Delhi High Court
Shikha Misra & Anr vs S. Krishnamurthy on 23 April, 2014
Author: Rajiv Sahai Endlaw
Bench: Rajiv Sahai Endlaw
*IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 23rd , April, 2014
+ CS(OS) 1854/2011
SHIKHA MISRA & ANR ..... Plaintiffs
Through: Mr. Sudhir Nandrajog, Sr. Adv. with
Mr. Rajesh Ranjan and Mr. Joel,
Advocates.
Versus
S. KRISHNAMURTHY ..... Defendant
Through: Mr. Rajat Aneja, Ms. Rashmi Verma
and Ms. Swati Gupta, Advocates
CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
RAJIV SAHAI ENDLAW, J
1. The following issues No.(ii) and (iii), of the issues framed on 27th
March, 2014 in this suit for specific performance of an Agreement of Sale of
immovable property and for permanent injunction restraining the defendant
from selling, assigning or mortgaging or creating any third party rights in the
property agreed to be sold, and ordered to be treated as preliminary issues
are for adjudication:-
"(ii) Even if the above issue were to be decided in
favour of the plaintiffs, whether the document dated
19th April, 1992 constitutes a binding and
enforceable Agreement to Sell of which specific
performance can be claimed? OPP
CS(OS) 1854/2011 Page 1 of 36
(iii) Even if the above issues are decided in favour
of the plaintiffs whether the suit filed in the year
2011 for specific performance of the alleged
Agreement to Sell dated 19th April, 1992 is within
time? OPP"
2. The counsels for the parties have been heard.
3. The two plaintiffs i.e. the plaintiff no.1 and her husband Mr. Santosh
Misra have instituted this suit, pleading:-
(i) that the plaintiff no.1 was a tenant of Ms. Manjula
Krishnamurthy wife of the defendant, in flat No.128, Pocket-B,
SFS DDA, East of Kailash, New Delhi, w.e.f. January, 1987 at
a monthly rent of Rs.2,000/- and on the terms and conditions
contained in the Agreement Dated 25th February, 1987;
(ii) that on Independence Day of 1989, the said Ms. Manjula
Krishnamurthy told the plaintiffs that she would like to sell the
said flat to the plaintiffs; the plaintiffs agreed to the said offer;
(iii) Ms. Manjula Krishnamurthy died in the year 1990 and after her
demise, the defendant became the sole owner of the said flat;
(iv) the defendant told the plaintiffs that he would do the paper
work for transfer of the said flat from the name of his wife to
CS(OS) 1854/2011 Page 2 of 36
his name and as soon as the paper work was completed, the flat
will be sold to the plaintiffs and that the plaintiffs should keep
paying a monthly / annual amount, lump sum per annum which
would be adjusted towards the final sale price;
(v) that the defendant thus on 19th April, 1992 entered into an
Agreement to Sell the said flat with the plaintiffs at the market
rate which would govern the sale consideration prevalent on the
day the DDA / competent authority changes the flat from the
name of his wife to the name of the defendant; a copy of the
said Agreement to Sell is annexed to the plaint;
(vi) that the defendant in the years 1998, 2000, 2003, 2004, 2005,
2006 and lastly in monsoon of 2007 / late 2009 assured the
plaintiffs that the paper work for change of ownership of the
flat was not complete and the defendant would abide by his
commitment and promise to sell the flat to the plaintiffs;
(vii) that the plaintiffs, on 20th December, 2010, for the first time
came to know that the mutation had taken place in favour of the
defendant on 29th October, 2009 and Conveyance Deed (of
CS(OS) 1854/2011 Page 3 of 36
freehold rights in the flat) was executed in favour of the
defendant on 26th November, 2009; this was conveyed to the
plaintiffs by the defendant himself who also gave necessary
documents to the plaintiffs on 20th December, 2010 and in
furtherance to the Agreement to Sell undertook to sell the flat to
the plaintiffs and told the plaintiffs that the plaintiffs will "now"
have to purchase the flat; the letter dated 20th December, 2010
written by the defendant is also annexed to the plaint;
(viii) though the plaintiffs were ready and willing but the defendant
did a volte face in the second week of February, 2011 and on
24th February, 2011;
(ix) the parties had agreed that whatever advances were being paid
by the plaintiffs would be adjusted towards the sale
consideration; the defendant asked the plaintiffs to pay amounts
higher than the rental value promising that the same would
form part and parcel of the sale consideration; believing the said
assurance the plaintiffs towards the end were paying
approximately Rs.6,500/- per month and in all Rs.1.5 lacs to
CS(OS) 1854/2011 Page 4 of 36
Rs.2 lacs per annum; the plaintiffs have so paid Rs.18,81,000/-
to the defendant till the date of institution of the suit;
(x) that as per the Agreement to Sell, the market price on 29th
October, 2009 is the basis of the sale consideration to be paid
by the plaintiffs to the defendant;
(xi) that the circle rate fixed by the Government of NCT of Delhi
for East of Kailash for residential purpose was Rs.13,000/- per
sq. mt. in the year 2009 making the total sale consideration as
Rs.16,16,030/-;
(xii) that as per the circle rates of Rs.26,000/- per sq. mt. of
February, 2011, the value of the flat is Rs.32,32,060/-;
(xiii) however the plaintiffs learnt that the defendant was showing the
flat to others for the purposes of sale;
(xiv) that the defendant avoided to give confirmed date for
completion of sale; and,
(xv) that the plaintiffs were basing the suit at the current circle rate
of Rs.26,000/- per sq. mt. according to which the price of the
CS(OS) 1854/2011 Page 5 of 36
flat is Rs.32,32,060/- and out of which the plaintiffs have
already paid more than Rs.18 lacs;
hence this suit for specific performance and permanent injunction;
4. Summons of the suit and notice of the application for interim relief
were issued to the defendant though no ex parte relief was granted.
5. The defendant, on appearance in this suit, informed of having filed a
suit for ejectment of the plaintiffs and which was pending consideration
before the Addl. District Judge.
6. The defendant has contested the suit by filing a written statement, on
the ground:-
(a) denying the Agreement to Sell and calling the filing of the suit
to be in abuse of the process of this Court;
(b) that the relief claimed in the plaint is vague and barred by time;
(c) that the defendant on 1st July, 2011 had instituted the suit for
ejectment of the plaintiffs and the proceedings in the present
suit are liable to be stayed under Section 10 of the CPC; that the
plaintiffs avoided to receive the summons of the said suit and
filed the present suit;
CS(OS) 1854/2011 Page 6 of 36
(d) that though the flat was let out for a period of two years in the
year 1986 at a rent of Rs.2,000/- per month but in terms of the
Rent Agreement dated 25th February, 1987 the rent was
enhanced from time to time and the plaintiffs were last paying
rent to the defendant at Rs.17,000/- per month;
(e) that the plaintiffs for the first time in their legal notice dated 9 th
April, 2011 had alleged an Agreement to Sell and to which
legal notice a reply dated 25th May, 2011 was got sent by the
defendant;
(f) denying that the wife of the defendant or the defendant had
agreed to sell the flat to the plaintiffs;
(g) that the documents of the flat were supplied to the plaintiffs
since the plaintiffs were wanting to enquire the market price of
the flat;
(h) denying that the letter dated 20th December, 2010 of the
defendant is in consonance with the Agreement to Sell;
(i) denying that the defendant had on 19th April, 1992 agreed to
sell the flat to the plaintiff;
CS(OS) 1854/2011 Page 7 of 36
(j) denying that the defendant had at any time meted out any
assurances as claimed to the plaintiffs; and,
(k) denying any agreement for adjustment of the payments made by
the plaintiffs to the defendant towards rent, in the sale price.
7. Needless to state, the plaintiffs have filed a replication reiterating their
case in the plaint.
8. On 27th March, 2014, on the pleadings of the parties the following
issues were framed:-
"(i) Whether the signatures on the document dated
19th April, 1992 titled Agreement to Sell are of
the defendant? OPP
(ii) Even if the above issue were to be decided in
favour of the plaintiffs, whether the document
dated 19th April, 1992 constitutes a binding and
enforceable Agreement to Sell of which specific
performance can be claimed? OPP
(iii) Even if the above issues are decided in favour of
the plaintiffs whether the suit filed in the year
2011 for specific performance of the alleged
Agreement to Sell dated 19th April, 1992 is
within time? OPP
(iv) Whether there was any agreement between the
parties that amounts paid by the plaintiffs
toward rent of the property shall be adjusted
towards the sale consideration? OPP
CS(OS) 1854/2011 Page 8 of 36
(v) If the above issues are decided in favour of the
plaintiffs, on what terms and at what price is the
defendant liable to sell the flat / property to the
plaintiffs? OPP
(vi) Relief."
and of which issues no.(ii) & (iii), as aforesaid, were ordered to be
treated as preliminary issues and it was clarified that under issue No.(ii), the
counsel for the plaintiffs to also address on the aspect of the effect of the
Agreement to Sell dated 19th April, 1992 being without consideration.
9. Before recording the respective contentions it is deemed appropriate
to set-out herein below the documents filed by the plaintiffs in support of the
existence of the Agreement to Sell.
10. The document dated 19th April, 1992 purportedly signed by the
defendant, is as under:-
"Agreement to Sell
I S. Krishnamurthy son of Sh. Sita Raman resident of
House No.A-1/273, Safdarjung Enclave New Delhi,
taking into consideration the cordial relationship
with Shikha and Santosh Misra, I agree to sell the
D.D.A. Flat No.B-128, East of Kailash, New Delhi
to Shikha and Santosh Misra at a market price on
the day when D.D.A. converts or transfers the flat in
my name as my wife has predeceased me, who was
the owner of the flat.
CS(OS) 1854/2011 Page 9 of 36
Date: 19.04.1992
Sd.
Delhi"
11. The letter dated 20th December, 2010 of the defendant to the plaintiff
is as under:-
"Mr. Santosh Misra Dec 20, 2010
of B-128 East of Kailash.
Following documents are attached as per your
requirements. Do acknowledge receipt and act now
in regard to the purchase of house. Please keep me
posted with the developments as and when you know.
Sooner the better.
(1) Letter of allotment by DDA-July 1985
(2) Request for the last and final payment as the
fifth one dated Apr. 1985.
(3) A copy of the mutation document by
Municipal Corporation of Delhi-March 2002
(4) A copy of Death Certificate of Mrs. Manjula
Krishnamurthy- 11 Oct. 1990
(5) Possession of Flat Slip- 28 Nov. 1985
(6) Physical possession of Flat on July 27 1985
(7) A copy of ground rent of B-128 East of
Kailash from 1988-2002
(8) A copy of the mutation certificate by DDA
dated 29-10-2009
(9) You are already in possession of freehold
letter showing payment of stamp duty and
CS(OS) 1854/2011 Page 10 of 36
conversion charges for free hold and also
showing me as the owner of the property of
B-128 East of Kailash
(10) A copy of DDA Payment Schedule
(11) A copy of Property tax receipt of 2010-2011
Sd.
Mr. S. Krishnamurthy
20/12/2010"
12. The senior counsel for the plaintiffs has argued:-
A. that the understanding arrived at with the wife of the defendant
on the Independence Day of the year 1989 was oral;
B. the written Agreement to Sell is of 19th April, 1992 supra,
though the defendant denies his signatures thereon;
C. the letter dated 20th December, 2010, which is admitted, is in
furtherance of the said Agreement to Sell;
D. that the Agreement to Sell dated 19th April, 1992:-
(i) shows of the desire of the defendant to sell;
(ii) clearly identifies the flat agreed to be sold;
CS(OS) 1854/2011 Page 11 of 36
(iii) clearly specifies the date of sale as the date on which the
DDA converts or transfers the flat from the name of the
wife of the defendant to the name of the defendant;
(iv) clearly describes the methodology of determination of
sale price;
E. that an Agreement to Sell need not to be signed by both the
purchaser and the seller;
F. reliance is placed,
(i) on Rajkishor Mohanty Vs. Banabehari Patnaik AIR
1951 Orissa 291 (DB) - laying down in the context of a
suit for specific performance that if the parties are not
able to come to a settlement with regard to the price, the
Court is not helpless and is bound to fix a price and the
said aspect does not effect the enforceability of the
contract to sell and that a contract may fix the manner in
which the price is to be determined or it may be stipulate
a fair price being fixed and a contract is binding though
CS(OS) 1854/2011 Page 12 of 36
the price is not specifically ascertained in the contract
itself;
(ii) on UOI Vs. Modi Sugar Mills Ltd. ILR 1970 II Delhi 92
(DB) - laying down that in a contract of sale of goods,
the parties may agree that the price of the goods may be
fixed by a third person who would be the valuer and
such a contract is valid in as much as fixation of price by
the valuer makes it certain and enforceable;
(iii) on illustration (e) of Section 29 of the Indian Contract
Act, 1872 providing that an Agreement to Sell of rice at a
price to be fixed by a third person is not uncertain or void
as the price is capable of being made certain;
G. that the market price of the flat, to which the parties had agreed
as sale consideration, is capable of being ascertained;
H. such market price is determined in the land acquisition
proceedings also;
CS(OS) 1854/2011 Page 13 of 36
I. that the time for completion of sale is also certain i.e. the date
of transfer of the flat from the name of the wife of the defendant
to the name of the defendant;
J. that in interpretation of contracts principle of business efficacy
is to be applied;
K. that it is well known that market value has to be determined in a
particular fashion;
L. on enquiry as to what was to be the basis of ascertaining the
market price, it is argued that the understanding of the parties
was of the market price being as per the circle rates;
M. on enquiry whether the plaintiffs were willing to pay / match
the price which may be available to the defendant of the said
flat if the same were to be sold free from all encumbrances,
answer is given in the affirmative contending that three months
time for such payment should be given to the plaintiffs;
N. that there is no requirement for an Agreement to Sell to be in
writing;
CS(OS) 1854/2011 Page 14 of 36
O. reliance is placed on Aloka Bose Vs. Parmatma Devi (2009) 2
SCC 582 laying down that an Agreement to Sell signed by the
vendor alone and delivered to the purchaser and accepted by the
purchaser is a valid contract;
P. that the payment of any consideration at the time of Agreement
to Sell is not essential and promise to pay the consideration in
future is enough;
Q. that the plaintiffs have expressly pleaded the terms and
conditions agreed upon of sale, including of adjustment of the
amounts paid by the plaintiffs from time to time in the sale
price;
R. that the plaintiffs, by making payments from time to time have
shown their readiness and willingness;
S. that adequacy of consideration is not relevant, attention in this
regard is invited to Explanation 2 to Section 25 of the Contract
Act;
T. that the suit for specific performance is within time since the
date for completion of the sale was transfer of the flat from the
CS(OS) 1854/2011 Page 15 of 36
name of the wife of the defendant to the name of the defendant
and which happened only in October, 2009 and the freehold
rights in the flat, only on conveyance whereof the defendant
could execute the Sale Deed, were conveyed to the defendant
by the DDA only on 26th November, 2009 and the suit has been
filed within three years therefrom; and,
U. that the defendant, vide letter dated 20th December, 2010 further
confirmed the Agreement to Sell.
13. Per contra, the counsel for the defendant has argued:-
I. that as per the Rent Agreement dated 25th February, 1987
filed by the plaintiffs themselves, the rent of Rs.2,000/-
per month was for a period of two years only and the rent
thereafter was to be increased by 20%; that the plaintiffs
had been increasing the rent by 20%;
II. that in admission / denial of documents the defendant
has denied the bank statement filed by the plaintiff;
CS(OS) 1854/2011 Page 16 of 36
III. that the plaintiffs have not pleaded as to how they have
arrived at the amount of Rs.18,81,000/- which is pleaded
to have been paid to the defendant;
IV. that the plaintiffs, in the legal notice dated 9th April, 2011
got sent by them had stated that the defendant on 26 th
October, 2008 had pegged the market value of the flat at
Rs.55 lacs and to which the plaintiffs had agreed and
were in the suit mala fidely claiming the price to be
Rs.32,32,060/-;
V. that the plaintiffs have been giving different versions of
sale consideration at different places and which showed
that there was no certain agreement between the parties;
and,
VI. reliance is placed on Mayawanti Vs. Kaushalya Devi
(1990) 3 SCC 1 - laying down that the stipulation and
terms of the contract have to be certain and the parties
have to have consensus ad idem for the contract to be
specifically enforceable; and on, (ii) High Way Farms
CS(OS) 1854/2011 Page 17 of 36
Vs. Chinta Ram 2000 (56) DRJ (Suppl) 201 - in the
facts of that case finding that the parties had only agreed
to enter into an agreement and holding that no contract
had come into being between the parties.
14. The senior counsel for the plaintiffs in rejoinder again contended that
the plaintiffs are willing to pay the market price.
15. There can be no doubt that an Agreement to Sell, including of an
immovable property, can be oral. When such an Agreement to Sell is denied,
the question whether any such oral Agreement to Sell had taken place or not
can be decided only after evidence.
16. However preliminary issues aforesaid were framed in this suit finding
that the plaintiffs were calling the document dated 19 th April, 1992 to be an
Agreement to Sell. As per the averments in the plaint, on the Independence
Day of the year 1989, the wife of the defendant had merely told the plaintiffs
that she would like to sell the flat to the plaintiffs and the plaintiffs had
merely agreed to the said offer. The plaintiffs have not pleaded that any
other terms were settled on that date. The Agreement to Sell, of which
specific performance is claimed, is the Agreement of 19th April, 1992 and
CS(OS) 1854/2011 Page 18 of 36
which is in writing. It has thus to be decided whether the written Agreement
to Sell dated 19th April, 1992 is specifically enforceable and even if that be
so, whether the suit filed in the year 2011 for specific performance thereof is
within time. The said Agreement to Sell, even if ultimately proved by the
plaintiffs to be signed by the defendant, merely contains an Agreement by
the defendant to sell to the plaintiffs the flat at a market price on the date
when the DDA converts or transfers the flat from the name of the wife of the
defendant to the name of the defendant.
17. Section 29 of the Indian Contract Act, 1872 provides that the
agreements, the meaning of which is not certain, or capable of being made
certain are void. The following are the Illustrations to the said Section:-
"(a) A agrees to sell B "one hundred tons of oil".
There is nothing whatever to show what kind of oil was
intended. The agreement is void for uncertainty.
(b) A agrees to sell B "one hundred tons of oil" of a
specified description, known as an article of
commerce. There is no uncertainty here not make the
agreement void.
(c) A who is a dealer in coconut-oil only, agrees to
sell to B "one hundred tons of oil". The nature of A's
trade affords an indication of the meaning of the
words, and A has entered into contract for the sale of
one hundred tons of coconut-oil.
CS(OS) 1854/2011 Page 19 of 36
(d) A agrees to sell to B "all the grain in my granary
at Ramnagar". There is no uncertainty here make the
agreement void.
(e) A agrees to sell to B "one thousand maunds of
rice at a price to be fixed by C". As the price capable
of being made certain, there is no uncertainty here to
make the agreement void.
(f) A agrees to sell to B "my white horse for rupees
five hundred or rupees one thousand". There is nothing
to show which of the two prices was to be given. The
agreement is void."
18. Reliance by the senior counsel for the plaintiffs on Illustration (e)
supra cannot be equated with the facts of the present case. As per the
aforesaid Agreement to Sell also, the parties had not agreed to any third
party fixing the price. Similarly Illustration (c) supra though admits that in
the absence of the description of the oil agreed to be sold, the contract would
have been uncertain and void, provides that it would not be so, for the reason
of the of the seller being the dealer of one kind of oil only and which is
deemed to afford an indication of the kind of oil agreed to be sold.
19. However, "market price", as would be apparent from the conduct of
the plaintiffs themselves, can have different connotations and in my view,
does not afford any indication of what the agreement between the parties as
to the price was.
CS(OS) 1854/2011 Page 20 of 36
20. The plaintiffs, in the legal notice dated 9th April, 2011 supra, with
respect to the agreement arrived at on the Independence Day of the year
1989 stated as under:-
"That, on Independence Day of the year 1989, Ms.
Manjula and you had come to our clients above residence
and expressed, that they would like to sell the said
demised premises, to our clients and thus an oral
agreement was struck. You and Ms. Manjula, your wife,
had stated to our clients, that "we are looking for
monthly payments to be made in such a manner so that,
we can live comfortably, every month and the period of
payments be stretched for a long time, as we are to retire
soon. Our clients immediately agreed and complied to
your wishes."
21. The plaintiffs, in the said notice itself, with respect to the happenings
on 19th April, 1992, stated as under:-
"However, Mrs. Manjula had died in the year 1990,
wherein, you brought to the notice of our clients that, as
the demised premises was in her name (Manjula), "I have
to do the paper work" and till such time it is completed,
"You keep paying monthly due as advance for the sale
price of the flat in question, while you continue as a
tenant. That, on 19.04.92 you had entered into
Agreement of Sell of the flat, and stated that market price
of the demised premises will be the price on the date of
transfer by DDA as you were anticipating, that the formal
change of name from DDA, in your name will be done as
a routine by substituting your name from your late wife's
name.
CS(OS) 1854/2011 Page 21 of 36
22. The plaintiffs in the said notice further stated as under:-
"That, you had said on 26.10.2008, that the flat in
question would be transferred in your name very shortly
and that you have pegged the market value, of the
demised premises at Rs.55 lakhs as a total sale
consideration for the said flat which is the market price
to which our clients as perfect citizens, readily agreed
and have already deposited / paid sum of Rs.18.81 lacs
toward the sale consideration for the said flat in question
in your favour. That our clients even ignored the "tenant
concession" which is the custom, in determining the
market price on the day. Wherein a tenant purchases /
buys the tenanted property, on a discount of 1/3 rd from
the price, as the same is reduced from the market rate.
That, then the agreement dated 19.04.92 was also
reiterated and extended. Our clients always believed to
be fair and wanted to keep their word and the agreement
wherein you asserted that price, for the demised premises
shall be the price on the day, the conversion is complete
was thus fulfilled. They kept their part of the bargain.
My clients readily agreed as you were well known to
our clients. That, in the beginning of this year in
January, 2011, our clients offered to pay the balance sale
consideration and asked you, to formalize the legal sale
papers by accounting the advance monies, you had
received as an Advance for the Agreement to Sell, of the
demises premises, and draw out a balance sheet for the
sale price of Rs.55 lakhs for the purpose of the sale deed
which was the price prevailing when the property in
question was transferred in your name by DDA.
That, this was evident by you deed/words, when you last
met our clients, on 24.02.2011, at the demised premises,
when you avoided to tell them a fixed date for execution
of the sale deed of the demised premises for the price
CS(OS) 1854/2011 Page 22 of 36
which was agreed as stated above and you have already
realized a sum of Rs.18.81 lacs as an advance for the said
sale deed." (emphasis added)
As per the aforesaid, the market price was Rs.55 lacs.
23. However the plaintiffs in the plaint, neither mentioned the said notice
dated 9th April, 2011 nor filed a copy thereof along with their list of
documents and on the contrary have pleaded the market price at which the
defendant had agreed to sell the flat to the plaintiffs to be as per the circle
rates fixed by the Government of NCT of Delhi.
24. Again, though the case set-up by the plaintiffs in the plaint is, of the
market price as per the agreement between the parties being the circle rate of
the date on which the flat was transferred from the name of the wife of the
defendant to the name of the defendant and as per circle rates according to
the plaintiffs the market price was Rs.16,16,030/-, the plaintiffs, perhaps to
institute the suit in this Court, the minimum pecuniary jurisdiction of which
is above Rs.20 lacs and under the impression that the disposal of the suit
before this Court would take longer than the disposal of the suit before the
Court of the District Judge where it would have been filed as per the market
price of Rs.16,16,030/-, have sought specific performance by treating the
CS(OS) 1854/2011 Page 23 of 36
market price to be the circle rate on the date of institution of the suit and as
per which the market price comes to Rs.32,32,060/-.
25. The plaintiffs during the arguments, have argued the market price to
be the price which the said flat would fetch in the market.
26. Thus, according to the plaintiffs themselves, there are several versions
of market price. The agreement dated 19th April, 1992 does not provide the
mode of determination of market price. Though the plaintiffs in the legal
notice dated 9th April, 2011 stated that the market price was to be the price
which the flat would fetch in the market and that such market price in
October, 2008 was Rs.55 lakhs, the plaintiffs in the plaint stated that the
market price was to be the price as per the circle rates announced by the
Government of NCT of Delhi. Again, though according to the plaintiffs the
date of determination of market price was to be the date of transfer of the flat
from the name of the wife of the defendant to the name of the defendant and
as per circle rates of the said date the market price was Rs.16,16,030/- but
the plaintiffs valued the suit as per the circle rates of the date of institution of
the suit and as per which the market price was Rs.32,32,060/-. The plaintiffs
however again, at the time of arguments on 31 st March, 2014, said the
market price was to be, not the market price of Rs.55 lakhs as in October,
CS(OS) 1854/2011 Page 24 of 36
2008 nor of Rs.16,16,030/- or Rs.32,32,060/- but of what the defendant was
in a position to fetch in the market as of today.
27. Thus, according to the plaintiffs themselves, there are several versions
of the market price to which the parties had agreed.
28. In the face of the case of the plaintiffs themselves, the argument of the
senior counsel for the plaintiffs, of the agreement to sell of which specific
performance is sought being not void for uncertainty and/or capable of being
made certain, cannot be accepted.
29. The practice, of transactions in sale / purchase of immovable property
being highly undervalued has been taken judicial notice of in Suraj Lamp
And Industries Pvt. Ltd. Vs. State of Haryana (2012) 1 SCC 656 also. It
thus cannot be said that any indice of market price can be had also from
deeds of sale / purchase of similar properties of contemporaneous time.
30. The offer by the senior counsel for the plaintiffs during the hearing, to
pay the market price as of today is in the circumstances of no avail and
rather shows the attempt of the plaintiffs who are in possession of the flat,
having been inducted therein as a tenant, to be adopting all means fair or
unfair available to them to retain such possession. It shows that the plaintiffs
CS(OS) 1854/2011 Page 25 of 36
themselves do not fall back on the agreement pleaded of the market price
being as per the circle rates.
31. In fact I had during the hearing enquired from the senior counsel for
the plaintiffs whether there were any circle rates in Delhi in the year 1992
when the defendant is claimed to have made a contract with the plaintiffs for
sale to the plaintiffs of the flat at the said circle rates. In fact the plaintiffs
have shied away from expressly pleading as to what was to be the modus of
arriving at the market price. It is only when the enquiry was made from the
senior counsel for the plaintiffs that the answer came that the said market
price was to be as per the circle rates. As far as I recollect, circle rates for the
purposes of determination of stamp duty payable on transactions of
immovable property were introduced in Delhi for the first time only in the
year 2007-08.
32. Faced therewith the senior counsel for the plaintiffs contended that
prior thereto there were circle rates issued by the DDA and the L&DO for
the purposes of charging unearned increase and circle rates issued by the
MCD for the purposes of determination of Property Tax.
CS(OS) 1854/2011 Page 26 of 36
33. He however could not state as to what was to be the price as per either
of the said rates.
34. The same again shows the vagueness and uncertainty of the agreement
pleaded by the plaintiffs. I would be loath to, in a suit for specific
performance, conduct an enquiry to determine the market price. The same
would amount to the Court making a contract for the parties instead of
specifically enforcing the contract. I may mention that though the Supreme
Court in Satya Jain Vs. Anis Ahmed Rushdie (2013) 8 SCC 131 directed
specific performance at prevailing market price and remitted the matter to
this Court for determination of the said market price but subsequently on
review, vide judgment reported in (2013) 8 SCC 147 clarified that the same
was not to be treated as a precedent. The said clarification by the Supreme
Court itself is indicative of, the jurisdiction while entertaining a claim for
specific performance, not extending to determination of market price.
35. The reliance placed by the senior counsel for the plaintiffs on the
determination of market price in the land acquisition proceedings is also
misconceived. The said determination is under a statute and which also lays
down the guidelines and / or guidelines of determination of which market
price have been evolved by the Courts over a period of time. Similarly, for
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determination for fair rent are well enshrined in the Rent Acts of different
States. However the said principle cannot be applied to enforcement of
contracts.
36. Specific performance of a contract, in addition to the general
provisions of contracts governed by the Contract Act, is also regulated by
the Specific Relief Act, 1963. A perusal of Section 14(1)(b) thereof shows
that contracts, specific performance of material terms of which the Court
cannot enforce, are not specifically enforceable. Similarly Section 14(3)(c)(i)
thereof, in relation to contracts for construction of any building or execution
of any work, inter alia provides that for such contracts to be specifically
enforceable, the building or the work should be described in terms
sufficiently precise to enable the court to determine the exact nature of the
building or work. Similarly Section 18(a) thereof provides that where the
contract in writing does not contain all the terms pleaded to have been
agreed upon, the contract cannot be specifically enforced except with
variation set-up by the defendant. The said provisions, though not applicable
to the facts of the case, are indicative of, only such contracts being
specifically enforceable which clearly spell out the terms and conditions
agreed between the parties, even though may not strictly be void for the
CS(OS) 1854/2011 Page 28 of 36
reason of uncertainly within the meaning of Section 29 of the Contract Act.
The jurisdiction exercised by the Court in a suit for specific performance is
to ensure performance of each and every thing to which the parties had
agreed and does not extend to making a contract between the parties.
37. The Supreme Court, in Ganesh Shet Vs. Dr. C.S.G.K. Setty (1998) 5
SCC 381, cited with approval Pomeroy on specific performance of contracts,
opining that greater amount or degree of certainty is required in the terms of
an agreement, which is to be specifically executed in equity, than is
necessary in a contract which is to be the basis of an action at law for
damages and that while an action at law is founded upon mere non-
performance by the defendant and this negative conclusion can be
established without determining all the terms of the agreement with
exactness, the suit in equity is wholly an affirmative proceeding; procuring a
performance by the defendant demands a clear, definite and precise
understanding of all the terms.
38. Fry, in his treatise on specific performance of contracts, 6 th Edition, in
paragraphs 353, 355, 356 and 357 sums up that, (i) in all sales, price is an
essential ingredient and where price is neither ascertained nor rendered
ascertainable, the contract is void for incompleteness, and incapable of
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enforcement: (ii) an agreement to sell for 1500 pounds less than any other
purchaser would pay, is void, as the sale was not to be to any other
purchaser; (iii) where a contract specifies a way of ascertaining the price, the
contract is conditional till the ascertainment and is absolute only when price
has been determined in the manner agreed upon and if the price is not so
determined, the contract remains imperfect and incapable of being enforced.
39. The Supreme Court, in Mayawanti supra held that in case of specific
performance, it is settled law that jurisdiction to order specific performance
is based on existence of a valid and enforceable contract; where a valid and
enforceable contract has not been made, the Court will not make a contract
for them; specific performance will not be ordered if the contract itself
suffers from some defects which makes the contract invalid or
unenforceable; the contract being the foundation of the obligation, the order
of specific performance is to enforce that obligation. It was further held that
specific performance of a contract is the actual execution of the contract
according to its stipulation and terms and the Courts direct the party in
default to do what he had contracted to do; the stipulations and the terms
thus of the contract have therefore to be certain and the parties must have
been consensus ad-idem; if the stipulation and terms are uncertain and the
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parties are not ad-idem, there can be no specific performance, for there is no
contract at all.
40. Seen in the aforesaid light, the agreement to sell at market price on a
particular date without specifying or agreeing how the said market price was
to be determined, cannot be said to be a contract, the terms and conditions of
which are certain or which is enforceable. The conduct of the plaintiffs
themselves, as aforesaid, has demonstrated the several modes of
determination of market price and the different prices on which the plaintiffs
claim to be entitled to purchase. Consent of the defendant to neither of
them, except to the price of Rs.55 lakhs, is shown; however the plaintiffs
themselves have not sued for the specific performance of the contract for
consideration of Rs.55 lakhs.
41. If according to the plaintiffs, the agreement was for the market price
as per the circle rates of the date of the transfer of flat in the name of the
defendant, the plaintiffs by seeking specific performance on a price of a later
date, cannot be said to be claiming specific performance of the contract
arrived at with the defendant. The same is indicative of the plaintiffs
themselves having abandoned, given up and / or given a go-by to the
contract which was arrived at according to the plaintiffs themselves.
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42. There is another aspect. The plaintiffs though are seeking specific
performance of the Agreement dated 19th April, 1992 which does not
provide for adjustment of rent towards the sale price, are now also seeking
the same. For this reason also, the plaintiffs are found to be not claiming
specific performance of the Agreement dated 19th April, 1992.
43. It is also a settled principle of law (See Lourdu Mari David Vs. Louis
Chinnaya Arogiaswamy (1996) 5 SCC 589) that a plaintiff who indulges in
falsehood is not entitled to the relief of specific performance. The plaintiffs
in their notice dated 9th April, 2011 claimed to have agreed to the market
price of Rs.55 lacs. However the plaintiffs, subsequently while filing this
suit, concealed and supressed the said agreement also, of the price having
been agreed at Rs.55 lacs and set-up a entirely new case, of the market price
being determined as per the circle rates. The agreement, for payment of price
of Rs.55 lacs, cannot also be said to be in terms of the Agreement dated 19 th
April, 1992, which was for payment of market price on the date of transfer
of the flat from the name of wife of the defendant to the name of the
defendant; Rs.55 lacs was the market price of the year 2008, till when such
transfer had not taken place.
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44. I am unable to agree with the view taken by the Division Bench of the
High Court of Orissa which in any case is more than half a century old and is
now antiquated. The Supreme Court, in Saradamani Kandappan Vs. S.
Rajalakshmi (2011) 12 SCC 18, in the context for suits of specific
performance has held that with the changing scenario and galloping prices of
immovable property, the old notions applicable to suits for specific
performance do not apply. Moreover, the factor which prevailed in the said
judgment for the Court to determine the market price and to which relevant
factor the senior counsel for the plaintiffs did not advert to, was that the
defendant in that case had already availed the benefit of part of the
settlement, for specific performance of the balance terms of which the suit in
that case was filed. The High Court in para 5 of the judgment held "the
defendants having had the benefit of the contract in respect of plot no. 1052
cannot be allowed to escape from the subsidiary contract to sell plot no.
1051 on the ground of difficulty as to valuation". It was in such
circumstance that the Court felt the need to fix the price. There is no such
compelling circumstance in the present case.
45. Rather, the whole case set-up by the plaintiffs is preposterous. Though
a little beyond the scope of the preliminary issues, but I cannot refrain
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myself from observing that the case pleaded by the plaintiffs is contrary to
the grain of human behaviour. It is inconceivable that a landlord, while
agreeing to sell his flat to a tenant, would also agree that the rent paid till the
date of completion of the sale be adjusted in the price. The grant of the relief
of specific performance is a discretionary matter and I am of the view that
when from the facts and circumstances appearing, the Court is clear that the
discretion in the grant of the relief of the specific performance is not to be
exercised in favour of the plaintiffs, nothing requires the Court to still
proceed with the trial and say what can be said today only, after several
years. Section 20(2)(a) of the Specific Relief Act provides that where the
terms of the contract or the conduct of the parties at the time of entering into
the contract or other circumstances under which the contract was entered
into are such that the contract though not voidable gives the plaintiffs an
unfair advantage over the defendant, the discretion to decree specific
performance shall not be exercised. Similarly the decree for specific
performance in the facts and circumstances aforesaid would also be
inequitable within the meaning of Section 20(2)(c) of the Specific Relief
Act.
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46. On the aspect of limitation also I am unable to agree with the senior
counsel for the plaintiffs. According to the plaintiffs, the completion of the
sale was dependent upon the action of the defendant and no time therefor
was fixed. In my view, even in such cases the plaintiff has to approach the
Court for specific performance within a reasonable time and cannot wait
endlessly and file the suit for specific performance whenever the plaintiff
may choose to do so. The plaintiffs, from the defendant for an unusually
long time not having the flat transferred to his name as the plaintiffs claim he
had promised to do, ought to have had notice that the defendant was refusing
to perform his part of the Agreement to Sell and ought to have filed the suit
for specific performance by compelling the defendant to have the flat so
transferred to his name and thereafter sell the same to the plaintiffs, within a
reasonable time of Agreement to Sell dated 19th April, 1992. The suit as
aforesaid has been filed after nearly 20 years therefrom.
47. I thus hold that on the averments contained in the plaint and the
documents filed therewith, no case of any binding enforceable Agreement to
Sell of which specific performance can be ordered, is made out and the suit
is also barred by time.
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48. Accordingly, both the preliminary issues are decided in favour of the
defendant and against the plaintiffs. Resultantly, the suit is dismissed. The
conduct of the plaintiffs also requires the plaintiffs to be burdened with costs
of the suit payable to the defendant. Counsel's fee assessed at Rs.25,000/-.
Decree sheet be drawn up.
RAJIV SAHAI ENDLAW, J.
APRIL 23, 2014 pp..
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