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 54. 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 6aforesaid 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 7specific 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 8mean 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 9performance. 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 10V,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 12of 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 13be 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 14to 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 15because 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 16forward 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 17immune 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 18perform 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 19enforced 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