2004 (8) TMI 694 - SC - Indian Laws

Whether the compensation could be awarded in a suit for specific performance without making a claim of compensation either in the original plaint or by amending the plaint during the course of the proceedings? Whether the Court has the power to award compensation in a suit for Specific Performance, where the plaintif has not specifically prayed for it in the plaint?

Issues Involved:
1. Specific performance of the agreement of sale.
2. Entitlement to compensation for breach of agreement.
3. Applicability of Section 28 and Section 21 of the Specific Relief Act, 1963.
4. Inclusion of costs as part of compensation.
5. Directions for the withdrawal and redeposit of amounts.

Detailed Analysis:

1. Specific Performance of the Agreement of Sale:
The appellant entered into an agreement of sale with the respondents on 20.10.1994 for the sale of land measuring 15.125 cents at Rs. 3,15,000 per cent for a total consideration of Rs. 44,66,385. The agreement was to be executed within three months, and the respondents paid Rs. 10 Lakhs as advance/earnest money. The appellant failed to execute the sale deed, leading the respondents to file a suit for specific performance on 26.4.1995. The trial court decreed the suit on 24.7.1997, ordering the appellant to cause the sale of the property within three months from the plaintiffs depositing the balance sale consideration. The respondents deposited the balance amount of Rs. 34,66,385 on 23.10.1997. The sale deed was executed and registered by the appellant on 17.8.1999.

2. Entitlement to Compensation for Breach of Agreement:
The respondents moved an application under Section 28(3) of the Specific Relief Act, 1963, claiming interest at 12% on Rs. 44,66,385 from the date of deposit until the registration of the sale deed and delivery of possession. The trial court allowed the application, awarding compensation including costs, excess amount deposited, and interest. The High Court modified the trial court's order, reducing the interest rates and directing the disbursement of the deposited sum. The appellant challenged this decision, arguing that compensation under Section 21 could not be awarded without a specific claim in the plaint.

3. Applicability of Section 28 and Section 21 of the Specific Relief Act, 1963:
The High Court initially agreed that Section 28 was not applicable but granted compensation under Section 21. Section 21 allows compensation for breach of contract in addition to or in substitution of specific performance, provided it is claimed in the plaint. The Supreme Court held that the respondents did not claim compensation in their original or amended plaint, thus not fulfilling the requirements of Section 21(5). The court emphasized that compensation cannot be awarded without a specific claim in the pleadings.

4. Inclusion of Costs as Part of Compensation:
The Supreme Court found that the High Court erred in including the costs awarded in the main suit as part of the compensation. The costs could be recovered separately but could not form part of the compensation for breach of contract.

5. Directions for the Withdrawal and Redeposit of Amounts:
The Supreme Court set aside the judgments of the High Court and the trial court, dismissing the respondents' application under Section 28(3). The appellant was entitled to withdraw the deposited amount, except the excess amount of Rs. 16,065, from the Indian Bank along with accrued interest. If the respondents had already withdrawn the amount, they were directed to redeposit or repay it with 6% interest within three months, failing which 12% interest would apply.

Conclusion:
The appeal was allowed, and the respondents were directed to comply with the specified terms regarding the withdrawal and redeposit of the amounts. The respondents could still recover the costs awarded in the suit as per the law.

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