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‘REPORTABLE’

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 7385 OF 2013

Satish Kumar          ….Appellant(s) versus

Karan Singh and Another              ….Respondent(s)

J U D G M E N T  

M.Y. EQBAL, J.

The  question  that  needs  consideration   in  the  

instant appeal is as to whether the so called agreement to sell  

dated 6.1.1995, which is extracted hereinbelow, is enforceable  

in  law  for  passing  a  decree  for  specific  performance  of  

contract.  The said agreement reads as under :-

”  RECEIPT + AGREEMENT DATED 6.1.1995   

Received  a  sum  of  amount  Rs.2,30,000/-(Two  Lac Thirty Thousand) from Karan Singh S/o Sh.  Basti Ram R/o Village and PO Mahipal Pur New  Delhi-110 037 on sixth January, 1995 against  our  DDA  alternative  plot  F.No.32(5)113/87/L&B/Alt./2511  dated  11.8.1989 in  the  name  of  Sh.  Jaishi  S/o  Sh.  Ram Saran R/o V&PO Mahipalpur  New Delhi.  The  total  area  of  the  above  said  plot  is  400  

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Sq.Yds.  The total premium settled for the above  said  plot  is  Rs.4,60,000/-  (Four  Lacs  Sixty  Thousand) will be given at the time of receive the  lease after execution at the Registrar Office.  No  payment will be given in between.”

Sd/- Jaisi Ram

In the presence of S/o Ram Saran J.N. Sehrawat   Village Mahipal Pur V& PO Mahipal Pur New Delhi-110037.

2. The trial court after recording the evidence decreed the  

suit  of  plaintiff-respondent  for  specific  performance and the  

High Court by the impugned judgment dismissed the appeal  

filed by the appellant and affirmed the decree passed by the  

Trial Court.

3. We have heard learned counsel appearing for the parties.

4. The plaintiff’s case in the plaint is that a decision was  

taken by the Delhi Development Authority for allotment of a  

plot of land measuring 400 Sq.yds. in favour of the defendant-

respondent.   It  was  pleaded  that  in  the  year  1995  the  

defendant  had  desired  to  sell  his  right  in  the  said  

recommendation letter which was to be allotted by the DDA in  

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favour  of  the  defendant.   It  was  further  pleaded  that  the  

defendant  agreed  to  sell  his  right  in  the  aforesaid  

recommendation letter and the plot to be allotted at a price of  

Rs.4,60,000/-.  For better appreciation para 6 of the plaint is  

extracted hereinbelow :-

“6.  That the negotiations in between the parties  had taken place and the plaintiff had agreed to  purchase the said rights of the defendant in the  said recommendation letter  and the plot  to be  allotted thereto.  The dealings were finalized and  a Receipt-cum-Agreement (for short Agreement)  was  also  executed  in  between  the  parties  on  January 6, 1995.

It is stated that the defendant had agreed to sell  his  rights  in  the  aforementioned  recommendation letter and the plot to be allotted  thereunder  to  the  plaintiff  for  the  sale  consideration  of  Rs.4,60,000/-  (Rupees  Four  lakhs  and  Sixty  thousand  only).   A  sum  of  Rs.2,30,000/-  (Rupees  Two  Lakhs  and  Thirty  Thousand only) was also paid by the plaintiff to  the defendant on January 6, 1995 itself.  Vide  the said agreement dated January 6, 1995, the  defendant had acknowledged receipt of the sum  of  Rs.2,30,000/-  (Rupees  Two  Lakhs  Thirty  Thousand only) from the plaintiff.  It was further  agreed  that  the  balance  amount  of  Rs.2,30,000/-  (Rupees  Two  Lakhs  Thirty  Thousand only) would be paid by the plaintiff to  the defendant  when the defendant  hands over  the  original  lease  deed  duly  executed  by  the  Delhi  Development  Authority  in  favour  of  the  defendant.”  

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5. Curiously enough although the total  sale consideration  

fixed  was  Rs.  4,60,000/-  but  the  suit  was  valued  at  

Rs.6,77,262.75p. on the basis of the value fixed by the DDA in  

respect of the plot in question.

6. During the  pendency of  the  suit  in  the  trial  court  the  

original defendant who was an old person died and his legal  

representative was substituted.  The original defendant as also  

the  legal  representative  contested  the  suit  denying  and  

disputing the alleged receipt-cum-agreement and stated that  

no decree for specific performance can be passed.  The trial  

court held that the receipt-cum-agreement is a legal and valid  

agreement to sell and shall be enforced by passing a decree for  

specific performance.  The High Court on the basis of evidence  

adduced by the parties affirmed the finding recorded by the  

trial court.

7. Prima facie, we are of the view that both the trial court  

and  the  High  Court  have  completely  failed  to  consider  the  

provisions of Specific Relief Act and the principles laid down  

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by this Court in catena of decisions as to the requirement of  

law for  passing a decree for specific performance.

8. It  is  well  settled  that  the  jurisdiction  to  order  specific  

performance of contract is based on the existence of a valid  

and  enforceable  contract.   Where  a  valid  and  enforceable  

contract  has  not  been  made,  the  Court  will  not  make  a  

contract for them.  Specific performance will not be ordered if  

the contract itself suffers from some defect which makes the  

contract invalid or unenforceable.  The discretion of the Court  

will not be there even though the contract is otherwise valid  

and enforceable.

9. This Court in Mayawanti  vs.  Kaushalya Devi  (1990) 3  

SCC 1 held thus:-

“8. In  a  case  of  specific  performance  it  is  settled  law,  and indeed  it  cannot  be  doubted,  that  the  jurisdiction  to  order  specific  performance  of  a  contract  is  based  on  the  existence  of  a  valid  and  enforceable  contract.  The  Law of  Contract  is  based  on  the  ideal  of  freedom of contract and it provides the limiting  principles within  which the parties  are free  to  make  their  own  contracts.  Where  a  valid  and  enforceable  contract  has  not  been  made,  the  

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court will not make a contract for them. Specific  performance will not be ordered if the contract  itself suffers from some defect which makes the  contract invalid or unenforceable. The discretion  of  the  court  will  be  there  even  though  the  contract is otherwise valid and enforceable and  it can pass a decree of specific performance even  before  there  has  been  any  breach of  the  contract.  It  is,  therefore,  necessary first  to see  whether there has been a valid and enforceable  contract  and  then  to  see  the  nature  and  obligation arising out of  it.  The contract  being  the  foundation  of  the  obligation  the  order  of  specific  performance  is  to  enforce  that  obligation.”

10. Exercise of discretionary power under Section 20 of the  

Specific Relief Act for granting a decree, this Court in the case  

of  Parakunnan  Veetill  Joseph’s  Son  Mathew  vs.  

Nedumbara Kuruivila’s Son and others, AIR 1987 SC 2328  

observed:-

“14. Section  20  of  the  Specific  Relief  Act,  1963 preserves judicial discretion of courts as to  decreeing  specific  performance.  The  court  should  meticulously  consider  all  facts  and  circumstances  of  the  case.  The  court  is  not  bound  to  grant  specific  performance  merely  because it is lawful to do so. The motive behind  the litigation should also enter into the judicial  verdict. The court should take care to see that it  is not used as an instrument of oppression to  have  an unfair  advantage  to  the  plaintiff.  The  High  Court  has  failed  to  consider  the  motive  with which Varghese instituted the suit. It was  instituted  because  Kuruvila  could  not  get  the  estate  and  Mathew  was  not  prepared  to  part  

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with it. The sheet anchor of the suit by Varghese  is  the  agreement  for  sale  Exhibit  A-1.  Since  Chettiar  had  waived  his  rights  thereunder,  Varghese as an assignee could not get a better  right to enforce that agreement. He is, therefore,  not entitled to a decree for specific performance.”

11. In the instant case both the Trial  Court and the High  

Court have completely overlooked and failed to appreciate the  

following facts:-

(a) The receipt + agreement dated 6.1.1995 is  a document by which the defendant alleged to  have  received  a  sum of  Rs.2,30,000/-  against  the alternative plot in question which the DDA  recommended to give to the defendant.  The said  plot will in turn will be given by the defendant to  the plaintiff after a lease was executed in favour  of the defendant by the DDA;

(b) The total premium amount settled by the  said  agreement  in  respect  of  the  plot  was  Rs.4,60,000/- whereas the defendant deposited  a sum of Rs.8,13,389/-  with the DDA for the  allotment of the said plot;

(c)     The plaintiff pleaded in his plaint that the  defendant  had agreed to  sell  his  rights in  the  recommendation letter and the plot to be allotted  thereunder to the plaintiff for a consideration of  Rs.4,60,000/-;

(d) Although  the  right  to  get  the  plot  was  agreed  to  be  sold  to  the  plaintiff  by  the  defendant  for  Rs.4,60,000/-  but  the  suit  was  valued at Rs. 6,77,262.75p. being the rate fixed  by the DDA.

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12. On  the  basis  of  these  admitted  facts  the  Trial  Court  

erroneously  held  that  the  receipt-cum-agreement  is  an  

enforceable  contract  and  on  that  finding  decreed  the  suit  

which was affirmed by the High Court.

13. It is interesting to note that the High Court has noticed  

the  fact  mentioned in para  24 of  trial  court  judgment  that  

during  the  pendency  of  the  lis  DDA  allotted  the  plot  in  

question  in  favour  of  the  deceased  father  of  the  defendant  

(original plaintiff) by executing a lease deed putting a condition  

that  the plot  in question will  remain non-transferable  for  a  

period of ten years.   Para 24 of  the trial  court judgment is  

quoted hereinbelow:-

“It is stated on oath by Umed Singh (DW1) that  the DDA allotted plot in dispute to his deceased  father  on certain  terms and conditions,  which  were embodied in the lease deed.  One of such  conditions  was  that  suit  will  remain  non- transferable for a period of ten  years.”

14. In spite of the aforesaid fact noticed by the High Court,  

that the land so allotted to the defendant- is not transferable  

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for a period of 10 years, the High Court failed to hold that a  

decree for specific performance cannot be passed.

15. We are sorry to hold that both the Trial Court and the  

High  Court  have  completely  misconstrued  the  facts  of  the  

case and misunderstood the law laid down by this Court in  

the  matter  of  exercising  discretionary  power  for  granting  a  

decree for specific performance.   

16. After giving our anxious consideration to the matter, we  

are of the view that the impugned order passed by the trial  

court and affirmed by the High Court cannot be sustained in  

law inasmuch as no  decree for specific performance can be  

passed on the basis of the alleged receipt-cum-agreement. We  

therefore,  allow  this  appeal  and  set  aside  the  judgments  

passed by the Trial Court and the High Court.

17. Consequently, we direct the appellant to refund a sum of  

Rs.4,30,000/- (Rupees Four Lakhs Thirty  Thousand)  which  

was paid by the respondents to the appellant together with  

interest @ 6% per annum from the date of such receipt within  

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two  months  from  today.  Any  amount  deposited  by  the  

respondents in the High Court shall be withdrawn by them.   

…………………………….J. (M.Y. Eqbal)

…………………………….J. (Arun Mishra)

New Delhi January 21, 2016

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