High Court Punjab-Haryana High Court

Gurdev Kaur vs Inderjit Singh on 13 January, 2009

Punjab-Haryana High Court
Gurdev Kaur vs Inderjit Singh on 13 January, 2009
RSA No.2136 of 2007                                           1



      IN THE HIGH COURT OF PUNJAB AND HARYANA AT
                     CHANDIGARH




                                      RSA No.2136 of 2007 (O&M)

                                      Date of Decision: 13.01.2009




Gurdev Kaur                                             ..Appellant

                         Vs.

Inderjit Singh                                          ..Respondent




Coram: Hon'ble Mr. Justice Vinod K.Sharma




Present:    Mr.V.K.Jindal, Advocate,
            for the appellant.

            Mr.Puneet Bali, Advocate,
            for the respondent.

                   ---

      1.    Whether Reporters of Local Newspapers may
            be allowed to see the judgment?

       2.     To be referred to the Reporters or not?

       3.     Whether the judgment should be reported in
              Digest?

               ---
Vinod K.Sharma,J. (Oral)

By way of this regular second appeal challenge is to the
RSA No.2136 of 2007 2

judgments and decree dated 13.9.2005 and 17.1.2007 passed by the learned

courts below decreeing the suit for possession by way of specific

performance of an agreement to sell dated 1.4.1999.

The plaintiff/respondent brought a suit for specific performance

for the agreement to sell dated 1.4.1999 executed by Gurdev Kaur

regarding the land measuring 9 kanals 7 marlas for a total consideration of

Rs.3.5 lacs as detailed in the head-note of the plaint or in the alternative for

recovery of Rs.5 lacs.

The appellant/defendant being owner in possession of the land

in dispute entered into an agreement to sell dated 1.4.1999 regarding the suit

land. At the time of agreement the appellant was paid a sum of Rs.2.50 lacs

as part sale consideration. It was agreed that the sale deed would be

executed on or before 31.3.2000 on the receipt of balance sale consideration

from the plaintiff. One of the stipulations in the agreement was that in case

the defendant failed to perform her part of the agreement she would be

liable to pay double the amount of earnest money i.e. Rs.5 lacs.

The plaintiff/respondent claimed that he was always ready and

willing to perform his part of agreement. However, the defendant resiled

from the agreement in question by refusing to perform her part of the

contract without any rhyme or reason. It was also the case of the plaintiff

that notice dated 16.3.2000 was issued by the defendant-appellant taking a

plea that the agreement was forged. Notice was replied. The plaintiff

appeared in the office of Sub Registrar, Anandpur Sahib on 31.3.2000 i.e.

the date stipulated for execution of the sale deed. He claimed to have gone
RSA No.2136 of 2007 3

there along with balance sale consideration and other expenses to perform

his part of the contract. However, defendant never turned up to perform her

part of the contract. The plaintiff/respondent got himself marked present

before the Sub Registrar, Anandpur Sahib. The case of the plaintiff was that,

as the defendant failed to execute the sale deed in his favour the suit for

specific performance was filed.

The suit was contested by the defendant wherein a preliminary

objection was taken that the suit was not maintainable. Defendant-appellant

claimed that she never executed any agreement to sell in favour of the

plaintiff. She also denied the receipt of Rs.2.5 lacs as earnest money. A plea

was taken that the agreement of sale was false and fabricated document

and was prepared by the plaintiff/respondent in connivance with the scribe

and got signed by the defendant under misrepresentation.

It was claimed that husband of the appellant namely Kuldip

Singh is owner of 3 trucks and has landed property of about 12 acres and

also a house in Shahpur Bela. Sons of the appellant-defendant are drivers

who ply their trucks. It was claimed that one of the trucks belonging to the

husband of the defendant-appellant was involved in a case registered at

Police Station, Biwara on 27.3.1999. Kuldip Singh was said to have been

told about the involvement of truck by the driver. It was claimed that police

of Police Station, Biwara demanded a sum of Rs.25,000/- to get the truck

released. Satinder Singh was contacted who helped in the matter by

arranging a sum of Rs.25,000/-who was running a shop at Anandpur Sahib.

He was also a friend of the plaintiff. It was claimed that the plaintiff agreed
RSA No.2136 of 2007 4

to arrange Rs.25,000/- on the condition that interest at the rate of 20 per cent

per annum would be paid on the said amount. It was claimed that the land in

dispute was given as a security and thus, it was claimed that the

defendant/appellant was made to sign the papers in the Tehsil Office.

Writing was not done in the presence of the defendant-appellant nor the

same was read out to her nor any payment was made. Thus, it was claimed

that in fact no agreement to sell was executed between the parties.

On the defence raised above it was claimed that whole

transaction was suspicious, therefore suit deserves to be dismissed.

In the replication pleas raised in the plaint were reiterated and

that of the written statement were denied.

On the pleading of the parties the learned trial court was

pleased to frame the following issues:-

1. Whether the defendant has agreed to sell the suit property

vide agreement dated 1.4.1999 and received

Rs.2,50,000/-? OPP

1-A Whether the agreement to sell dated 1.4.1999 is false,

forged and fabricated document and is a result of

misrepresentation? OPD

2. Whether the plaintiff is still ready and willing to perform

his part of agreement? OPP

3. Whether the plaintiff is entitled to the relief of possession

by way of specific performance? If issue No.1 and 2 are

proved? OPP
RSA No.2136 of 2007 5

4. Whether the plaintiff is entitled to alternative relief of

recovery of Rs.5 lacs along with interest? OPP

5. Whether the suit is not maintainable? OPD

6. Relief.

Learned courts below on appreciation of evidence did not

believe the case set up by the appellant/defendant and decided issue No.1 in

favour of the plaintiff/respondent. Issues No.1-A and 2 were also decided in

favour of the plaintiff/respondent and against the defendant/appellant.

On issue No.3, it was held that the plaintiff/respondent was

entitled to the relief of possession by way of specific performance. In view

of the findings on issue No.3, it was held that the plaintiff was not entitled

to the alternative relief. Thus, issue No.4 was also decided against the

appellant/defendant and in view of the findings referred to above the suit

was decreed.

Appeal filed against the judgment and decree of the learned

trial court also failed.

Mr.V.K.Jindal, learned counsel appearing on behalf of the

appellant while challenging the judgment and decree passed by the learned

courts below referred to the following stipulation in the agreement:-

” If I failed to execute the sale deed registered within the

period fixed above, in favour of above mentioned Inderjit

Singh, then I, apart from the amount of earnest money, will pay

Rs.2,50,000/- on account of compensation i.e. in total I will

return Rs.5,00,000/- to Inderjit Singh. For the payment of
RSA No.2136 of 2007 6

aforesaid amount, I and my entire moveable and immovable

property stands guarantee.”

to contend that once the parties have stipulated that in the event of failure to

execute the agreement the plaintiff/respondent shall be entitled to a sum of

Rs.5 lacs, the learned courts were not justified in decreeing the suit for

specific performance. Reference was made to Sections 10 and 14 of the

Specific Relief Act which provide that a specific performance of the

contract cannot be ordered when the party can be compensated in terms of

money.

However, this plea of the learned counsel for the appellant

cannot be accepted as explanation I to Section 10 provides that breach of

contract to transfer immovable property cannot be adequately relieved by

compensation in money.

Similarly, section 14 of the Specific Relief Act can be of no

help to the appellant/defendant as the compensation in money cannot be

said to be adequate in view of explanation I to Section 10 of the Act.

Learned counsel for the appellant thereafter contended that as

the plaintiff/respondent had himself claimed alternative relief of damages,

the decree of specific performance would be inequitable and unjust.

In support of this contention learned counsel for the appellant

placed reliance on the judgment of Hon’ble Supreme Court in the case of

Kansi Ram Vs. Om Parkash Jawal and others AIR 1996 SC 2150,

wherein Hon’ble Supreme Court was pleased to lay down as under:-

“5. ….. But it is equally settled law that granting decree for
RSA No.2136 of 2007 7

specific performance of a contract of immovable property is

not automatic. It is one of the discretion to be exercised on

sound principles. When the Court gets into equity jurisdiction,it

would be guided by justice, equity, good conscience and

fairness to both the parties. Considered from this perspective, in

view of the fact that the respondent himself had claimed

alternative relief for damages, we think that the Courts would

have been well justified in granting alternative decree for

damages, instead of ordering specific performance which

would be unrealistic and unfair. Under these circumstances,we

hold that the decree for specific performance is inequitable and

unjust to the appellant.”

However, Mr. Puneet Bali, learned counsel appearing on behalf

of the respondent controverted the contention raised by the learned counsel

for the appellant by placing reliance on the judgment of this court in the

case of Mohini Kapoor Vs. Deepak Uppal 2006 (1) RCR (Civil) 807,

wherein this court had upheld the order passed by the learned courts below

ordering specific performance of the contract wherein alternative relief of

compensation was also claimed, by observing as under:-

” The argument based on the aforementioned Clause 2 has

also been rejected by the learned lower Appellate Court by

observing that merely because prayer for the alternative relief

of refunding double the amount of earnest money has been

made as per the terms of the agreement would not necessarily
RSA No.2136 of 2007 8

mean that the suit of the plaintiff-respondent for specific

performance of agreement was to be dismissed by granting him

alternative relief of damages to pay double the amount of

earnest money. The learned lower Appellate Court has placed

reliance on various judgments and has rejected the argument of

the defendant-appellant by observing as under:

“In the present case the respondent-plaintiff has been

ready and willing to perform their part of the contract.

The appellant-defendants had been avoiding performance

thereof. Untenable grounds have been taken by them.

Incorporation of clause of payment of damages, as

has rightly been argued by learned counsel for the

respondent/plaintiffs, even otherwise cannot be

interpreted to refuse specific performance of the

agreement. In case Kapoor Singh Vs. Surinder Singh,

1993 (1) RRR 567: 1993 (1) PLR 499, it was held that

mere mention in the agreement of a sum to be paid as

damages in case of default is no ground to deny the

specific performance of the agreement. It was further

observed that such mention was only made for the

purpose of securing performance. In Sadiz Hussain V.

Anup Singh, AIR 1924 Lahore 151 it was held that

general rule of equity is that if a thing is agreed upon to

be done though there is a penalty annexed to secure its
RSA No.2136 of 2007 9

performance. Yet the very thing itself must be done.

Reference may be made to authority report Hukam

Chand and another V. Nikka Singh and another, 15,

Punjab Record, 1908 wherein it was ruled that party

should not be allowed to evade merely because the

agreement provided a penal clause.

Still in another recent authority reported as

Gurmail Singh and others V. Amrit Singh and others,

2000 (1) RCR (Civil) 70: 1993 (3) PLR 68 (P&H) it

was held that merely because agreement indicated that

the plaintiff would claim double the amount in case of

breach, would not exclude the right of the plaintiff to

enforce the agreement. Support has also been sought

from the authorities reported as Smt.Shakuntla Devi V.

M/s Mohanlal Amrit Raj Jain Market, Pali AIR 1994

(Rajasthan) 259; Ramani Ammnal V.Susilammal,

AIR 1991 Madras 163; Narayan Nagarao V. Amrit

Haribhau, AIR 1957 Bombay 241; Sadiq Hussain V.

Anup Singh, AIR 1924 Lahore 151, Hukam Chand

and another V. Nikka Singh and another, 15 Punjab

Record 1908; V.K.Kandasami Chettiar Vs.

Shanmugha Thevara and another, AIR (36) 1949

Madras 3021; Kirpal Singh Vs. Mst. Kartaro and

others, AIR 1980 Rajasthan 212 and Vairvan
RSA No.2136 of 2007 10

V,K.S.Vidyanandam and others, 1996 (4) LLR 163.

Looking from another angle, relief of specific

performance is to be ordinarily granted and is to be

refused only in exceptional circumstances. In case of

immovable property monetary compensation is not

adequate. Mere mentioning of liquidated damages does

not curtail jurisdiction of the Court to grant relief of

specific performance. Reference may be made to

authority reported as Janga Singh v. Harbans Singh,

1992(1) RRR 566 : 1992 PLJ 7 (P&H); Gurdial Singh

v. Darshan Singh, 1995(3) RRR 508 : 1996(1) PLR 102

(P&H); Anokh Devi v. Trilok Singh, 1996(1) RRR 288 :

1996(1) PLR 372 (P&H); M.L. Devender Singh v. Syed

Khaja, AIR 1973 SC 2452; and Afsar Gujjar v. Barkha

Ram, 1989 PLJ 23 (P&H).

Still further it may be mentioned that in case of

immovable property time is never the essence of the

contract unless so is recited in the contract. Reference

may be made to the authorities reported as Mohammad

Nadir v. Chaudhari Jahangiri Mal and others, AIR

(36) 1949 Lahore 72; Bhagwan Singh v. Teja Singh

alias Teja Ram, 1996(3) LLR 487 (P&H); and, Gur

Akbar Akal Kaur v. Tehal Singh, 1994(1) RRR 225

(P&H) : 1994(1) LLR 581 (P&H).

RSA No.2136 of 2007 11

Thus, plea of learned counsel for the appellants that

sufficient time having elapsed, the specific performance

should be refused, cannot be accepted. The default lies

with the appellants and refusing specific performance

would be amounting to undue enrichment of wrong-

doers.”

Mr. J.K. Sibal, learned Senior counsel has placed

reliance on Clause 2 of the agreement to sell and has argued

that once there is a contract between the parties entered with

their free will giving option to one party to terminate the

contract at any time and without assigning any reason then

such a contract has to be considered as determinable within

the meaning of Section 14(1)(c) of the Specific Relief Act,

1963 (for brevity the ‘Act’). According to the learned

counsel, in such like cases no specific performance of a

contract of sale would be permissible and proper relief of

refunding double the amount of earnest money would alone

be sustainable in law. In support of his submission, learned

counsel has placed reliance on the observation in para Nos.

56 and 57 of the judgment of the Supreme Court in the case

of Her Highness Maharani Shanti Devi P. Gaikwad v.

Savjibhai Haribhai Patel and others, 2001(1) RCR(Rent)

481 (SC) : 2001(2) RCR(Civil) 536 (SC) : (2001)5 SCC

101. Learned counsel has also relied upon another judgment
RSA No.2136 of 2007 12

of the Supreme Court in Dadarao v. Ramrao, (1999)8 SCC

416 and argued that where the agreement itself provided for

contingencies if sellers are refusing to sell and purchases are

refusing to buy by stipulating the refund of earnest money

then there was no obligation to complete the sale transaction

by passing a decree for specific performance. Learned

counsel has then argued that when there is continuous steep

rise in prices of the property in respect of a house located in

an urban area then relief of specific performance of

agreement could be refused by passing a decree for

alternative relief of damages.

Mr. Ashok Aggarwal, learned Senior counsel appearing

for the plaintiff- respondent has argued that the law is well

settled and merely because an alternative plea of refund of

earnest amount and damages has been raised it cannot

constitute a bar to claim a decree for specific performance of

contract. In support of his submission, learned counsel has

placed reliance on the judgment of the Supreme Court in the

case of P.C. Varghese v. Devaki Amma Balambika Devi

and others, 2005(4) RCR(Civil) 469 : (2005)8 SCC 486 and

P.D. Souza v. Shondrilo Naidu, 2004(3) RCR(Civil) 668 :

(2004)6 SCC 649. Learned counsel has then argued that the

agreement of sale by virtue of Clause 2 or any other Clause

would not become a contingent contract which could alone
RSA No.2136 of 2007 13

be performed on the happening of a particular event.

According to the learned counsel, Clause 2 firstly lacks

mutuality and then the relief by filing the suit has been

claimed without any delay. Learned counsel has drawn my

attention to the date of filing the suit which is 18.05.1991

and the date of agreement to sell executed between the

parties on 18.08.1990. There is a stipulation in the agreement

to sell that the balance sale consideration was to be paid by

the plaintiff-respondent to defendant-appellant Nos. 1 and 2

within 30 days from the date of issuance of transfer

permission by defendant- respondent No. 3 and after

obtaining of Income Tax Clearance Certificate from the

concerned Department. There was no communication sent by

the defendant- appellants to the plaintiff-respondent so as to

permit the commencement of period of 30 days. Replying to

the argument of the learned counsel for the defendant-

appellant, Mr. Aggarwal has submitted that continuous steep

rise in prices of property during the pendency of the suit

cannot constitute the sole basis for refusing to grant a decree

for specific performance and grant of the alternative relief of

refund of earnest amount along with damages. Learned

counsel has also submitted that in any case Clause 2 cannot

be interpreted to mean that the defendant-appellant has

arbitrary discretion to refuse performance of the agreement
RSA No.2136 of 2007 14

to sell but the same has been incorporated in order to secure

the performance of agreement to sell. Learned counsel has

also made a reference to the explanation appended to Section

10 and Section 22 of the Act. The last submission made by

the learned counsel is that there are concurrent findings of

fact which do not deserve to be interfered in exercise of

jurisdiction under Section 100 of the Code and that the plea

of determination of contract based on Section 14(1)(c) has

nowhere been raised by the defendant-appellant in the

Courts below. According to the learned counsel, an issue of

the aforementioned plea could have been framed, evidence

could have been led and then finding could have been

recorded and, therefore, such a plea cannot be permitted to

be raised before the High Court in an appeal under Section

100 of the Code.

After hearing the learned counsel for the parties and

perusing the judgments of both the courts below, I am of the

considered view that this appeal does not merit admission

because no substantive question of law requiring

determination by this court is involved. Both the courts

below have concurrently found that the defendant-appellants

have failed to perform their part of the contract whereas the

plaintiff-respondents have always been ready and willing to

perform their part. It has rightly been held that merely
RSA No.2136 of 2007 15

because a clause for payment of damages has been

incorporated in the agreement to sell dated 18.8.1990 would

not constitute a ground to refuse specific performance of the

agreement. It is elementary to point out that a breach of

contract cannot be adequately relieved by compensation in

money. The aforementioned legal position emerges from the

plain language of Explanation (1) of Section 10 and Section

23 of the Act. For the aforementioned purpose, reliance can

be placed on the judgment of the Supreme Court in P.C.

Varghese case (supra). It is also evident that Clause 2 merely

contained sanction for securing the performance of the

agreement to sell as contemplated by Section 23 of the Act.

The aforementioned view is supported by the judgment of

the Supreme Court in the case of Manzoor Ahmed Magray

v. Gulam Hassan Aram and others, 1999(4) RCR(Civil)

597 : AIR 2000 SC 191. It is equally well settled that under

Section 230-A of the Income Tax Act, 1961, clearance

certificate for registration of transfer of property has to be

obtained by the defendant- appellants and an application was

required to be submitted by them. In this regard, reference

may be made to the judgment of Karnataka High Court in the

case of Smt. Fouzia Shahi Nazeer v. B.K. Lingappa and

others, 1990 ITR 342. It has been categorically found by the

courts below that the defendant-appellants did not come
RSA No.2136 of 2007 16

forward to complete the formalities for obtaining transfer

permission letter from HUDA or from the Income Tax

Department. Moreover, both the courts below have exercised

discretion in favour of the plaintiff- respondents by keeping

in view the facts and circumstances of the case and the

aforementioned discretion cannot be interfered with in

exercise of jurisdiction under Section 100 of the Code

because nothing has been shown from the record that there is

any legal infirmity in the application of law or in respect of

finding of fact. It has been repeatedly emphasized by the

Supreme Court that this court in exercise of jurisdiction

under Section 100 of the Code should be extremely slow in

setting aside the findings of fact as the first appellate court is

the final court of fact as well as law. In this regard, reference

may be made to the judgment of the Supreme Court in the

case of Santosh Hazari v. Purushottam Tiwari, 2001(3)

RCR(Civil) 243 : (2001)3 SCC 179. In concluding portion of

para 15 of the judgment their Lordships of have observed as

under :

“We need only remand (remind ?) the first appellate

courts of the additional obligation cast on them by the

scheme of the present Section 100 substituted in the

Code. The first appellate court continues, as before, to

be a final court of facts; pure findings of fact remain
RSA No.2136 of 2007 17

immune from challenge before the High Court in

second appeal. Now the first appellate court is also a

final court of law in the sense that its decision on a

question of law even if erroneous may not be

vulnerable before the High Court in second appeal

because the jurisdiction of the High Court has now

ceased to be available to correct the errors of law or

the erroneous findings of the first appellate court even

on questions of law unless such question of law be a

substantial one.”

Therefore, the appeal does not deserve admission as no

substantial question of law requiring determination by this court

has been raised.

The argument of the learned counsel for the defendant-

appellants placing reliance on Clause 2 would not require any

detailed consideration because such an argument has not been

raised in terms before the courts below. The absence of such an

argument before the courts below would be significant because

it would have required pleadings, framing of issues and

adducing of evidence by the parties. It is no doubt true that such

a course can be adopted even at the stage of second appeal

under Section 100 of the Code, but I do not wish to prefer to

adopt the aforementioned course because there is nothing on

the record to show that there was any intimation refusing to
RSA No.2136 of 2007 18

perform the contract. Therefore, it has as to be concluded that

the contract in terms of Clause 2 in any case had never been

determined. No notice expressing the intention to determine the

contract in terms of Clause 2 has ever been given and therefore,

Section 14(1)(c) of the Act cannot be invoked. It is further

appropriate to mention that the use of expression ‘a contract’

which is in its nature determinable in Clause (C) of sub-section

(1) of Section 14 of the Act would not include in its sweep the

ordinary agreement to sell containing penalty clause which are

aimed at securing the performance of the contract as envisaged

by Section 23 of the Act. Moreover, sub-section (3) of Section

14, has incorporated a non-obstante clause which provides that

notwithstanding anything contained inter alia any clause (C) of

sub-section (1) the court may still enforce specific performance

where the suit is for enforcement of a contract. It appears to me

that the situation contemplated by Section 14(1)(c) is the one

which was available in the case of Indian Oil Corporation

Limited v. Amritsar Gas Service, 1991(1) SCC 533, because in

that case the finding recorded in the award was that the

distributorship agreement was revocable and the same was

admittedly for rendering personal service and in such a situation

Section 14(1)(c) would automatically get attracted. It has

further been made clear that sub-section (1) of Section 14 of the

Act specifies the contracts which cannot be specifically
RSA No.2136 of 2007 19

enforced and one of the type of contract mentioned is which is

in its nature determinable. It is thus evident that Section 14(1) is

attracted to those contracts which cannot be specifically

enforced and it includes a contract which in its nature is

determinable. The aforementioned provision when read with

Explanation (1) of Section 10 then it becomes evident that

breach of a contract to transfer immovable property cannot be

adequately relieved by compensation in money. In other words,

a presumption is available under Explanation (1) of Section 10

that the court must presume that the breach of a contract to

transfer immovable property must be specifically enforced and

the alternative relief of securing compensation in money would

not be adequate. Therefore, on principle as well as on precedent

the legal position is against the defendant-appellants.”

Though the relief of specific performance is a discretionary

relief but it is well settled that normally suit for specific performance is

required to be decreed unless on the facts and circumstances of the case

courts come to the conclusion that it would not be, just, fair and equitable to

grant decree for specific performance by taking into consideration the facts

brought on record, rise in price of the property or any other equitable

consideration.

In the present case, the appellant/defendant neither pleaded nor

proved that the decree of specific performance would be harsh or
RSA No.2136 of 2007 20

inequitable so as to grant a relief against the well settled law that normally

a suit for specific performance is required to be decreed. It is also well

settled that inadequate price fixed in an agreement to sell cannot be a

ground to deny the decree of specific performance unless the price is shown

to be so inadequate to prick the conscience of the court to hold that the

specific performance would be unfair and inequitable.

As already observed above no such plea was raised or proved,

thus, no fault can be found with the judgments and decree passed by the

learned courts below.

The appeal raises no substantial question of law for

consideration by this court as the plea raised by the learned counsel for the

appellant already stands decided by this court in the case of Mohini

Kapoor Vs. Deepak Uppal (supra).

No merit.

Dismissed.

13.01.2009                                         (Vinod K.Sharma)
rp                                                      Judge