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Wednesday, October 7, 2015

Suit for Specific Performance of contract - defendant pleaded that it is only executed as security for debt - already executed an agreement of sale infavour of third party - plaintiff never pleaded that he is always ready and willing to perform nor pleaded that he is ready to redeem the mortgage debt nor pleaded that he has got already redeemed the mortgage debt - as per sec.20 (2)(a) of Specific relief Act , the plaintiff is not entitled for specific performance of the contract and on the other hand it is a fit case for refund of the amount of Rs.4 lakhs with 18 % per annum, failing which Trail court decree would be confirmed - 2015 S.C. MSKLAWREPORTS

the suit for specific performance of contract.- in a suit filed by the plaintiff/respondent No.1. -    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. -  since the answering defendant 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. -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.-the trial court came to  the  conclusion that it is not  a  fit  case  for  specific  performance  of  contract,  and 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.- 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  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.- Apex court held that 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 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.
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. -2015 S.C. MSKLAWREPORTS


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