2007 (2) TMI 635 - SC - Indian Laws

Whether rise in the price of an immovable property by itself is not a ground for refusal to enforce a lawful agreement of sale?

Summary

Issues Involved:
1. Nature of the agreement (whether it was an agreement for sale or a loan agreement).
2. Exercise of discretionary jurisdiction under Section 20 of the Specific Relief Act, 1963.

Detailed Analysis:

1. Nature of the Agreement:
The primary issue was whether the agreement dated 11.05.1979 between the appellant and Respondent No. 1 was an agreement for sale or merely an agreement for a loan. The appellant contended that the agreement was a loan transaction, supported by similar agreements with other parties, and the default clauses indicated it was not meant to be acted upon as a sale agreement. The appellant cited Dadarao and Another v. Ramrao and Others [(1999) 8 SCC 416] to support this contention.

The Court, however, held that the agreement was indeed an agreement for sale. The agreement explicitly described the property, the consideration amount, and the terms of payment. The document was signed by both parties and attested by witnesses. The Court emphasized that a document must be read in its entirety to determine the intention of the parties. The default clauses, which stipulated damages for breach, did not negate the nature of the agreement as a sale contract. The Court distinguished the present case from Dadarao, noting that the agreement in Dadarao had different terms and was not a binding precedent due to its failure to consider relevant statutory provisions and earlier precedents.

The Court also referenced P.D'Souza v. Shondrilo Naidu [(2004) 6 SCC 649] and Jai Narain Parasrampuria (Dead) and Others v. Pushpa Devi Saraf and Others [(2006) 7 SCC 756], which clarified that stipulations for damages in case of breach do not imply that the agreement was not for sale. The Court found no uncertainty or vagueness in the agreement and concluded that the parties intended to sell the property.

2. Exercise of Discretionary Jurisdiction under Section 20 of the Specific Relief Act, 1963:
The appellant argued that the courts below should not have exercised their discretionary jurisdiction to grant specific performance, especially considering the rise in property prices in Bangalore. The Court rejected this submission, stating that the rise in property prices is not a valid ground to refuse enforcement of a lawful agreement. The Court noted that the appellant had entered into multiple agreements for the same property, including one with his son-in-law, which was never acted upon. This indicated an attempt to defeat the lawful claim of Respondent No. 1.

The Court upheld the concurrent findings of fact by the Trial Court and the High Court, which had both decreed specific performance of the agreement. The appellant's failure to contest the agreement as a sham or nominal one at the earliest opportunity further weakened his case. The Court concluded that there was no merit in the appeal and dismissed it, with no order as to costs.

Conclusion:
The Supreme Court affirmed the judgments of the Trial Court and the High Court, holding that the agreement dated 11.05.1979 was an agreement for sale and not a loan agreement. The Court also upheld the exercise of discretionary jurisdiction under Section 20 of the Specific Relief Act, 1963, to grant specific performance, dismissing the appeal with no order as to costs.