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Sunday, May 19, 2013

SPECIFIC PERFORMANCE OF AGREEMENT OF SALE = Whether the agreement is barred by Section 4 of the Delhi Land (Restriction of Transfer) Act, 1972 and is void under section 23 of the Contract Act. (PO3 WS).= appellant had served a legal notice upon the respondents, in paras 5 and 6 whereof it was alleged against the respondents that they had suppressed from the appellant the fact that an award had been published with respect to the subject lands. Thereafter, in para 7 of the notice, it was asserted as under:- That apart from above, by virtue of Section 3 & 4 of the Delhi Lands (Restrictions on Transfer) Act, 1972, there is prohibition on transfer of such lands, which has been acquired by the Central Government under the provision of the Land Acquisition Act, 1894, by sale, mortgage, gift, lease or otherwise. Thus, you have also committed an offence u/s 3 & 4 of the said Act and you have made yourself liable to be prosecuted u/s 9 of the Delhi Lands (Restrictions on Transfer) Act 1972." 5. It does not lie in the mouth of the appellant to now urge to the contrary.- The same is that it is not obligatory for a Court to decree specific performance of a contract for sale of immovable property merely because it would be legally permissible to do so.


ITEM NO.31 COURT NO.3 SECTION XIV


S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS

Petition(s) for Special Leave to Appeal (Civil) No. 4628/2013

(From the judgment and order dated 31.8.2012 in RFA No.75/2012 of the High
Court of Delhi at New Delhi)

Jinesh Kumar Jain ...Petitioner(s)

versus

Iris Paintal and others ...Respondent(s)

(With prayer for interim relief)

Date: 08/02/2013 This petition was called on for hearing today.

CORAM:
HON'BLE MR. JUSTICE G.S. SINGHVI
HON'BLE MR. JUSTICE DIPAK MISRA

For Petitioner(s) Mr. B.P. Aggarwal, Adv.
Mr. Om Prakash Mishra, Adv.
Mr. Ghan Shyam Vasisht, Adv.
For Respondent(s)

UPON hearing counsel the Court made the following
O R D E R

Having failed to convince the Division Bench of the Delhi High
Court to set aside the judgment and decree dated 10.7.2010 passed by the
learned Single Judge dismissing the suit filed by him for specific
performance of an agreement for sale dated 26.9.1988, the petitioner has
filed this petition.

In the suit filed by him, 
the petitioner claimed that
respondent Nos. 1 to 4 had agreed to sell 4.85 acres land situated in
Village Chhatterpur, Tehsil Mehrauli, New Delhi for a total consideration
of Rs.48,50,000/-;
 that he had paid Rs.4,50,000/- as advance; that the sale
deed was to be executed within 45 days,
 but respondent Nos. 1 to 4 failed
to secure the required permissions and execute the sale deed.

In the two separate written statements filed by them,
respondent Nos. 1 to 4 pleaded that 
the suit was liable to be dismissed
because the agreement for sale was executed in violation of the prohibition contained in the Delhi Lands (Restrictions on Transfer) Act, 1972 (for short, 'the 1972 Act'). 
They further pleaded that 
the petitioner did not
have the sale consideration and he was not ready and willing to perform his
part of the agreement within the stipulated time.

On the pleadings of the parties, the learned Single Judge
framed the following issues on three separate dates, i.e., 11.4.1991,
12.12.1995 and 26.09.2001:

"11.4.1991


1. Whether the agreement is not enforceable as the provisions of
section 269 UC of Income Tax Act were not complied with (PO2 WS)





2. Whether the agreement is barred by Section 4 of the Delhi
Land (Restriction of Transfer) Act, 1972 and is void under
section 23 of the Contract Act. (PO3 WS).



3. Whether the defendant has obtained the necessary permission,
if so, by what date and if not, what is the effect.


4. Whether the plaintiff was ready and willing to perform his
part of the contract.


5. Whether the plaintiff is entitled to the relief of specific
performance.


6. Relief.





12.12.1995


1. Whether the plaintiff has filed the suit in collusion with
defendant No.1? OPD 2-4.


2. Whether the agreement dated 26.9.1988 purported to have been
entered on behalf of defendants 2 to 4 was illegal, collusive,
fictitious, fraudulent and unauthorized? (Onus to prove on
parties.)


3. Whether defendants 2 to 4 did not execute any valid power of
attorney in favour of defendant No.1 to sell their shares in the
property in question? OPD 2 to 4.


4. Whether the defendants 2 to 4 did not receive any
consideration for the purported sale of their interest in the
suit property? If so, to what effect? OPD 2-4.


5. Whether the defendants 2 to 4 had revoked and cancelled the
power of attorney issued in favour of defendant No.1 prior to
26.9.1988? OPD 2-4.


6. Relief.


26.9.2001


1. Whether payment received by defendant no.1 on behalf of
defendants 2 to 4 is illegal and prohibited in view of Section 9
of Foreign Exchange Regulation Act, 1973? OPD 2 to 4"





After detailed analysis of the pleadings of the parties and
evidence produced by them, the learned Single Judge decided all the issues
against the petitioner except the issue framed on 26.9.2001, which was not
pressed by the contesting respondents. 
The learned Single Judge referred
to Sections 3 and 4 of the 1972 Act, the judgment of this Court in Shanti
Sports Club and another v. Union of India and others (2009) 15 SCC 705, as
also the judgment of the Division Bench of the High Court in Shri Raghubir
v. Union of India (W.P.(C) No.3186/2000 decided on 19.5.2005) and concluded
that the agreement executed between the parties was void. 


The learned
Single Judge further held that the petitioner was guilty of violating the
terms of agreement and that he had miserably failed to prove his readiness
and willingness to pay the balance consideration.


The Division Bench of the High Court dismissed the appeal filed
by the petitioner by recording the following observations:


"3. The first reason given by the learned Single Judge is that
the agreement in question being barred by Section 3 of the Delhi
Lands (Restriction of Transfer) Act 1972 was void, keeping in
view Section 23 of the Indian Contract Act 1872 and for which
view the decision of the Supreme Court reported as 2009 (15) SCC
705 Shanti Sports Club & Anr. v. UOI & Ors. as also a decision
of a Division Bench of this Court dated May 19, 2005 in WP(C)
No.3186/2000 Shri Raghubir v. UOI & Ors. have been noted by the
learned Single Judge.



4. We note that on February 25, 1989, vide Ex.PW-1/4, 
the
appellant had served a legal notice upon the respondents,

 in
paras 5 and 6 whereof it was alleged against the respondents


that they had suppressed from the appellant the fact that an
award had been published with respect to the subject lands.


Thereafter, in para 7 of the notice, it was asserted as under:-


"7. That apart from above, by virtue of Section 3 & 4 of
the Delhi Lands (Restrictions on Transfer) Act, 1972,

 there is prohibition on transfer of such lands, which has been
acquired by the Central Government under the provision of
the Land Acquisition Act, 1894, by sale, mortgage, gift,
lease or otherwise. 

Thus, you have also committed an
offence u/s 3 & 4 of the said Act and you have made
yourself liable to be prosecuted u/s 9 of the Delhi Lands
(Restrictions on Transfer) Act 1972."



5. It does not lie in the mouth of the appellant to now urge to
the contrary.


6. That apart, the learned Single Judge has correctly noted that
Section 3 of the Delhi Lands (Restrictions on Transfer) Act 1972
would apply where an award has been published in respect of the
lands agreed to be sold and Section 4 of the Delhi Lands
(Restrictions on Transfer) Act 1972 would apply if award has not
been published but proceedings for the proposed acquisition has
been commenced under the Land Acquisition Act 1894.


7. Eschewing a reference to the reasoning in the impugned
decision on the subject of the respondents not even applying for
the necessary sale permissions and as a result whether at all
the appellant had to prove readiness and willingness to complete
the transaction, for the reason we feel it would be useless for
us to discuss said aspect of the matter keeping in view the fact
that we agree with the reasoning of the learned Single Judge on
the third factor for which specific performance has been denied.


8. The same is that it is not obligatory for a Court to decree
specific performance of a contract for sale of immovable
property merely because it would be legally permissible to do
so.



9. It needs to be highlighted that for faults neither
attributable to either party, the suit seeking specific
performance of Ex.P-1, filed in the year 1989, could be decided
only on July 10, 2012 i.e. after 23 years of the suit being
filed.


11. To the reasoning of the learned Single Judge we would only
add that cases where the proposed buyer has substantially paid
the sale consideration i.e. has paid a major chunk of the sale
consideration would be a good factor to be kept in mind in
deciding 
whether specific performance be refused and the seller
be somewhat recompensed by requiring the buyer to pay at a
higher price, and the logic of the reasoning would be that the
seller has used the money elsewhere and has got the benefit of
price rise being neutralized. 
But where under an agreement to
sell what is parted with is a small percentage of the sale
consideration, loosely called earnest money, if delay not
attributable to the seller takes place in the suit being
adjudicated, it would be good exercise of discretion not to
grant specific performance, as in the instant case, 
but to
recompense the buyer by directing refund of the earnest money-
cum-part sale consideration with adequate interest thereon.


Highlighting that in the instant case interest awarded is @18%
per annum (simple) and that the period for which interest has to
be paid is when the suit was filed i.e. the year 1989 till date
of payment during which period the maximum rate at which
scheduled banks were offering interest on fixed deposit was 12%
per annum which successively fell to as low as 5.5% per annum
and currently stands at 9% per annum, 

we are of the opinion that
the discretion exercised by the learned Single Judge does not
warrant any reversal in appeal inasmuch as the discretion has
been exercised on sound and reasonable judicial principles which
are capable of correction by a Court of Appeal and not in an
arbitrary manner."





We have heard learned counsel for the petitioner and carefully
scanned the record.
In our view, the detailed reasons recorded by the learned
Single Judge and the Division Bench of the High Court for negating the
petitioner's prayer for grant of specific performance are legally correct
and there is no merit in the special leave petition.
The petitioner has not disputed that land, which was subject
matter of agreement dated 26.9.1988, had already been acquired by the
Central Government and the Land Acquisition Officer had passed award dated
6.6.1987. 
Therefore, there is no escape from the conclusion that the
agreement was violative of the prohibition contained in the 1972 Act.
The findings recorded by the learned Single Judge, which have
been approved by the Division Bench of the High Court, that the petitioner
did not have the requisite funds to pay the balance consideration within 45
days and that he was not ready and willing to perform his part of the
agreement are pure findings of fact recorded after careful analysis of the
record produced before the High Court and we do not find any valid ground
to interfere with the same. The very fact that the petitioner did not pay
the balance consideration within 45 days of the agreement also goes to show
that he was not ready and willing to perform his part of the agreement.
The special leave petition is accordingly dismissed.


For filing a frivolous case like the present one, the disposal
of which has consumed substantial time of the learned Single Judge and the
Division Bench of the High Court as also of this Court, the petitioner is
saddled with costs of Rs.1,00,000/-, which shall be deposited by him with
the Supreme Court Employees Mutual Welfare Fund within a period of two
months from today.


(Satish K.Yadav) (Phoolan Wati Arora)
Court Master Court Master
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