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TMI Blog1973 (8) TMI 166X X X X Extracts X X X X X X X X Extracts X X X X ..... D.W. 3, a nephew of Laxmanaswamy and an Income tax practitioner residing at Secunderabad, for the sale of this very property for ₹ 55,000/- the terms of which were embodied in a document Ex. B. 15. The First Defendant denies the binding character of the first agreement of 27-9-1962 under which a cheque for ₹ 10,000/- was drawn up by the Plaintiff in favour of the first Defendant and handed over to his agent by the Plaintiff. The exact reason for a cancellation of this cheque for ₹ 10,000/- in favour of the 1st Defendant is not clear, but, according to Sambamurthy, D.W. 3, the reason was that, actually, ₹ 20,000/- was being demanded on behalf of the first Defendant as earnest money to which the plaintiff had consented so that a new cheque was, for some unknown reason, to be issued and not another cheque for ₹ 10,000/. The evidence of Sambamurthy also show that the Plaintiff had become aware of want of written authority on the part of either Laxmanaswamy or Sambamurthy to conclude the contract on behalf of the 1st Defendant so that he must have felt uncertain about the effect of the first agreement. Evidently, attempts to show the Plaintiff that his pos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/- received from Gulam Hussain Jowkar (2nd Defendant), Rajab (3rd Defendant), Safar Jowkar (4th Defendant), Hussain Jowkar (5th Defendant), Wali Hussain Nasab (6th Defendant), all partners in the firm carrying on the business of running Alpha Hotel (7th Defendant), situated in front of the Railway Station at Secunderabad. Apparently, the offer of ₹ 70,000/- had come too late and proved too tempting for the first Defendant to resist it. 5. The first Defendant had, in answer to the suit of the Plaintiff-Respondent, pleased that the contract of 9-10-1962 was the result of misrepresentation and fraud. All he could urge in support of such a plea was that the first Defendant had been so completely overawed by the Plaintiff and his lawyer misrepresenting to him that the first agreement was still binding and that the Plaintiff could sue upon it that he executed the agreement of 9-10-1962. Both the Trial Court and the High Court had found the plea of fraud and misrepresentation taken by the first Defendant to be baseless. Nevertheless, the Trial Court had relied upon the facts leading up to the agreement of 9-10-1962 and the allegation that the first Defendant was overawed as suff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uced in toto :- 12. Except as otherwise provide in this Chapter, the specific performance of any contract of any contract may in the discretion of the Court be enforced- (a) when the act agreed to be done is in the performance, wholly or partly, of a trust; (b) when there exists no standard for ascertaining the actual damage caused by the non-performance of the act agreed to be done; (c) when the act agreed to be done is such that pecuniary compensation for its non-performance would not afford adequate relief; or (d) when it is probable that pecuniary compensation cannot be got for the non-performance of the act agreed to be done. Explanation.-Unless and until the contrary is proved, the Court shall presume that the breach of a contract to transfer immovable property cannot be adequately relieved by compensation in money, and that the breach of a contract to transfer moveable property can be thus relieved. 8. The principles embodied in Section 12 of the old Act have been incorporated in Section 10 of the Specific Relief Act of 1963 (hereinafter referred to as the Act of 1963 ) which runs as follows : 10. Except as otherwise provided in this Chapter, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... underlying the superficially attractive arguments on behalf of the Defendants-appellants are two: firstly, that the mere existence of a clause in a contract providing for liquidated damages or a penalty for a breach is sufficient to rebut the presumption raised by the explanation to Section 12; and, secondly, that, if the presumption is rebutted, the bar contained in Section 21 of the old Act will ipso facto become operative. We now proceed to deal with each of the two assumptions mentioned above. 12. The answer to the 1st assumption is provided by Section 20 of the old Act. It reads : 20. A contract, otherwise proper to be specifically enforced, may be thus enforced, though a sum be named in it as the amount to be paid in case of its breach, and the party in default is willing to pay the same. 13. If the Legislative intent was that the mere proof that a sum is specified as liquidated damages or penalty for a breach should be enough to prove that a contract for the transfer of immovable property could be adequately compensated by the specified damages or penalty, Section 20 of the old Act will certainly become meaningless. It is true that Section 20 of the old Act does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id there : The question always is : What is the contract ? Is it that one certain act shall be done, with a sum annexed, whether by way of penalty or damages, to secure the performance of this very act ? Or, is it that one of the two things shall be done at the election of the party who has to perform the contract, namely, the performance of the act or the payment of the sum of money? If the former, the fact of the penal or other like sum being annexed will not prevent the court's enforcing performance of the very act, and thus carrying into execution the intention of the parties : if the latter, the contract is satisfied by the payment of a sum of money, and there is no ground for proceeding against the party having the election to compel the performance of the other alternative. From what has been said it will be gathered that contracts of the kind now under discussion are divisible into three classes :- (i) Where the sum mentioned is strictly a penalty-a sum named by way of securing the performance of the contract, as the penalty is a bond : (ii) Where the sum named is to be paid as liquidated damages for a breach of the contract : (iii) Where the sum named ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction by a Court of appeal . This jurisdiction cannot be curtailed or taken away by merely fixing a sum even as liquidated damages. We think that this is made perfectly clear by the provisions of Section 20 of the old Act (corresponding to Section 23 of the Act of 1963) so that the Court has to determine, on the facts and circumstances of each case before it, whether specific performance of a contract to convey a property ought to be granted. 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 sufficiency or insufficiency of any evidence to remove such a presumption is a matter of evidence. The fact that the parties themselves specified a sum of money to be paid in the event of its breach is, no doubt, a piece of evidence to be considered in deciding whether the presumption has been repelled or not. But, in our opinion, it is nothing more than a piece of evidence. It is not conclusive or decisive. 21. The second assumption underlying the contentions on behalf of the Defendants-appellants i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Respondent, will only get ₹ 10,000/- more in price over ₹ 60,000/- if his contract of sale to the partners of the Alpha Hotel were to stand. It is, therefore, clear that the first Defendant must have some ulterior motive in being prepared to suffer an ostensible loss of ₹ 10,000/- even if his sale of 16-10-1962 for ₹ 70,000/- to the partners of the Alpha Hotel could be upheld. The plaintiff himself had stated that financial considerations do not really determine his stand. We are unable to accept this profession of unconcern for financial gain on the part of an astute businessman like the first Defendant. It is more likely that there is some undisclosed understanding between him and the partners of Alpha Hotel who are also co-appellants with him before us. 24. The result in that we think that the presumption contained in the explanation to Section 12 of the old Act was not rebutted here. In such cases Equity helps honest plaintiffs against Defendants who break solemnly given undertakings. The High Court had rightly decreed the suit for specific performance of the contract. 25. Lastly, it was urged before us that the High Court should not have lightly i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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