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Saturday, February 20, 2016

whether the so called agreement to sell dated 6.1.1995, which is extracted hereinbelow, is enforceable in law for passing a decree for specific performance of contract. The said agreement reads as under :- ”RECEIPT + AGREEMENT DATED 6.1.1995= In the instant case both the Trial Court and the High Court have completely overlooked and failed to appreciate the following facts:- (a) The receipt + agreement dated 6.1.1995 is a document by which the defendant alleged to have received a sum of Rs.2,30,000/- against the alternative plot in question which the DDA recommended to give to the defendant. The said plot will in turn will be given by the defendant to the plaintiff after a lease was executed in favour of the defendant by the DDA; (b) The total premium amount settled by the said agreement in respect of the plot was Rs.4,60,000/- whereas the defendant deposited a sum of Rs.8,13,389/- with the DDA for the allotment of the said plot; (c) The plaintiff pleaded in his plaint that the defendant had agreed to sell his rights in the recommendation letter and the plot to be allotted thereunder to the plaintiff for a consideration of Rs.4,60,000/-; (d) Although the right to get the plot was agreed to be sold to the plaintiff by the defendant for Rs.4,60,000/- but the suit was valued at Rs. 6,77,262.75p. being the rate fixed by the DDA.-“It is stated on oath by Umed Singh (DW1) that the DDA allotted plot in dispute to his deceased father on certain terms and conditions, which were embodied in the lease deed. One of such conditions was that suit will remain non-transferable for a period of ten years.”- that the land so allotted to the defendant- is not transferable for a period of 10 years, the High Court failed to hold that a decree for specific performance cannot be passed. Consequently, we direct the appellant to refund a sum of Rs.4,30,000/- (Rupees Four Lakhs Thirty Thousand) which was paid by the respondents to the appellant together with interest @ 6% per annum from the date of such receipt within two months from today.

                                                                ‘REPORTABLE’

                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO. 7385 OF 2013


Satish Kumar                                          ….Appellant(s)
                                   versus
Karan Singh and Another                              ….Respondent(s)

                               J U D G M E N T

M.Y. EQBAL, J.

            The question that needs consideration  in the instant appeal  is
as to whether the so called agreement  to  sell  dated  6.1.1995,  which  is
extracted hereinbelow, is enforceable  in  law  for  passing  a  decree  for
specific performance of contract.  The said agreement reads as under :-
”RECEIPT + AGREEMENT DATED 6.1.1995

Received a sum of amount Rs.2,30,000/-(Two Lac Thirty Thousand)  from  Karan
Singh S/o Sh. Basti Ram R/o Village and PO Mahipal Pur New Delhi-110 037  on
sixth    January,    1995    against    our     DDA     alternative     plot
F.No.32(5)113/87/L&B/Alt./2511 dated 11.8.1989 in the  name  of  Sh.  Jaishi
S/o Sh. Ram Saran R/o V&PO Mahipalpur New Delhi.   The  total  area  of  the
above said plot is 400 Sq.Yds.  The total  premium  settled  for  the  above
said plot is Rs.4,60,000/- (Four Lacs Sixty Thousand) will be given  at  the
time of receive the lease after  execution  at  the  Registrar  Office.   No
payment will be given in between.”
                                                                        Sd/-
                                                                   Jaisi Ram
In the presence of                      S/o Ram Saran
J.N. Sehrawat                       Village Mahipal Pur
V& PO Mahipal Pur
New Delhi-110037.

2.    The trial court after recording  the  evidence  decreed  the  suit  of
plaintiff-respondent for specific performance and  the  High  Court  by  the
impugned judgment dismissed the appeal filed by the appellant  and  affirmed
the decree passed by the Trial Court.

3.    We have heard learned counsel appearing for the parties.

4.    The plaintiff’s case in the plaint is that a  decision  was  taken  by
the Delhi Development Authority for allotment of a plot  of  land  measuring
400 Sq.yds. in favour of the defendant-respondent.  It was pleaded  that  in
the year 1995 the defendant had desired  to  sell  his  right  in  the  said
recommendation letter which was to be allotted by the DDA in favour  of  the
defendant.  It was further pleaded that the defendant  agreed  to  sell  his
right in the aforesaid recommendation letter and the plot to be allotted  at
a price of Rs.4,60,000/-.  For better appreciation para 6 of the  plaint  is
extracted hereinbelow :-

“6.  That the negotiations in between the parties had taken  place  and  the
plaintiff had agreed to purchase the said rights of  the  defendant  in  the
said recommendation letter  and  the  plot  to  be  allotted  thereto.   The
dealings were finalized and a Receipt-cum-Agreement  (for  short  Agreement)
was also executed in between the parties on January 6, 1995.

It is stated that the defendant  had  agreed  to  sell  his  rights  in  the
aforementioned recommendation letter and the plot to be allotted  thereunder
to the plaintiff for the sale consideration of  Rs.4,60,000/-  (Rupees  Four
lakhs and Sixty thousand only).  A sum of Rs.2,30,000/-  (Rupees  Two  Lakhs
and Thirty Thousand only) was also paid by the plaintiff  to  the  defendant
on January 6, 1995 itself.  Vide the said agreement dated January  6,  1995,
the defendant had acknowledged receipt of the sum  of Rs.2,30,000/-  (Rupees
Two Lakhs Thirty Thousand only) from the plaintiff.  It was  further  agreed
that the balance amount of Rs.2,30,000/- (Rupees Two Lakhs  Thirty  Thousand
only) would be paid by the plaintiff to the  defendant  when  the  defendant
hands over the original lease deed duly executed by  the  Delhi  Development
Authority in favour of the defendant.”

5.    Curiously enough although the total sale consideration fixed  was  Rs.
4,60,000/- but the suit was valued at Rs.6,77,262.75p. on the basis  of  the
value fixed by the DDA in respect of the plot in question.

6.    During the pendency of the  suit  in  the  trial  court  the  original
defendant who was an old  person  died  and  his  legal  representative  was
substituted.  The  original  defendant  as  also  the  legal  representative
contested the suit denying and disputing the  alleged  receipt-cum-agreement
and stated that no decree for  specific  performance  can  be  passed.   The
trial court held  that  the  receipt-cum-agreement  is  a  legal  and  valid
agreement to sell and shall be enforced by passing  a  decree  for  specific
performance.  The High Court  on  the  basis  of  evidence  adduced  by  the
parties affirmed the finding recorded by the trial court.

7.    Prima facie, we are of the view that both  the  trial  court  and  the
High Court have completely failed to consider  the  provisions  of  Specific
Relief Act and  the  principles  laid  down  by  this  Court  in  catena  of
decisions as to the requirement of law for  passing a  decree  for  specific
performance.

8.     It  is  well  settled  that  the  jurisdiction  to   order   specific
performance  of  contract  is  based  on  the  existence  of  a  valid   and
enforceable contract.  Where a valid and enforceable contract has  not  been
made, the Court will not make a contract  for  them.   Specific  performance
will not be ordered if the contract itself suffers from  some  defect  which
makes the contract invalid or unenforceable.  The discretion  of  the  Court
will  not  be  there  even  though  the  contract  is  otherwise  valid  and
enforceable.

9.    This Court in Mayawanti  vs.  Kaushalya Devi   (1990)  3  SCC  1  held
thus:-

“8. In a case of specific performance it  is  settled  law,  and  indeed  it
cannot be doubted, that the jurisdiction to order specific performance of  a
contract is based on the existence of a valid and enforceable contract.  The
Law of Contract is based  on  the  ideal  of  freedom  of  contract  and  it
provides the limiting principles within which the parties are free  to  make
their own contracts. Where a valid and enforceable  contract  has  not  been
made, the court will not make a  contract  for  them.  Specific  performance
will not be ordered if the contract itself suffers from  some  defect  which
makes the contract invalid or unenforceable. The  discretion  of  the  court
will be there even though the contract is otherwise  valid  and  enforceable
and it can pass a decree of specific performance even before there has  been
any breach of the  contract.  It  is,  therefore,  necessary  first  to  see
whether there has been a valid and enforceable contract and then to see  the
nature and obligation arising out of it. The contract being  the  foundation
of the obligation the order of  specific  performance  is  to  enforce  that
obligation.”

10.   Exercise of discretionary power  under  Section  20  of  the  Specific
Relief Act for granting a decree, this  Court  in  the  case  of  Parakunnan
Veetill Joseph’s Son Mathew  vs.  Nedumbara Kuruivila’s Son and others,  AIR
1987 SC 2328  observed:-
“14. Section  20  of  the  Specific  Relief  Act,  1963  preserves  judicial
discretion of courts as to decreeing specific performance. The court  should
meticulously consider all facts and circumstances of the case. The court  is
not bound to grant specific performance merely because it is  lawful  to  do
so. The motive behind the litigation should also  enter  into  the  judicial
verdict. The court should take care to  see  that  it  is  not  used  as  an
instrument of oppression to have an unfair advantage to the  plaintiff.  The
High Court has failed to consider the motive with which Varghese  instituted
the suit. It was instituted because Kuruvila could not get  the  estate  and
Mathew was not prepared to part with it. The sheet anchor  of  the  suit  by
Varghese is the agreement for sale Exhibit A-1. Since  Chettiar  had  waived
his rights thereunder, Varghese as an assignee could not get a better  right
to enforce that agreement. He is, therefore, not entitled to  a  decree  for
specific performance.”

11.   In the instant case both the Trial  Court  and  the  High  Court  have
completely overlooked and failed to appreciate the following facts:-
(a)   The receipt + agreement dated 6.1.1995 is  a  document  by  which  the
defendant alleged to have  received  a  sum  of  Rs.2,30,000/-  against  the
alternative plot in question which  the  DDA  recommended  to  give  to  the
defendant.  The said plot will in turn will be given  by  the  defendant  to
the plaintiff after a lease was executed in favour of the defendant  by  the
DDA;

(b)   The total premium amount settled by the said agreement in  respect  of
the plot  was  Rs.4,60,000/-  whereas  the  defendant  deposited  a  sum  of
Rs.8,13,389/-  with the DDA for the allotment of the said plot;

(c)     The plaintiff pleaded in his plaint that the  defendant  had  agreed
to sell his rights in the recommendation letter and the plot to be  allotted
thereunder to the plaintiff for a consideration of Rs.4,60,000/-;

(d)   Although the right to get the plot  was  agreed  to  be  sold  to  the
plaintiff by the defendant for Rs.4,60,000/- but the suit was valued at  Rs.
6,77,262.75p. being the rate fixed by the DDA.

12.   On the basis of these admitted facts the Trial Court erroneously  held
that the receipt-cum-agreement  is  an  enforceable  contract  and  on  that
finding decreed the suit which was affirmed by the High Court.
13.   It is interesting to note that the High Court  has  noticed  the  fact
mentioned in para 24 of trial court judgment that  during  the  pendency  of
the lis DDA allotted the plot in question in favour of the  deceased  father
of the defendant (original plaintiff) by executing a lease  deed  putting  a
condition that the plot in  question  will  remain  non-transferable  for  a
period of ten years.   Para  24  of  the  trial  court  judgment  is  quoted
hereinbelow:-
“It is stated on oath by Umed Singh (DW1) that  the  DDA  allotted  plot  in
dispute to his deceased father on certain terms and conditions,  which  were
embodied in the lease deed.  One of  such  conditions  was  that  suit  will
remain non-transferable for a period of ten  years.”

14.   In spite of the aforesaid fact noticed by the  High  Court,  that  the
land so allotted to the defendant- is not transferable for a  period  of  10
years, the High Court failed to hold that a decree for specific  performance
cannot be passed.
15.   We are sorry to hold that both the Trial  Court  and  the  High  Court
have completely misconstrued the facts of the  case  and  misunderstood  the
law laid down by this Court in the matter of exercising discretionary  power
for granting a decree for specific performance.
16.   After giving our anxious consideration to the matter, we  are  of  the
view that the impugned order passed by the trial court and affirmed  by  the
High Court cannot be sustained in law inasmuch as no   decree  for  specific
performance  can  be  passed  on  the  basis  of  the  alleged  receipt-cum-
agreement. We therefore, allow this  appeal  and  set  aside  the  judgments
passed by the Trial Court and the High Court.
17.   Consequently, we direct the appellant to refund a sum of Rs.4,30,000/-
 (Rupees Four Lakhs Thirty Thousand) which was paid by  the  respondents  to
the appellant together with interest @ 6% per annum from the  date  of  such
receipt  within  two  months  from  today.  Any  amount  deposited  by   the
respondents in the High Court shall be withdrawn by them.

                                                              …………………………….J.
                                                                (M.Y. Eqbal)




                                                              …………………………….J.
                                                               (Arun Mishra)
New Delhi
January 21, 2016

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