‘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
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
