2015 (9) TMI 1686 - SC - Indian Laws

Execution of agreement - Degree of specific performance or refund of amount - agreement to sale - whether in the facts and circumstances of the case, a decree of specific performance of agreement of sale should have been passed, or the decree of refund of part consideration received by the defendant, with interest, would have served the ends of justice? - HELD THAT - Explanation 1 to sub-section (2) provides that mere inadequacy of consideration shall not be deemed to be an unfair advantage within the meaning of clause (a) or hardship within the meaning of clause (b). Explanation 2 provides that the question whether the performance of a contract when involved hardship on the defendant within the meaning of clause (b) shall, except in cases where the hardship has resulted from any act of the plaintiff subsequent in the contract, be determined with reference to the circumstances accepting at the time of contract. Sub-section (3) provides that the court may properly exercise discretion to decree specific performance in any case where the plaintiff has done substantial acts or suffered losses in consequence of a contract capable of specific performance. In the present case, it appears that possession was not given to the plaintiff at the time of execution of the agreement, nor the area of land agreed to be sold was clear, as such, it cannot be said that the plaintiff has done substantial acts or suffered losses due to expenditure in constructions, etc., in consequence of a contract capable of specific performance. The direction given by the High Court in the impugned order shows that the measurements of land actually agreed to be sold, are not final - instead of affirming the decree of specific performance as modified by the High Court, it will be equitable, just and proper to direct the appellants to pay back the amount of ₹ 60,000 accepted by the original defendant with interest @ 18% p.a to the respondent-plaintiff from 4-2-1992 till date, within a period of three months from today, failing which this appeal shall stand dismissed. Appeal dismissed.

Summary

Issues:
1. Specific performance of agreement for land sale
2. Interpretation of contract terms
3. Discretion of court in granting specific performance

Analysis:
1. Specific Performance of Agreement for Land Sale:
The case involved a dispute over a land sale agreement where the plaintiff sought specific performance. The plaintiff filed a suit for possession and injunction regarding a piece of land based on an agreement with the defendant. The agreement stipulated the sale of land at a certain rate per cottah, with an earnest money paid upfront. Measurements of the land were disputed, leading to the filing of the suit for specific performance.

2. Interpretation of Contract Terms:
The terms of the agreement between the parties played a crucial role in determining the outcome of the case. The agreement specified the area of land to be sold, the rate of sale, and the conditions for payment. The courts examined the terms of the agreement, including the provisions for adjustments in case of discrepancies in land measurements. The description of the schedule property and the declarations made by the original defendant in the agreement were key points of consideration.

3. Discretion of Court in Granting Specific Performance:
The courts analyzed the provisions of Section 20 of the Specific Relief Act, 1963, which governs the grant of specific performance. The Act provides for the discretion of the court in granting specific performance based on various factors such as unfair advantage to the plaintiff, hardship on the defendant, and substantial acts or losses suffered by the plaintiff. The court considered these factors in deciding whether to grant specific performance or order a refund of the earnest money.

In the final judgment, the Supreme Court declined to interfere with the findings of the High Court. Instead of affirming the decree of specific performance, the court directed the defendants to refund the earnest money with interest to the plaintiff within a specified timeframe. The court emphasized the equitable and just resolution of the dispute based on the circumstances of the case, ultimately disposing of the appeal in favor of the plaintiff.