2015 (9) TMI 1608 - SC - Indian Laws

Discretionary relief for specific performance - failure to prove agreement of sale dated 2.9.1967 - lease agreement. Held that - There is no dispute that even a decree for specific performance can be granted on the basis of oral contract - while deciding a suit for specific performance, that an oral contract is valid, binding and enforceable. A decree for specific performance could be passed on the basis of oral agreement. However, in a case where the Plaintiff come forward to seek a decree for specific performance of contract of sale of immoveable property on the basis of an oral agreement or a written contract, heavy burden lies on the Plaintiff to prove that there was consensus ad idem between the parties for the concluded agreement for sale of immoveable property. Whether there was such a concluded contract or not would be a question of fact to be determined in the facts and circumstances of each individual case. It has to be established by the Plaintiffs that vital and fundamental terms for sale of immoveable property were concluded between the parties. It is equally well settled that relief of specific performance is discretionary but not arbitrary, hence, discretion must be exercised in accordance with sound and reasonably judicial principles. The cases providing for a guide to courts to exercise discretion one way or other are only illustrative, they are not intended to be exhaustive, In England, the relief of specific performance pertains to the domain of equity, but in India the exercise of discretion is governed by the statutory provisions. In the instant case while deciding the issue as to whether the agreement of 1967, allegedly executed by the Defendants, can be enforced, the Court had to consider various discrepancies and series of legal proceedings before the agreement alleged to have been executed. In the agreement dated 2.9.1967, there is reference of earlier agreement dated 29.11.1965 where under ₹ 18,000/- was paid to the Defendant-Appellant which was denied and disputed. Curiously enough that agreement dated 29.11.1965 was neither filed nor exhibited to substantiate the case of the Plaintiff - Indisputably, various documents including order-sheets in the earlier proceedings including execution case were filed to nullify the claim of the Plaintiff regarding possession of the suit property but these documents have not been considered by the High Court. In our considered opinion the evidence and the finding recorded by the criminal courts in a criminal proceeding cannot be the conclusive proof of existence of any fact, particularly, the existence of agreement to grant a decree for specific performance without independent finding recorded by the Civil Court. It is not a fit case where the discretionary relief for specific performance is to be granted in favour of the Plaintiff-Respondent - The High Court in the impugned judgment has failed to consider the scope of Section 20 of the Specific Relief Act and the law laid down by this Court. Suit liable to be dismissed - appeal allowed.

Summary

Issues Involved:
1. Validity of the Power of Attorney.
2. Execution of the agreement of sale dated 02.09.1967.
3. Payment of the consideration amount.
4. Entitlement to specific performance and possession.
5. Claim for mesne profits.
6. Validity of execution proceedings and orders.
7. Readiness and willingness to perform the contract.
8. Entitlement to compensatory costs.

Issue-wise Analysis:

1. Validity of the Power of Attorney:
The trial court affirmed that Defendant No. 1 was the Power of Attorney holder for Defendant No. 2. This was not contested further.

2. Execution of the Agreement of Sale Dated 02.09.1967:
The trial court concluded that the Plaintiff failed to prove the execution of the agreement of sale dated 02.09.1967. The document was written on a small piece of paper in small letters without any valid reason for such presentation. The High Court, however, re-appreciated the evidence and found that the agreement was indeed executed, relying on testimonies and the document's presence in a criminal proceeding. The High Court emphasized that the observations made by the Criminal Court regarding the document's execution were relevant and admissible under Section 13 of the Indian Evidence Act.

3. Payment of the Consideration Amount:
The trial court found against the Plaintiff on the issue of payment of the consideration amount. The High Court, however, reversed this finding, concluding that the evidence supported the Plaintiff's claim of having paid the amount as per the agreement.

4. Entitlement to Specific Performance and Possession:
The trial court denied the relief for specific performance due to the adverse findings on the execution and payment issues. The High Court, however, allowed the appeal, holding that the Plaintiff was entitled to specific performance and possession based on the re-evaluated evidence.

5. Claim for Mesne Profits:
The trial court did not grant mesne profits, and the High Court's judgment did not specifically address this issue in detail.

6. Validity of Execution Proceedings and Orders:
The trial court's findings on the execution proceedings and miscellaneous orders, which were deemed fraudulent and without jurisdiction, were not challenged in the High Court. The High Court did not interfere with these findings.

7. Readiness and Willingness to Perform the Contract:
The High Court found that the Plaintiff was ready and willing to perform their part of the contract, contrary to the trial court's findings. This was supported by evidence of payments and the Plaintiff's conduct.

8. Entitlement to Compensatory Costs:
The trial court's decision on compensatory costs under Section 35(a) of the Code of Civil Procedure was not specifically discussed in the High Court's judgment.

Conclusion:
The Supreme Court ultimately allowed the appeal, setting aside the High Court's judgment and restoring the trial court's decision. The Supreme Court emphasized that the High Court misdirected itself in law by relying heavily on the criminal court's findings and failed to consider the discretionary nature of specific performance under Section 20 of the Specific Relief Act. The Supreme Court concluded that the evidence and findings from the criminal proceedings could not serve as conclusive proof for granting specific performance without independent verification by the civil court.