Specific Performance Suit Cannot Be Dismissed On Sole Ground of Delay or Laches: Supreme Court

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Case Name: A.R Madana Gopal etc. etc. vs. M/S Ramnath Publications and Pvt ltd. etc etc. [Civil Appeal No. 3523-3526 of 2010]

Excerpt

The Supreme Court in a judgement on Friday (April 9, 2021) observed that a suit for a specific property cannot be dismissed merely on the grounds that it has been delayed or there was laches.

Facts of the Case

In the present case, four suits were filed for specific performance of the agreement of sale (dated- 20.3.1991) and MoU (dated- 20.1.1994). According to the plaint, the Respondent entered into an agreement with Appellants of the same family for sale of the suit property as per the terms. The Respondent applied to the Income Tax authorities for permission to alienate the property, as it was required by the terms of the agreement to get an Income Tax Clearance Certificate. In June 1991, an Order was passed by Income Tax Authorities for compulsory acquisition of property. This was challenged in the High Court by a writ petition which was allowed and the authorities were directed to reconsider the matter afresh. Later, the authorities passed an order for the purchase of property which was again challenged and an Order of permanent injunction was passed by High Court and the parties were directed to maintain the status quo. 

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Later, the parties entered into 4 separate MoUs in addition to the agreement of sale. It was also agreed that the Respondent will keep the original title deeds which would be handed over to the Appellant at the time of registration and the balance of sale price would also be paid at the same time. When the writ petition challenging compulsory acquisition was allowed and disposed of in 1998, it was again challenged by income tax authorities. Later, the Appellant started demanding the execution of sale property which was not fulfilled even after repeated request, the Appellant filed suits for specific performance.

All four suits were tried together and the learned single-judge where the Appellant was directed to pay the balance amount and then the Respondent to execute the sale deed in favour of the Appellant. This was again challenged before the division bench and set aside the judgement of a single judge which was the subject matter of present appeal 

Pleadings before the Court

It was submitted by the learned counsel on behalf of the Appellant that the Respondents dismissed the Appellants’ demand for execution of the selling deeds on the grounds that the Income Tax Department’s Writ Appeal against the High Court’s judgment dated 11.09.1998 was still pending. The Appellants did not file suits for particular performance until they received information that the land had already been encumbered. It cannot be assumed, according to the Appellants, that the suits were filed late. It was further submitted that the total sale consideration for all four agreements for the purchase of the property was Rs. 37/- lakhs, of which Rs. 34/- lakhs was paid by August 1994, demonstrating that the Appellants were always ready and willing to perform their part of the agreement, and the Appellants were entitled to specific performance relief because they had paid a significant portion of the consideration and had partial possession.

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On the other hand, it was submitted by the Learned Counsel on behalf of the Respondent that the agreement’s key component was time. The Appellants were not entitled to the relief sought as a result of the two-year and three-month delay following the Writ Petition’s disposition. An important factor was also the rise in property prices in Chennai. It was further observed that at the time of the agreement, the Appellants were not in possession of the land. The MOU made no promise that the Appellants will be granted possession. The Appellants had not stated how they came to own the first floor. The Appellants made a brazen attempt to evict the Indian Bank from a portion of the house.

Court’s Observation

The bench of the Supreme Court comprising Justices L. Nageshwar  Rao and S. Ravindra Bhat observed that a claim for particular results cannot be ignored solely due to inaction or delay. However, there was an exception to this rule where an immovable property must be sold within a certain time frame, and it is not determined that the sale could not be completed within that time frame due to any default on the plaintiff’s part. 

It was further observed that the sole reason for denying precise output cannot be price hikes. Since the Appellants charged 90% of the purchase price before 1994, we believe the Respondents were not entitled to any extra compensation.

Court’s Judgement

The Supreme Court in its judgement set aside the order of the division bench of the High Court and upheld the order of the single-judge bench of High Court by saying that any delay in decreeing specific performance as a result of the Court process cannot be used against the complainant as a matter of law until a suit for specific performance has been filed.

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Click here for the judgement.


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