Himachal Pradesh High Court
Man Chand Katoch vs Virender Speya on 13 July, 2018
Author: Tarlok Singh Chauhan
Bench: Tarlok Singh Chauhan
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA C.S. No. 4025 of 2013.
.
Judgment reserved on: 27.6.2018 Date of Decision: 13 .07.2018.
Man Chand Katoch ....Plaintiff
Versus
Virender Speya ...Defendant
Coram r
The Hon'ble Mr. Justice Tarlok Singh Chauhan, Judge.
Whether approved for reporting ?1 No For the Plaintiff : Mr. N. D. Sharma, Advocate.
For the Defendant : Mr. G.D. Verma, Senior Advocate, with Mr. B.C. Verma, Advocate.
Tarlok Singh Chauhan, Judge The plaintiff has filed the instant suit for specific performance of contract executed between the parties on 13.3.1997 whereby the defendant had agreed to sell plot No. 503, TypeB in Sector4, B.C.S., PhaseII, New Shimla to the plaintiff or in the alternative for recovery of Rs.80,00,000/ (for short suit land). It is averred that an agreement to sell was 1 Whether reporters of Local Papers may be allowed to see the Judgment ? Yes ::: Downloaded on - 16/07/2018 23:02:48 :::HCHP 2 executed between the parties whereby the defendant agreed to sell the suit land that had been allotted to the defendant vide .
letter dated 14.02.1996 by the Chief Administrator of the then H.P. Nagar Vikas Pradhikaran, Kasumpti, Shimla9 at the cost of Rs.3,67,388/. The area of the plot was 182.72 sq.mtrs. and was in possession of the defendant on hirepurchase basis. The defendant agreed to sell/transfer the plot and it was agreed that the plaintiff would make the payment through gross drafts in the name and saving bank account at UCO Bank, Kasumpti of the original transferee i.e. the defendant on account of payments made/deposited by him with the Himachal Pradesh Nagar Vikas Pradhikaran at the rate Rs.20,000/ in 8 (eight) quarterly instalments and it was also agreed by the parties that the first such instalment had been deposited on 12.3.1997.
In terms of the agreement of sale, the plaintiff deposited a sum of Rs.1,95,000/ in 8 (eight) quarterly instalments.In addition thereto, a sum of Rs.5,83,877/ was deposited by the plaintiff with the Himachal Pradesh Nagar Vikas Pradhikaran towards cost, ground rent, enhanced cost of plot and ground rent for the period 20122013 and 20132014. Thus in all, the plaintiff deposited a total sum of Rs.7,78,877/. The Himachal Pradesh ::: Downloaded on - 16/07/2018 23:02:48 :::HCHP 3 Housing and Urban Development Authority (for short HIMUDA) enhanced the cost of the plot allotted to the defendant by .
Rs.1,22,636/ which was deposited by the petitioner on 3.7.2008. In addition thereto, the plaintiff paid the ground rent and also the enhanced ground rent amounting to Rs.25,000/ and Rs.6,891/ respectively. It is averred that the plaintiff had fulfilled all the terms and conditions of the agreement dated 13.3.1997 and had performed each and every condition of the agreement and was still ready and willing to perform the same, but the defendant was dillydallying the matter and reluctant to transfer the plot in the name of the plaintiff. Hence, the suit.
2. The defendant contested the suit by filing written statement wherein preliminary objections regarding maintainability, concealment of material facts, the plaintiff having not approached the court with clean hands, alleged agreement of sale being not enforceable, suit being bad for non joinder of necessary parties, limitation, valuation etc. were raised. On merits, the execution of the agreement in question was not disputed. However, it was submitted that the agreement though had been reduced into writing, yet the same is not a legal and valid document as it was in contravention of ::: Downloaded on - 16/07/2018 23:02:48 :::HCHP 4 the terms and conditions as contained by the HIMUDA, which was previously known as Himachal Pradesh Nagar Vikas .
Pradhikaran and, therefore, the plaintiff was not entitled to the relief claimed.
3. It is further averred that the allotment in question was governed by the conditions as contained in Annexure 'A' attached with the allotment letter, according to which, the lease in respect of the plot in question commenced with effect from the date of issue of the letter after payment of the amount as mentioned in the said letter. Apart from the payment of Rs.3,67,380/ the defendant was also liable to pay from the commencement of this lease ground rent calculated on the premium of the land @ 2 ½% per annum for the first 33 years, @ 3¾ % per annum for the next 33 years and @ 5% per annum for the remaining 33 years of the lease and in case there was any contravention of these terms and conditions, the hire purchase agreement that had been executed in favour of the defendant by the Pradhikaran on 6.4.1996 was liable to be terminated. It is further averred that as per this agreement, there was a complete bar to transfer, alienate, sell, assign or otherwise part with the possession of the whole or any part of ::: Downloaded on - 16/07/2018 23:02:49 :::HCHP 5 the plot without previous consent in writing of the owner and any permission on this account was subject to the discretion of .
the Pradhikaran. The replying defendant had entered into an agreement in ignorance to the above said terms and conditions and the same is not enforceable in the eyes of law and, therefore, since he was neither competent in law to alienate this plot in favour of the plaintiff nor was he ready and willing to do so because in case the alleged agreement of sale is implemented by him in favour of the plaintiff, in that event, the allotment itself may result into cancellation. It is also averred that since the plaintiff has deposited a total sum of Rs.7,78,877/, the defendant in order to cutshort the litigation is ready to return the amount to the plaintiff. It is lastly averred that the suit is otherwise barred by limitation and, therefore, deserves to be dismissed as such.
4. The plaintiff has filed replication to the written statement of the defendant reiterating the contents of the plaint and while denying those of the written statement.
5. From the pleadings of the parties, this Court on 21.3.2014 framed the following issues:
::: Downloaded on - 16/07/2018 23:02:49 :::HCHP 61. Whether the plaintiff is entitled for relief of Specific Performance of Contract on the basis of agreement dated 13.3.1997? OPP .
2. Whether in the alternative the plaintiff is entitled for decree of Rs.80,00,000/ alongwith interest being the market value of plot as of date? OPP
3. Whether the suit in the present form is not maintainable?OPD
4. Whether the suit as filed lacks material true and better particulars?OPD
5. Whether alleged agreement for sale is not enforceable in the eyes of law in view of the terms and conditions as laid down by the H.P. Housing and Urban Development Authority, Shimla in the allotment order?OPD
6. Whether the suit is bad for want of impleading all the necessary parties? OPD
7. Whether suit is barred by limitation? OPD
8. Whether the suit is not properly valued for the purposes of court fee and jurisdiction?OPD ISSUES NO. 1 & 2:
6. In order to prove these issues, the plaintiff entered into the witness box as PW1 (wrongly numbered as PW2) and states that on 12.3.1997 he had issued a cheque in the sum of Rs.20,000/in favour of the defendant and on 13.3.1997 an ::: Downloaded on - 16/07/2018 23:02:49 :::HCHP 7 agreement to sell Ex.PW1/A was entered between them in respect of the suit land. He proved his signatures on the .
agreement and thereafter stated that a sum of Rs.20,00,000/ was paid by him to the defendant by way of draft and further a sum of Rs.1,75,000/ was deposited by him in the bank account. He proved on record the seven receipts with respect to the deposit of the amount in the bank vide receipts Ex.PW1/B to Ex.PW1/H. The remaining sum of Rs.5,83,877/ was paid by him in installments to the HIMUDA and receiptsthereof were exhibited as Ex.PW1/J1 to Ex.PW1/J31. He stated that he is ready and willing to perform his part of the contract. Lastly he stated that the entire sale consideration was paid by him to the defendant, but the defendant refused to transfer the suit land in his name, compelling him to file the instant suit.
7. In crossexamination, the witness admitted that he did not verify the title of the defendant from the HIMUDA, but stated that the defendant had shown him the allotment letter.
He further stated that he had read the copy of the allotment letter and it is nowhere provided therein that the defendant was not permitted to alienate the suit property in favour of anybody else. He denied the suggestion that the receipts as tendered by ::: Downloaded on - 16/07/2018 23:02:49 :::HCHP 8 him in his evidence were forged. The witness appears to have got confused with regard to the payment of Rs.2,00,000/and .
would permit it as Rs.20,00,000/ and further stated that he did not remember when and how he had paid this amount. He further admitted that he did not keep any account of Rs.20,00,000/ and he even went on denying the suggestion that he was stating falsely about the tendering of this amount to the defendant.
8. This aspect regarding the deposit of Rs.2,00,000/ and Rs.20,00,000/ has been in fact clarified by PW2 (wrongly numbered as PW1) Sh. Tara Singh Thakur, who remained as Administrative Officer in HIMUDA w.e.f. 2006 to 2009. In his crossexamination, he stated that agreement Ex.PW1/A had been scribed in his presence and he further deposed that both the parties were known to him. He proved his signatures on the agreement Ex.PW1/A and further went on to state that the plaintiff in his statement has wrongly stated that a sum of Rs.
20,00,000/ had been paid and rather a sum of Rs.2,00,000/ has been paid. In crossexamination, he stated that Ex.PW1/A was toped in the D.C. Office in his presence and denied the suggestion that the contents of the agreement to sell was ::: Downloaded on - 16/07/2018 23:02:49 :::HCHP 9 incorrectly recited. He further stated that the contents of clause 8 of the agreement to sell were incorrect because the .
amount was recited 10 times of the quarterly payment paid to the transferor, which should be written as 10% of the total amount. He lastly stated that despite his objections, the said error was overlooked.
9. PW3 Rajiv Sharma is an Architect and stated that the value of the property in New Shimla, Sector4 is ranging from 45,000/ to 50,000/ per sq. meters. In cross examination, the witness stated that the property comprises in New Shimla are mainly the property owned by the Housing Board apart from certain properties owned by the individuals.
He denied the suggestion that the value of the property situated adjacent to the byepass was more valuable than the property situated down below. He clarified that one of the main reasons for this is that the property situated adjacent to the National Highway requires NOC from the National Highway Authority, which is cumbersome process as certificate has to be obtained from Delhi. This was dissuading the people from purchasing such property. The other reason according to him was that in view of the requirement of maintaining the acquired width ::: Downloaded on - 16/07/2018 23:02:49 :::HCHP 10 whereby the sizeof the plots normally decreased to the extent that the same is not approved by the local authority including .
the TCP. According to him, there would be several factors which would be relevant when the property is situate 50 yards from the National Highway. He feigned ignorance regarding the number of roads in New Shimla, which connect the houses of Housing Board and those of individuals. He also feigned ignorance about the number of plots in New Shimla. However, he admitted that he did not have any data to support his valuation, but volunteered to state that the same is determined on the market value. He further clarified that the value as stated by him pertains to the year 20132014 and according to him the prices of the plots in Sector4 remain stable since 2013 and prior to that the value of the property was plus minus 10% in 2010 and prior to that the value of the property was less.
This in entirety is the evidence led by the plaintiff.
10. As against this, the defendant examined one Lok Chand, Senior Assistant in the office of HIMUDA, who appeared as DW1 and proved on record the allotment letter Ex.DW1/A and also the hirepurchase agreement Ex.DW1/B. ::: Downloaded on - 16/07/2018 23:02:49 :::HCHP 11
11. The defendant Virender Speya appeared as DW2 and stated that an agreement of sale was executed between the .
parties on 13.3.1997, but the plaintiff did not comply with the terms and conditions of the agreement. Earlier to this, there was a hire purchase agreement with the erstwhile Shimla Development Authority which is presently 'HIMUDA'. A sum of Rs.3,67,380/ was paid by me to HIMUDA. Besides this, he was to pay ground rent at the rate of 2½ % for the first 33 years and thereafter 3¾ % for the next 33 years and 5% for the remaining 33 years. In the event of there being a dispute, it was the Chief Executive Officer, HIMUDA, who was required to resolve the dispute. According to him, as per the terms and conditions of the agreement, he could not have entered into a further agreement of sale, but he had done so out of sheer ignorance.
He further stated that in terms of the agreement, he could not even sell the property and he otherwise had no intention to sell the same as the allotment in his favour was liable to be cancelled. He further deposed that the plaintiff had undertaken to pay a sum of Rs.3,67,380/ before 31 st March, 2002 and after the said date, the plaintiff was not authorised to make any payment to him or the Housing Board and therefore, the ::: Downloaded on - 16/07/2018 23:02:49 :::HCHP 12 payments, if any, paid by the plaintiff after March, 2002, were without his consent and knowledge and, therefore, he was not .
liable to pay the enhanced amount as claimed by the plaintiff in the suit.
12. In crossexamination, he denied that he had received the entire payment/sale consideration as per the agreement. He admitted that the only initial payments had been made by him to the Himachal Pradesh Nagar Vikas Pradhikaran, but after the agreement, he had not deposited a single penny with the aforesaid Pradhikaran or the HIMUDA.
He was not aware of the fact that in the reference regarding the land allotted to him the amount of compensation had been enhanced in favour of the claimants. He claimed to have made the payment of ground rent, from time to time, but was unable to produce any receipt in this regard. He stated that the land continued to be on hire purchase agreement and had not got it on freehold and the same was still in his possession. He denied the suggestion that as per the conditions of the allotment, the structure upon the land is built up within a period of five years.
However, he candidly admitted that he had received the entire ::: Downloaded on - 16/07/2018 23:02:49 :::HCHP 13 amount as stipulated in the agreement, but the same was not paid within the stipulated time as envisaged in the agreement.
.
This in entirety is the evidence led by the defendant.
13. After going into the pleadings and the evidence on record, there is no dispute regarding the agreement and further it is also not in dispute that the defendant has received the entire sale consideration as provided for under the agreement as is candidly admitted by the defendant. No doubt, he claimed to have received the sale consideration belately, but could not prove the same.
14. At this stage, Mr. G.D.Verma, learned Senior Counsel for the defendant would claim that instead of directing the specific performance of the agreement, this Court should exercise its discretion under Section 20 of the Act, by directing the refund of the amount by the defendant alongwith some proportionate additional amount. He would further argue that this Court can take judicial notice of the fact that the value of property escalates in urban areas very fast due to nonequitable of a long period of time.
::: Downloaded on - 16/07/2018 23:02:49 :::HCHP 1415. I have gone through the judgment in Vimaleshwar Nagappa Shet vs. Noor Ahmed Shariff and others (2011) .
12 SCC 658, which has been heavily relied upon by the defendant wherein admittedly the agreement to sell was executed on 2.5.1988 which was decreed after more than 11 years in the year 1999 i.e. on 01.10.1999. The judgment and decree so passed was challenged before the High Court of Karnataka which was finally decided by the High Court only on 3.3.2009 and it is thereafter that the matter reached before the Hon'ble Supreme Court after more than two decades from the date of agreement to sell. Therefore, the judgment as relied upon by the defendant is not at all applicable to the facts of the present case.
16. As regards the specific performance of the contract, it would be necessary for the Court to bear in mind the fundamental principles of law. The court is not bound to grant the relief of specific performance merely because it is lawful to do so. Section 20(1) of the Specific Relief Act, 1963 indicates that the jurisdiction to decree specific performance is discretionary. Yet, the discretion of the court is not arbitrary ::: Downloaded on - 16/07/2018 23:02:49 :::HCHP 15 but is "sound and reasonable", to be "guided by judicial principles". The exercise of discretion is capable of being .
corrected by a court of appeal in the hierarchy of appellate courts. Subsection 2 of Section 20 contains a stipulation of those cases where the court may exercise its discretion not to grant specific performance. SubSection 2 of Section 20 is in the following terms :
"Section 20 (2). The following are cases in which the court may properly exercise discretion not to decree specific performance
(a) where the terms of the contract or the conduct of the parties at the time of entering into the contract or the other circumstances under which the contract was entered into are such that the contract, though not voidable, gives the plaintiff an unfair advantage over the defendant; or
(b) where the performance of the contract would involve some hardship on the defendant which he did not foresee, whereas its nonperformance would involve no such hardship on the plaintiff;
(c) where the defendant entered into the contract under circumstances which though not rendering the contract voidable, makes it inequitable to enforce specific performance."::: Downloaded on - 16/07/2018 23:02:49 :::HCHP 16
17. However, explanation 1 stipulates that the mere inadequacy of consideration, or the mere fact that the contract .
is onerous to the defendant or improvident in its nature, will not constitute an unfair advantage within the meaning of clause (a) or hardship within the meaning of clause (b).
Moreover, explanation 2 requires that the issue as to whether the performance of a contract involves hardship on the defendant has to be determined with reference to the circumstances existing at the time of the contract, except where the hardship has been caused from an act of the plaintiff subsequent to the contract. (Refer: Jayakantham and others vs. Abaykumar, (2017) 5 SCC 178) 18 Having made a note of the well settled principles, certain binding precedents on the subject also need to be considered. Though there is plethora of law on the subject, however, the court need not to make note of the entire law and reference to certain recent decisions in this regard shall suffice.
19. In K. Nanjappa vs. R.A. Hameed, (2016) 1 SCC 762, it was held that in a suit for specific performance of a contract, the court has to keep in mind Section 20 of the ::: Downloaded on - 16/07/2018 23:02:49 :::HCHP 17 Specific Relief Act, 1963. Section 20 preservers judicial discretion to grant decree for specific performance. However, .
the Court is not bound to grant specific performance merely because it is lawful to do so. The Court should meticulously consider all facts and circumstances of the case and to see that it is not used as an instrument of oppression to have an unfair advantage not only to the plaintiff but also to the defendant.
Relief of specific performance is discretionary but not arbitrary, hence, discretion must be exercised in accordance with sound and reasonable judicial principles. The cases providing for a guide to courts to exercise discretion one way or the other are only illustrative, they are not intended to be exhaustive. In England, the relief of specific performance pertains to the domain of equity, but in India the exercise of discretion is governed by the statutory provisions. It shall be apt to reproduce relevant observations as contained in paras 22 to 28 thereof, which read thus:
"22. However, in a case where the plaintiff come forward to seek a decree for specific performance of contract of sale of immoveable property on the basis of an oral agreement or a written contract, heavy burden lies on the ::: Downloaded on - 16/07/2018 23:02:49 :::HCHP 18 plaintiff to prove that there was consensus ad idem between the parties for the concluded agreement for sale of immoveable property. Whether there was such a .
concluded contract or not would be a question of fact to be determined in the facts and circumstances of each individual case. It has to be established by the plaintiffs that vital and fundamental terms for sale of immoveable property were concluded between the parties.
23. In a suit for specific performance of a contract, the Court has to keep in mind Section 20 of the Specific Reliefs Act. This Section preserves judicial discretion to grant decree for Specific performance. However, the Court is not bound to grant specific performance merely because it is lawful to do so. The Court should meticulously consider all facts and circumstances of the case and to see that it is not used as an instrument of oppression to have an unfair advantage not only to the plaintiff but also to the defendant.
24. In the case of Surya Narain Upadhyaya vs. Ram Roop Pandey and others, 1995 Supp (4) SCC 542, this Court while considering Section 20 of the Specific Relief Act held as under: "4. Though the decree for specific performance is a discretionary power, yet the court is not bound to grant such a relief merely because it is lawful to do so; but the discretion of the court is not arbitrary, but sound and reasonable, guided by judicial ::: Downloaded on - 16/07/2018 23:02:49 :::HCHP 19 principles of law and capable of correction by a court of appeal. Therefore, the discretion should be properly exercised keeping in view the settled .
principles of law as envisaged in Section 20 of the Act. This case demonstrates that the High Court took irrelevant consideration into account to refuse to grant the decree for specific performance. It also committed manifest illegality in reversing the concurrent finding of facts recorded by the trial court as well as the first appellant court, namely the appellant has always been ready and willing to perform his part of the contract."
25. It is equally well settled that relief of specific performance is discretionary but not arbitrary, hence, discretion must be exercised in accordance with sound and reasonably judicial principles. The cases providing for a guide to courts to exercise discretion one way or other are only illustrative, they are not intended to be exhaustive, In England, the relief of specific performance pertains to the domain of equity, but in India the exercise of discretion is governed by the statutory provisions.
26. In the case of Mayawanti vs. Kaushalya Devi, (1990) 3 SCC 1, this Court observed as under: "8. In a case of specific performance it is settled law, and indeed it cannot be doubted, that the jurisdiction to order specific performance of a contract is based on the existence of a valid and ::: Downloaded on - 16/07/2018 23:02:49 :::HCHP 20 enforceable contract. The Law of Contract is based on the ideal of freedom of contract and it provides the limiting principles within which the parties are .
free to make their own contracts. 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 defect which makes the contract invalid or unenforceable. The discretion of the court will be there even though the contract is otherwise valid and enforceable and it can pass a decree of specific performance even before there has been any breach of the contract. It is, therefore, necessary first to see whether there has been a valid and enforceable contract and then to see the nature and obligation arising out of it. The contract being the foundation of the obligation the order of specific performance is to enforce that obligation."
27. In the case of K. Prakash vs. B.R. Sampath Kumar, (2015) 1 SCC 597, this Court held:
"13. Indisputably, remedy for specific performance is an equitable remedy. The court while granting relief for specific performance exercises discretionary jurisdiction. Section 20 of the Act specifically provides that the court's jurisdiction to grant decree of specific performance is discretionary but not arbitrary. Discretion must be ::: Downloaded on - 16/07/2018 23:02:49 :::HCHP 21 exercised in accordance with the sound and reasonable judicial principles.
.
14. The King's Bench in Rooke's case said:
"Discretion is a science, not to act arbitrarily according to men's will and private affection: so the discretion which is exercised here, is to be governed by rules of law and equity, which are not to oppose, but each, in its turn, to be subservient to the other.
This discretion, in some cases follows the law implicitly, in others, allays the rigour of it, but in no case does it contradict or overturn the grounds or principles thereof, as has been sometimes ignorantly imputed to this Court. That is a discretionary power, which neither this nor any other court, not even the highest, acting in a judicial capacity is by the Constitution entrusted with."
15. The Court of Chancery in Attorney General v.
Wheate followed Rooke's case and observed: (ER p.
666) "... the law is clear, and courts of equity ought to follow it in their judgments concerning titles to equitable estates; otherwise great uncertainty and confusion would ensue. And though proceedings in equity are said to be secundum discretionem boni viri, yet, when it is asked, vir bonus est quis? The answer is, qui consulta patrum, qui leges juraque servat. And as it is said in Rooke's case, that discretion is a science not to act arbitrarily ::: Downloaded on - 16/07/2018 23:02:49 :::HCHP 22 according to men's wills and private affections; so the discretion which is to be executed here, is to be governed by the rules of law and equity, which are .
not to oppose, but each in its turn to be subservient to the other. This discretion, in some cases follows the law implicitly; in others assists it, and advances the remedy; in others, again, it relieves against the abuse, or allays the rigour of it; but in no case does it contradict or overturn the grounds or principles thereof, as has been sometimes ignorantly imputed to this Court. That is a discretionary power, which neither this, nor any other court, not even the highest, acting in a judicial capacity, is by the constitution entrusted with. This description is full and judicious, and what ought to be imprinted on the mind of every Judge."
16. The principle which can be enunciated is that where the plaintiff brings a suit for specific performance of contract for sale, the law insists upon a condition precedent to the grant of decree for specific performance: that the plaintiff must show his continued readiness and willingness to perform his part of the contract in accordance with its terms from the date of contract to the date of hearing. Normally, when the trial court exercises its discretion in one way or the other after appreciation of entire evidence and materials on record, the appellate court should not interfere unless it is ::: Downloaded on - 16/07/2018 23:02:49 :::HCHP 23 established that the discretion has been exercised perversely, arbitrarily or against judicial principles. The appellate court should also not exercise its .
discretion against the grant of specific performance on extraneous considerations or sympathetic considerations. It is true, as contemplated under Section 20 of the Specific Relief Act, that a party is not entitled to get a decree for specific performance merely because it is lawful to do so. Nevertheless once an agreement to sell is legal and validly proved and further requirements for getting such a decree are established then the court has to exercise its discretion in favour of granting relief for specific performance."
28. Reference may also be made by this Court in the case of Zarina Siddiqui vs. A. Ramalingam, 2015 (1) SCC 705, this Court observed as under: "33. The equitable discretion to grant or not to grant a relief for specific performance also depends upon the conduct of the parties. The necessary ingredient has to be proved and established by the plaintiff so that discretion would be exercised judiciously in favour of the plaintiff. At the same time, if the defendant does not come with clean hands and suppresses material facts and evidence and misleads the court then such discretion should not ::: Downloaded on - 16/07/2018 23:02:49 :::HCHP 24 be exercised by refusing to grant specific performance."
.
20. Similar reiteration of law can be found in Satish Kumar vs. Karan Singh, (2016) 4 SCC 352, wherein it was observed as under: "8. It is well settled that the jurisdiction to order specific performance of contract is based on the 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 defect which makes the contract invalid or unenforceable. The discretion of the Court will not be there even though the contract is otherwise valid and enforceable.
9. This Court in Mayawantivs. Kaushalya Devi(1990) 3 SCC 1 held thus: "8. In a case of specific performance it is settled law, and indeed it cannot be doubted, that the jurisdiction to order specific performance of a contract is based on the existence of a valid and enforceable contract. The Law of Contract is based on the ideal of freedom of contract and it provides the limiting principles within which the parties are free to ::: Downloaded on - 16/07/2018 23:02:49 :::HCHP 25 make their own contracts. 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 defect which makes the contract invalid or unenforceable. The discretion of the court will be there even though the contract is otherwise valid and enforceable and it can pass a decree of specific performance even before there has been any breach of the contract. It is, therefore, necessary first to see whether there has been a valid and enforceable contract and then to see the nature and obligation arising out of it. The contract being the foundation of the obligation the order of specific performance is to enforce that obligation."
10. Exercise of discretionary power under Section 20 of the Specific Relief Act for granting a decree, this Court in the case of Parakunnan Veetill Joseph's Son Mathew vs. Nedumbara Kuruivila's Son and others, AIR 1987 SC 2328 observed: "14. Section 20 of the Specific Relief Act, 1963 preserves judicial discretion of courts as to decreeing specific performance. The court should meticulously consider all facts and circumstances of the case. The court is not bound to grant specific performance merely ::: Downloaded on - 16/07/2018 23:02:49 :::HCHP 26 because it is lawful to do so. The motive behind the litigation should also enter into the judicial verdict. The court should take care to see that it is .
not used as an instrument of oppression to have an unfair advantage to the plaintiff. The High Court has failed to consider the motive with which Varghese instituted the suit. It was instituted because Kuruvila could not get the estate and Mathew was not prepared to part with it. The sheet anchor of the suit by Varghese is the agreement for sale Exhibit A1. Since Chettiar had waived his rights thereunder, Varghese as an assignee could not get a better right to enforce that agreement. He is, therefore, not entitled to a decree for specific performance."
21. The principles as noted above, have thereafter been reiterated in recent decision of Hon'ble Supreme Court in Jayakantham and others vs. Abaykumar, (2017) 5 SCC 178, wherein it was observed as under:
"7. While evaluating whether specific performance ought to have been decreed in the present case, it would be necessary to bear in mind the fundamental principles of law. The court is not bound to grant the relief of specific performance merely because it is lawful to do so. Section 20(1) of the Specific Relief Act, 1963 indicates that the ::: Downloaded on - 16/07/2018 23:02:49 :::HCHP 27 jurisdiction to decree specific performance is discretionary. Yet, the discretion of the court is not arbitrary but is "sound and reasonable", to be "guided by .
judicial principles". The exercise of discretion is capable of being corrected by a court of appeal in the hierarchy of appellate courts. Subsection 2 of Section 20 contains a stipulation of those cases where the court may exercise its discretion not to grant specific performance. Sub Section 2 of Section 20 is in the following terms :
r to "Section 20 (2). The following are cases in which the court may properly exercise discretion not to decree specific performance
(a) where the terms of the contract or the conduct of the parties at the time of entering into the contract or the other circumstances under which the contract was entered into are such that the contract, though not voidable, gives the plaintiff an unfair advantage over the defendant; or
(b) where the performance of the contract would involve some hardship on the defendant which he did not foresee, whereas its nonperformance would involve no such hardship on the plaintiff;
(c) where the defendant entered into the contract under circumstances which though not rendering the contract voidable, makes it inequitable to enforce specific performance."::: Downloaded on - 16/07/2018 23:02:49 :::HCHP 28
8. However, explanation 1 stipulates that the mere inadequacy of consideration, or the mere fact that the contract is onerous to the defendant or improvident in its .
nature, will not constitute an unfair advantage within the meaning of clause (a) or hardship within the meaning of clause (b). Moreover, explanation 2 requires that the issue as to whether the performance of a contract involves hardship on the defendant has to be determined with reference to the circumstances existing at the time of the contract, except where the hardship has been caused from an act of the plaintiff subsequent to the contract.
9. The precedent on the subject is elucidated below :
9.1. In Parakunnan Veetill Joseph's Son Mathew v.
Nedumbara Kuruvila's Son, this Court held that : (SCC p.345, para 14) "14. Section 20 of the Specific Relief Act, 1963 preserves judicial discretion of Courts as to decreeing specific performance. The Court should meticulously consider all facts and circumstances of the case. The Court is not bound to grant specific performance merely because it is lawful to do so. The motive behind the litigation should also enter into the judicial verdict. The Court should take care to see that it is not used as an instrument of oppression to have an unfair advantage to the plaintiff..."
9.2. A similar view was adopted by this Court in Sardar Singh v. Smt. Krishna Devi: (SCC p. 26, para 14) ::: Downloaded on - 16/07/2018 23:02:49 :::HCHP 29 "...14. Section 20(1) of the Specific Relief Act, 1963 provides that the jurisdiction to decree specific performance is discretionary, and the court is not .
bound to grant such relief, merely because it is lawful to do so; but the discretion of the court is not arbitrary but sound and reasonable, guided by judicial principles and capable of correction by a court of appeal. The grant of relief of specific performance is discretionary. The circumstances specified in Section 20 are only illustrative and not exhaustive. The court would take into consideration the circumstances in each case, the conduct of the parties and the respective interest under the contract."
9.3. Reiterating the position in K. Narendra v. Riviera Apartments (P) Ltd, this Court held thus : (SCC p.91, para
29) "...29. Performance of the contract involving some hardship on the defendant which he did not foresee while nonperformance involving no such hardship on the plaintiff, is one of the circumstances in which the court may properly exercise discretion not to decree specific performance. The doctrine of comparative hardship has been thus statutorily recognized in India. However, mere inadequacy of consideration or the mere fact that the contract is onerous to the defendant or improvident in its ::: Downloaded on - 16/07/2018 23:02:49 :::HCHP 30 nature , shall not constitute an unfair advantage to the plaintiff over the defendant or unforeseeable hardship on the defendant. The principle .
underlying Section 20 has been summed up by this Court in Lourdu Mari David v. Louis Chinnaya Arogiaswamy by stating that the decree for specific performance is in the discretion of the Court but the discretion should not be used arbitrarily; the discretion should be exercised on sound principles of law capable of correction by an appellate court."
9.4. These principles were followed by this Court in A.C. Arulappan v. Smt. Ahalya Naik, with the following observations : (SCC pp. 604 & 606, paras 7 & 15) "7. The jurisdiction to decree specific relief is discretionary and the court can consider various circumstances to decide whether such relief is to be granted. Merely because it is lawful to grant specific relief, the court need not grant the order for specific relief; but this discretion shall not be exercised in an arbitrary or unreasonable manner.
Certain circumstances have been mentioned in Section 20(2) of the Specific Relief Act, 1963 as to under what circumstances the court shall exercise such discretion. If under the terms of the contract the plaintiff gets an unfair advantage over the defendant, the court may not exercise its discretion in favour of the plaintiff. So also, specific relief may ::: Downloaded on - 16/07/2018 23:02:49 :::HCHP 31 not be granted if the defendant would be put to undue hardship which he did not foresee at the time of agreement. If it is inequitable to grant .
specific relief, then also the court would desist from granting a decree to the plaintiff."
"15. Granting of specific performance is an equitable relief, though the same is now governed by the statutory provisions of the Specific Relief Act, 1963. These equitable principles are nicely incorporated in Section 20 of the Act. While granting a decree for specific performance, these salutary r guidelines shall be in the forefront of the mind of the court....."
9.5. A Bench of three Judges of this Court considered the position in Nirmala Anand Vs. Advent Corporation (P) Ltd. and Ors., and held thus : (SCC p.150, para 6) "6. It is true that grant of decree of specific performance lies in the discretion of the court and it is also well settled that it is not always necessary to grant specific performance simply for the reason that it is legal to do so. It is further well settled that the court in its discretion can impose any reasonable condition including payment of an additional amount by one party to the other while granting or refusing decree of specific performance. Whether the purchaser shall be directed to pay an additional amount to the seller or converse would ::: Downloaded on - 16/07/2018 23:02:49 :::HCHP 32 depend upon the facts and circumstances of a case. Ordinarily, the plaintiff is not to be denied the relief of specific performance only on account of the .
phenomenal increase of price during the pendency of litigation. That may be, in a given case, one of the considerations besides many others to be taken into consideration for refusing the decree of specific performance. As a general rule, it cannot be held that ordinarily the plaintiff cannot be allowed to have, for her alone, the entire benefit of phenomenal increase of the value of the property during the pendency of the litigation. While balancing the equities, one of the considerations to be kept in view is as to who is the defaulting party. It is also to be borne in mind whether a party is trying to take undue advantage over the other as also the hardship that may be caused to the defendant by directing specific performance. There may be other circumstances on which parties may not have any control. The totality of the circumstances is required to be seen."
22. Similar reiteration of law can be found in the judgment of this Court in Rajesh Kumar Sood vs. Parvej Nowrojee, 2016 (3) SLC 1673 = 2016 (4) ILR 1583."
::: Downloaded on - 16/07/2018 23:02:49 :::HCHP 3323. In view of the law expounded in the aforesaid judgments, it can be taken to be well settled that even though .
the Court is not bound to grant the relief of specific performance merely because it is lawful to do so, yet merely because the inadequacy of consideration or the mere fact that the contract is onerous to the defendant would not be a consideration for denying the relief of specific performance. The Court has meticulously considered all facts and circumstances of the case and to see that no unfair advantage is obtained by either of the parties. Even though, the relief of specific performance is discretionary, but at the same time, it is not arbitrary. Discretion has to be exercised in accordance with the sound and reasonable judicial principles. Ordinarily, the plaintiff is not to be denied the relief of specific performance only on account of the phenomenal increase of price during the pendency of litigation. This may be in a given case, one of the considerations besides many others, to be taken into consideration for refusing the decree of specific performance. As a general rule, it cannot be held that ordinarily the plaintiff cannot be allowed to have, for him alone, the entire benefit of phenomenal increase of the value of the property during the ::: Downloaded on - 16/07/2018 23:02:49 :::HCHP 34 pendency of the litigation. While balancing the equities, one of the considerations to be kept in view is as to who is the .
defaulting party. It is also to be borne in mind whether a party is trying to take undue advantage over the other, as also the hardship that may be caused to either of the parties while enforcing or refusing the specific performance. There may be one or other circumstances on which the parties may not have any control. Thus, this is totality of the circumstances that are required to be seen while granting or refusing the decree of specific performance.
24. Judged in light of the various pronouncements of the Hon'ble Supreme Court, it would be noticed that the defendant has also done litigation trying to take advantage of the pendency of the suit or else there was no reason why he should not have or should be refused the performance of his part, especially when the plaintiff has already performed his part of the agreement as is candidly admitted by the defendant himself.
25. As observed earlier, a party cannot be permitted to take advantage of his own wrong. Thus, the equities are totally against the defendant and in favour of the plaintiff and, ::: Downloaded on - 16/07/2018 23:02:49 :::HCHP 35 therefore, in my considered view, the plaintiff is entitled to a decree for specific performance.
.
Issues No.1 and 2 are answered accordingly.
ISSUE NO.3.:
26. The pleadings as also the evidence led by the defendant are not proved that the suit in the present form is not maintainable. Accordingly, this issue is answered against the defendant. r ISSUE NO.4:
27. The defendant has failed to prove as to how the suit filed by the plaintiff lacks material true and better particulars.
Accordingly, this issue is decided against the defendant.
ISSUE NO.8:
28. The defendant has led no evidence to show as to how the suit is not properly valued for the purposes of court fee and jurisdiction and even the pleadings to this effect are totally lacking. Thus, this issue is also decided against the defendant.
ISSUES NO. 5 & 6:
29. Undoubtedly, the property in question is owned by the HIMUDA that by itself does not mean that it is a necessary ::: Downloaded on - 16/07/2018 23:02:49 :::HCHP 36 party especially when the contract in question is bilateral agreement between the plaintiff and the defendant. That apart, .
there is no complete prohibition in sale of the property of the HIMUDA, atleast no such clause has been brought to the notice of this Court.
30. It is otherwise more than settled that a necessary party is one without whom no order can be made effectively, while a proper party is one in whose absence an effective order can be made but whose presence is necessary for a complete and final decision on the question involved in the proceedings.
The addition of a party is generally not a question of initial jurisdiction of the Court, but of judicial discretion, which has to be exercised in view of all the facts and circumstances of a particular case. The Court is empowered to join a person whose presence is necessary for the prescribed purpose and cannot direct addition of a party, whose presence is not necessary for that purpose.
ISSUE NO.7:
31. The onus of this issue is on the defendant. It is contended by Mr. G.D. Verma, Senior Advocate that the suit ::: Downloaded on - 16/07/2018 23:02:49 :::HCHP 37 filed by the plaintiff is hopelessly barred by limitation as the agreement in question was entered into between the parties on .
13.3.1997, whereas the instant suit was filed only on 12.7.2013. In addition thereto, it is pointed out that as per this agreement, the plaintiff was required to pay sale consideration to the HIMUDA on or before 31.3.2002 and, therefore, should have filed the suit, if not earlier, then within three years from the said date. In support of his contention, he has relied upon the following judgments of the Hon'ble Supreme Court:
i) Vimaleshwar nagappa shet vs. noor ahmed shariff and others (2011) 12 SCC 658 ;
ii) Rathnavathi and another vs. Kavita Ganashamdas (2015) 5 SCC 223.
32. I have gone through the aforesaid judgments and being the judgments of the Hon'ble Apex Court, obviously there can be no quarrel with the ratio laid down to the effect that limitation period in absence of there being any fixed date for performance in the agreement would commence from the date when the plaintiff had noticed of refusal of performance.
33. However, in case the records of the case are perused, then it would be noticed that this is not a simple agreement ::: Downloaded on - 16/07/2018 23:02:49 :::HCHP 38 entered into between the parties, but is an agreement which stipulates the performance of certain obligations at the instance of .
the plaintiff at different stages as would be evidently clear from conditions No.2 to 5 of the agreement, which read thus:
"2. The transferee will make the payment through crossed Bank Draft in the name and saving Bank account at UCO Bank, Kasumpti of the Original allottee/transferor on account of payments made/deposited by him with the H.P.N.V.P. @ Rs.20,000/ (Rs. Twenty thousand only) is 8 (eight) quarterly instalments and 1st such instalment has been deposited vide Bank Draft No. 466142 dated 12.3.1997 in the Saving Bank Account payee at UCO Bank at Kasumpti, Shimla, Tehsil and District, Shimla, H.P.
3. The monthly instalment @ Rs.6426/ (Rupees Six thousand four hundred twenty six) only shall also be deposited by the transferee to the HPNVP which at present is being paid by the transferor as per allotment/ letter/HPTA and the monthly instalments which were due from December, 1996 to March, 1997 (12/96 to 3/97) have been deposited with the HPNVP by the transferee on 12.3.1997 vide Receipt No. 5663 dated 12.3.1997.
4. The ground rent/lease money or any other type of charges etc. shall also be paid by the transferee to the NVP as fixed/to be claimed by them from time to time.::: Downloaded on - 16/07/2018 23:02:49 :::HCHP 39
5. The original allottee/transferor has agreed to transfer the Lease Deed in favour of the transferee after full payment the NVP by the transferee and the .
transferor has also agreed to incur expenditure whatsoever, on account of transferor of plots at the time of transfer. However, the possession of the plot will be handed over by the transferor to the transferee after signing the agreement/making payment of Ist instalment."
34. In addition to the aforesaid conditions, it would be noticed that consequence of this nonperformance of the aforesaid conditions provided for certain serious and grave consequences.
35. It is not in dispute that the plaintiff in furtherence to the agreement and in compliance to the agreement had deposited various amounts in the bank and last of such payment was in fact made on 29.6.2013 and thus the suit is obviously within the period of limitation, more particularly when the defendant has not raised any objection regarding the payments being made by the plaintiff on his behalf eversince the date of agreement till as late as on 29.6.2013. Therefore, the issue is decided against the defendant.
::: Downloaded on - 16/07/2018 23:02:49 :::HCHP 4036. Consequently, in view of the aforesaid discussion, the suit of the plaintiff is decreed and the plaintiff is held entitled to a .
decree for specific performance of the contract and the defendant is directed to execute the sale deed /lease deed of Plot No. 503, TypeB in Sector 4, B.C.S. PhaseII, New Shimla, Tehsil and District, Shimla, H.P. allotted to the defendant vide letter No. NVP Admn(b) 5th PSFS/P(B)65361570507, dated 14.02.1996 issued by the Chief Administrator of the then H.P. Nagar Vikas Pradhikaran, Kasumpti, Shimla9. Decree sheet be drawn accordingly.
13th July, 2018. (Tarlok Singh Chauhan ), (GR) Judge ::: Downloaded on - 16/07/2018 23:02:49 :::HCHP