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TMI Blog2004 (7) TMI 684X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 20 clearly stipulates that merely inadequacy of consideration or the mere fact that the contract is onerous to the defendant or improvident in its nature would not constitute an unfair advantage within the meaning of sub-section (2) of Section 20. The Court for arriving at the said finding gave opportunities to the parties to settle the matter and the respondents No. l and 2 were prepared to pay upto ₹ 60 lakhs as against the demand of the appellant to the fine of rupees one and a half crores which was subsequently reduced upto ₹ 120 lakhs. In view of the respective stand taken by the parties, the Court inter alia directed the respondents No. l and 2 to pay a sum of ₹ 40 lakhs in addition to the sum already paid by them. Conclusion: The Supreme Court dismissed the appeal, upholding the High Court's decree for specific performance. The court found that the plaintiff had been ready and willing to perform her part of the contract, the suit was within time, and the discretionary jurisdiction was correctly exercised. The existence of a liquidated damages clause did not preclude specific performance, and escalation in property prices was not a sufficient ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 981. A further notice was issued by the Plaintiff on 29.6.1981 calling upon the defendant to execute the deed of sale. On or about 6.8.1981 the plaintiff sent a draft sale deed in order to enable the defendant to claim the requisite clearance under Section 230A of the Income Tax Act. A notice dated 7.9.1981 was also issued by the plaintiff to which the defendant did not reply. The plaintiff advanced in all ₹ 55,000 including ₹ 6,000 towards consideration on 9.9.1981 to enable the defendant to defray the expenses for obtaining the Income Tax clearance certificate. In the aforementioned situation, a suit for specific performance of the agreement of sale was filed. Once of the issue which was raised by the defendant in his written statement was that the plaintif had never been ready and willing to perform her part of contract. The learned Trial Court having regard to the pleadings of the parties inter alia framed the following issues: (4) Does the plaintiff prove that she was and has always been ready and willing to perform her part of the contract? (7) Whether the suit is within time? The Trial Court answered the issue No. 4 in the negative and dismissed the suit. An appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 SCC 481. Mr. M.N. Krishnamani, learned senior counsel appearing on behalf of the respondent, on the other hand, would submit that a finding of fact has been arrived at by the High Court to the effect that the respondent had all along been ready and willing to perform her part of the contract. It was urged that the defendant-appellant did not hand over the original documents and furthermore, did not discharge the mortgage. The learned counsel would contend that the mortgage was redeemed by the defendant upon receipt of the requisite amount from the plaintiff, the High Court must be held to have correctly exercised its discretionary jurisdiction. The learned counsel furthermore would draw our attention to the fact that the defendant-appellant accepted a sum of ₹ 20,000 in August, 1981 and within the period of two months thereafter the suit had been filed. It is indisputable that in a suit for specific performance of contract the plaintiff must establish his readiness and willingness to perform his part of contract. The question as to whether the onus was discharged by the plaintiff or not will depend upon the fact and circumstance of each case. No strait-jacket formula can b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid to be of the essence of the contract. In any event, the defendant consciously waived his right. He, therefore, now cannot turn round and contend that the time was of the essence of the contract and the plaintiff was not ready and willing to perform her part of contract in December, 1978. In Ardeshir H Mama (supra) in the fact of the matter it was held that there was no completed contract. The said decision has no application in the fact of the present case. The clause as regard payment of damages as contained in Clause (7) of agreement of sale reads as under : 7. That if the vendor fails to discharge the mortgage and also commits any breach of the terms in this agreement and fails to sell the property, then in that even he shall return the advance of ₹ 10,000 paid as aforesaid and shall also be liable to pay a further sum of ₹ 20,000 as liquidated damages for the breach of the agreement. The mortgage was, thus, required to be redeemed. From Exhibit P40 dated 15th June, 1979 it appears that the Life Insurance Corporation of India admitted the execution of the discharge and the Mortgagor (defendant) was authorized to present the same for registration. The mortgage dee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the penalty is a bond; (ii) Where the sum named is to be paid liquidated damages for a breach of the contract; (iii) Where the sum named is an amount the payment of which may be substituted for the performance of the act at the election of the person by whom the money is to be paid or the act done. Where the stipulated payment comes under either of the two first - mentioned heads, the Court will enforce the contract, if in other respects it can and ought to be enforced just in the same way as a contract not to do a particular act, with a penalty added to secure its performance or a sum named as liquidated damages, may be specifically enforced by means of an injunction against breaking it. On the other hand, where the contract comes under the third head, it is satisfied by the payment of the money, and there is no ground for the Court to compel the specific performance of the other alternative of the contract. This Court further stated: 20. The fact that the parties themselves have provided a sum to be paid by the party breaking the contract does not, by itself, remove the strong presumption contemplated by the use of the words unless and until the contrary is proved . The sufficien ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 3 acres belonging to me hereby agree to sell to you for ₹ 2000 and agree to receive ₹ 1000 from you in presence of V. D. N. Sane. A sale deed shall be made by me at my cost by 15.4.1972. In case the sale deed is not made to you or if you refuse to accept, in addition of earnest money an amount of ₹ 500 shall be given or taken and no sale deed will be executed. The possession of the property has been agreed to be delivered at the time of purchase. This agreement is binding on the legal heirs and successors and assigns. (Emphasis supplied ) Interpreting the said term, it was held: 6. The relationship between the parties has to be regulated by the terms of the agreement between them. Whereas the defendants in the suit had taken up the stand that the agreement dated 24.4.1969 was really in the nature of a loan transaction, it is the plaintiff who contended that it was an agreement to sell. As we read the agreement, it contemplates that on or before 15.4.1972 the sale deed would be executed. But what is important is that the agreement itself provides as to what is to happen if either the seller refuses to sell or the purchaser refuses to buy. In that event the agreem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, too late for the Appellant now to suggest that having regard to the escalation in price, the Respondent should be denied the benefit of the decree passed in his favour. Explanation l appended to Section 20 clearly stipulates that merely inadequacy of consideration or the mere fact that the contract is onerous to the defendant or improvident in its nature would not constitute an unfair advantage within the meaning of sub-section (2) of Section 20. The decision of this Court in Nirmala Anand (supra) may be considered in the aforementioned context. Raju, J. in the fact and circumstance of the matter obtaining therein held that it would not only be unreasonable but too inequitable for courts to make the appellant the sole beneficiary of the escalation of real estate prices and the enhanced value of the flat in question preserved all along by the respondents No. l and 2 by keeping alive the issues pending with the authorities of the Government and the municipal body. It was in the facts and circumstances of the case held : 23... Specific performance being an equitable relief, balance of equities have also to be struck taking into account all these relevant aspects of the matter, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd are trying to wriggle out of the contract. The respondents cannot take advantage of their own wrong and then plead that the grant of decree of specific performance would amount to an unfair advantage to the appellant. 46. Requiring the appellant to pay further sum of ₹ 40 lakhs would/may amount to frustrating the agreement itself as the appellant may not be in a position to pay the sum of ₹ 40 lakhs. Respective counsel for the parties had quoted the figure of a particular sum which could be paid to the appellant in lieu of avoiding the decree of specific performance. The appellant had not made an offer to pay any additional sum over and above the quoted price to sell by way of compensation. It does not indicate the financial position of the appellant to pay the additional sum of ₹ 40 lakhs. With due respect, in my view, it would be unfair to grant the decree of specific performance by one hand and take it back by the other. 47. For the reasons stated above, I am of the view that the appellant is entitled to the specific performance of agreement to sell the flat No. 71 on the 7th floor of Divya Prabha Building on the price mentioned in the agreement to sell whic ..... 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