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REPORTABLE

    IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.9047 OF 2014 (Arising out of Special Leave Petition (Civil) No.2271 of 2012)

K. Prakash …Appellant (s)

                Versus

B.R. Sampath Kumar … Respondent(s)

JUDGMENT

M.Y. Eqbal, J.:

  Leave granted.

2. This  appeal  by  special  leave  is  directed  against  the  

judgment  and  order  dated 23.8.2011  passed by  the  High  

Court of Karnataka whereby Regular First Appeal No.396 of  

2007 of the respondent was allowed, reversing the judgment  

of  the  trial  court  and  dismissing  the  suit  for  specific  

performance  of  the  agreement  filed  by  the  plaintiff-

appellant.

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2. The facts of the case lie in a narrow compass.

3. All disputes pertain to a self acquired property of the  

father of the respondent.  The respondent’s father had four  

sons and three daughters.  On 31.7.1988, transfer of Khata  

was executed by all brothers and sisters in the name of the  

respondent.   After  the  demise  of  their  parents,  partition  

seems to have taken place on 14.12.2000 among brothers  

and sisters and the property in question is said to have fallen  

to the share of defendant, who was required to pay a sum of  

Rs.1,25,000/- to each of the brothers and sisters in lieu of  

their  shares  in  the  suit  house.   The  plaintiff  had  paid  

Rs.1,25,000/- to all  his brothers and sisters except brother  

Selva Pillai.

4.  The respondent herein executed an Agreement for Sale  

in favour of the appellant on 15.12.2003 agreeing to sell the  

schedule  property  for  a  total  sale  consideration  of  

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Rs.16,10,000/-.   The  schedule  property  is  located  at  

Bangalore, admeasuring 30 x 45 feet with built up area of  

1700 sq.ft., consisting of ground floor and first floor including  

out house.  The ground floor is occupied by the respondent  

and  the  first  floor  is  occupied  by  the  appellant.  as  a  

mortgagee.  The out-house is occupied by the brother of the  

defendant-respondent namely Sheshadri (as mortgagee).  It  

is relevant to note that an amount of Rs.3,75,000/- was paid  

by  the  appellant  to  the  respondent  as  requested  by  the  

respondent and Sheshadri, who is occupying the  out-house  

portion, has paid Rs.1,65,000/- as a mortgage consideration  

to the respondent while occupying the house.  Agreement  

further reveals that the aforesaid amounts shall be treated  

as advance amount received by the respondent under the  

agreement of sale.  The understanding between the parties  

is that the mortgage consideration need not be repaid by the  

respondent to the mortgagees including Sheshadri and his  

mortgage  consideration  will  be  repaid  by  the  prospective  

vendee i.e. the appellant.  However, on the date of execution  

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of sale agreement, only a sum of Rs.5,000/- was paid by the  

appellant  to  the  respondent.   Thus,  in  all  a  sum  of  

Rs.5,45,000/-  is  said  to  have  been paid  by  the  appellant.  

The  plaintiff  could  raise  loan  of  Rs.3  lakh  by  securing  

property. The remaining sale consideration of Rs.7,65,000/-  

was payable to the respondent within one year from the date  

of the agreement,  and in case respondent fails  to comply  

with any of the conditions in the agreement, he would repay  

double the amount i.e. Rs.10,90,000/- to the appellant.

5. Although  prescribed  time  was  one  year,  litigation  

seems  to  have  started  between  the  parties  within  three  

months.  Repeated complaints were filed by the appellant  

against  the  respondent  before the police authorities.    At  

last, appellant-plaintiff moved a suit on 9.7.2004 praying for  

a  decree  of  specific  performance  on  the  ground  that  the  

respondent-defendant has denied the execution of the sale  

deed.   The sum and substance of  the  appellant-plaintiff’s  

case is that the defendant-respondent has failed to perform  

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his  part  of  the contract  though the appellant-plaintiff  was  

ready and willing to perform his part of the contract.

6. The  defendant-respondent  denying  Agreement  Ex.P1  

pleaded in his written statement that there being difference  

of opinion between himself and his brothers, he was in highly  

disturbed  state  of  mind  and  when  he  approached  the  

appellant  for  suggestion  and  help,  appellant  took  his  

signature on the alleged agreement of sale and he signed it  

since he had implicit faith in the appellant.  The appellant-

plaintiff  had  assured  that  B.R.  Sheshadri  -  brother  of  the  

respondent-defendant,  who  was  living  in  the  out-house,  

would  be  made  to  vacate  the  premises  in  the  guise  of  

interest being created in favour of appellant in the property.  

It  has  also  been  contended  that  the  respondent  had  no  

intention  to  execute  the  agreement  of  sale  or  to  sell  the  

property and the agreement was entered into only for the  

purpose  of  securing  the  loan  and  the  property  was  

mortgaged as a security for the loan.   

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7. After  hearing argument on both sides,  the trial  court  

decreed the suit  in favour of  the plaintiff-appellant  with a  

direction  to  the  defendant-respondent  to  execute  the  

absolute sale deed in  favour  of  the plaintiff,  free from all  

claims  and  encumbrances,  by  receiving  the  balance  

consideration of Rs.10,65,000/- and to hand over the vacant  

and peaceful possession of the suit Schedule Property to the  

plaintiff.   Aggrieved  by  the  decision,  the  defendant-

respondent preferred an appeal before the High Court, which  

passed the impugned order setting aside the decree of the  

trial court and dismissing the suit for specific performance.  

Hence, this appeal by special leave by the plaintiff.

8. Mr. Sanjay Parikh, learned counsel appearing on behalf  

of the appellant contended that instead of adverting to and  

re-appreciating the evidence on record, the High Court erred  

in  arriving  at  the  findings  based  on  conjectures  and  

surmises.   The  appellant-plaintiff  has  complied  with  the  

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provisions  of  Section  16(c)  of  the  Specific  Relief  Act  by  

establishing  his  willingness  to  perform  his  part  of  the  

contract whereas the respondent-defendant failed to do so.  

It is further contended that the respondent has admitted by  

way  of  affidavit  dated  10.10.2006  that  he  executed  the  

Agreement of sale dated 15.12.2003 and also by letter dated  

21.1.2004 further admitted that he has executed aforesaid  

agreement  and  he  had  already  received  a  sum  of  

Rs.5,45,000/-  as  part  payment  of  the  total  sale  

consideration.   At  the instance of  appellant,  on 16.2.2004  

Syndicate Bank issued two cheques one for Rs.10,65,000/- in  

favour  of  the respondent  towards balance amount  of  sale  

consideration and another for Rs.1,19,840/- in favour of Sub-

Registrar,  Rajajinagar,  Bangalore  for  payment  of  the  

registration charges of the said sale deed.  As contended, on  

failure  of  the  respondent  to  reply  legal  notice  of  the  

appellant  and  execute  the  sale  deed  in  favour  of  the  

appellant,  the  appellant  had  to  move  a  suit  for  relief  of  

specific performance directing the respondent to receive the  

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balance sale consideration to execute an absolute sale deed  

in  favour  of  the  appellant.   Learned  counsel  drew  our  

attention to the exhibits and the evidence of the defendant-

respondent  and  submitted  that  the  appellate  court  has  

committed serious illegality in ignoring these materials and  

reversed the finding of the trial court.

9. Per  contra,  Mr.  Vishwanath  Shetty,  learned  senior  

counsel appearing on behalf of respondent, submitted that  

taking advantage of financial crises and disturbed state of  

mind  of  the  respondent,  the  appellant  suggested  him  to  

execute  an  agreement  of  sale  and  without  revealing  its  

contents  took his  signature on the agreement,  which was  

made only for nominal purpose and he had no intention to  

sell the property.  It is further contended that the appellant  

had concocted and fabricated the agreement. It is alleged by  

the respondent that since appellant did not perform his part  

of  the  contract,  the  entire  alleged  agreement  stood  

cancelled.  Prevailing circumstances had forced respondent  

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to write aforesaid letter dated 21.1.2004 calling appellant to  

pay the entire amount.  Alleged agreement and letter were  

created by the appellant under suspicious circumstances and  

mental pressure of the defendant-respondent, and as such,  

they are not legally enforceable for a decree under Section  

16(c) read with Section 20 of the Specific Relief Act, 1963.  

The High Court  has  held  that  there  was  payment  of  only  

Rs.5000/-  to  the  defendant  as  against  the  claim  of  the  

plaintiff that he has paid a sum of Rs.5,45,000/- under Ex.P1  

and  P2.   It  has  been  further  contended  on  behalf  of  the  

respondent that the market value of the property in the year  

2003  in  Bangalore  was  much  more  to  the  consideration  

amount contained in Ex. P1 and P2.  The whole transaction  

was nothing but farce.  Respondent contends that taking into  

consideration  all  aspects  of  the  matter,  the  High Court  is  

right in reversing the judgment of the trial court, which had  

ignored the material evidence on record with regard to the  

conduct of the plaintiff-appellant.  

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10. While deciding the issue as to whether the agreement  

dated 15.12.2003 was executed by the defendant in favour  

of the plaintiff-appellant, the trial court has gone through the  

pleading and evidence and discussed the matter in detail.  

The  trial  court  found  that  after  the  agreement  executed  

between  the  parties  on  15.12.2003  the  defendant-

respondent issued letter dated 21.1.2004 calling upon the  

plaintiff to get ready with the entire balance amount on or  

before  15.4.2004  and also  mentioned that  in  default,  the  

agreement  dated  15.12.2003 will stand cancelled and the  

advance  amount  shall  be  forfeited.  The trial  court  further  

found that the plaintiff had paid an amount of Rs. 3,75,000/-  

to  the  defendant  for  the  property  in  occupation  of  the  

plaintiff  taken  on  lease  and  the  defendant  in  cross  

examination had admitted that the plaintiff occupied the first  

floor  as  mortgagee  and  that  the  plaintiff  has  paid  the  

amount of  Rs. 3,75,000/- (exhibit P-3). The trial court further  

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found that  the defendant  was examined as  DW-1 and he  

admitted the signature of himself, his wife and signature of  

plaintiff.  He further admitted in cross examination that he  

had read the papers and signed the same.   The defendant  

also  handed  over  copies  of  the  title  deeds  and  the  

encumbrance certificate to the plaintiff on lease basis and  

also  Exhibit  P-1  and  P-2,  the  trial  court  came  to  the  

conclusion that the defendant entered into an agreement of  

sale with the plaintiff for a consideration of Rs. 16,10,000/-  

and  that  the  amount  of  Rs.  5,45,000/-  was  paid  as  an  

advance towards the sale of the said property.  Further the  

defendant (DW-1) admitted the receipt of the legal  notice  

dated 12.3.2004 (exhibit P-3) but he did not reply the said  

notice.

11. The trial court also discussed the defence taken by the  

defendant during cross examination that the  suit property  

has  fallen  to  the  share  of  the  defendant  and that  all  his  

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brothers and sisters are residing separately.  The trial court,  

therefore,  came  to  the  conclusion  that  there  is  a  valid  

agreement  to  sell  the  suit  property  executed  by  the  

defendant in favour of the plaintiff on receipt of the advance  

consideration.

12. The High Court has taken a very peculiar view that the  

plaintiff-appellant filed the suit which was premature.  For  

better  appreciation,  the  relevant  portion  of  para  8  of  the  

judgment  passed  by  the  High  Court  is  extracted  

hereinbelow:-

 “It  is  not  in  dispute that  the agreement is  dated 15.12.2003.  Under the agreement, both  the  parties  have  agreed  that  the  sale  deed  should be executed within one year from that  day, that is on or before  15.12.2004.  But the  suit is filed on 9.7.2004, that is within about 7  months  from  the  date  of  the  agreement.  Absolutely,  no reasons are forthcoming as  to  why  the  suit  was  filed  prematurely.   In  the  meanwhile, the plaintiff approached the Police  for enforcement  of the contract.  The same is  clear  in  the  matter  on  record  Ex.P.11  dated  08.2.2004  is  the  complaint  lodged  by  the  plaintiff  before  the  Deputy  Police  Commissioner.  In the said complaint,  he has  clearly  stated  that  though  the  defendant  agreed for selling his property on  15.12.2003,  the plaintiff  has not come forward to execute  the sale deed and that the plaintiff  has been  

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delaying the execution of sale deed since four  days prior to the filing of the complaint.  The  plaintiff  requested  the  Deputy  Police  Commissioner to call the defendant and to take  action  by  directing  him  to  execute  the  sale  deed as agreed.  He also sought for protection  by filing the said complaint.

Ex.P.12 is the complaint dated 3.3.2004  filed  by  the  plaintiff  before  the  Police  Commissioner,  Bangalore  city.   In  the  said  complaint  also,  the  plaintiff  has  alleged  that  defendant is refusing to execute the sale deed  in  his  favour  and  that  therefore,  the  Commissioner should  intervene in the manner  for getting the sale deed executed in favour of  the plaintiff.

Ex.P.13 is the complaint dated 11.4.2004  filed by the plaintiff before the Police Inspector,  Subramanyanagar  Police  Station,  Bangalore  (subsequently  police  station).   In  the  said  complaint,  he has stated that  defendant  and  his family members have threatened to kill the  plaintiff and his family members and therefore,  action should be taken against the4 defendant.  However,  Inspector  of  Police  has  issued  an  endorsement on 11.3.2004, as per Ex.P.14 to  the effect that dispute between the parties is of  civil nature and the complainant was directed  to  get  his  grievances  redressed  before  the  jurisdictional  Civil  Court.   Ex.P.15  is  another  complaint  of  similar  nature.   Ex.P.16  is  an  endorsement issued by the Police officer to the  wife of the complainant intimating her that the  complaint  lodged  by  her  on  12.3.2004,  is  received  and  for  any  grievance,  she  can  approach the Subramanyanagar Police Station.  Further, in Ex.P.17, the Inspector of Police has  intimated the plaintiff  that the defendant has  denied the agreement of sale and that he had  signed  the  sale  agreement  under  mental  pressure.   Again  by  issuing  such  an  endorsement,  the  Inspector  has  directed  the  

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plaintiff to get his grievances redressed before  the  Civil  Court.  Cr.P.C.107  proceedings  were  initiated  before  the  Tehsildar,  Bangalore,  against  the  parties  as  is  clear  from Ex.P.18.  based  on  the  complaints,  two  charge  sheets  were  lodged  against  the  defendant  as  per  Ex.P.19  and  21;  the  same  are  pending  consideration before the Criminal Court.  These  facts clearly go to show that the plaintiff  has  approached  the  police  repeatedly  by  making  one or the other allegations that too within the  span of 2 to 4 months of the agreement.  He  has  approached  the  Commissioner  of  Police  and  Deputy  Commissioner  of  police  seeking  their interference in the matter for getting the  sale deed executed in his favour.”

13. The  High  Court  further  held  that  in  the  agreement  

(Exhibit P-1) the parties have agreed that if the sale deed  

could not be executed by the defendant, he will repay a sum  

of Rs,. 10,90,000/-, According to the High Court, the recital in  

the  agreement  shows   that  it  was  not  executed  by  the  

defendant with free mind and volition rather he was under  

pressure while executing those documents.   

14. We  have  given  our  thoughtful  consideration  in  the  

matter and perused the pleading and evidence.  We are of  

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the view that the High Court has not approached the issue in  

its right perspective and has committed serious error of law  

in  holding  that  the  agreement  was  executed  by  the  

defendant without free mind and volition and under some  

pressure.   The  agreement  was  executed  on  15.12.2003  

wherein it has been mentioned that the total consideration  

amount was 16,10,000/- and out of that part consideration of  

sum of Rs. 5,45,000/- was paid.  The said agreement was  

followed by another letter dated 21.1.2004, executed by the  

respondent,  the  contents  whereof  are  reproduced  herein-

below:-

                     “21.01.2004 “That on this 22nd day of January, 2004, I have  executed the agreement of  sale in favour of  Sri K.Prakash, in respect of the House bearing  No.2558, 11th Main Road, Subramanyanagara,  Bangalore-560 010, to sell the same for a total  sale  consideration  of  Rs.16,10,000/-  (Rupees  Sixteen Lakhs Ten thousand only). In all I have  received a sum of Rs.5,45,000/- (Rupees Five  Lakhs  Forty  Five  Thousand  only)  from  K.  Prakash and the balance sale consideration to  be  paid  on  or  before  15.04.2004  evening,  failing to pay the balance sale consideration as  per  the  agreement  dated  15.12.2004.   This  Agreement stands cancel. I agree for the same.

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Sd/- Sd/- (Sampath Kumar)                              Vendor (K.Prakash)

(Purchaser) Sd/- (Kanthamani)

WITNESSES: WITNESSES   Sd/- 1) Sd/-   Sd/- 2)  Sd/-   Sd/- 3)   Sd/-”

15. Indisputably,  remedy  for  specific  performance  is  an  

equitable  remedy.   The  Court  while  granting  relief  for  

specific  performance  exercise  discretionary  jurisdiction.  

Section 20 of the Act specifically provides that the court’s  

jurisdiction  to  grant  decree  of  specific  performance  is  

discretionary but not arbitrary.  Discretion must be exercised  

in  accordance  with  the  sound  and  reasonable  judicial  

principles.

16. 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 discretion which is exercised here, is to  

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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”

The  Court  of  Chancery  in  Attorney  General   vs.  

Wheat [(1759) 1 Eden 177; 28 ER 652] followed the Rooke’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.  This description is  

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

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  

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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.

18.     Mr. Shetty, lastly submitted that  grant of decree for  

specific performance in favour of the appellant will cause a  

great hardship for the reason not only because of the lesser  

price shown in the agreement but also because of the rise in  

price which have been increased ten times the price agreed  

between the parties.

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, where this Court  

held :-

 “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  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  

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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.”

21.      As discussed above the agreement was entered into  

between the parties in 2003 for sale of the property for a  

total  consideration  of  Rs.16,10,000/-.   Ten  years  have  

passed by and now the price of the property in that area  

where it  situates has increased by not less than five times.  

Keeping in mind the factual position we are of the view that  

the  appellant  should  pay  a  total  consideration  of  Rs.25  

lakhs, being the price for the said property.

22.    We, therefore, allow this appeal and set aside the  

judgment and order passed by the High Court and restore  

the  judgment  and  decree  of  the  trial  court  with  the  

modification that on payment of Rs.25 lakhs, less already  

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paid by the plaintiff,  the defendant-owner shall  execute a  

registered sale deed within a period of three months from  

today.

………………………….J. [ M.Y. Eqbal ]

…………………………….J [Pinaki Chandra Ghose]

New Delhi September 22, 2014

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