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Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURSIDCITION

CIVIL APPEAL NO. 8427 OF 2014

Ramesh Chand (Dead)  through L.Rs. … Appellant

Versus

Asruddin (Dead)  through LRs and another …Respondents

J U D G M E N T

Prafulla C. Pant, J.

This appeal is directed against judgment and order dated

22.01.2014, passed by the High Court of Punjab and Haryana

in Regular Second Appeal No. 1344 of 2011 (O&M) whereby

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said court has dismissed the appeal, and affirmed the decree

passed  by  the  first  appellate  court  regarding  specific

performance  of  contract,  in  a  suit  filed  by  the

plaintiff/respondent No.1.

2. We  have  heard  learned  counsel  for  the  parties  and

perused the papers on record.

3. Brief facts of the case are that plaintiff/respondent No.1

Asaruddin entered into an agreement with defendant No. 1/

appellant  Ramesh  Chand  on  21.06.2004,  whereby  the

appellant  agreed  to  sell  his  land  measuring  12  kanals,  16

marlas, situated in Village Mohammed Nagar, Tehsil Ferozpur

Jhirka,  District  Gurgaon,  to  the  respondent  No.  1  for  an

amount  of  rupees  six  lacs.   An  agreement  for  sale  was

executed  between  the  parties  after  the  appellant  accepted

rupees four lacs as a part of  consideration.   It  was further

agreed between the parties that the land in suit, mortgaged

with  defendant  No.  2/respondent  No.  2  Gurgaon  Gramin

Bank,  Nagina,  would  be  redeemed  by  the  appellant  before

execution  of  the  sale  deed.   It  is  pleaded  by  the

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plaintiff/respondent No.  1 that  he was and is  always ready

and  willing  to  perform  his  part  of  contract.  The

plaintiff/respondent  No.  1  gave  notice  to  the  appellant  to

execute the sale deed on 30.11.2004, and remained present

with the balance amount of consideration in the Office of Sub

Registrar,  Nagina,  and  got  his  presence  marked.   But  the

appellant failed to turn up to execute the sale deed, as agreed

between him and the respondent No. 1.  Hence the suit for

specific performance of contract.

4. The appellant-defendant No.1 contested the suit and filed

the written statement before the trial  court.   He denied the

execution of the agreement dated 21.06.2004 to sell his land.

It is pleaded by the appellant before the trial court that he had

already executed agreement dated 07.05.2004 to sell the land

in  favour  of  one  Pravin  Kumar,  resident  of  Tauru  for  an

amount  of  Rs.7,62,200/-  after  receiving  Rs.1,20,000/-  as

earnest money.  In the circumstances, there was no occasion to

enter into agreement with the respondent No.1 to sell the same

land.  It is further pleaded that since the answering defendant

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was in the need of money, he had taken loan of Rs.1,50,000/-

from the  plaintiff  on  21.06.2004,  on interest  at  the  rate  of

1.5%  per  month.   The  appellant  specifically  denied  having

received  rupees  four  lacs,  as  alleged  by  the  plaintiff.   It  is

further pleaded that when respondent No. 1 made demand for

repayment  of  Rs.1,50,000/-  with  interest,  and  created

pressure,  the  answering  defendant  asked  Pravin  Kumar  to

make payment of Rs.1,80,000/- to the plaintiff.  It is further

alleged that after said payment was made to the plaintiff on

10.11.2005  by  Pravin  Kumar,  the  alleged  agreement  dated

21.06.2004,  which  was  a  kind  of  security,  stood  cancelled.

And respondent No. 1 should have returned the document to

the plaintiff.

5. On the  basis  of  the  pleadings  of  the  parties,  the  Civil

Judge (Jr. Division), Ferozpur Jhirka, framed as many as ten

issues  on  06.09.2005.   After  recording  oral  testimony  of

witnesses  of  the  parties,  and  considering  the  documentary

evidence on record, the trial court came to the conclusion that

it  is not a fit  case for specific performance of contract,  and

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disposed  of  the  suit  with  a  finding  that  the  agreement

executed  between  the  plaintiff  and defendant  No.  1  was  in

substance an agreement of security for repayment of loan and

directed the defendant No.  1 to pay back earnest money of

rupees four lacs with 8% interest per annum from 21.06.2004

till payment is made to the plaintiff.

6. Aggrieved by the decree passed by the trial court, plaintiff

filed  Civil  Appeal  No.  51  of  2010  before  the  first  appellate

court.   After  hearing  the  parties,  the  appellate  court

(Additional  District  Judge,  Nuh)  vide  judgment  and  order

dated 14.02.2011, allowed the appeal, and decreed the suit for

specific performance of contract, directing the defendant No. 1

to  execute  the  sale  deed  in  terms  of  the  agreement  dated

21.06.2004, after accepting balance rupees two lacs from the

plaintiff.   This made defendant No. 1 Ramesh Chand to file

Regular  Second  Appeal  No.  1344  of  2011  before  the  High

Court.  During the Second Appeal, defendant No. 1 appears to

have died, and his legal heirs prosecuted the appeal.   After

hearing  the  parties,  the  High  Court  dismissed  the  appeal

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upholding the order passed by the first appellate court.  Hence

this appeal before us through special leave. During this appeal

the plaintiff/respondent No.1 also expired, and his legal heirs

got substituted.

7. Learned counsel for the appellant argued before us that

the first appellate court and the High Court have erred in law

in  not  considering  the  fact  that  the  appellant  had  already

executed an agreement of sale on 07.05.2004 in favour of one

Pravin  Kumar,  and  the  decree  of  specific  performance  of

contract  in  the  subsequent  agreement,  if  any,  in  favour  of

respondent No.1 was not at all desirable.  On the other hand,

on behalf of respondent No.1 it is contended that he cannot be

denied the fruits  of  decree of  specific  performance after  the

findings  recorded  by  the  first  appellant  court  which  stood

affirmed by the High Court.

8. Section 20 of Specific Relief Act, 1963, provides that 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.  However, the discretion of the court is not

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arbitrary  but  sound  and  reasonable,  guided  by  judicial

principles.  Sub-section (2) of Section 20 of the Act provides

the three situations in which the court may exercise discretion

not to decree specific performance.  One of such situation is

contained in clause (a) of sub-section (2) of the Section which

provides that 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 or such that the contract though not voidable, gives the

plaintiff an unfair advantage over the defendant, the decree of

specific  performance  need  not  be  passed.  It  is  pertinent  to

mention here that  in the present case,  though execution of

agreement  dated  21.06.2004 between the  parties  is  proved,

but it is no where pleaded or proved by the plaintiff that he got

redeemed the mortgaged land in favour of defendant No. 2 in

terms of the agreement, nor is it specifically pleaded that he

was ready and willing to get the property redeemed from the

mortgage.

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9. In the above facts and circumstances of the case and the

judicial principle discussed above, we are of the opinion that it

is  a  fit  case  where  instead  of  granting  decree  of  specific

performance, the plaintiff can be compensated by directing the

appellant to pay a reasonable and sufficient amount to him.

We are of the view that mere refund of rupees four lacs with

interest at the rate of 8% per annum, as directed by the trial

court, would be highly insufficient.  In our considered opinion,

it would be just and appropriate to direct the appellants (Legal

Representatives of original defendant No.1, since died) to repay

rupees four  lacs along with interest  at  the rate  of  18% per

annum  from  21.06.2004  till  date  within  a  period  of  three

months  from  today  to  the  L.Rs.  of  respondent  No.  1

(mentioned in I.A. No. ___ of 2015 dated 07.09.2015).  If they

do so, the decree of specific performance shall stand set aside.

We clarify that if the amount is not paid or deposited before

the trial court in favour of the L.Rs. of respondent No.1 within

a  period  of  three  months,  as  directed  above,  the  decree  of

specific  performance  shall  stand  affirmed.  We  order

accordingly.

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10. The appeal stands disposed of.  Pending I.A(s) also stand

disposed of.  No order as to costs.

..…………………..…………J. [Dipak Misra]

…………………..……………J. [Prafulla C. Pant]

New Delhi; October 06, 2015.