2022 (8) TMI 1565 - SC - Indian Laws

Suit for specific performance is barred by limitation or not - amended Section 10 of the Specific Relief Act is prospective or retrospective in operation - entitlement to the relief of specific performance - benefit of Section 12 of the Specific Relief Act in view of the part payment made in respect of the contract. Whether the suit for specific performance is barred by limitation? - HELD THAT - The vendors were entitled to rescind the contract as there was a breach of condition i.e time was the essence . Coming back to the point of limitation it is clear that Article 54 of the Limitation Act mandates that in this case at hand the date fixed for payment of consideration was three months from the date of the agreements (i.e. 26.03.1997 and 27.03.1997). In any case the time period for filing the suit had commenced from 26/27.6.1997 and would have expired after three years i.e. in the end of June 2000. Article 54 of the Limitation Act provides for two consequences based on the presence of fixed time period of performance. It is only in a case where the time period for performance is not fixed that the purchaser can take recourse to the notices issued and the vendors reply thereto. In the case at hand the aforesaid circumstances do not come into play as a fixed time period was clearly mandated by Clause 3 read with Clause 23 of the agreements to sell - there would not have been any reason for this Court to continue the analysis on merits. However we feel that even on merits the purchaser s case cannot be countenanced in law. Whether the amended Section 10 of the Specific Relief Act is prospective or retrospective in operation? - HELD THAT - When a substantive law is brought about by amendment there is no assumption that the same ought to be given retrospective effect. Rather there is a requirement for the legislature to expressly clarify whether the aforesaid amendments ought to be retrospective or not - it is clear that ordinarily the effect of amendment by substitution would be that the earlier provisions would be repealed and amended provisions would be enacted in place of the earlier provisions from the date of inception of that enactment. However if the substituted provisions contain any substantive provisions which create new rights obligations or take away any vested rights then such substitution cannot automatically be assumed to have come into force retrospectively. In such cases the legislature has to expressly provide as to whether such substitution is to be construed retrospectively or not. There are no hesitation in holding that the 2018 amendment to the Specific Relief Act is prospective and cannot apply to those transactions that took place prior to its coming into force. Whether the purchaser is entitled to the relief of specific performance? - HELD THAT - The purchaser did not voluntarily adhere to the time stipulation under the contract. In order to by pass the condition of time being the essence the purchaser invoked the standard of good faith. Aforesaid standard prescribes a higher duty of care for parties entering into a contract. Unless such duty is expressly stipulated good faith standard cannot be implicitly read into any contract - Section 16(c) of the Specific Relief Act would only come into force if the purchaser was ready and willing to perform the contract within the three month period prescribed under Clause 3 of the agreements. The aforesaid conclusion is also bolstered by the fact that specific performance can only be granted when essential terms of contract are not violated in terms of Section 16(b). The purchaser was not ready or willing to perform his part of the contract within the time stipulated and accordingly specific performance cannot be granted for the entire contract - The trial Court has rightly answered this point against the plaintiff and the Appellate Court on an erroneous appreciation of the facts and law reversed the said findings. In any case whether the purchaser is entitled to take benefit of Section 12 of the Specific Relief Act in view of the part payment made in respect of the contract? - HELD THAT - There was no inability on part of the parties to perform the rest of the contract or the remaining part was waived. In this case the purchaser breached the essential condition of the contract which altogether disentitles him to claim specific performance. There is no doubt that the claim of purchaser is hit by delay and laches on their part as they did not take appropriate measures within the stipulated time and filing of the suit was delayed by almost five years - This is not an appropriate case for granting relief to the purchaser in terms of Section 12 of the Specific Relief Act 1963 as the claim of the purchaser is barred by delay laches and limitation. Thus the contract was breached due to the conduct of the plaintiff/purchaser who were not willing to perform the contract after entering into a time sensitive agreement. In any case it is an admitted fact that plaintiff had paid only part consideration. Though there is a forfeiture clause in the agreement this Court with a view of rendering complete justice between the parties deems it appropriate to direct the vendors/appellants to repay the said amount with interest @ 7.5% p.a. from the date such payment was made by the purchaser to the vendors till the entire amount is paid back. We further direct the vendors to pay the entire amount to the credit of the suit account within six months from the date of receipt of a copy of the order. Conclusion - i) The suit for specific performance was barred by limitation as the purchaser failed to file the suit within the prescribed period. ii) 2018 amendment to Section 10 of the Specific Relief Act was substantive and could not be applied retrospectively. iii) The purchaser was not entitled to specific performance due to his failure to perform his contractual obligations within the stipulated time. iv) Section 12 of the Specific Relief Act did not apply as the purchaser s failure was due to his own conduct. Appeal allowed.

Summary

ISSUES PRESENTED and CONSIDERED

The Court considered the following key issues:

A. Whether the suit for specific performance is barred by limitation.

B. Whether the amended Section 10 of the Specific Relief Act is prospective or retrospective in operation.

C. Whether the purchaser is entitled to the relief of specific performance.

D. Whether the purchaser is entitled to take benefit of Section 12 of the Specific Relief Act in view of the part payment made in respect of the contract.

ISSUE-WISE DETAILED ANALYSIS

Issue A: Limitation

The Court examined the limitation period under Article 54 of the Limitation Act, 1963, which prescribes a three-year period from the date fixed for performance or when the plaintiff has notice of refusal. The agreements in question stipulated a three-month period for the completion of the sale consideration, which the Court interpreted as making time the essence of the contract. The Court found that the suit filed by the purchaser was barred by limitation as it was filed beyond the three-year period from the date fixed for performance.

The Court emphasized that the purchaser's attempt to rely on a notice dated 08.02.2000 to extend the limitation period was insufficient because the condition of time being the essence had been breached, and no equity could be claimed to escape the consequences of such a breach.

Issue B: Retrospective or Prospective Application of Amended Section 10

The Court examined whether the 2018 amendment to Section 10 of the Specific Relief Act, which made specific performance a mandatory remedy, applied retrospectively. The Court concluded that the amendment was substantive, not procedural, and therefore could not be applied retrospectively. The Court emphasized that substantive amendments require express legislative intent for retrospective application, which was absent in this case.

Issue C: Entitlement to Specific Performance

The Court analyzed whether the purchaser was entitled to specific performance under the pre-amended law, which allowed for judicial discretion. The Court noted that discretion should be exercised in a principled manner. The purchaser's delay in seeking specific performance and failure to adhere to the time stipulation in the contract were significant factors against granting specific performance. The Court found that the purchaser was not ready and willing to perform his part of the contract within the stipulated time, thus disentitling him from specific performance.

Issue D: Benefit of Section 12 of the Specific Relief Act

The Court considered whether the purchaser could claim specific performance for part of the contract under Section 12 of the Specific Relief Act, given the part payment made. The Court held that Section 12 did not apply as the purchaser's inability to perform was due to his own conduct, not due to any external factors or partial inability of the vendors. The Court emphasized that the purchaser's delay and laches barred the claim for specific performance, even for part of the contract.

SIGNIFICANT HOLDINGS

The Court held that the suit for specific performance was barred by limitation, as the purchaser failed to file the suit within the prescribed period. The Court ruled that the 2018 amendment to Section 10 of the Specific Relief Act was substantive and could not be applied retrospectively. The Court found that the purchaser was not entitled to specific performance due to his failure to perform his contractual obligations within the stipulated time. Additionally, the Court determined that Section 12 of the Specific Relief Act did not apply, as the purchaser's failure was due to his own conduct.

The Court directed the vendors to repay the part payment made by the purchaser with interest, despite the forfeiture clause in the contract, to render complete justice between the parties. The appeal was allowed on these terms, and the parties were left to bear their own costs.