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REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 9947 OF   2014 (Arising out of Special Leave Petition (C) No. 19555 of 2012)

Zarina Siddiqui ……Appellant

versus

A. Ramalingam alias R. Amarnathan …..Respondent

JUDGMENT

M.Y. EQBAL, J.

Leave granted.

2. This  appeal  by  special  leave  is  directed  against  the  

judgment and order dated 1.3.2012 passed by the High Court  

of  Karnataka whereby Regular  First  Appeal  No.265 of  1999  

filed  by  the  defendant-respondent  was  allowed  and  the  

judgment and decree passed by the trial court in the suit of  

the appellant-plaintiff was set aside.

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3. The facts giving rise to the present appeal are that the  

respondent-first  defendant  is  the  absolute  owner  of  1/3rd  

undivided share in the property bearing no.43, Mission Road,  

Bangalore  (hereinafter  referred  to  as  the  ‘suit  schedule  

property’) and his elder brother-second defendant is his power  

of  attorney  holder.   It  is  the  case  of  the  plaintiff  that  on  

25.6.1979,  the  second  defendant-respondent  as  registered  

power  of  attorney  holder  entered  into  an  agreement  to  sell  

1/3rd share in the suit property to the appellant-plaintiff for  

consideration  of  Rs.40,000/-  and  received  advance  of  

Rs.5,000/-.  As  per  the  aforesaid  registered  agreement,  the  

balance consideration was to be paid on or before 30.12.1980  

and the parties to the agreement had to take necessary steps  

for obtaining permission from the competent authority under  

the  Urban  Land  (Ceiling  and  Regulation)  Act.   Plaintiff’s  

further case is that he paid the entire sale consideration to the  

second defendant who received the same on behalf of the first  

defendant.  It is contended that the plaintiff had been always  

ready and willing to perform his part of the contract and that  

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the  plaintiff  has  been  requesting  the  defendants  to  take  

necessary  steps  to  obtain  permission from the  Urban Land  

Ceiling  Authority.   Since  the  defendants  failed  to  take  

necessary  steps,  the  plaintiff  issued  legal  notice  to  the  

defendants  on  5.3.1980  and  25.5.1980  calling  upon  the  

defendants to complete the sale in favour of the plaintiff and to  

perform their part of the contract.  The defendants sent reply  

to notice on 4.10.1980 wherein they repudiated the agreement  

in question. As averred, the plaintiff has been in possession of  

the undivided share of the defendants in the schedule property  

in  pursuance  of  the  above  agreement  for  sale.   Since  the  

defendants failed to execute the sale deed, the plaintiff filed  a  

suit  for  specific  performance  praying  for  a  direction  to  the  

defendants to execute the sale deed in respect of 1/3rd share in  

the suit property.

4. In the suit, the defendants 1 and 2 have filed separate  

written  statements.   In  the  written  statement  filed  by  first  

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defendant he has admitted that he is the owner of 1/3rd share  

in  the  suit  property.   He  has  also  admitted  that  the  2nd  

defendant  is  the  brother  and  registered  power  of  attorney  

holder of the first defendant.  But he pleaded that the power of  

attorney was given by him to the second defendant only for the  

limited  purpose  of  looking  after  and  managing  the  suit  

property. He denied that there was an agreement to sell the  

suit  property  in  favour  of  the  plaintiff  and  also  denied  of  

having received advance amount of Rs. 5000/-.  Respondent-

first defendant alleged that the said agreement was prepared  

by his elder brother by misusing the power of  attorney and  

second defendant had acted on the ill-advise of the plaintiff, to  

play fraud on him.  He contended that the suit property was  

worth  more  than  Rs.3,00,000/-  on  the  date  of  the  said  

agreement  and he had sent a registered notice to the plaintiff  

on 1.10.1983 denying the execution of the said agreement.  

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5. It  has  been  further  alleged  by  the  respondent-first  

defendant  that  one  D.  Narendra  had  filed  a  suit  O.S.  

No.767/78, re-numbered as O.S.2762/80, seeking partition of  

1/3rd share in the suit scheduled property.  Appellant-plaintiff  

herein was the 4th defendant in the said suit and he had filed  

his written statement on 27.2.1979, wherein he pleaded that  

he had agreed to purchase the suit property.  He contended  

that the same goes to show that the plaintiff had planned to  

snatch the property and that the agreement in question came  

into existence in collusion with the second defendant.

6. The respondent-defendant has further pleaded that the  

plaintiff  occupied  the  premises  in  question  as  a  tenant  by  

virtue  of  allotment  order  in  HRC(ACC)  306/1970  and  that  

thereafter  he has  sublet  the  portion of  the suit  property  to  

various persons.  It is further stated that the plaintiff has not  

been  paying  rent  to  the  defendant  in  proportionate  to  the  

income that he derives by such sub letting.  The defendant  

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alleged that he had no intention to sell the full property to any  

person much less to the plaintiff, and he wants to retain the  

suit property.

7. The second defendant,  elder  brother  of  the respondent  

and his power of attorney holder, by way of separate written  

statement denied that the agreement for sale in question was  

executed with the consent of the first defendant.  According to  

him, the plaintiff obtained the said agreement by playing fraud  

and giving assurance that he would get certain benefits.  He  

also pleaded in his written statement that one D. Narendra,  

who had alleged to have purchased 1/3rd share in  the suit  

property from Thyagarajan, had filed a suit being O.S.767/78  

seeking decree of partition and separate possession.  In the  

said suit, the plaintiff stated that he is holding agreement from  

Thyagarajan to purchase the property.  Thyagarajan is the son  

of the second defendant, who in good faith that his son would  

retain his  1/3rd share and to  save the  property  obliged the  

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plaintiff  to  execute  the  sale  agreement  and  not  with  an  

intention to sell the property.  It is pleaded that the plaintiff  

had promised that he would not enforce the sale agreement  

and  it  is  only  to  see  that  the  suit  filed  by  D.  Narendra  is  

dismissed.  The second defendant contended that the receipts  

issued by him to the plaintiff  were not  towards payment of  

consideration,  but the same was towards payment of  rents.  

Moreover he had not  issued any receipt for  having received  

money towards sale consideration.

8. On consideration of entire facts and evidence brought on  

record,  the  trial  court  decreed  the  suit  directing  the  first  

defendant to execute the sale-deed in favour of the plaintiff in  

respect of 1/3rd share in the suit schedule property.  The trial  

court held that defendant no.1 has admitted to have executed  

the power of attorney (Ex.P22) and it clearly states that the  

second  defendant  was  authorized  to  sell  the  suit  property.  

Further, defendant has utterly failed to prove that the plaintiff  

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had obtained the agreement for  sale in question by playing  

fraud.  On the contrary, the evidence clearly proves that the  

first defendant had authorized the second defendant to sell the  

suit  property to the plaintiff  and that the second defendant  

has agreed to sell the suit property to the plaintiff having full  

authority  to do so.   Defendant no.1,  who was examined as  

DW-1, has admitted the signatures of defendant no.2 in the  

receipts  produced  by  the  plaintiff,  which are  at  Ex.P8(a)  to  

P8(g).   The  trial  court  came  to  the  conclusion  that  the  

defendants have received the amount of consideration and the  

plaintiff  performed his  part  of  the agreement by paying full  

consideration and was always ready and willing to get the sale  

deed executed.  However, the defendants have not performed  

their part of the agreement and have evaded to execute the  

sale deed in favour of the plaintiff.  Therefore, trial court came  

to  the  conclusion  that  it  is  a  fit  case  to  grant  specific  

performance  of  agreement  and  to  direct  defendant  no.1  to  

execute the sale deed in favour of the plaintiff.   

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9. Aggrieved by the judgment and decree, the respondent-

defendant preferred appeal before the High Court.   

10. By judgment dated 3.2.2004, learned Single Judge of the  

High Court partly allowed the appeal modifying the judgment  

and  decree  of  the  trial  court  by  refusing  to  grant  specific  

performance and directing the first defendant to pay back the  

consideration amount with interest at 12% from the date of  

agreement  till  the  date  of  payment  after  deducting  rent  

payable to him by the plaintiff in respect of 1/3rd share.

11. Aggrieved by  the aforesaid decision of  the  High Court,  

petitioner  approached  this  Court  preferring  an  appeal  by  

special leave being Civil Apeal No.6956 of 2004.  This Court by  

judgment dated 4.3.2011 in that appeal titled as H. Siddiqui  

vs.  A.  Ramalingam,  (2011)  4  SCC  240,  set  aside  the  

judgment and order of the High Court and remanded back the  

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matter  to  the  High  Court  to  decide  the  same  afresh  in  

accordance  with  law.   This  Court  in  the  remand  order  

observed as under:

“20.  The  High  Court  failed  to  realise  that  it  was  deciding  the  first  appeal  and  that  it  had  to  be  decided  strictly  in  adherence  with  the  provisions  contained in Order 41 Rule 31 of the Code of Civil  Procedure, 1908 (hereinafter called “CPC”) and once  the issue of the alleged power of attorney was also  raised as is evident from Point (a) formulated by the  High Court, the Court should not have proceeded to  Point  (b)  without  dealing  with  the  relevant  issues  involved in the case, particularly, as to whether the  power  of  attorney  had  been  executed  by  the  respondent in favour of his brother enabling him to  alienate his share in the property. 21.  The  said  provisions  provide  guidelines  for  the  appellate court as to how the court has to proceed  and decide the case. The provisions should be read  in  such  a  way  as  to  require  that  the  various  particulars mentioned therein should be taken into  consideration.  Thus,  it  must  be  evident  from  the  judgment of the appellate court that the court has  properly appreciated the facts/evidence, applied its  mind and decided the case considering the material  on  record.  It  would  amount  to  substantial  compliance with the said provisions if the appellate  court’s  judgment  is  based  on  the  independent  assessment of the relevant evidence on all important  aspects  of  the  matter  and  the  findings  of  the  appellate  court  are  well  founded  and  quite  convincing. It is mandatory for the appellate court to  independently assess the evidence of the parties and  consider  the  relevant  points  which  arise  for  adjudication  and  the  bearing  of  the  evidence  on  those points. Being the final court of fact, the first  appellate  court  must  not  record  mere  general  expression  of  concurrence  with  the  trial  court  

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judgment rather it must give reasons for its decision  on  each  point  independently  to  that  of  the  trial  court. Thus, the entire evidence must be considered  and  discussed  in  detail.  Such  exercise  should  be  done after formulating the points for consideration  in terms of the said provisions and the court must  proceed in adherence to the requirements of the said  statutory provisions.

xxxxxxxx 23. More so, none of the courts below had taken into  consideration  Clause  11  of  the  agreement  dated  30.6.1979 which reads as under:  

“11. In the event of any default on the part of  the  vendors  in  completing  the  sale  the  earnest  money  paid  herewith  shall  be  refunded to the purchasers together with a  like  amount  of  Rs.5,000/-  (Rupees  five  thousand  only)  as  liquidated  damages  for  breach of contract.”  

Thus, in case of non-execution of the sale deed, the  appellant  could  get  the  earnest  money  with  damages.  24. So far as the issues of inadequate consideration  and  rise  in  price  are  concerned,  both  the  parties  have argued the same at length and placed reliance  on  a  large  number  of  judgments  of  this  Court,  including: Chand Rani (Smt.) (dead) by Lrs. v. Kamal  Rani  (Smt.)(dead)  by  Lrs.,  AIR  1993  SC  1742;  Nirmala  Anand  v.  Advent  Corporation  (P)  Ltd.  &  Ors.,  (2002)  8 SCC 146;  P.  1D’Souza v. Shondrilo  Naidu, (2004) 6 SCC 649; Jai Narain Parasrampuria  (dead) & Ors. v. Pushpa Devi Saraf & Ors., (2006) 7  SCC  756;  Pratap  Lakshman  Muchandi  &  Ors.  v.  Shamlal Uddavadas Wadhwa & Ors., (2008) 12 SCC  67. 25. In view of the above, as we are of the considered  opinion that the courts below have not proceeded to  adjudicate upon the case strictly in accordance with  law, we are not inclined to enter into the issue of  inadequate consideration and rise in price. However,  the judgment impugned cannot be sustained in the  eyes of law.”  

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12. On remand, High Court considered the matter afresh and  

allowed  the  appeal  of  first  defendant  and  set  aside  the  

judgment and decree of the trial court, dismissing the suit of  

the plaintiff.  Hence, this appeal by wife of the plaintiff (since  

deceased).  

13. Mr.  K.K.  Mani,  learned  counsel  appearing  for  the  

plaintiff-appellant, assailed the impugned judgment passed by  

the  High  Court  as  being  contrary  to  law  and  facts  and  

evidence on record. Learned counsel firstly contended that the  

learned Single Judge gravely erred in law in holding that the  

Power of Attorney was not proved as required under Sections  

65 and 66 of the Evidence Act.  Learned counsel submitted  

that  the learned Single Judge of  the High Court completely  

misdirected himself in reversing the findings recorded by the  

trial  court  which  is  based  on  evidence.   Learned  counsel  

contended  that  the  reasoning  given  by  the  High  Court  in  

refusing to grant specific performance merely because the part  

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of  the  consideration  amount  was  paid  by  the  plaintiff-

appellant prior to the date of the execution of the agreement is  

wholly unjustified and not tenable.  

14. Per  contra,  Mr.  V.  Prakash,  learned  senior  counsel  

appearing  for  the  defendant-respondent,  at  the  very  outset  

contended  that  the  agreement  in  question  (PW-1)  is  not  a  

genuine  transaction  and  fraud  has  been  played  with  the  

defendant-respondent  by  getting   the  agreement  to  sell  

executed  through  his  elder  brother-cum-power  of  attorney  

holder.   Learned  counsel  submitted  that  as  per  evidence  

adduced by the plaintiff, the entire consideration amount was  

paid but as a matter of fact those payments were admittedly  

prior to the date of execution of agreement.  Learned counsel  

contended that D. Narendra, claiming 1/3rd share in the said  

property from one Thyagarajan had filed a suit for partition.  

The  present  plaintiff-appellant,  who  was  one  of  the  

defendants,  vide  written  statement,  contended  that  he  is  

holding an agreement from Thyagarajan for purchase of  the  

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property.   Learned  counsel  submitted  that  the  second  

defendant-cum-power of attorney holder in good faith executed  

agreement for  the 1/3rd share to save the property and not  

with an intention to sell the property. Learned counsel further  

contended that there is a specific clause in the agreement i.e.  

clause (11) providing that in the event  of any default on the  

part of the vendors in completing the sale, the earnest money  

shall be refunded to the purchaser together with Rs.5,000/- as  

liquidated damage.

15. Mr.  V.  Prakash,  learned  senior  counsel,  further  

contended that at the time of execution of the agreement, the  

market  price  of  the  property  was  Rs.  3,00,000/-  and  as  

against the said price a sum of Rs.40,000/- was shown in the  

agreement as full consideration for the suit property.  Learned  

counsel submitted that by the passing of time, the price of the  

suit  property has increased more than 10-15 times,  and in  

that  view  of  the  matter,  the  court  should  not  exercise  

discretion  in  granting  decree  for  specific  performance.  

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Learned counsel relied upon the decision in Rajinder Kumar  

vs. Kuldeep Singh & Ors., (2014) 2 SCC 135, Vimaleshwar  

Nagappa Shetty vs. Noor Ahmed Sheriff & Ors., (2011) 12  

SCC 658, K.S. Vidyanadam & Ors. vs. Vairavan, (1997) 3  

SCC 1.

16.  We have perused the judgment passed by the trial Court  

and also the judgment of reversal passed by the High Court.  

Firstly, we would like to consider the pleading of the parties in  

the suit.

17. The first defendant through his power of attorney holder  

entered into an agreement on 25th June, 1979 agreeing to sell  

his 1/3rd undivided share in the suit property for a sum of Rs.  

40,000/-  and  out  of  the  said  consideration  a  sum  of  Rs.  

5,000/- was paid in advance.  Under the terms of registered  

agreement the sale was to be completed before 30th December,  

1980 on payment of balance consideration of Rs.35,000/- and,  

in the meantime, all necessary steps had to be taken to obtain  

permission  from  the  competent  authority  under  the  Urban  

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Land Regulation Act.  The plaintiff further pleaded that he was  

always ready and willing to perform his part of the contract  

and in furtherance of that entire sale consideration was paid  

long before 30.12.1980.

18. Both, the first defendant viz. owner of the property and  

his elder brother, who is a power of attorney holder, have filed  

separate written statement.  Defendant No.1 admitted in his  

written statement that he is the owner of 1/3rd share in the  

suit  property  and  that  the  second  defendant  is  his  elder  

brother and the power of attorney holder.  But the case of the  

defendant No.1 is that the power of attorney was given to the  

second defendant only for the limited purpose for managing  

the suit property.  He denied that there was an agreement to  

sell in favour of the plaintiff and also denied the payment of  

advance consideration.  The first defendant made out a case  

that  the agreement in question is a vexed agreement which  

was prepared by his elder brother by misusing the power of  

attorney.  The defendant further pleaded that the property was  

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worth more than three lakhs on the date of said agreement  

and that  he  has  not  received any part  of  the  consideration  

amount from the plaintiff.

19. The second defendant in his separate written statement  

pleaded that he is the power of attorney holder for the limited  

purpose for  safeguarding the interest of  the first  defendant.  

According to his pleading, a sale agreement was obtained by  

the plaintiff by playing fraud and by giving assurance that the  

second defendant would get certain benefits.

20. We have noticed that both the power of attorney and the  

agreement  to  sale  are  registered  documents.   Perusal  of  

registered  power  of  attorney  would  show  that  the  first  

defendant authorized his elder brother- second defendant to  

sell the suit property at any price which he may deem fit and  

collect the sale proceeds.  Clauses (i) to (iii) of the registered  

power of attorney read as under:-

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“(i) That my attorney is authorized to sell the above  property to any person or persons at any price which  he may deem fit and collect  the sale proceeds. (ii) My attorney is also athorised to get necessary  permission from the competent authority for the sale  of  above  property  or  from  any  other  government  machinery required under law. (iii) that my attorney is also authorized to execute  and sign document of sale/mortgage and any other  legal  transfer  and  get  the  same  registered  in  the  proper office of registration complete in all respect.”

21. Similarly  by  registered  agreement  of  sale  dated  

25.6.1979, executed by the second defendant, he specifically  

agreed to sell the property for a sum of Rs. 40,000/- and out  

of  that  he  received  a  sum  of  Rs.  5,000/-  as  advance  

consideration.

22. Although  defendant  no.2  filed  a  separate  written  

statement,  but  he  did not  examine himself  as  a  witness  in  

order to prove the case pleaded by him. The first defendant  

examined himself as DW-1 and deposed in the Court. In his  

evidence, he admitted that he discussed about the sale of the  

suit property with the plaintiff, but he wanted to sell at a price  

of  Rs.  3,00,000/-.   He  admitted  the  signature  of  his  elder  

brother as power of attorney holder in the agreement and also  

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in  the  receipt  of  payment  of  consideration  amount.  Certain  

correspondences made by plaintiff with DW-1 and exhibited in  

the suits would show that by one letter (exhibit P-14) DW-1  

confirmed that  he  authorized  his  elder  brother  to  negotiate  

and sell  the suit property.   By another letter (exhibit  P-15),  

DW-1 further  confirmed that  his  brother  was authorized  to  

negotiate  for  sale  of  the property  and receive  consideration.  

Another letter (Exhibit P-20) would show that he was aware  

about the sale agreement executed by his brother, who had  

received some advance consideration.

23. Curiously enough, although it was pleaded by defendant  

no.1 that the power of attorney was given to defendant no.2 for  

limited purpose of managing the property, the said power of  

attorney  was  not  produced  in  the  Court.   DW-1  did  not  

produce the original power of attorney to prove his case that  

the second defendant, his elder brother, was only authorized  

to manage the property.  It is the plaintiff, who produced the  

xerox  copy  of  the  registered  power  of  attorney,  which  was  

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shown to the DW-1 during cross-examination, who admitted  

the  signature  in  the  power  of  attorney.   All  these  relevant  

pieces  of  evidence  have  not  been  appreciated  by  the  High  

Court  in  its  right  perspective.  Instead  of  drawing  adverse  

inference against the defendant, in not producing the original  

power of attorney, which was in their power and possession,  

the High court has committed grave error in holding that the  

power  of  attorney  has  not  been  proved  as  required  under  

Sections 65 and 66 of the Evidence Act. In our view, when the  

xerox copy of power of attorney produced by the plaintiff  in  

evidence and the signature and the contents of the said power  

of  attorney  were  admitted  by  the  defendant,  there  was  no  

question of proving the said document as required under the  

Evidence Act.  The judgment of reversal passed by the High  

Court by coming to the aforesaid conclusion is wholly perverse  

and contrary to law.   A certified copy of the power of attorney  

is  now  on  record  and  it  falsifies  the  case  of  the  

defendants/respondent undisputedly.

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24. The  last  contention  of  Mr.  Prakash,  learned  senior  

counsel appearing for the respondent is that having regard to  

the increasing market price of the suit property, the discretion  

to grant specific performance should not be exercised in favour  

of  the  plaintiff-appellant  and  against  the  defendant-

respondent.

25. It is well settled that remedy for specific performance is  

an  equitable  remedy.   The  Court  while  granting  decree  of  

specific  performance  exercises  its  discretionary  jurisdiction.  

Section 20 of the Specific Relief Act specifically provides that  

Court’s discretion to grant decree of  specific performance is  

discretionary but not arbitrary.  Discretion must be exercised  

in accordance with sound and reasonable judicial principles.

26. The King’s Bench in Rookey’s Case [77 ER 209; (1597) 5  

Co.Rep.99] it is said :

“Discretion  is  a  science,  not  to  act  arbitrarily  according to men’s will and private affection: so the  

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discretion which is exercised here, is to be governed  by rules of law and equity, which are to oppose, but  each, in its turn, to be subservient to the other.  This  discretion, in some cases follows the law implicitly,  in others or allays the rigour of it,  but in no case  does  it  contradict  or  overturn  the  grounds  or  principles thereof, as has been sometimes ignorantly  imputed to this Court.  That is a discretionary power,  which neither this nor any other Court, not even the  highest,  acting  in  a  judicial  capacity  is  by  the  constitution entrusted with”

27. The Court of Chancery in  Attorney General vs. Wheat  

[(1759) 1 Eden 177; 28 ER 652] followed the Rookey’s case and  

observed :

“The law is clear and courts of equity ought to follow  it  in  their  judgments  concerning  titles  to  equitable  estates;  otherwise  great  uncertainty  and  confusion  would ensue.  And though proceedings in equity are  said to be secundum discretionem boni vin, yet when it  is  asked,  vir  bonus  est  quis?  The  answer  is,  qui  consulta partum, qui leges juraq servat.  And as it is  said in Rooke’s case, 5 Rep. 99 b, that discretion is a  science not to act arbitrarily according to men’s will  and  private  affection:  so  the  discretion  which  is  exercised here, is to be governed by rules of law and  equity, which are to oppose, but each, in its turn, to  be subservient to the other.  This discretion, in some  cases follows the law implicitly, in others or allays the  rigour  of  it,  but  in  no  case  does  it  contradict  or  overturn  the  grounds  or  principles  thereof,  as  has  been  sometimes  ignorantly  imputed  to  this  Court.  That is a discretionary power, which neither this nor  any  other  Court,  not  even  the  highest,  acting  in  a  judicial capacity is by the constitution entrusted with.  

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This description is full and judicious, and what ought  to be imprinted on the mind of every judge.”

28. In Satya Jain vs. Anis Ahmed Rushdie, (2013) 8 SCC  

131, at page 145, this Court observed:-  

“40. The discretion to direct specific  performance of  an  agreement  and  that  too  after  elapse  of  a  long  period of time, undoubtedly, has to be exercised on  sound, reasonable, rational and acceptable principles.  The parameters for the exercise of discretion vested  by Section 20 of the Specific Relief Act, 1963 cannot  be  entrapped  within  any  precise  expression  of  language and the contours thereof will always depend  on  the  facts  and  circumstances  of  each  case.  The  ultimate  guiding  test  would  be  the  principles  of  fairness and reasonableness as may be dictated by  the peculiar facts of any given case, which features  the  experienced  judicial  mind  can  perceive  without  any  real  difficulty.  It  must  however  be  emphasised  that efflux of time and escalation of price of property,  by itself, cannot be a valid ground to deny the relief of  specific  performance.  Such  a  view  has  been  consistently  adopted  by  this  Court.  By  way  of  illustration  opinions  rendered  in  P.S.  Ranakrishna  Reddy v. M.K. Bhagyalakshmi (2007) 10 SCC 231 and  more recently in  Narinderjit  Singh v.  North Star  Estate  Promoters  Ltd.(2012)  5  SCC  712    may  be  usefully recapitulated.”

29. In  Nirmala Anand vs. Advent Corpn. (P) Ltd., (2002) 8  

SCC 146, at page 150, a three Judge Bench of this Court on a  

similar issue held as under :-

“6.  It  is  true  that  grant  of  decree  of  specific  performance lies in the discretion of the court and it  is also well settled that it is not always necessary to  

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grant specific performance simply for the reason that  it is legal to do so. It is further well settled that 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. 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. While balancing the equities, one of the  considerations to be kept in view is as to who is the  defaulting  party.  It  is  also  to  be  borne  in  mind  whether  a  party  is  trying  to  take undue advantage  over  the  other  as  also  the  hardship  that  may  be  caused  to  the  defendant  by  directing  specific  performance.  There may be other circumstances on  which parties may not have any control. The totality  of the circumstances is required to be seen.”

30. In V. Pechimuthu vs. Gowrammal, (2001) 7 SCC 617,  

at page 629 this court held as under:-

“25.  Counsel  for  the  respondent  finally  urged  that  specific  performance  should  not  be  granted  to  the  appellant  now because  the  price  of  land had risen  astronomically in the last few years and it would do  injustice to the respondent to compel her to reconvey  property at prices fixed in 1978. 26.  The  argument  is  specious.  Where  the  court  is  considering  whether  or  not  to  grant  a  decree  for  specific performance for the first time, the rise in the  price  of  the  land  agreed  to  be  conveyed  may  be  a  

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relevant  factor  in  denying  the  relief  of  specific  performance. (See K.S. Vidyanadam v. Vairavan). But  in this case, the decree for specific performance has  already been passed by the trial court and affirmed by  the first appellate court. The only question before us  is  whether  the  High  Court  in  second  appeal  was  correct  in  reversing  the  decree.  Consequently  the  principle  enunciated  in  K.S.  Vidyanadam  (1997)  3  SCC 1 will not apply.”

31. In a recent judgment dated 22.9.2014 in Civil Appeal No.  

9047 of 2014 entitled K. Prakash vs.  B.R. Sampath Kumar,  

this Court observed that:

“17. The principles which can be enunciated is that where  the plaintiff brings a suit for specific performance of contract  for sale, the law insists a condition precedent to the grant of  decree for specific performance that the plaintiff must show  his continued readiness and willingness to perform his part  of the contract in accordance with its terms from the date of  contract  to the date of hearing.   Normally,  when the trial  court  exercises  its  discretion  in  one  way  or  other  after  appreciation of entire evidence and materials on record, the  appellate court should not interfere unless it is established  that the discretion has been exercised perversely, arbitrarily  or against  judicial  principles.   The appellate court  should  also not exercise its discretion against the grant of specific  performance  on  extraneous  considerations  or  sympathetic  considerations.  It is true, as contemplated under Section 20  of the Specific Relief Act, that a party is not entitled to get a  decree for specific performance merely because it is lawful to  do so.  Nevertheless once an agreement to sell is legal and  validly proved and further requirements for getting such a  decree  is  established  then  the  Court  has  to  exercise  its  discretion  in  favour  of  granting  relief  for  specific  performance.

19.    Subsequent  rise  in  price  will  not  be  treated  as  a  hardship  entailing  refusal  of  the  decree  for  specific  performance.  Rise  in  price  is  a  normal  change  of  circumstances and, therefore, on that ground a decree for  specific performance cannot be reversed.

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20.   However, the court may take notice of the fact that  there has been an increase in the price of the property and  considering the other facts and circumstances of the case,  this Court while granting decree for specific performance can  impose  such  condition  which  may  to  some  extent  compensate  the  defendant-owner  of  the  property.   This  aspect of the matter is considered by a three Judge Bench of  this Court in Nirmala Anand  vs.  Advent Corporation (P)   Ltd. and Others, (2002) 8 SCC 146.”

32. In the case of  Vimaleshwar Nagappa Shet  vs.  Noor  

Ahmed  Shariff  and  others,  (2011)  12  SCC  658,  an  

agreement to sell a dwelling house was entered into by some of  

the co-sharers and the matter was ultimately compromised on  

payment of higher price.  On those facts the Court held that  

since the value of the property escalates in urban areas very  

fast,  it  would  not  be  equitable  to  grant  relief  of  specific  

performance after the lapse of a long period of time.  The said  

decision has no application in the present case.

33. Similarly, in the case of  K.S. Vidyanadam (supra), this  

Court  on  facts  found  that  there  was  a  total  lapse  and  

negligence for a period of more than 2½ years from the side of  

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the plaintiff in taking any step to perform his part of contract  

under  the  agreement  and  there  was  gross  violation  of  the  

terms of the agreement which required him to pay the balance,  

purchase the stamp paper and then seek for execution of the  

sale deed.  Further the delay was coupled with substantial rise  

in price, which brought about a situation where it would not  

be equitable to give the relief of  specific performance to the  

plaintiff.  With due respect, this decision is also not applicable  

in the facts of the present case.

34. The equitable discretion to grant or not to grant a relief  

for specific performance also depends upon the conduct of the  

parties.    The  necessary  ingredient  has  to  be  proved  and  

established  by  the  plaintiff  so  that  discretion  would  be  

exercised judiciously in favour of the plaintiff.   At the same  

time, if  the defendant does not come with clean hands and  

suppresses material facts and evidence and misled the Court  

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then such discretion should not be exercised by refusing to  

grant specific performance.

35. In the instant case, as noticed above, although defendant  

no.2 held a registered power of attorney on behalf of defendant  

no.1 to sell and dispose of the property, but the defendants  

not only made a false statement on affidavit that the power of  

attorney  had  authorized  the  second  defendant  only  to  look  

after  and  manage  the  property  but  also  withheld  the  said  

power  of  attorney  from the  Court  in  order  to  misguide  the  

Court  from  truth  of  the  facts.   Further,  by  registered  

agreement the defendants agreed to sell the suit premises after  

receiving advance consideration but they denied the existence  

of  the  agreement  in  their  pleading.   Such  conduct  of  the  

defendants in our opinion, disentitle them to ask the Court for  

exercising  discretion  in  their  favour  by  refusing  to  grant  a  

decree for specific performance.  Further, if  a party to a lis  

does not disclose all material facts truly and fairly but states  

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them in distorted manner and mislead the Court, the Court  

has inherent power to exercise its discretionary jurisdiction in  

order to prevent abuse of the process of law.

36. However, it is noticed from the facts that the registered  

agreement  to  sell  was  executed  between  the  parties  on  

25.6.1979 and the suit for specific performance was filed by  

the plaintiff-appellant in January, 1981.  The suit was decreed  

by  the  trial  court  in  November,  1998.   The  defendant-

respondent challenged the said decree before the High Court  

in April, 1999.  The High Court allowed the appeal by terms of  

judgment  dated  3.2.2004  and  set  aside  the  trial  court’s  

judgment and decree.  The plaintiff-appellant preferred special  

leave petition, which was numbered as Civil Appeal No.6956 of  

2004.  The Civil Appeal was finally decided on 4.2.2011 setting  

aside the High Court’s judgment and remanding the matter  

back  to  the  High  Court  to  decide  the  appeal  afresh.   On  

remand,  the  learned  Single  Judge  in  terms  of  order  dated  

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1.3.2012 allowed the appeal and set aside the judgment and  

decree of  the trial  court.   In this way, the matter remained  

pending before the High Court and this Court for a number of  

years.

37. As held by this Court time and again, efflux of time and  

escalation of price of the property by itself cannot be a valid  

ground to  deny the  relief  of  specific  performance.   But  the  

Court  in  its  discretion  may  impose  reasonable  conditions  

including payment of additional amount to the vendor.  It is  

equally  well  settled  that  the  plaintiff  is  not  to  be  denied  

specific performance only on account of phenomenal increase  

of price during the pendency of litigation.

38. The  defendant-respondent  alternatively  pleaded  in  the  

written statement that even at the relevant time the price of  

the suit property was Rs.3,00,000/- when the said agreement  

was executed for Rs.40,000/- only.  But on the other hand it  

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has come in evidence that against Rs.40,000/-, the plaintiff-

appellant has paid a total amount of Rs.65,000/-.

39. Be that as it may, in the facts and circumstances of the  

case and considering the phenomenal increase in price during  

the period the matter remained pending in different courts, we  

are  of  the  considered  opinion  that  impugned  order  under  

appeal  be set aside but with a condition imposed upon the  

appellant (plaintiff)  to pay a sum of Rs.15,00,000/- (Rupees  

Fifteen Lacs) in addition to the amount already paid by the  

appellant  to  the  respondent.   On  deposit  in  trial  court  of  

aforesaid  amount  by  the  appellant,  for  payment  to  the  

respondent, within three months from today, the respondent  

shall  execute  and  register  the  sale  deed  in  favour  of  the  

plaintiff  in  respect  of  the  suit  property.   In  the  event  the  

aforesaid condition of deposit of Rs.15 lacs is fulfilled within  

the  time  stipulated  hereinabove  but  the  defendant  fails  to  

comply with the direction, then the appellant shall be entitled  

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to  execute  the  decree  in  accordance  with  the  procedure  

provided in law.

40. In  the  result,  this  appeal  is  allowed.   The  impugned  

judgment passed by the High Court is set aside and decree of  

the  trial  court  is  affirmed  with  the  conditions  imposed  as  

indicated hereinabove.  There shall be no order as to costs.

…………………………….J. [ M.Y. Eqbal ]  

.…………………………….J [Shiva Kirti Singh]

New Delhi October 29, 2014   

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