/- and Rs. 9.900/-. Such right of resale could not be exercised by a stranger to the agreement. The contention of High Court that the plaintiff did not represent interest of ‘A’ and R’ was wrong. In fact rights of reconveyance were assigned by ‘A’ and ‘R’ in favour of plaintiff T’.

By depositing the money plaintiff had well-expressed his will to be al­ways ready and willing to perform his part of contract. High Court’s decision was therefore not justified. High Court erred in holding that plaintiff could have got executed sale-deeds within 2 years whereas the period to exercise such right was three years.

Ex parte decree against ‘R’ and ‘A’ has become final. ‘S’ and ‘M’ were bound to make resale in favour of ‘A’ and ‘R’ and their assignee. ‘S’ and ‘M’ did not plead non-execution of exhibits or have lost their right of reconveyance of property.

In the instance case, plaintiff T acquired valid title to claim specific performance. Judgment of High Court set aside.

30. Specific performance of contract:

The plaint contains not only a prayer for specific performance but also a prayer for perpetual injunction restraining the defendants from interfering with the possession of the plain­tiffs and from creating any documents or entering into any transaction in respect of the suit property.

Whether the plaintiffs are able to prove that they are in possession of the suit property as on the date of suit and establish that they are entitled to the injunction prayed for, is a different matter from the maintainability or tenability of their case for specific performance.

There is also the question whether the relief of injunction can be treated as being only a relief consequential to the relief of specific performance and the denial of one would automatically lead to the denial of the other, or whether it is an independent relief in itself and even if the plaintiffs are not entitled to a decree for specific performance they would still be entitled to a decree for injunction, a relief the grant of which is, of course, in the discre­tion of the Court.

It may be noticed that a suit for injunction would be governed by the residuary article, Article 113 of the Limitation Act and the cause of action for the said relief arises when the right to sue accrues. That would depend upon the Court deciding when the right accrued, on the pleadings and the evidence in the case. Therefore, the suit insofar as it relates to the prayer for a decree for perpetual injunction cannot be held to be barred by limitation at this preliminary stage. In any event, therefore, the dismissal of the suit as a whole as not maintainable, could not be justified or said to be correct.

In such a situation, when the whole matter requires reconsideration it would not be proper to go into the various arguments urged by the counsel in this case. The interests of justice would be sub-served by setting aside the finding by the Courts below that the suit is barred by limitation, even while upholding the finding that the trial Court had the jurisdiction to try the suit and remanding the suit to the trial Court for a decision of all the issues arising therein, including the issue of limitation, in accordance with law after giving the parties an opportunity to adduce evidence in support of their respective cases.

31. Specific performance—Refusal of:

A person who seeks the equi­table relief of specific performance should come to Court with clean hands and any false case set up by him would disentitle him to the equitable relief of specific performance.

32. Sustainability of:

Purchaser deposited balance amount of consid­eration as per contract agreement with seller instead of in Court and at­tempting to procure sale deed within a period prescribed by trial Court. Therefore, specific performance of contract of sale could not be denied by raising new plea for the first time in second appeal.

Merely because the plaintiff did not deposit the balance amount of consideration into Court the suit could not be dismissed.