Dr. Kimti Lal vs Harpal Singh & Anr

VALMIKI J. MEHTA, J (ORAL)

RFA No. 436/2016 and C.M. Appl. Nos. 26409/2016 (for stay),39689/2018 (under Section 340 (2) Cr.P.C., filed by therespondents)

This Regular First Appeal under Section 96 of the Code of Civil Procedure, 1908 („CPC‟) is filed by the defendant in the suit impugning the

Judgment of the Trial Court dated 14.05.2016 by which the trial court has decreed the suit for specific performance filed by the respondents/plaintiffs

with respect to half undivided share of property no. A-3, Kirti Nagar, New Delhi-15 situated on a plot of 698 sq. yards and having 2 ½ storey built

up structure. The subject Agreement to Sell is dated 26.08.2004.

The facts of the case are, that the parties entered into an Agreement to Sell on 26.08.2004 for the suit property for a total sale consideration of Rs.

55,00,000/-. Admittedly, only a sum of Rs. 5,00,000/- was paid by the respondents/plaintiffs to the appellant/defendant under the Agreement to Sell.

Time fixed under the agreement to sell for completing the transaction was 31.03.2005 and the respondents/plaintiffs claimed that though they were

ready to pay the balance sale consideration, but the sale transaction could not go through as income tax clearance certificate was not obtained by the

appellant/defendant. The appellant/defendant is an NRI and therefore did not present himself for completion of the sale contract, although the

respondents/plaintiffs claim to be always ready and willing to perform their part of the contract. Â It was also pleaded in the plaint that on the

instructions of the appellant/defendant, the respondents/plaintiffs took possession of different parts of the property from the outgoing tenants. Â

The appellant/defendant contested the suit by filing a written statement. It was pleaded that it was not the appellant/defendant but the

respondents/plaintiffs who were guilty of breach of contract because they did not complete the sale transaction by 31.03.2005, as they did not have the

balance payment/amount to fulfill their end of the bargain. It was pleaded that on account of violation of the respondents/plaintiffs to complete their

part of the obligation, hence the agreement to sell was cancelled, and the earnest money of Rs. 5,00,000/- was forfeited. The suit was also prayed to

be dismissed because there was a clause in the agreement to sell which entitled the respondents/plaintiffs to seek a refund of double the amount paid.

The suit for specific performance was also prayed to be dismissed on the ground that there was a delay of 18 months in filing of the present suit and

therefore discretionary relief of specific performance should not be granted.

After the pleadings were complete, the trial framed the following issues:-

“1) Whether the plaintiffs have been ready and willing to perform their part of the agreement to sell and if so, to what effect? OPP

2) Whether the discretion in the grant of the relief of specific performance is to be exercised in favour of the plaintiff? OPP

3) Whether time for payment of balance sale consideration was of the essence of the agreement and if so, whether the plaintiff has failed to pay the

balance consideration and to what effect? OPD

4) Relief.â€​

The subject agreement to sell is an admitted document and the same has been exhibited as Ex.PW1/2. There are two issues which arise for

consideration and the first being whether the respondents/plaintiffs had the financial capacity and were thus ready to perform their part of the

contract, this aspect of readiness/financial capacity is the sine qua non as per Section 16(c) of the Specific Relief Act, 1963. The second aspect is as

to whether merely by having made a payment of Rs.5,00,000/- only out of a total sale consideration of Rs. 55,00,000/-, whether the

respondents/plaintiffs were entitled to the discretionary relief of specific performance.

The trial court has held that the respondents/plaintiffs had the financial capacity because during the course of cross-examination of respondent no.

1/plaintiff no. 1 as PW1 on 09.09.2009, they brought the bank statement. This bank statement was filed on record by the appellant/defendant, and

therefore, the trial court has held that the respondents/plaintiffs have proved their readiness i.e. financial capacity.

In my opinion, the trial court has committed a complete illegality in holding that the respondents/plaintiffs had the financial capacity because financial

capacity cannot be judged on the basis of self-serving ipse dixit. Financial capacity is one of the most important ingredients of a sale transaction

because not only is this aspect related to the breach of contract being non-performance by a buyer because of not having requisite moneys, the

readiness or financial capacity independently under Section 16(c) of the Specific Relief Act is an aspect which has to be proved right from the date of

the agreement to sell till the decree of the suit vide N.P. Thirugnanam (D) through LRs v. Dr. R. Jagan Mohan Rao & Ors, 1995 (5) SCC 115. The

relevant para of this judgment is para 5 which reads as under:-

“5. It is settled law that remedy for specific performance is an equitable remedy and is in the discretion of the court, which discretion requires to be

exercised according to settled principles of law and not arbitrarily as adumbrated under s.20 of theSpecific Relief Act1963 (for short, 'the Act'). Under

s.20, the court is not bound to grant the relief just because there was valid agreement of sale.Section 16(c)of the Act envisages that plaintiff must

plead and prove that he had performed or has always been ready and willing to perform the essential terms of the contract which are to be performed

by him, other than those terms the performance of which has been prevented or waived by the defendant. The continuous readiness andwillingness on

the part of the plaintiff is a condition precedent togrant the relief of specific performance. This circumstance ismaterial and relevant and is required to

be be considered by the courtwhile granting or refusing to grant the relief. If the plaintiff fails toeither aver or prove the same, he must fail. To adjudge

whether theplaintiff is ready and willing to perform his part of the contract, thecourt must take into consideration the conduct of the plaintiff priorand

subsequent to the filing of the suit alongwith other attendingcircumstances. The amount of consideration which he has to pay tothe defendant must of

necessity be proved to be available. Rightfrom the date of the execution till date of the decree he mustprove that he is ready and has always been

willing to perform hispart of the contract. As stated, the factum of his readiness and willingness to perform his part of the contract is to be adjudged

with reference to the conduct of the party and the attending circumstances. The court may infer from the facts and circumstances whether the

plaintiff was ready and was always ready and willing to perform his part of contract.â€​

(emphasis supplied)

Therefore, it is seen that in law to prove readiness under Section 16(c) of the Specific Relief Act, a buyer/plaintiff must show his financial capacity

to pay the balance sale consideration right from the time of entering into the agreement to sell, till the decree of the suit. In the present case, the

Agreement to Sell is dated 26.08.2004 and evidence was led by the respondents/plaintiffs in 2009, and therefore, it is to be seen that whether there is

any evidence on record which satisfies the judicial conscience of this Court that the respondents/plaintiffs have the financial capacity to pay the

balance sale consideration of Rs. 50,00,000/-. Â

Before considering the arguments urged on behalf of the respondents/plaintiffs, as also the evidence existing on the trial court record on the aspect

of financial capacity/readiness, it is required to be observed that financial capacity has to be proved by clear cut evidence to the satisfaction of the

Court being an extremely important aspect in a suit for specific performance. I have in the case of Baldev Behl & Ors. v. Bhule & Ors., (2012) 132

DRJ 247 held that financial capacity has to be proved to the satisfaction of the Court by clear cut documentary evidence and self serving ipse dixit

cannot be held to discharge the onus of proof with respect to the aspect of readiness/financial capacity. The relevant paras of the judgment in the case

of Baldev Behl & Ors. (supra) are paras 26(i) and 26(ii) and these paras read as under:-

26(i). This issue pertains to plaintiff No.1 being ready and willing to perform his part of the agreement to sell. As per Section 16(c) of the Act, every

plaintiff in a suit for specific performance must aver and prove that the plaintiff has always been and continues to be ready and willing to perform his

part of the contract/agreement to sell. Readiness is financial capacity to go ahead with the agreement to sell and willingness is the intention. I may, at

this stage,specifically invite attention to the observations of the Supreme Courtin the case of Balraj Taneja and Anr. (supra), and relevant parashave

been reproduced above, and which show that in a suit forspecific performance even if there is no defence of the defendant,yet, the aspect of

readiness and willingness has to be specificallyproved by the plaintiff. This is stated by the Supreme Court in para30 of the said judgment. The

question is whether the plaintiff No.1 has proved his readiness and willingness at the relevant time and also continues to be ready and willing to

perform his part of the contract/agreement to sell.

(ii) Readiness to perform the obligations by a proposedpurchaser is a very important aspect and it has to be proved bycategorical evidence. Mere oral

evidence and self-servingdepositions cannot be a substitute for categorical evidence on thespecific statutory requirement of Section 16(c). It is not

disputed on behalf of the plaintiff No.1 that plaintiff No.1 has not filed any income tax returns or any bank account or proof of any other

assets/properties or any other evidence to show the financial capacity of the plaintiff No.1 to pay the balance sale consideration. As perthe case of the

plaintiff No.1, the balance sale consideration wouldbe approximately Rs.19.5 lacs and there is no evidence worth thename in the record to show the

plaintiff No.1‟s financial capacity forthis amount. Of course, while on this argument, I am assuming that there is a certainty as to consideration

because in reality there is no certainty as to balance sale consideration inasmuch as the plaintiff No.1 has failed to exercise the option in terms of the

agreement to sell as to which area of the balance land less the hutment/portion the plaintiff No.1 seeks specific performance of. Also, as already

stated above, this area claimed by the plaintiff No.1 has to be further conditioned by an area of 12 bighas which has already been sold to be defendant

No.3 under the sale deed dated 8.4.1988. In any case, I need not state anything further inasmuch as there is not a single piece of paper on record or

any credible evidence which proves the financial capacity of the plaintiff No.1. I accordingly hold that plaintiff No.1 has miserably failed to prove his

readiness to perform his obligations under the agreement to sell dated 27.8.1988. In fact, even willingness on the part of the plaintiff No.1 is absent

inasmuch as there is no certainty of any option exercised by the plaintiff No.1 as to specific area which the plaintiff No.1 seeks to purchase, and

which specific area had necessarily to be clear inasmuch as there is the issue of lessening the area whether on account of hutments or on account of

12 bighas of land already purchased by the defendant No.3 vide sale deed dated 8.4.1988 and hence of clarity as to for what area and for what price

the agreement to sell has to go ahead.""Â (emphasis is mine)

In the present case, it is seen that admittedly no documentary evidence whatsoever has been filed by the respondents/plaintiffs with respect to

their financial capacity. No income tax returns have been filed. No proof of bank deposits have been filed. No proof that balance sale consideration

existed in the bank account of the respondents/plaintiffs has been filed. No documents have been filed to show that respondents/plaintiffs were

owners of various properties or had other means to show financial capacity to pay the balance sale consideration of Rs. 50,00,000/-. In my opinion,

therefore, the trial court was completely unjustified in holding that the respondents/plaintiffs have proved their financial capacity. I cannot agree with

the arguments urged on behalf of the respondents/plaintiffs that since the respondent no. 1/plaintiff no. 1/PW1 had in his cross-examination dated

09.09.2009 stated that he had brought with him the bank pass book, therefore, it should be held that the respondents/plaintiffs have proved their

financial capacity. The contents of document can only be known if the document is filed and in the absence of the document, it cannot be assumed as

to what was the content of the document.

I may note that the onus of proof of financial capacity is on the plaintiff in a suit for specific performance and there is no need of any rebuttal

evidence by the seller, as is argued on behalf the respondents/plaintiffs, once the primary onus by a buyer/plaintiff itself is not discharged by leading

such evidence which will satisfy the judicial conscience of the Court to establish capacity to pay balance sale consideration. Â

12(i). Learned counsel for the respondents/plaintiffs places reliance upon the judgment passed by this Court in the case of D.C. Khosla v. Vinod

Kumar Jain,232 2016 DLT 354 to argue that this Court has held in the said case that once there is an oral statement of a witness having brought a

bank account statement, then in such a case financial capacity is held to be proved.

12 (ii). I, however, cannot agree with this argument urged on behalf of the respondents/plaintiffs because the facts of the case in D.C. Khosla (supra)

were completely different and those facts showed that the buyer had the money which was deposited in his bank. In the case of D.C. Khosla (supra),

the financial capacity was held to be proved because the witness in the said case specifically gave the bank account no. as 7215 of State Bank of

India, Clock Tower, Sabzi Mandi, Delhi, and the deposit of the balance amount of sale consideration was also evidenced from the receipt and pass

book of the account which were brought in court. Therefore, in the facts of the said case where there was categorical evidence of the amount as also

the bank account in question, hence it was held that financial capacity existed. In the present case, however, besides a PW1 making a statement in his

cross-examination, that he had brought his bank account statement, it is not shown that the bank account statement was of which bank, whether the

amount of Rs. 50,00,000/- was available in that bank account, what was the account number of the bank and what was the period of existence of the

alleged Rs. 50,00,000/-in the bank account. Also, at best the respondents/plaintiffs would have proved an amount existing in the bank account on a

specific date, this specific amount though is not exactly mentioned, whereas the requirement of readiness/financial capacity is to be shown right from

the date of entering into the agreement to sell till the decision in the suit for specific performance, and therefore on the basis of just one line in the

cross-examination of PW1 of his having brought his bank account statement, without any details, whatsoever, it cannot be said that such evidence

exists which this Court must believe in the facts of this case for holding that the respondents/plaintiffs have proved their financial capacity.

I, therefore, hold that the respondents/plaintiffs have failed to prove their readiness as required by Section 16(c) of the Specific Relief Act and on

this ground itself the suit for specific performance was liable to be dismissed.

The second aspect is that whether the suit of the respondents/plaintiffs can be decreed for specific performance because the respondents/plaintiffs

have only paid an amount of Rs. 5,00,000/- out of the total sale consideration of Rs. 55,00,000/- i.e. just 9-10% of the total sale price. This aspect has

been considered by this Court in detail in the case of M/s Hotz Industries Pvt. Ltd. v. Dr. Ravi Singh (Since deceased through L.Rs) & Ors., CS(OS)

No. 1261/1995 decided on 28.02.2018 and it was held that a buyer of a property merely on the payment of about 10% of the price is not entitled to the

discretionary relief of specific performance. Detailed reasons have been given in the judgment in the case of Hotz Industries Pvt. Ltd. (supra), that

object of an agreement to sell is to see that the seller is able to buy an equivalent property as agreed to be sold by receipt of consideration, and once a

considerable amount of time lapses between the date of the agreement to sell and the decree of the suit for specific performance, a seller cannot get a

property of equivalent value much later than the date of agreement to sell as per the consideration of the property agreed to be sold which is of many

years earlier. Also, this Court has noted in the case of Hotz Industries Pvt. Ltd. (supra) that the seller within his pocket if has the balance sale

consideration, such balance sale consideration to the extent of 90% would have been used by the seller either for purchasing a property or for making

investment or for getting other returns, and therefore it is not as if that the buyer is in any manner prejudiced if the suit for specific performance is not

granted when only about 10% of the sale consideration is paid and especially when for breach of contract he can be compensated by awarding

monetary damages/compensation. The relevant paras of the judgment in the case of Hotz Industries Pvt. Ltd. (supra) are paragraphs 20(i) to 23 and

these paragraphs read as under:-

 20.(i)  The next aspect to be considered is as to whether plaintiff is entitled to the discretionary relief of specific performace.In law, merely

because there is an agreement to sell, and that theproposed seller is found to be guilty of breach of agreement to sell,yet it does not automatically

follow that a proposed buyer is only forthat reason entitled to the specific performance of the agreement tosell. In fact, besides the

defendants/proposed sellers being guilty ofbreach of contract, and that even if the proposed buyer/plaintiffproves that there was financial capacity in

the plaintiff to pay thebalance sale consideration, yet the plaintiff is not necessarily andautomatically entitled to specific performance, and this is

because thegrant of relief of specific performance is a discretion vested in theCourt as per Section 20 of the Specific Relief Act.

(ii) An agreement to sell is a contract between the partiesand contracts between the parties are subject matter of theIndian Contract Act, 1872. The

effect of breach of contract isprovided under Section 73 of the Indian Contract Act. If there isa breach of contract then an aggrieved party is entitled

tomonetary damages as per Section 73 of the Indian Contract Actand which monetary damages is the amount of loss which iscaused to the aggrieved

party under the contract. An aggrievedparty who was the proposed buyer under the agreement to sellwill suffer loss if in case on the date and in

around the date ofbreach, the value of a similar property as the contractedproperty under the agreement to sell, which could be purchasedby the

plaintiff as a proposed buyer, had increased. To theextent of increase of price of the property a plaintiff who is aproposed buyer suffers loss when a

proposed seller/defendantdoes not sell the property under an agreement to sell, because abuyer has to pay a higher price for purchase of a

similarproperty, and thus ordinarily whenever there is a breach ofcontract of an agreement to sell on account of the breach by thedefendant/proposed

seller, then the plaintiff/proposed buyerbecomes entitled ordinarily to damages/loss under Section 73 ofthe Indian Contract Act being the difference of

the contract priceand the higher price of a similar property in around the date ofbreach. The Specific Relief Act contains provisions that in spiteof a

plaintiff who is the proposed buyer, and against whombreach of contract is caused by a defendant in the suit being theproposed seller, the

plaintiff/proposed buyer need not ask forand be granted damages in such a case where theplaintiff/proposed buyer pleads and seeks that there should

bespecific performance of the contract and not the breach of thecontract. In a way therefore the provisions of Specific Relief Actdirecting specific

performance of a breached agreement to sellare in the nature of Exceptions or Provisos to Section 73 of theIndian Contract Act. What is being stated

by this Court is that ifthere is a breach of contract then an aggrieved party on accountof the breach of the contract gets under Section 73 of the

IndianContract Act monetary damages but where instead of grant ofdamages because of the contract being broken, aplaintiff/proposed buyer instead

seeks/prays that the contractshould be specifically performed, then such a scenario is in thenature of an Exception or a Proviso to the ordinary

situationcomprised in Section 73 of the Indian Contract Act that breachof contract entitles a person to monetary damages on account ofthe loss

caused. Therefore once the provisions of Specific ReliefAct with respect to specific performance are not the normalconsequence of a breach of

contract being of grant of damages asper Section 73 of the Indian Contract Act, therefore theprovisions of the Specific Relief Act; with the

importantprovision therein being Section 20 of the Specific Relief Act;provides that Court has the discretion whether or not to grantspecific

performance and that merely because it is lawful to doso, the Court will not grant specific performance but instead mayonly grant damages with the

measure of damages being those asprovided in Section 73 of the Indian Contract Act. This aspect has been considered by this Court in detail in the

judgment in the case of Jinesh Kumar Jain Vs. Iris Paintal and Ors. ILR (2012) 5 Delhi 678. The relevant paras of this judgment are paras 13 to 18

and these paras read as under:-

Now let us assume that the agreement to sell dated 26.9.1988 was not hit by the 1972 Act; the defendants were guilty of breach of their

obligation to perform their part of contract; and that the plaintiff was ready and willing to perform his part; even then, can it be said that the plaintiff is

yet entitled to the discretionary relief of specific performance. It will be appropriate at this stage to refer to Section 20 of the Specific Relief Act,

1963, and more particularly sub-Section 3 thereof. Section 20 reads as under:-

Discretion as to decreeing specific performance.- (1) The jurisdiction to decree specific performance is discretionary, and the court is not bound to

grant such relief merely because it is lawful to do so; but the discretion of the court is not arbitrary but sound and reasonable, guided by judicial

principles and capably of correction by a court of appeal.

(2) The following are cases in which the court may properly exercise discretion not to decree specific performance:-

(a) where the terms of the contract or the conduct of the parties at the time of entering into the contract or the other circumstances under which the

contract was entered into are such that the contract, though not voidable, gives the plaintiff an unfair advantage over the defendant; or

(b) where the performance of the contract would involve some hardship on the defendant which he did not foresee, whereas its non-performance

would involve no such hardship on the plaintiff; or

(c) where the defendant entered into the contract under circumstances which though not rendering the contract voidable, makes it inequitable to

enforce specific performance.

(3) The court may properly exercise discretion to decree specific performance in any case where the plaintiff has done substantial acts or suffered

losses in consequence of a contract capable of specific performance.

(4) The court shall not refuse to any party specific performance of a contract merely on the ground that the contract is not enforceable at the instance

of the party.†14. Sub-Section 3 makes it clear that Courts decree specificperformance where the plaintiff has done substantial acts inconsequence

of a contract/agreement to sell. Substantial actsobviously would mean and include payment of substantial amounts ofmoney. Plaintiff may have paid

50% or more of the consideration orhaving paid a lesser consideration he could be in possession pursuantto the agreement to sell or otherwise is in the

possession of the subjectproperty or other substantial acts have been performed by the plaintiff,and acts which can be said to be substantial acts under

Section 20(3).However, where the acts are not substantial i.e. merely 5% or 10% etcof the consideration is paid i.e. less than substantial consideration

ispaid, (and for which a rough benchmark can be taken as 50% of theconsideration), and/or plaintiff is not in possession of the subject land,I do not

think that the plaintiff is entitled to the discretionary relief ofspecific performance.

The Supreme Court in the recent judgment of Saradamani Kandappan vs. Mrs. S. Rajalakshmi, 2011 (12) SCC 18 has had an occasion to consider

the aspect of payment of a nominal advance price by the plaintiff and its effect on the discretion of the Court in granting the discretionary relief of

specific performance. Though in the facts of the case before the Supreme Court, it was the buyer who was found guilty of breach of contract,

however, in my opinion, the observations of the Supreme Court in the said case are relevant not only because I have found in this case the plaintiff/

buyer guilty of breach of contract, but also because even assuming the plaintiff/buyer is not guilty of breach of contract, yet, Section 20 sub-Section 3

of the Specific Relief Act, 1963 as reproduced above clearly requires substantial acts on behalf of the plaintiff/proposed purchaser i.e. payment of

substantial consideration. Paras 37 and 43 of the judgment in the case of Saradamani Kandappan (supra) are relevant and they read as under: “37.

The reality arising from this economic change cannot continue to be ignored in deciding cases relating to specific performance. The steep increase in

prices is a circumstance which makes it inequitable to grant the relief of specific performance where the purchaser does not take steps to complete

the sale within the agreed period, and the vendor has not been responsible for any delay or non-performance. A purchaser can no longer take shelter

under the principle that time is not of essence in performance of contracts relating to immovable property, to cover his delays, laches, breaches and

“non-readinessâ€. The precedents from an era, when high inflation was unknown, holding that time is not of the essence of the contract in regard

to immovable properties, may no longer apply, not because the principle laid down therein is unsound or erroneous, but the circumstances that existed

when the said principle was evolved, no longer exist. In these days of galloping increases in prices of immovableproperties, to hold that a vendor who

took an earnest money of say about10% of the sale price and agreed for three months or four months as theperiod for performance, did not intend that

time should be the essence, willbe a cruel joke on him, and will result in injustice. Adding to the misery isthe delay in disposal of cases relating to

specific performance, as suitsand appeals therefrom routinely take two to three decades to attainfinality. As a result, an owner agreeing to sell a

property for rupeesone lakh and received rupees ten thousand as advance may berequired to execute a sale deed a quarter century later by receiving

theremaining rupees ninety thousand, when the property value has risento a crore of rupees.

 xxxxx xxxxx xxxxx

Till the issue is considered in an appropriate case, we can only reiterate what has been suggested in K.S. Vidyanandam.

(i) The courts, while exercising discretion in suits for specificperformance, should bear in mind that when the parties prescribe atime/period, for taking

certain steps or for completion of the transaction,that must have some significance and therefore time/period prescribedcannot be ignored.

(ii) The courts will apply greater scrutiny and strictness whenconsidering whether the purchaser was “ready and willing†toperform his part of the

contract.

(iii) Every suit for specific performance need not be decreed merely because it is filed within the period of limitation by ignoring the time-limits

stipulated in the agreement. The courts will also “frown†upon suits which are not filed immediately after the breach/refusal. The fact that

limitation is three years does not mean that a purchaser can wait for 1 or 2 years to file a suit and obtain specific performance. The three-year period

is intended to assist the purchasers in special cases, as for example, where themajor part of the consideration has been paid to the vendor and

possessionhas been delivered in part-performance, where equity shifts in favour of thepurchaser.â€​  (emphasis is mine) Â

A reading of the aforesaid paras shows that Courts have a bounden duty to take notice of galloping prices. Surely it cannot be disputed that the

balance of convenience i.e. equity in the present case is more in favour of the defendants who have only received 10% of the consideration. If the

hammer has to fall in the facts of the present case, in my opinion, it should fall more on the plaintiff than on the defendants inasmuch as today the

defendants cannot on receiving of the balance consideration of 44,00,000/-, and even if exorbitant rate of interest is received thereon, purchase any

equivalent property for this amount. Correspondingly, the plaintiff has had benefit of 90% of sale consideration remaining with him (assuming he has

any) and which he could have utilized for purchase of assets including an immovable property. In specific performance suits a buyer need not have

ready cash all the time and his financial capacity has to be seen and thus plaintiff can be said to have taken benefit of the 90% balance with him. It is

well to be remembered at this stage that in a way that part of Specific Relief Act dealing with specific performance is in the nature of exception to

Section 73 of the Contract Act, 1872 i.e. the normal rule with respect to the breach of a contract under Section 73 of the Contract Act, 1872 is of

damages, and, the Specific Relief Act, 1963 only provides the alternative discretionary remedy that instead of damages, the contract in fact should be

specifically enforced. Thus for breach of contract the remedy of damages is always there and it is not that the buyer is remediless. However, for

getting specific relief, the Specific Relief Act, 1963 while providing for provisions of specific performance of the agreement (i.e. performance instead

of damages) for breach, requires discretion to be exercised by the Court as to whether specific performance should or should not be granted in the

facts of each case or that the plaintiff should be held entitled to the ordinary relief of damages or compensation.

I have recently in the case titled as Laxmi Devi vs. Mahavir Singh being RFA No. 556/2011 decided on 1.5.2012 declined specific performance,

one of the ground being payment of only nominal consideration under the agreement to sell. Para 11 of the said judgment reads as under:-

“11. Besides the fact that respondent/plaintiff was guilty of breach of contract and was not ready and willing to perform his part of the contract

lacking in financial capacity to pay the balance consideration, in my opinion, the facts of the present case also disentitle the respondent/plaintiff to the

discretionary relief of specific performance. There are two reasons for declining the discretionary relief of specific performance. The first reason is

that the Supreme Court has now on repeated occasions held that unless substantial consideration is paid out of the total amount of consideration, the

Courts would lean against granting the specific performance inasmuch as by the loss of time, the balance sale consideration which is granted at a

much later date, is not sufficient to enable the proposed seller to buy an equivalent property which could have been bought from the balance sale

consideration if the same was paid on the due date. In the present case, out of the total sale consideration of 5,60,000/-, only a sum of 1 lakh has been

paid i.e. the sale consideration which is paid is only around 17% or so. In myopinion, by mere payment of 17% of the sale consideration, itcannot be

said that the respondent/plaintiff has made out a casefor grant of discretionary relief or specificperformance.…………..â€​

Therefore, whether we look from the point of view of Section 20 sub-Section 3 of the Specific Relief Act, 1963 or the ratio of the judgment of the

Supreme Court in the case of Saradamani Kandappan (supra) or even on first principle with respect to equity because 10% of the sale consideration

alongwith the interest will not result in the defendants even remotely being able to purchase an equivalent property than the suit property specific

performance cannot be granted. In fact, on a rough estimation, the property prices would have galloped to at least between 30 to 50 times from 1988

till date. I take judicial notice of this that in the capital of our country, like in all other megapolis, on account of the increase in population and rapid

urbanization, there is a phenomenal increase in the prices of urban immovable property.

 I therefore hold and answer issue no. 5 against the plaintiff and in favour of the defendants holding that the plaintiff is not entitled to discretionary

relief of specific performance. â€​Â

The ratio of the judgment passed by this Court in Jinesh Kumar Jain (supra)has been thereafter followed by this Court in the following cases:-

(i) Sushil Jain Vs. Meharban Singh and Others (2012) 131 DRJ 421.

(ii) Baldev Behl & Ors. Vs. Bhule & Ors. (2012) 132 DRJ 247 (In para 25 of this judgment it is noted that the appeal against the judgment in the case

of Jinesh Kumar Jain (supra) being RFA(OS) No.75/2012 stands dismissed by a Division Bench of this Court on 31.8.2012).

(iii) A.K. Narula Vs. Iqbal Ahmed and Others ILR (2013) I Â Delhi 315. Â

22.(i) A reading of the ratio of the aforesaid judgment ofthis Court in the case of Jinesh Kumar Jain (supra) showsthat aproposed buyer as a plaintiff

when only has paid a very limitedamount of consideration, then such a plaintiff may not ordinarily beentitled to the discretionary relief of specific

performance when thegrant of specific performance is being decided after a long period oftime having elapsed after entering into the agreement to sell

and thesuit for specific performance coming up for final disposal. The logicis very simple that from the balance sale consideration which has tobe paid

by the plaintiff/proposed buyer under an agreement to sell tothe defendant/proposed seller, even by adding thereto interest, surelythe

defendant/proposed seller from the balance sale considerationplus interest cannot purchase a property of an equivalent type aswould have been

purchased by receipt of the sale consideration at thetime when the agreement to sell was entered into many many yearsearlier.

(ii) As a result of rise in the prices of a property, that in thefacts of the present case this Court can take judicial notice that pricesof properties in Delhi,

and that prices in the year 1995 would be farfar lesser than the prices of the property today in the year 2018, andthat too more so with the fact of the

suit property being situated inone of the prime colonies of the Delhi being Maharani Bagh, grant ofspecific performance will severly and gravely

prejudice thedefendants. On a conservative estimate the value of the suit propertyas on today would be at least around 20 times more than what

wasthe price of the suit property in the year 1995 and that therefore withthe balance sale consideration payable to the defendants as on todayeven

with interest, the defendants will not be able to purchase theproperty as the defendants could have purchased with the value ofthe balance sale

consideration in the year 1995.

(iii) In my opinion in such cases as the present the plaintiff infact should be extremely careful in such a suit for specificperformance; that when

evidence is led the plaintiff also leadsrequisite evidence as to the loss which would be caused to theplaintiff on account of the breach of contract by

thedefendants/proposed sellers, so that the Court can grant monetarydamages to the plaintiff/proposed buyer on account of the breach ofcontract by

the defendants/proposed sellers along with the interest,but indubitably the position on record in the present case is that theplaintiff has led no evidence

whatsoever as to what was thedifference of the property price in around April/May, 1995 than whatwas the price of the property on the date of

entering into agreementto sell on 10.2.1995. Once a plaintiff fails to lead any evidence whatsoever to prove loss, then the plaintiff harms its own case

because the Court in equity when it exercises discretionary power to deny specific performance because of Section 20 of the Specific Relief Act, and

that the Court wants to grant damages on the principles under Section 73 of the Indian Contract Act, the Court cannot do so since it does not have any

evidence before it in order to grant monetary damages to the plaintiff/proposed buyer and which loss/monetary damages the plaintiff would have been

entitled to on account of defendants/proposed sellers held guilty of breach of agreement to sell. After all it is not that the plaintiff has pleadedand

proved why it wants to be the owner only and only of the suitproperty and that why any other property in the same or similararea would not be

sufficient for the plaintiff's needs. Thereforesince plaintiff with the balance sale consideration with it plus anadditional amount could well have

purchased a similar propertyin the same or similar area in around May, 1995 and within somereasonable time thereafter, but yet plaintiff has chosen

not to,hence the plaintiff is held disentitled to the discretionary relief ofspecific performance. It is therefore held that since the plaintiffhas only paid

approximately 14.5% of the sale consideration ason the date of entering into the agreement to sell being theamount of Rs.37 lacs, therefore plaintiff is

not entitled to thediscretionary relief of specific performance. Â

(iv) It is also relevant that since plaintiff has over this period from the year 1995 to 2018 had moneys in its pocket of the balance sale consideration of

Rs.2.18 crores, the plaintiff would/could have invested wisely for obtaining returns on this amount of balance sale consideration.

(v) Therefore on the one hand defendants cannot purchase a similar property in similar area as in the year 1995 when the agreement to sell was

entered into with respect to the sale consideration of 1995 in the year 2018, on the other hand the plaintiff has had benefit of having enjoyed and put to

use and derived benefits of the balance sale consideration of Rs.2.18 crores, assuming the plaintiff had such a balance sale consideration amount with

it (and in reality though it does not have as held while deciding issue no.6) therefore if the plaintiff is granted specific performance in the facts of the

present case there would result not only in grave jeopardy to the defendants but that situation would be accompanied by the benefit which the plaintiff

has had by having with it and having used or could have used the balance sale consideration of Rs.2.18 crores.

I therefore hold that plaintiff in the facts of this case is not entitled to the benefit of being granted the discretionary relief of specific performance.

Issue no. 7 is therefore decided in favor of the defendant nos. 1 to 3 and against the plaintiff.â€​(emphasis added)

In view of the ratio in the case of Hotz Industries Pvt. Ltd. (supra,) and the fact that admittedly the respondents/plaintiffs have paid just about 9%

to 10% of the total sale consideration, it is held that the respondents/plaintiffs are not entitled to the discretionary relief of specific performance. Â

16.(i) Learned counsel for the respondents/plaintiffs finally argued that the respondents/plaintiffs have taken possession of different parts of the

property from the tenants by paying consideration to the tenants and therefore specific performance be granted in the facts of the present case as

equities are in the favour of the respondents/plaintiff. Unfortunately, however, this argument urged by the respondents/plaintiffs is a blatant lie being

argued in this Court because not only under the agreement to sell, possession was not to be received by the respondents/plaintiffs till the sale deed was

registered inasmuch as the Agreement to Sell clearly states that the possession will be delivered i.e. will be delivered in future but also that para 9 of

the plaint of the respondents/plaintiffs itself concedes that they received possession from the tenants only because tenants wanted to vacate and the

appellant/defendant told them to receive possession on his behalf from the tenants. This para 9 of the plaint admitting that the respondents/plaintiffs did

not receive possession from the tenants after paying them consideration but only receive possession for and on behalf of the appellants/defendants

reads as under:-

“9. That at the time of entering into the agreement the defendant was in possession of 2 rooms, kitchen, latrine, 2 bathrooms on ground floor and

had been occupying the same. Besides this the defendant had inducted a tenant namely Chetan Oberio with respect to the portion upon garage on the

second floor. There was another tenant having possession of office on the first floor and godown in the basement in the said property.â€​

(ii). Any doubt in this regard is removed from the admission made by the respondent no.1/plaintiff no. 1/ PW1/ in his crossexamination on 09.09.2009

where it is clearly admitted by the plaintiff no. 1 that he had taken possession form the tenants of the appellant/defendant on behalf of the defendant

and as the trustee of the appellant/defendant.

(iii). Â This argument, therefore, urged on behalf of the respondents/plaintiffs is clearly a blatant lie and falsehood in the face of the Court in view of

the aforesaid discussion, and therefore the same is rejected. Â

In view of the aforesaid discussion, this appeal is allowed. The impugned judgment of the trial court dated 14.05.2016 is set aside. The suit of the

respondent/plaintiff for specific performance will stand dismissed. Decree sheet be prepared. Â

Appellant/defendant is entitled to costs of the entire litigation till date and with respect to which the appellant/defendant will file the certificate of

fees and costs in this Court within a period of two weeks from today. Â

It is also finally observed that counsel for the respondents/plaintiffs had initially sought to impugn the General Power of Attorney executed by the

appellant/defendant in favour of his attorney Mr. Pradeep Kharbanda, and who is none other than the brother-in-law of the appellant/defendant, and

photocopy of this General Power of Attorney duly notarized and dated 21.12.2010 is on the record, the counsel for the appellant/defendant is response

says that to remove any doubt whatsoever a fresh Power of Attorney will be executed by the appellant/defendant in favour of his brother-in-law Sh.

Pradeep Kharbanda and filed in this Court within four weeks from today, and which will be duly notarized or attested by Indian Embassy in United

Kingdom. Â The Power of Attorney now being filed will also confirm with respect to execution of the earlier Power of Attorney dated 21.12.2010

and also ratifying all acts of Sh. Pradeep Kharbanda taken both in the suit as also this appeal.

The appeal is accordingly allowed and disposed of in terms of the aforesaid observations.