A.C. ARULAPPAN . versus SMT. AHALYA NAIK

K.G. BALAKRISHNAN. J. Leave granted.

p. 427, margin E

Defendant in a suit for specific perfonnance is the appellant before us. The appellant and the respondent plaintiff entered into an agreement on 1.5.1977 whereby the appellant agreed to sell his RCC building with appurtenant land for a consideration of Rs. 85,000. The respondent paid a sum of Rs. 42,000 as advance. The plaint schedule property was outstanding on two mortgages-one in favour of the Karnataka Government and another in favour of Pragathi Co-operative Bank Ltd. The appellant was also liable to pay a sum of Rs. 8,000 to one Lakshmamma. In the agreement, it was stated that the appellant intended to sell the property to clear the loans outstanding in respect thereof. No time limit was stipulated for execution of sale deed. The plaint schedule house was in occupation of a tenant. According to the respondent, the appellant again executed another agreement on I 0.12.1977 wherein some more terms and conditions were incorporated. As per that agreement, the appellant was to execute the sale deed on or before 16.1.1978. The respondent alleged that she had all along been ready and willing to perform her part of the contract but the appellant failed to execute the sale deed on 16.1.1978 though she was present in the Sub-Registrar's Office for execution of sale deed. The respondent filed a suit within a week thereafter and sought for specific performance of the contract.

pp. 427–428, margin F

The appellant contended that the respondent was not entitled to seek specific performance. He admitted the agreement entered into by him on 1.5.1977, but alleged that the consideration agreed to by him was Rs. 98,000 and t Rs. 85,000. The appellant also alleged that the City Improvement Trust B 1ard had not granted permission to sell the property and that he could not get the income tax clearance certificate from the competent authority for the sale of the property. He also alleged that the respondent resiled from the contract and requested for refund of the advance amount and that in that behalf she wrote two letters on 27.9.1977 and 1.11.1977. The appellant further alleged that the respondent wanted to revoke the agreement dated l /5/1977 and for that purpose the respondent and her husband took the appellant to their tax consultant where the appellant was forced to sign certain papers. The appellant alleged that the argument dated 10.12.1977 was vitiated by coercion and threat.

p. 428, margin B

The trial court declined to grant the decree for specific performance and dismissed the suit though the court held that there was no evidence to prove that the agreement dated 10.12.1977 was vitiated by coercion. The trial court noticed that the appellant was to retire from service and that he was not having funds to purchase another house and that he had not obtained the requisite permission under the Urban Land Ceiling Act and also had not obtained the income tax clearance certificate. The trial court held that the agreement dated 1.5. I 977 was executed with a view to discharge some debts of the appellant and he wanted to move to a small house elsewhere. It was also noticed that the appellant was not keeping good health and voluntarily retired from service. Considering the overall circumstances of the case, it was noted by the trial court that the appellant would be put to great hardship in case the relief of specific performance was granted to the plaintiff.

p. 428, margin E

The respondent filed an appeal before the High Court and the appellate court decreed the suit as prayed for. According to the appellate court, mere inadequacy of consideration, or the mere fact that the contract is onerous to the defendant or improvident in its nature, would not be deemed to constitute an unfair advantage and the ingredients of clause (b) of Section 20(2) of the Specific Relief Act are not attracted. On this premise, the appeal filed by the respondent was allowed.

pp. 428–429, margin G

We heard the learned counsel for the appellant as also learned counsel for the respondent..

p. 429, margin A

The jurisdiction to decree specific relief is discretionary and the court can consider various circumstances to decide whether such relief is to be granted. Merely because it is lawful to grant specific relief, the court need not grant the order for specific relief; but this discretion shall not be exercised in an arbitrary or unreasonable manner. Certain circumstances have been mentioned in Section 20(2) of the Specific Relief Act, 1963 as to under what circumstances the court shall exercise such discretion. If under the terms of the contract the plaintiff gets an unfair advantage over the defendant, the court may not exercise its discretion in favour of the plaintiff. So also, specific relief may not be granted if the defendant would be put to undue hardship which he did not foresee at the time of agreement. If it is inequitable to grant specific relief, then also the court would desist from granting a decree to the plaintiff.

p. 429, margin B

In D. Anjaneyu/u and Anr. v. Damacherla Venkata Seshaiah and Anr., AIR (1987) SC 1641, the High Court declined to grant a decree for specific performance in favour of the plaintiff, even though the defendant was guilty of breach of agreement. That was a case where the defendant had constructed costly structures and if a decree for specific performance was granted, the defendant would have been put to special hardship. This Court directed the defendant to pay compensation to the plaintiff.

p. 429, margin D

In Parakunnan Veetill Joseph's Son Mathew v. Nedumbara Kuruvila's Son and Ors., AIR (1987) SC 2328, this Court cautioned and observed as under:

p. 429, margin F

"Section 20 of the Specific Relief Act, 1963 preserves judicial discretion to 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 in 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."

pp. 429–430, margin G

In lourdu Mari David and Ors. v. Louis Chinnaya Arogiaswamy Ors., AIR (1996) SC 2814, the plaintiff, who sought for specific performance of an agreement to purchase immovable property, filed a suit with and false facts. In the plaint, it was alleged that the plaintiff was already possession of Door No. 2/53 as a lessee and he was given possession Door No. 1153 on the date of agreement itself. But he did not give evidence that he had got possession of Door No. 1153 on the date agreement. It was found that his case as regards Door No. 1153 was also alleged that he had paid Rs. 400 in addition to the sum of Rs. 4,000 as advance, but this was proved to be an incorrect statement He alleged the third defendant had inspected the house during the course of negotiations, but this also was found to be false. This Court held that it is settled the party who seeks to avail of the jurisdiction of a Court and performance being equitable relief, must come to the Court with clean In other words, the party who makes false allegations does not come clean hands and is not entitled to the equitable relief.

p. 430, margin A

In Gobind Ram v. Gian Chand. (2000] 7 SCC 548, it was observed paragraph 7 of the judgment that grant of a decree for specific performance of contract is not automatic and is one of the discretions of the court the court has to consider whether it would be fair, just and equitable. court is guided by the principles of justice, equity and good conscience.

p. 430, margin D

In the instant case, the first agreement was on 1.5.1977. No date stipulated in the agreement for performance of the contract. The outstanding dues payable by the defendant to the mortgagees are clause 3 of the agreement. From the tenor of the agreement, it is clear that the appellant wanted to raise money to pay off his debts. In case of of agreement, the appellant was to repay the advance with interest and in the event of breach of agreement on the part of the plaintiff, she not be entitled to get back the advance. After this agreement, the respondent wrote two letters to the appellant indicating that she was not willing proceed with the contract and that she terminated the contract. By letter I . I 1.1977, she requested the appellant to re-pay the amount of Rs. 42,000 by her, with 12 percent interest. She wrote another letter also stating wanted to settle the matter immediately and that she wanted to get from 1.5.1977 onwards for the amount paid by her as advance. Within period, the second agreement dated 10.12.1977 is alleged to have been executed between plaintiff and defendant. The appellant alleged that this agreement was brought about by coercion and threat and that he was physically manhandled by the respondent's husband. He also alleged that he caused to send a lawyer's notice on the very next day repudiating this agreement, but he could not produce a copy of the notice and the trial court disbelieved his version. But it is important to note that the terms of the agreement dated I 0.12.1977 which is sought to be enforced by the respondent are at variance with the original agreement. As per the second agreement, the sale deed was to be executed within a short period. i.e. on or before 16.1.1978. It is strange to note that under the second agreement if the appellant failed to execute the sale deed, he will have to pay double the amount of part-consideration received by him, whereas if the respondent failed to perform her part of the agreement, she need to only pay a sum of Rs. 10,000 as pecuniary damages and the balance amount was to be paid back to her by the appellant with 12 per cent interest. It is also strange to note that though the total consideration is fixed at R-s. 85,000 a sizeable sum, viz. Rs. 10,000 would be retained by the respondent as deposit towards expenses for repairs and renewals of the house.

pp. 430–431, margin E

From the terms and conditions adumbrated in the second agreement, dated 10.12.1977, it is clear that the respondent had been trying to take an unfair advantage over the appellant and that the circumstances in which this agreement was executed within a short period of termination of the first contract by the respondent, make it highly probable that the appellant might not have readily agreed to this contract.

p. 431, margin D

There are other circumstances also to hold that the defendant-respondent had not approached the court with clean hands. Admittedly, the plaint schedule house was in occupation of a tenant. The appellant had agreed to evict the tenant. During the course of litigation between the appellant and the respondent, the appellant came to know that the tenant had been trying to give possession of the house to the respondent. He immediately field a suit and obtained an injunction and recovered possession of the house from the tenant. The respondent alleged that she got possession of the house from the tenant. She also filed a suit alleging that she had been in possession of the property and she obtained possession of the house from the tenant. It is clear that she had been trying to get possession of the house even before execution of the sale deed, for which she had apparently colluded with the tenant. Moreover, the appellant in this case was clearly in impecunious circumstances and so many loans were outstanding against him. He had executed the first agreement to pay off these debts and in order funds. From the tenor of the first agreement, it is clear that very serious about the sale of the house. The fact that after respondent resiled from the agreement and sought for repayment money also proves this fact. The appellant had voluntarily retired Admittedly, he had no other house to stay after retirement. plaintiff had tried to take unfair advantage over the defendant the course of the transaction she had not been fair.

pp. 431–432, margin E

Granting of specific performance is an equitable relief, is now governed by the statutory provisions of the Specific These equitable principles are nicely incorporated in Section While granting a decree for specific performance, these salutary guidelines shall be in the forefront of the mind of the court. The trial the added advantage of recording the evidence and seeing the the witnesses considered the relevant facts and reached a conclusion. appellate court should not have reserved that decision disregarding facts and, in our view, the appellate court seriously flawed Therefore, we hold that the respondent is not entitled to a decree performance of the contract.

p. 432, margin B

The respondent-plaintiff had advanced a sum of Rs. 42,000 on 1.5.1977. She had also parted with Rs. 4,000 subsequently. she is entitled to refund of these amounts with reasonable interest. that the respondent-plaintiff will be entitled to get the total 46,000 (Rs. 42,000 + Rs. 4,000) with 14 percent interest payment of the amount till the date of realisation. There shall this amount on the plaint schedule property. The respondent would liberty to enforce the decree against the appellant and his the appellant fails to re-pay the said sum of Rs. 46,000 with interest.

p. 432, margin D

The appeals stand disposed of with the aforesaid directions. Parties either side to bear their respective costs. B.S. Appeals

p. 432, margin F