The specific performance of a contract is governed by the Specific Relief Act, 1963, and the Court is bound to apply its provisions purposively and in a meaningful manner. In the present case, upholding the sale deed between the proforma respondent and the Appellant, the Trial Court ordered the specific part performance of a subsequent agreement under Section 12.
The Appellant, a vendor purchased land of 300 sq. yd. After 10 days, the Appellant entered into an oral agreement with the proforma Respondent for sale of 100 sq. yd. A total consideration of Rs. 3000/- was agreed upon and Rs. 2500/- was paid. The Appellant claims that possession of the land was given to the Respondent. Thereafter, a written agreement was entered upon payment of balance consideration.
The Appellant (“vendor”) then entered into an agreement with the Respondent, D. Sarla (“vendee”) for sale of the same land for Rs. 75,000/-. The Appellant also informed the vendee about the oral agreement and the delivery of possession of 100 sq. yd. The vendor alleges that she requested the vendee to incorporate in the agreement about the earlier agreement with the proforma respondent. The vendee also informed that she would get the earlier agreement cancelled.
The proforma Respondent filed a suit seeking a decree of perpetual injunction restraining Vendee from interfering with his possession over 100 sq. yd. The vendee also filed a suit to declare the agreement between the Appellant and the proforma Respondent void and null. The vendee also filed a suit for the specific performance of the agreement between the Appellant and herself. All these matters were clubbed and heard together.
The trial court vide common judgment allowed the suit for specific performance in part. It was held that the vendee was entitled to seek specific performance only to the extent of 200q. yd. Additionally, the vendee’s suit against proforma Respondent was dismissed for non-joinder of the Appellant. Since the sale of land was only to the extent of 200 sq. yd. the trial court ordered payment of Rs. 50,000/-. Cross appeals were filed before the High Court. The High Court dismissed all the appeals vide common judgment. Hence, the present appeal before the Supreme Court.
Appellant’s (Vendor’s) Arguments
It was submitted for the vendor that the agreement between the vendor and the proforma Respondent was liable to be cancelled for making default in payment. With respect to the second agreement between the vendee and the vendor, it was submitted that the execution of the same was contingent upon cancellation of an earlier agreement between the vendor and the proforma Respondent. Furthermore, the second agreement was a composite agreement, that is, it involved a sale of 300 sq. yd. Hence, there exists no scope for sale of 200 sq. yd.
The suit for specific performance was contended to be not maintainable on the ground that the vendee was not ready to pay the balance sale consideration. Also, the reason being that the Appellant did not have 300 sq. yd.
Respondent’s (Vendee’s) Arguments
It has been submitted that the specific performance of the second agreement should have been granted in its entirety. Additionally, it was contended that the sale agreement between the vendor and the proforma Respondent was not genuine. With respect to the readiness of the vendee to pay sale consideration, it was submitted that advance payment of Rs. 40,000/- reveals the willingness of the vendee to perform the agreement.
Proforma Respondent’s Arguments
It has been submitted that there was no challenge to the sale deed in his favour. Additionally, a suit filed by the vendee without impleading the vendor for declaration of the agreement between the vendor and the proforma Respondent null and void, hence unjustified. Lastly, there being no prayer against the proforma Respondent, he cannot be bound to execute a deed of conveyance in favour of the vendee. It was also contended that since no relief was sought against proforma Respondent, by virtue of Order II Rule 2 of CPC, it amounted to relinquishment. Also, the second suit was hit by Section 34 of the Specific Relief Act, 1963.
The Court found that the performance of the second agreement between the vendor and the vendee was contingent on the cancellation of the earlier agreement between the vendor and the proforma Respondent untenable. It was observed that there was no such requirement in the second agreement. The settled law is that the onus of proof lies on the party who makes an allegation. Therefore, it was for the vendor to prove that the second agreement was contingent upon the cancellation of an earlier agreement. The vendor in the instant case failed to discharge the onus.
The finding that the vendee was unwilling to perform the agreement is untenable. It was found that the vendee had paid Rs. 40,000 and a further Rs. 5,000 to the vendor’s husband. It was also observed that time is not of the essence to agreements for sale of immovable property.
With respect to the part performance of the agreement, the Court observed that relief of specific performance is governed by the Specific Relief Act, 1963 (“SRA”). The relief under it is equitable and discretionary. The Court observed that generally enforcement of the contract is done in its entirety. However, Sec. 12 of the SRA draws an exception. Wherein, the part performance of a contract is set out.
The Court, with respect to the agreement between the vendor and the proforma Respondent and on the question of non-joinder of the proforma Respondent, made remarks under Sec. 21 of the Limitation Act, 1963. Sec. 21 stipulates about the effects of adding or substituting a new plaintiff or defendant. The suit for declaration of agreement between the vendor and the proforma Respondent as null and void was filed by vendee without making the proforma Respondent a party. It was thus hit by Sec. 21 of the Limitation Act and hence no question of relief for specific performance against proforma Respondent, for being time-barred.
Therefore, it was held that the sale deed between the vendor and the proforma Respondent with respect to 100 sq. yd. was valid. Sec. 12 of SRA was construed purposively and in a meaningful manner to empower the court to direct specific performance. Specific performance only to the extent the contract was capable of being performed.
The appeals were dismissed and the judgment of the High Court confirming the Order of the Trial Court was upheld. It was found that the Trial Court was right in reducing the sale consideration by 1/3rd in view of the earlier contract being valid between the vendor and the proforma Respondent.
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