Gujarat High Court
Ahmedabad Municipal Corporation vs Jaykumar Babulal Jain on 21 June, 2018
Author: J.B.Pardiwala
Bench: J.B.Pardiwala
C/FA/2807/2016 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 2807 of 2016
With
CIVIL APPLICATION NO. 2 of 2016
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE J.B.PARDIWALA Sd/-
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1 Whether Reporters of Local Papers may be allowed to YES
see the judgment ?
2 To be referred to the Reporter or not ? YES
3 Whether their Lordships wish to see the fair copy of the NO
judgment ?
4 Whether this case involves a substantial question of law NO
as to the interpretation of the Constitution of India or any
order made thereunder ?
Circulate this Judgment in the Subordinate Judiciary.
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AHMEDABAD MUNICIPAL CORPORATION
Versus
JAYKUMAR BABULAL JAIN
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Appearance:
MR SATYAM Y CHHAYA(3242) for the PETITIONER(s) No. 1
MS NISHA M THAKORE(3293) for the RESPONDENT(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA
Date : 21/06/2018
ORAL JUDGMENT
1. With the consent of the learned counsel appearing for the respective parties, this First Appeal is taken up for final hearing.
2. This First Appeal under Section 96 of the Code of Civil Procedure is at the instance of the original defendant, calling in Page 1 of 56 C/FA/2807/2016 JUDGMENT question the legality and validity of the judgment, order and decree passed by the City Civil Court, Ahmedabad, in the Civil Suit No.1404 of 1996 filed by the respondent herein - original plaintiff for specific performance of contract and monetary compensation by way of damages.
3. It appears from the materials on record that the suit filed by the respondent herein for specific performance and compensation came to be partly allowed. The civil court directed that as the appellant herein - Ahmedabad Municipal Corporation demolished the shop of the respondent herein for the purposes of road widening, an alternative space be provided to the respondent in accordance with the agreement in writing and shall pay compensation by way of damages at the rate of Rs.5,000=00 per month from 5th January 1996 till the deposit of the entire amount. If the amount of compensation is calculated in accordance with the decree passed by the City Civil Court, then as on date, an amount of Rs.13 lac is to be paid by the Corporation to the respondent.
4. The facts giving rise to this First Appeal may be summarised as under :
1. The respondent herein filed a Regular Civil Suit No.1404 of 1996 in the City Civil Court, Ahmedabad, for a specific performance against the appellant therein -
original defendant - Ahmedabad Municipal Corporation. The record indicates that as per the provisions contained in the Gujarat Town Planning and Urban Development Act, 1976 (herein after referred to as 'the Act, 1976'), the Town Planning Scheme No.30 (Asarva North Extension) [herein Page 2 of 56 C/FA/2807/2016 JUDGMENT after referred to as 'the TP Scheme'] was framed by the competent authority. The TP Scheme in question was approved by the State Government with effect from 11.09.1979 and in view of the provisions of the Act, the TP scheme in question became the part of the Act. In view of the provisions contained in the Act, 1976, the defendant - Ahmedabad Municipal Corporation is under a statutory obligation to implement the TP scheme in consonance with the provisions of the Act, 1976, read with the Rules.
2. The record further indicates that one Amthiben Dahyabhai was the owner of the land bearing Survey No.566 of Asarva Ward City, Ahmedabad. The said survey number was given Original Plot No.146 under the TP scheme in question and in lieu of the Original Plot No.146, Final Plot No.239 was allotted in favour of the owner of the land. It needs to be noted here that the deducted portion which was subjected to deduction while allotting the Final Plot No.239, out of Original Plot No.146 was forming part of the Town Planning Road ['TP road', for short]. The record further reveals that the occupation / construction of the plaintiff which was shown in yellow color at Mark-8 in the sketch [Exh.24] was forming part of the TP road. As per the provisions contained under Section 67 of the Act, 1976, once the Preliminary TP scheme is sanctioned, all lands required by the Appropriate Authority shall vest absolutely in the Appropriate Authority free from all encumbrances. In view of Section 68 of the Act, 1976 read with the Rule 33 of the Gujarat Town Planning and Urban Development Rules, 1979 (herein after referred to as 'the Rules, 1979'), Page 3 of 56 C/FA/2807/2016 JUDGMENT the defendant (appellant herein) Corporation is under an obligation to implement the sanctioned TP scheme and, therefore notice as contemplated under Section 68 of the Act, 1976 read with the Rule 33 of the Rules, was issued by the defendant Corporation to plaintiff on 21.04.1987 [Exh.24]. The affected parties including the respondent herein - original plaintiff were directed to file their objections.
3. Pursuant to the said notice, the respondent herein - original plaintiff had filed his objections did 11.06.1987 and a personal hearing was given to him on 10.09.1987. After considering the objections filed by the respondent herein - original plaintiff vide communication dated 18.11.1987 [Exh.27], those were turned down and the defendant Corporation informed the plaintiff to remove the construction within seven days and it was also communicated in the said correspondence that the request for an alternative accommodation made at the end of the plaintiff - objector was not acceptable.
4. The plaintiff relied upon one communication at Exh.28 and thereby claimed that at the relevant point of time, the Corporation had agreed to provide an alternative accommodation and for such purpose the plaintiff was asked to pay Rs.3,000/-. It is the case of the plaintiff that out of the total amount of Rs.3,000/- towards the premium, he had paid an amount of Rs.1,000/- in the year 1991 and the receipt of such payment is produced by the plaintiff at Exh.29.
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5. It is matter of record that the plaintiff had earlier filed Civil Suit No.6434 of 1995 without issuing any statutory notice and prayed for injunction. In the said suit, written submissions were filed by the defendant Corporation and the same were produced during the course of the proceedings of the present suit at Exh.34. During the pendency of the above referred suit, being Civil Suit No.6434 of 1995, the construction in question was demolished and the road was laid down and, therefore, the respondent herein - original plaintiff filed the present suit being Civil Suit No.1404 of 1996 for specific performance of the so-called contract dated 18.11.1987 after a period of more than seven years. The defendant - Corporation appeared and opposed the suit. The earlier written statement filed in the Civil Suit No.6434 of 1995 was also made a part of the record and the same was produced by the plaintiff. As per the case of the plaintiff, he prayed for specific performance on the ground that in view of Form-A produced at Exh.28, the defendant Corporation had agreed to provide alternative accommodation in lieu of premium of Rs.3,000/- and the first installment towards such installment i.e. Rs.1,000/- was already paid on 19.02.1991 and therefore the plaintiff is entitled for a decree of specific performance in view of the so-called agreement dated 18.11.1987. In the alternative, the plaintiff prayed that the defendant Corporation may be directed to pay an amount of Rs.10,000/- per month towards compensation as the plaintiff had to suffer monetary loss in view of the demolition of his commercial construction.
Page 5 of 56C/FA/2807/2016 JUDGMENT
6. On behalf of the respondent - Corporation it was contended that in view of the provisions of the Act, 1976 and more particularly in view of Section 67 of the Act, 1976, once the Preliminary TP scheme is sanctioned, the land which is required by the appropriate authority would vest in favour of the appropriate authority free from all encumbrances and plaintiff is not entitled for any alternative accommodation. There is no policy of the Corporation to provide any alternative accommodation as a matter of right and even under the provisions of the Act, 1976, the plaintiff is not entitled for such alternative accommodation.
5. Mr.Chhaya, the learned counsel appearing for the Corporation - original defendant, submitted that the shop of the plaintiff had to be demolished as the Corporation had to undertake the project of road widening in accordance with the provisions of the Town Planning Act. For the purposes of road widening if any structure has to be demolished, then the owner of the structure is not entitled to any alternative land or monetary compensation.
6. Mr.Chhaya submitted that the trial Court committed an error apparent on the face of record while not appreciating the fact that the decree of specific performance is a matter of discretion and the same cannot be claimed as a matter of right. In the peculiar facts and circumstances of the present case, in none of the cases which were subject matter of laying down the road in question, alternative accommodation was provided by the Page 6 of 56 C/FA/2807/2016 JUDGMENT Corporation. Further, it is clear from the record that in view of the communication dated 18.11.1987 [Exh.27], the plaintiff was informed by the Corporation that the request/plea of alternative accommodation cannot be accepted as the construction was commercial in nature. Thereafter, the present suit was filed in the year 1996 after more than 8 years and thus, only on the ground of delay and laches, the suit filed by the plaintiff ought to have been dismissed. The trial Court has committed a grave error in not considering the above referred legal aspects and thus, the impugned judgment and decree passed by the trial Court is erroneous in law which requires interference .
7. It is submitted that the impugned judgment and decree passed by the learned trial Court dated 15.03.2016 passed in Regular Civil Suit No.1404 of 1996 filed by the respondent herein original plaintiff is contrary to the provisions of the law and the court below has failed to appreciate the provisions of the Gujarat Town Planning and Urban Development Act, 1976 read with the Gujarat Town Planning and Urban Development Rules, 1979. The Court below has failed to appreciate the controversy involved in the present suit and also failed to appreciate the real issues.
8. It is submitted that the main issue raised by the plaintiff regarding providing alternative place against demolition of the said property was erroneous and baseless. As per the provisions of the act and law laid down by this Court as well as by the Apex Court property which is forming part of the deduction under the sanctioned town planning scheme cannot claim for any alternative accommodation whatsoever, more particularly when Page 7 of 56 C/FA/2807/2016 JUDGMENT the construction which is subjected to demolition/deduction is a commercial property. The scheme of the act do not provide for any such alternative place in view of the deduction portion, more particularly when such deducted portion is forming part of the Act read with the Rules. As per the provisions contained in the Act read with the Rules appropriate and/or local authority is under an obligation to frame an appropriate town planning scheme within the area which is identified and notified for the said purpose. As per the scheme of the Act original plot owned by the individual owners/occupier would be identified by the concerned appropriate authority/town planning authority while framing the TP scheme. Such occupiers/owners would be allotted the original plots with respect to their respective occupation and after deducting the average deduction the respective original plots would be reconstituted and in lieu of the original plot the respective final plots would be allotted to the respective owners/occupiers of the original plots. It is submitted that the deducted portion would be used for the public amenities and other necessary services as provided under Section 40 of the Act. The scheme of the Act goes further and the draft town planning scheme would get sanctioned under Section 48(2) of the Act. Once the draft town planning scheme is sanctioned, the Town Planning Officer would be appointed under Section 50 of the Act, who would prepare the town planning scheme in tune with the provisions of the Act read with the Rules. In view of Section 52 read with Section 64 of the Act, the Town Planning Officer has to submit a Preliminary Town Planning Scheme to the State Government after declaration of its award under Section 52(2) and ultimately the State Government would sanction the preliminary town planning scheme under Section 65 of the Act.
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9. It is submitted that as per Section 65 Sub-Section (3) of the Act, 1976 once the Town Planning Scheme is sanctioned the same would became a part of the Act and thereafter any action pursuant to such sanctioned Preliminary Town Planning Scheme would be immune from any challenge except on the grounds which are well recognized in view of the catena of decisions.
10. It is submitted that as per the provisions of the law once town planning scheme is sanctioned under Section 65 of the Act, in view of the provisions contained under Section 67 all the lands required by the appropriate authority shall vest absolutely in the appropriate authority free from all encumbrances. As per the provisions contained in Section 68 read with Rule 33, it is the duty of the Corporation to implement the sanctioned Preliminary Town Planning Scheme in accordance with its proposal. It is submitted that so far as the property in question is concerned, the record would indicate that the original owner of Survey No.566 has been allotted Original Plot No.146 and in lieu of the Original Plot No.146, the Final Plot No.239 was allotted to its original owner. As can be seen from the sketch attached to the notice below Exh.24 that the shop of the respondent original plaintiff is at serial number 8 in the sketch and majority of the construction of the shop was forming part of the town planning road beyond the boundary of the Final Plot No.239 allotted to its Original Plot. The Town Planning Scheme No.30 Asarva (North Extension - Scheme in question) got sanctioned from the Government on 11.09.1979 and came into effect on the same day. Thereafter, notices as contemplated under Section 68 read with Rule 33 were issued and after following due procedure of Page 9 of 56 C/FA/2807/2016 JUDGMENT law and after hearing the respondent original plaintiff it was informed vide communication dated 18.11.1987 [Exh.27] that no alternative accommodation is to be provided and the respondent
- original plaintiff was obliged in law to remove the construction within seven days. The basis of the suit is erroneous and illegal in view of the provisions contained in the Specific Relief Act. The suit was not maintainable. As per the case of the respondent - plaintiff himself in the plaint the so-called promise/ condition 'A' was received by the plaintiff in November, 1987 and admittedly the suit was filed in the year 1996. On the ground of delay and latches the suit was not maintainable.
11. In such circumstances referred to above, Mr.Chhaya prays that there being merit in this First Appeal, the same may be admitted and the impugned judgment and decree be stayed from its operation, implementation and execution.
12. On the other hand, this First Appeal has been vehemently opposed by Ms.Nisha Thakore, the learned counsel appearing on behalf of the respondent - original plaintiff. Ms.Thakore would submit that no error, not to speak of any error of law, could be said to have been committed by the court below in passing the impugned judgment and decree. Ms.Thakore submitted that, indisputably the Corporation had promised in writing that they would provide an alternative space or accommodation in lieu of the demolition of the shop for the purposes of road widening.
13. As the Corporation declined to allot any alternative space, the plaintiff was left with no other option but to file a suit for specific performance and compensation.
Page 10 of 56C/FA/2807/2016 JUDGMENT
14. In such circumstances referred to above, Ms.Thakore prays that there being no merit in this First Appeal, the same be dismissed.
15. Having heard the learned counsel appearing for the parties and having considered the materials on record, the only question that falls for my consideration is, whether the court below committed any error in passing the judgment and decree.
16. The civil court, vide Exh.39, framed the following issues :
"(1) Whether the plaintiff proves that he is in lawful occupation and possession of the suit property bearing Survey No.566/1/2/3 of Original Plot No.146, Census No.98/54/4/3 and Final Plot No.239 of Town Planning Scheme No.30, Asarwa, Ahmedabad ?
(2) Whether the plaintiff proves that the defendant Corporation has agreed to provide for an alternative place for business in lieu of land bearing Town Planning Scheme No.30 ?
(3) Whether the plaintiff proves that the defendant Corporation has demolished the suit property going on road line without providing any alternative space to the plaintiff ?
(4) Whether the plaintiff proves that the plaintiff has spent considerable amount in constructing the suit property and that if plaintiff is dispossessed without being provided alternative place, plaintiff will suffer serious loss ?Page 11 of 56
C/FA/2807/2016 JUDGMENT
(5) Whether the suit of the plaintiff is barred by Section
487 of the BPMC Act ?
(6) Whether the defendant proves that the Town Planning
Scheme No.30 has been approved by the Government and therefore the same now has legislative intent and therefore, it is the obligatory duty of the defendant Corporation to implement the Scheme ?
(7) Whether the plaintiff is entitled to the reliefs as prayed for ?
(8) What order and decree ?"
17. The issues framed by the civil court referred to above came to be answered as under :
"(1) In the affirmative.
(2) In the affirmative.
(3) In the affirmative.
(4) In the affirmative.
(5) In the negative.
(6) Partly in the affirmative.
(7) Partly in the affirmative. Plaintiff is entitled to have an
alternative space as well as Rs.5,000=00 per month from the defendant as compensation from the date of demolition of the property till any alternative arrangement is made available.
(8) As per final order."
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C/FA/2807/2016 JUDGMENT
18. Let me look into the agreement Exh.28 entered into between the plaintiff and the defendant as regards the allotment of an alternative land in lieu of the land and the structure thereupon which came to be demolished by the Corporation for the purpose of road widening.
19. The free English translation of the agreement document Exh.28 is reproduced herein below :
"Form-A regarding the conditions for giving alternative facility.
Subject: Conditions for giving alternative facility to the occupants of business shades coming under the deduction of 60 feet T.P. Road passes through T.P. Scheme No.30 Chamanpura Chakla towards Omnagar crossing :
Conditions regarding giving alternative land in Final Plot No. 166 of T.P. Scheme No. 8. (1) Land will be allocated with a premium of Rs. 3000/-
(Rupees Three Thousand) for 10' x 10', 3.00 x 3.00 meters, total 9 Sq. meters.
(2) This land will be alloted on lease for 99 years. Therefore, the annual rent for the lease of the land shall have to be paid Rs. 101/- (Rupees one hundred and one) plus Municipal Tax and Educational Cess.
Additionally, Lessee would be responsible to pay any types of Tax, Government Tax, etc. The tenure of the lease would Page 13 of 56 C/FA/2807/2016 JUDGMENT be 99 years, but if necessary, Municipal Corporation may obtain possession without any compensation after 30 years or may remove the super-structure.
(3) The Lessee may make construction only on ground floor at his own expense upon the land given to him and he may not make any kind of construction of cellar or first floor.
(4) The Municipal Corporation shall have the right of construction on the upper floor and the Municipal Corporation can construct the upper floor above the ground floor and at that time, the Lessee shall not make any kind of interference.
(5) All the Lessees shall have to make similar kind of construction by remaining together, as this land has to be given on lease to others along with the Lessees in the same way.
(6) The map in respect of planning of the construction is required to be prepared and after obtaining approval of the Estate Officer, construction shall have to be done as per the map.
(7) The plinth of the construction shall have to be kept 0.45 meters.
(8) The maximum height of construction shall have to be kept at 3.00 meters.
(9) The ceiling of the construction shall be of R.C.C. (10) The amount of premium for use of the said land shall Page 14 of 56 C/FA/2807/2016 JUDGMENT be Rs. 3000/- (Rupees Three Thousand only) per a square meter.
(11) Rs. 1000/-, out of Rs. 3000/- as mentioned above, shall have to be deposited along with consent letter. The remaining amount shall have to be paid quarterly in four equal installment of Rs. 500/- (Rupees Five Hundred only) within period of one year from the date of handing over of the possession.
(12) The doors and rolling shutters shall have to be installed in the front part of stall, whereas no doors, windows, roof tiles or any other easement shall have to be installed at any side.
(13) If installments of remaining amount are not paid regularly within one year, Municipal Corporation shall have right to pull down the construction erected by lessee at their risk and expenses in order to make the place open OR shall be entitled to take possession of place allotted to the lessee along with construction done thereon. No compensation shall be paid for the same."
20. The plain reading of the entire agreement Exh.28 would indicate that except the signature of the plaintiff, there is no other stamp or seal or signature of any authority of the Municipal Corporation. Whether the agreement Exh.28 could be termed as a legal document having regard to the provisions of the Act, is also a question which the trial Court ought to have addressed itself. It is not clear as to who is the authority who executed the agreement. It is also not clear as to whether the Page 15 of 56 C/FA/2807/2016 JUDGMENT said authority was authorised in any manner by the Executive Committee of the Corporation.
21. I shall deal this issue a little later. Let me consider, whether the trial Court was justified in passing a decree for specific performance on the basis of such agreement, i.e. Exh.28, and also awarding monetary compensation by way of damages.
22. Section 20 of the Specific Relief Act, 1963, provides as follows :
"20. Discretion as to decreeing specific performance-
(1) 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.
(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 Page 16 of 56 C/FA/2807/2016 JUDGMENT
(b) where the performance of the contract would involve some hardship on the defendant which he did not foresee, whereas its non-performance 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.
Explanation 1. -- Mere inadequacy of consideration, or the mere fact that the contract is onerous to the defendant or improvident in its nature, shall not be deemed to constitute an unfair advantage within the meaning of Clause (a) or hardship within the meaning of Clause (b).
Explanation 2. -- The question whether the performance of a contract would involve hardship on the defendant within the meaning of Clause (b) shall, except in cases where the hardship has resulted from any act of the plaintiff subsequent to the contract, be determined with reference to the circumstances existing at the time of the contract.
(3) The court may properly exercise discretion to decree specific performance in any case where the plaintiff has done substantial acts or suffered losses in consequence of a contract capable of specific performance.
Page 17 of 56C/FA/2807/2016 JUDGMENT (4) The court shall not refuse to any party specific performance of a contract merely on the ground that the contract is not enforceable at the instance of the other party."
23. The relief of specific performance having its roots in equity, the Specific Relief Act, 1963, has preserved the discretion of the Court not to grant the relief even though the agreement is specifically performable in law. The only fetters imposed by the statute on the exercise of the discretion are that the discretion must not be exercised arbitrarily but soundly and reasonably and guided by judicial principles. The phrase "capable of correction by a Court of appeals" has been inserted possibly to indicate the necessity for the trial Court to state the reasons for exercising its discretion in a particular way. The circumstances when specific performance mentioned in the Clauses (a), (b) and
(c) of Sub-section (2) of Section 20 cannot be granted are not expressly exhaustive. They indicate the situations in which the Court may properly exercise discretion not to decree specific performance. However, certain considerations have been excluded as relevant factors. These are contained in Explanations 1 and 2 to the Section as well as in Section 20(4). It is to be noticed that each of these exclusions are preceded by the word "mere". The word "mere" in the context means "sole". In other words, any one of those factors by itself would not justify the exercise of discretion against granting specific performance. The factors cumulatively or with other factors may form the basis of a decision not to grant specific performance.
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24. Hardship of the defendant may be one of the grounds which may be taken into consideration for exercising its discretion by the Court in refusing to grant a decree for specific performance of contract.
25. Section 20 of the Specific Relief Act embodies a Common law that is grant of a decree for specific performance of a contract is a discretionary one. The Court may, in a given situation, take into consideration the subsequent events.
26. Long years have been passed by in the case on hand and the trial Judge does not seem to have taken this fact into consideration while granting the decree for specific performance.
27. In Spry on Equitable Remedies, it is stated:--
"On principle, indeed, Courts of equity must take account of all the circumstances known to exist at the time when an order is sought as well as of circumstances likely to occur subsequently, when they are called upon to decide whether the effect of ordering specific performance will be to cause such great hardship as to account to an injustice. There is no sufficient reason why a cause of hardship should be ignored merely because it did not exist at the time when the material contract was entered into. Certainly the fact that it has occurred subsequently may be a matter of weight, and if it appears that the parties contemplated that events might occur such as have in fact occurred the alleged causes of hardship will usually be of little importance indeed. But this Page 19 of 56 C/FA/2807/2016 JUDGMENT is not to say that they are irrelevant or that sometimes they may not be decisive so as to incline the balance of justice against the grant of relief.
Fortunately, however, this matter does not depend solely on principle, for there may be " found various decisions where events occurring after the date of entry into the agreement in question have been treated as relevant. Furthermore, it will subsequently be seen that any hardship of the defendant, if specific performance were ordered, must be weighed against the inconvenience or hardship which would be caused to the plaintiff if specific performance were refused. And in determining how great any such hardship or inconvenience to the plaintiff will be once again events and probable events as known at the date of the hearing are taken into account and there is no arbitrary restriction or limitation to events taking place at the time of entry into the material agreement.
It must not be forgotten that as soon as it is shown that damages and other legal remedies arc inadequate an applicant will be held prima facie entitled to specific performance of a valid and enforceable agreement. Specific performance will not be refused merely because inconvenience or even hardship to the defendant would be caused thereby. But if the hardship suffered by the defendant, if specific enforcement took place, would be so much greater than the detriment which would be suffered by the plaintiff if he were confined to his remedy at law that it would be unreasonable and oppressive to grant relief, specific enforcement will be denied."Page 20 of 56
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28. In S.G. Banerjee's Specific Relief Act, 10th Edn. at page 357, it is stated :--
"It is almost universally recognised that specific performance of a contract should not be granted, if in the circumstances of a case, it is inequitable to do so. The clause follows and gives statutory recognition to the universal rule. It enacts that where the defendant enters into the Contract under circumstances, which, though they do not render the contract voidable, yet make it inequitable to enforce specific performance, the Court may properly exercise discretion not to decree specific performance. What would or would not be inequitable would depend upon the facts and circumstances of the each case."
29. In Om Prakash v. Amarjit Singh, reported in 1988 Supp. SCC 780, the law is stated in the following terms:
"This is a suit for specific performance on an agreement to sell. The grant of relief is discretionary. The Court after consideration of all relevant circumstances must be persuaded to exercise its equitable and discretionary jurisdiction in favour of specific enforcement. The jurisdiction is subject to all the conditions to which all discretionary jurisdictions are subject. There are certain personal bars to relief. Respondent 1, who was the plaintiff in the suit, did not enter the box and tender evidence. The subject-matter of the suit is a small piece of property of 68 sq. yds. and is said to be the only worldly goods of the appellant."Page 21 of 56
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30. It is a settled principles of law that the provisions of Section 20 of the Specific Relief Act is not exhaustive. The same has to be considered and read with the Section 14 thereof. It is further well settled that the plaintiff does not have an absolute right to obtain a decree for specific performance of contract.
31. In Yohannan and another v. Harikrishnan Nair and others, reported in AIR 1992 Ker 49, it is stated :
"The cases in which the Court may properly exercise discretion not to decree specific performance has been enumerated in Sub-section (2). They are (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 avoidable, 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 non- performance 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."
32. The discretion of the Court in the matter, thus, is not confined within the four corners of Section 20 of the Act.
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33. In Dr. S.C. Banerjee's Specific Relief Act, 10th Edn. at page 326, the law is stated in the following terms :--
"The discretion is guided by judicial principles. The expression means that discretion is not to be arbitrarily exercised, but must be based on sound, reasonable and judicial principles, that is, the discretion must not be dependent upon the mere pleasure of the Judge but must be sound and reasonably guided by judicial principles. The Court must grant or withhold relief according to the circumstances of each particular case, when the general rules and principles do not furnish an exact measure of justice between the parties."
34. In granting or withholding the relief, the Court should take the following circumstances, conditions and incidents into consideration :
"(1) The contract must be certain, unambiguous and upon a valuable consideration;
(2) The contract must be perfectly fair in all its parts;
(3) The contract must be free from any fraud misrepresentation, imposition or mistake;
(4) The contract must not impose an unconscionable or hard bargain;Page 23 of 56
C/FA/2807/2016 JUDGMENT (5) The performance of the contract must not impose any hardship on the defendant, such as he could not foresee;
(6) The contract must be capable, of specific execution through a decree of the Court,"
35. The appeal Court should not interfere with the judgment of the trial Court only because it is not right but when it is clearly wrong. Even in regular suits, the appeal courts are loathe to interfere with the findings of fact arrived at by the trial Court on the basis of oral evidence. (See Ratanlal Nahata v. Nandita Bose reported in 1997(1) CHN 392).
36. There is no dispute that an order of specific performance is a discretionary one. In an appeal against such an order, the appellate Court generally does not interfere with the discretion exercised by the trial Judge unless it appears that while exercising such discretion the trial Judge has wrongly applied the principles for grant of such discretion or unless it is established that such discretion has been unreasonably or capriciously used. In this connection reference may be made to the decision of Supreme Court in Uttar Pradesh Co-operative Federation Ltd. v. Sunder Bros. of Delhi, reported in AIR 1967
249. In that decision the Supreme Court was dealing with an appeal against an order granting stay in exercise of power under Section 34 of the Arbitration Act, which is undoubtedly a discretionary power. While discussing the scope of the said appeal the Apex Court held that where the discretion vested in the. Court has been exercised by the lower court, the appellate Court would be slow to interfere with the exercise of its Page 24 of 56 C/FA/2807/2016 JUDGMENT discretion. In dealing with the matter raised before it at the appellate stage, the appellate Court would not be justified in interfering with the discretion under appeal solely on the ground that if it had considered the matter at the trial stage it might have come to a contrary conclusion. If the discretion has been exercised by the trial Court reasonably and in a judicial, manner the fact that the appellate Court could have taken a different view may not justify such interference with the trial Court's exercise of discretion. If it appears to the appellate Court that in exercise of its discretion the trial Court had acted unreasonably or capriciously or has ignored the relevant fact, then it would be open to the appellate Court to interfere with the trial Court's exercise of discretion.
37. Let me now look into Section 16 of the Specific Relief Act. Section 16 of the Specific Relief Act provides that specific performance of a contract cannot be enforced in favour of a person (b) who has become incapable of performing or violates any essential term of the contract that remains to be performed on his part or willfully acts at variance with or in subversion of the relation intended to be established by the contract, or (c) who fails to aver and prove that he has performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him other than the terms performance of which has been prevented or waived by the defendant. Clause (c) has since been explained (i) that it is not essential where the contract involves payment of money, to actually tender to the defendant or to deposit in Court except when so directed by the Court; and (ii) the plaintiff must aver performance of readiness and willingness to perform the contract Page 25 of 56 C/FA/2807/2016 JUDGMENT according to its true construction.
38. A plain reading of Section 16 of the Specific Relief Act makes it clear that in order to obtain specific performance of a contract, the plaintiff has to show that he has not violated any essential term of the contract that on his part remains to be performed or that he has not acted willfully at variance with or in subversion of the relation intended to be established by the contract and that he has averred and proved that he has performed and was always ready and willing to perform the essential terms of the contract to be performed by him unless prevented or waived by the defendant. The ingredients may be specified thus: (1) the plaintiff has become incapable of performing any part of the contract that remains to be performed by him; or (2) he has violated any essential term of the contract that remains to be performed by him; or (3) he acts in fraud of the contract; or (4) he willfully acts at variance with the relation intended to be established by the contract; or (5) he willfully acts In subversion of the relation intended to be established by the contract; or (6) he fails to aver that he has performed the essential terms of the contract to be performed by him; or (7) he was always ready and willing to perform the essential terms of the contract to be performed by him; or (8) he was prevented by the defendant from performing any part of the contract; or (9) the defendant had waived performance of any part of the contract; and (10) he has to prove the conditions contained in (6) to (8). According to the explanation, much readiness and willingness to perform the contract must be according to the true construction of the contract.
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39. The King's Bench in Rookey's Case [77 ER 209; (1597)5 Co.Rep.99], it is 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 to oppose, but each, in its turn, to be subservient to the other. This discretion, in some cases follows the law implicitly, in others 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"
40. The Court of Chancery in Attorney General vs. Wheat [(1759)1 Eden 177; 28 ER 652] followed the Rookey's case and observed :
"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 vin, yet when it is asked, vir bonus est quis? The answer is, qui consulta partum, qui leges juraq servat. And as it is said in Rooke's case, 5 Rep. 99 b, that 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 to oppose, but each, in its turn, to be subservient to the other. This discretion, in some cases follows the law Page 27 of 56 C/FA/2807/2016 JUDGMENT implicitly, in others 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."
41. In Satya Jain vs. Anis Ahmed Rushdie, (2013)8 SCC 131, at page 145, the Supreme Court observed :-
"40. The discretion to direct specific performance of an agreement and that too after elapse of a long period of time, undoubtedly, has to be exercised on sound, reasonable, rational and acceptable principles. The parameters for the exercise of discretion vested by Section 20 of the Specific Relief Act, 1963 cannot be entrapped within any precise expression of language and the contours thereof will always depend on the facts and circumstances of each [pic]case. The ultimate guiding test would be the principles of fairness and reasonableness as may be dictated by the peculiar facts of any given case, which features the experienced judicial mind can perceive without any real difficulty. It must however be emphasised that efflux of time and escalation of price of property, by itself, cannot be a valid ground to deny the relief of specific performance. Such a view has been consistently adopted by this Court. By way of illustration opinions rendered in P.S. Ranakrishna Reddy v. M.K. Page 28 of 56 C/FA/2807/2016 JUDGMENT Bhagyalakshmi (2007) 10 SCC 231 and more recently in Narinderjit Singh v. North Star Estate Promoters Ltd.(2012) 5 SCC 712 may be usefully recapitulated."
42. In Nirmala Anand vs. Advent Corpn. (P) Ltd., (2002)8 SCC 146, at page 150, a three Judge Bench of the Supreme Court on a similar issue held as under :-
"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 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 Page 29 of 56 C/FA/2807/2016 JUDGMENT 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."
43. In V. Pechimuthu vs. Gowrammal, (2001)7 SCC 617, at page 629 the Supreme Court held as under:-
"25. Counsel for the respondent finally urged that specific performance should not be granted to the appellant now because the price of land had risen astronomically in the last few years and it would do injustice to the respondent to compel her to reconvey property at prices fixed in 1978.
26. The argument is specious. Where the court is considering whether or not to grant a decree for specific performance for the first time, the rise in the price of the land agreed to be conveyed may be a relevant factor in denying the relief of specific performance. (See K.S. Vidyanadam v. Vairavan). But in this case, the decree for specific performance has already been passed by the trial court and affirmed by the first appellate court. The only question before us is whether the High Court in second appeal was correct in reversing the decree. Consequently the principle enunciated in K.S. Vidyanadam (1997) 3 SCC 1 will not apply."
44. In a judgment dated 22.9.2014 delivered in the Civil Appeal No.9047 of 2014 titled K. Prakash vs. B.R. Sampath Kumar, Page 30 of 56 C/FA/2807/2016 JUDGMENT reported in AIR 2015 SC 9, the Supreme Court observed that:
"17. The principles which can be enunciated is that where the plaintiff brings a suit for specific performance of contract for sale, the law insists 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 other after appreciation of entire evidence and materials on record, the appellate court should not interfere unless it is 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 is established then the Court has to exercise its discretion in favour of granting relief for specific performance.
19. Subsequent rise in price will not be treated as a hardship entailing refusal of the decree for specific performance. Rise in price is a normal change of circumstances and, therefore, on that ground a decree for specific performance cannot be reversed.Page 31 of 56
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20. However, the court may take notice of the fact that there has been an increase in the price of the property and considering the other facts and circumstances of the case, this Court while granting decree for specific performance can impose such condition which may to some extent compensate the defendant-owner of the property. This aspect of the matter is considered by a three Judge Bench of this Court in Nirmala Anand vs. Advent Corporation (P) Ltd. and Others, (2002)8 SCC 146."
45. 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 mislead the Court then such discretion should not be exercised by refusing to grant specific performance.
46. Having regard to the evidence on record, I am of the view that the trial Court committed a big mistake in passing the decree for specific performance almost after a period of 30 years. This litigation, by now, is almost three decades old. It all started with a notice dated 21st April 1987 issued to the plaintiff under Section 68 of the Act, 1976, read with Rule 33 of the Rules. The notice had to be issued as the Corporation wanted the road to be widened in accordance with the Town Planning scheme. The Page 32 of 56 C/FA/2807/2016 JUDGMENT objections raised by the plaintiff were turned down and he was asked to remove the construction.
47. It appears that the first civil suit bearing Civil Suit No.6434 of 1995 filed by the plaintiff against the Corporation for injunction was withdrawn, as by that time, the shop of the plaintiff was demolished and the road was widened. Thereafter, the second civil suit bearing Regular Civil Suit No.1404 of 1996 came to be filed, which has given rise to this First Appeal.
48. I fail to understand and it is not made clear as to in what circumstances the agreement came to be executed for the purpose of providing an alternative space or land in lieu of the shop which came to be demolished.
49. There is no statutory obligation on the part of the Corporation to provide any alternative land. Despite the same, why such an agreement came to be executed, is something which has really taken this Court by surprise. Prima facie, it appears that only with a view to facilitate the implementation of the Town Planning scheme, the Corporation thought fit to enter into such agreements so that they could get the possession of the land for the purpose of widening of the road without any hindrance or trouble.
50. It is also not clear as to who is the authority who was authorized by the Corporation to enter into such an agreement. In fact, I do not find even any signature of such an authority on Page 33 of 56 C/FA/2807/2016 JUDGMENT the agreement. There is not even any seal or stamp of the Corporation.
51. However, from the evidence on record, it appears that the Corporation did make themselves clear before the plaintiff that they would allot an alternative land, and for such allotment, the Corporation called upon the plaintiff to deposit an amount of Rs.3,000=00. It is not in dispute that an amount of Rs.1,000=00 as demanded first in point of time was deposited by the plaintiff with the Corporation.
52. In any view of the matter, the factum of agreement having entered into for the purpose of providing an alternative land has not been seriously disputed by the learned counsel appearing for the Corporation.
53. Be that as it may, I am of the view that after a period of almost three decades the decree for specific performance, and that too, in the peculiar facts and circumstances of the case, should not have been granted by the civil court. It is also necessary for me to state that the learned counsel appearing for the respondent - original plaintiff has not seriously defended the decree passed by the civil court for specific performance. The learned counsel, however, submitted that the decree as regards the compensation may not be disturbed.
54. I fail to understand as to on what basis the amount of Rs.5,000=00 per month towards the damages came to be Page 34 of 56 C/FA/2807/2016 JUDGMENT determined. However, it is the Corporation who created the ghost by executing such an agreement, and now they are trying to kill. To a certain extent the Corporation is responsible for giving rise to this litigation. I am of the view that awarding a lumpsum amount to the respondent - original plaintiff would serve the ends of justice.
55. Specific performance and claim for damages under the Contract Act as alternate remedies cannot be concurrently pursued where remedies under Section 21 of the Specific Relief Act and under Section 73 of the Contract Act are sought in the alternative. The plaintiffs may elect between the two remedies at any time down to the hearing if he is not otherwise in default. It is only claim to compensation under Section 21 that will fall to ground on abandonment to claim specific performance, but the claim for damages for breach of contract under Section 73 would still survive.
56. The distinction between a suit for specific performance under Section 21 of the Specific Relief Act and a suit for breach of contract under Section 73 of the Contract Act is that under Section 21 the plaintiff may ask for compensation either in addition to or in substitution for specific performance on the ground that the contract is subsisting, however, when party sues for damages for breach of contract under Section 73, the party elects to treat that the contract has come to an end and himself has discharged from its obligation and no further performance is contemplated. It is open to the party to put forward a claim under Section 21 of the Specific Relief Act and in the alternative Page 35 of 56 C/FA/2807/2016 JUDGMENT a claim to damages for breach of contract under Section 73 of the Contract Act.
57. There is distinction between damages for breach of a contract which can only be claimed under the Contract Act and damages in substitution for specific performance the claim for which Section 19 of the Specific Relief Act permits. The two claims are based on entirely different considerations. Compensation in substitution for specific performance is granted where the court could have granted specific performance but declines in its discretion to do so.
58. While awarding the amount of compensation under Section 19 of the Specific Relief Act, the court has ordinarily no alternative but to act on the principles contained in Section 73 of the Contract Act.
59. Whether the claim is for specific performance or for damages, the cause of action is breach of contract. The reliefs follow as a consequence of the breach of contract. If the party aggrieved is ready and willing to carry out his part and the party complained against commits the breach then the party aggrieved may either sue for specific performance or for damages. Moreover, a claim for specific performance under the Specific Relief Act can co-exist with a claim for damages under the Contract Act and claim under one Act cannot preclude claim under the other so long as the requirements of the respective statutes are satisfied.
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60. The claim for damages for breach of contract entered into against the provisions of law.
61. In the suit filed by the plaintiff, there is a plea for specific performance of an agreement to provide for alternative land and also for compensation. As noted above, the Specific Relief Act, 1963, contemplates that in addition to or in substitution of a claim for performance plaintiff is entitled to claim compensation. Section 21 provides as follows :
"21. Power to award compensation in certain cases. -- (1) In a suit for specific performance of a contract, the plaintiff may also claim compensation for its breach, either in addition to, or in substitution of, such performance.
(2) If, in any such suit, the Court decides that specific performance ought not to be granted, but that there is a contract between the parties which has been broken by the defendant, and that the plaintiff is entitled to compensation for that breach, it shall award him such compensation accordingly.
(3) If, in any such suit, the Court decides that specific performance ought to be granted, but that it is not sufficient to satisfy the justice of the case, and that some compensation for breach of the contract should also be made to the plaintiff, it shall award him such compensation accordingly.Page 37 of 56
C/FA/2807/2016 JUDGMENT (4) In determining the amount of any compensation awarded under this section, the Court shall be guided by the principles specified in section 73 of the Indian Contract Act, 1872 (9 of 1872).
(5) No compensation shall be awarded under this section unless the plaintiff has claimed such compensation in his plaint:
Provided that where the plaintiff has not claimed any such compensation in the plaint, the Court shall, at any stage of the proceeding, allow him to amend the plaint on such terms as may be just, for including a claim for such compensation.
Explanation. -- The circumstance that the contract has become incapable of specific performance does not preclude the Court from exercising the jurisdiction conferred by the section."
62. Under sub-section(2) of section 21, the Court is empowered to award compensation for breach where it holds that there is a contract between the parties which was broken by the defendant but in the event it decides that specific performance ought not to be granted. Sub-section (3) empowers the Court to grant compensation for breach in addition to a decree for specific performance where it is of the view that specific performance Page 38 of 56 C/FA/2807/2016 JUDGMENT alone would not satisfy the justice of the case. Sub-section (5), however, stipulates that compensation cannot be awarded under the section unless the plaintiff has claimed such compensation in the plaint. This provision is mandatory.
63. The proviso to sub-section (5) dilutes the rigours of the main provision by allowing the plaintiff who has not claimed such compensation in the plaint to amend the Plaint at any stage of the proceedings and the Court, it has been provided, shall at any stage of the proceedings allow an amendment for including a claim for such compensation on such terms as may be just.
64. In Shamsu Suhara Beevi v. G. Alex, (2004) 8 SCC 569, for instance, the Supreme Court held that the High Court erred in granting compensation under section 21, in addition to the relief of specific performance in the absence of a prayer made to that effect either in the plaint as originally filed or as amended at any stage of the proceedings.
65. Section 22 of the Specific Relief Act contains the following provision:
"22. Power to grant relief for possession, partition, refund of earnest money, etc. -- (1) Notwithstanding anything contained in the Code of Civil Procedure, 1908, (5 of 1908), any person suing for the specific performance of a contract for the transfer of immovable property may, in an appropriate case, ask for--Page 39 of 56
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(a) possession, or partition and separate possession, of the property, in addition to such performance; or
(b) any other relief to which he may be entitled, including the refund of any earnest money or deposit paid or made by him, in case his claim for specific performance is refused.
(2) No relief under clause (a) or clause (b) of sub-section (1) shall be granted by the Court unless it has been specifically claimed:
Provided that where the plaintiff has not claimed any such relief in the plaint, the Court shall, at any stage of the proceeding, allow him to amend the plaint on such terms as may be just for including a claim for such relief.
(3) The power of the Court to grant relief under clause (b) of sub--section (1) shall be without prejudice to its powers to award compensation under section 21."
66. Section 22 has a non obstante provision which overrides the Code of Civil Procedure, 1908. A plaintiff who claims specific performance of a contract for the transfer of immovable property, may in an appropriate case ask for possession, partition and separate possession of the property, in addition to specific performance. The plaintiff may also claim any other relief Page 40 of 56 C/FA/2807/2016 JUDGMENT including the refund of earnest money or deposit paid, in case the claim for specific performance is refused. Corresponding to the provisions of sub-section (5) of section 21, sub-section (2) of section 22 stipulates that such relief cannot be granted by the Court unless it has been specifically claimed. However, the proviso requires that the Court shall at any stage of the proceedings allow the plaintiff to amend the plaint to claim such relief where it has not been originally claimed on such terms which may appear just.
67. The object of the legislature in introducing the proviso to sub-section (5) of section 21 and to sub-section (2) of section 22 was to obviate a multiplicity of the proceedings.
68. In Babu Lal v. Hazari Lal, AIR 1982 SC 818, the Supreme Court noted that the legislature "has given ample power to the Court to allow amendment of the plaint at any stage." (At para 20 page 825). This, the Supreme Court held, would include even the stage of execution. The Supreme Court also held that a mere contract for sale or for that matter, a decree for specific performance does not confer title on the buyer and that title would pass only upon execution of the decree. While discussing the issue of limitation, the Supreme Court held as follows:
"If once we accept the legal position that neither a contract for sale nor a decree passed on that basis for specific performance of the contract gives any right or title to the decree-holder and the right and the title passes to him only Page 41 of 56 C/FA/2807/2016 JUDGMENT on the execution of the deed of sale either by the judgment- debtor himself or by the Court itself in case he fails to execute the sale deed, it is idle to contend that a valuable right had accrued to the Petitioner merely because a decree has been passed for the specific performance of the contract. The limitation would start against the decree-holders only after they had obtained a sale in respect of the disputed property. It is, therefore, difficult to accept that a valuable right had accrued to the judgment-debtor by lapse of time. Section 22 has been enacted only for the purpose of avoiding multiplicity of proceedings which the law Courts always abhor."
69. The same view was taken by the Supreme Court in a later judgment in Jagdish Singh v. Natthu Singh, AIR 1992 SC 1604:
"So far as the proviso to sub-section (5) is concerned, two positions must be kept clearly distinguished. If the amendment relates to the relief of compensation in lieu of or in addition to specific performance where the plaintiff has not abandoned his relief of specific performance the Court will allow the amendment at any stage of the proceeding. That is a claim for compensation falling under Section 21 of the Specific Relief Act, 1963 and the amendment is one under the proviso to sub-section (5). But different and less liberal standards apply if what is sought by the amendment is the conversion of a suit for specific performance into one for damages for breach of contract in which case Section 73 of the Contract Act is invoked. This amendment is under the Page 42 of 56 C/FA/2807/2016 JUDGMENT discipline of R.17, 0.6, C.P.C The fact that sub-section (4) in turn, invokes Section 73 of the Contract Act for the principles of quantification and assessment of compensation does not obliterate this distinction."
70. In the decision in Shamsu Suhara Beevi (supra), while holding that the High Court had erred in granting compensation under section 21, in addition to the relief of the specific performance in the absence of a prayer to that effect, the Supreme Court held that a prayer could have been made to that effect either in the plaint or by amending the plaint at any later stage of the proceeding to include the relief of compensation in addition to the relief of a specific performance. The plaint, however, in that case, was never amended and the order of the High Court was, therefore, held to be in error.
71. In context with grant of compensation, let me refer to and rely upon a decision of the Supreme Court in the case of Jai Narain Parasrampuria (dead) and others v. Pushpa Devi Saraf and others, (2006)7 SCC 756. In the case before the Supreme Court, both the parties were found guilty of serious misconduct. The court took notice that both the parties had abused the process of court. They initiated unnecessary nay frivolous proceedings against each other. However, ultimately, specific performance was declined but amount of compensation was awarded, holding the original defendant for bringing out a very unusual situation. The relevant observations made by the Supreme Court are as under :
Page 43 of 56C/FA/2807/2016 JUDGMENT "[84] Both the parties hereto are guilty of serious misconduct. Both of them have abused the process of court. They initiated unnecessary nay frivolous proceedings against each another. Both the parties took recourse to abuse of judicial process against the other upon suppression of material fact, which would amount to fraud on court. The question in regard to exercise of discretionary jurisdiction for grant of a decree of specific performance of contract, as envisaged u/s. 20 of the Specific Relief Act, must be considered from the said angle.
[85] Section 20 of the Specific Relief Act reads thus:
"20. Discretion as to decreeing specific performance.- (1) 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.
(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 Page 44 of 56 C/FA/2807/2016 JUDGMENT hardship on the defendant which he did not foresee, whereas its non-performance would involve no such hardship on the plaintiff; or
(c) where the defendant entered into the contract under circumstances which though not rendering the contract voidable, makes it inequitable to enforce specific performance.
Explanation 1.- Mere inadequacy of consideration, or the mere fact that the contract is onerous to the defendant or improvident in its nature, shall not be deemed to constitute an unfair advantage within the meaning of cl. (a) or hardship within the meaning of cl. (b).
Explanation 2.- The question whether the performance of a contract would involve hardship on the defendant within the meaning of cl. (b) shall, except in cases where the hardship has resulted from any act of the plaintiff subsequent to the contract, be determined with reference to the circumstances existing at the time of the contract.
(3) The court may properly exercise discretion to decree specific performance in any case where the plaintiff has done substantial acts or suffered losses in consequence of a contract capable of specific performance.
(4) The court shall not refuse to any party specific performance of a contract merely on the ground that the contract is not enforceable at the instance of the party."
Page 45 of 56C/FA/2807/2016 JUDGMENT [86] Balancing of equities in a case of this nature is a difficult task. It is now well settled that compensation can be awarded in lieu of grant of decree of specific performance of contract. The courts are now evolving separate principles in regard to the remedy of compensation. The learned author cites various cases to make home the point stating:
"18-17 A monetary award which is made in substitution for (or in addition to) non-monetary relief will frequently be determined on the basis of pecuniary performance or pecuniary rescission; but, in some cases, may also be determined by reference to the loss which has been suffered.
18-18 (a) Pecuniary performance. Pecuniary performance is a money substitute for the thing which the defendant would have been required to do, had specific relief been ordered. It is to be determined by identifying the difference between two values: (i) the value of the claimant's right to performance of the obligation and (ii) the value of the performance which the defendant is able to give. Where the defendant is not able to perform the obligation, the amount of the award will represent the value of the claimant's right to performance : in such a case, an order for pecuniary performance will be for a sum corresponding with the value of the claimant's right to performance. The position is similar where the court declines to grant non-monetary relief and thereby (in effect) releases the defendant from the need to perform the obligation in the future."Page 46 of 56
C/FA/2807/2016 JUDGMENT [87] In Spry's Equitable Remedies, it is stated:
"In considering what circumstances induce the court, as a matter of discretion, to award equitable damages rather than relief in specie it must be borne in mind that when once the general conditions for the exercise of equitable jurisdiction have been established, that is, the inappropriateness of damages in respect of a matter coming within a recognized head of relief, prima facie there arises a right to specific performance or to an injunction, as the case may require. So it was observed by Lord Langdale, "I conceive the doctrine of the court to be this, that the court exercises a discretion, in cases of specific performance, and directs a specific performance unless it should be what is called highly unreasonable to do so." Similarly reference has been made to "the rule that where the plaintiff has established the invasion of a common law right, and there is ground for believing that without an injunction there is likely to be a repletion of the wrong, he is, in the absence of special circumstances, entitled to an injunction against such repetition."
On the one hand it is clear that the passage of provisions for equitable damages did not affect these general principles. So it has been affirmed that the authorities show "that Lord Cairns' Act did not revolutionise the principles upon which the equitable jurisdiction had been administered up to that time and that some special case must be shown before the court should exercise the jurisdiction under the Act". On the Page 47 of 56 C/FA/2807/2016 JUDGMENT other hand, in cases where an injunction or an order of specific performance would be granted if there were no power to grant damages the statutory power of the court to award damages may, in special circumstances, be of critical weight. It may induce the court to conclude that any inconvenience or hardship which would be caused to the plaintiff if he were obliged to accept merely an award of damages would be so far outweighed by the hardship that would be caused to the defendant if specific enforcement were granted that damages constitute the most appropriate remedy. Hence where the court would otherwise have granted specific relief the importance of a power to grant equitable damages is found to lie primarily in its relation to considerations of hardship between the parties and to the balance of convenience."
[88] In Gillett v. Holt, (2000)2 ALL ER, it was pointed out:
"Since Mr. Gillett has established his claim to equitable relief, this court must decide what is the most appropriate form for the relief to take. The aim is (as Sir Arthur Hobhouse said in Plimmer V/s. Mayor of Wellington, (1884)9 AC 699 (PC), to 'look at the circumstances in each case to decide in what way the equity can be satisfied'. The court approaches this task in a cautious way, in order to achieve what Scarman LJ (in Crabb V/s. Arun, (1975)3 ALL ER 865), called 'the minimum equity to do justice to the plaintiff'. The wide range of possible relief appears from Snell's Equity (30th edn, 1999) pp 641- 643."Page 48 of 56
C/FA/2807/2016 JUDGMENT [89] For the aforementioned purpose it is necessary to have a broad approach, as was observed in Gillett (supra). Therein it was further held:
"That is in my view the maximum extent of the equity. The court's aim is, having identified the maximum, to form a view as to what is the minimum required to satisfy it and do justice between the parties. The court must look at all the circumstances, including the need to achieve a 'clean break' so far as possible and avoid or minimize future friction."
[90] In Malhotra V/s. Choudhury, (1979)1 ALL ER 186, Stephenson, LJ., in the fact situation obtaining therein, opined:
"But as counsel for the plaintiff pointed out, the question which the judges were summoned by their Lordships to answer and which was proposed for their consideration was 'Whether, upon a contract for the sale of real estate, where the vendor, without his default [my emphasis], is unable to make a good title, the purchaser is by law entitled to recover damages for the loss of his bargain?' That is the question which was answered in the judgement of Pollock B, which was also the judgement of Kelly CB, Keating and Brett, JJ, and the question as it was stated by both Denman J and Pigott B. I note this is the way in which the rule is stated in Williams on Contract of Sale of Land, cited by Megarry J in Wroth V/s. Tyler, (1973)1 ALL ER 897:
'Where the breach of contract is occasioned by the vendor's Page 49 of 56 C/FA/2807/2016 JUDGMENT inability, without his own fault [my emphasis], to show a good title, the purchaser is entitled to recover as damages his deposit, if any, with interest, and his expenses incurred in connection with the agreement, but not more than nominal damages for the loss of his bargain.' It is not necessary to decide how far the words 'without his default' go, if I am right in thinking that inability without default is what one has to consider as attracting the rule in Bain V/s. Fothergill, (1874-80) ALL ER Rep 83.
There may be cases in which there has been no lack of bona fides, yet the rule in Bain V/s. Fothergill, has been excluded. I would not however venture to suggest that anything less than lack of good faith could exclude the rule. But it seems from later decisions that fraud, in the full sense of that word such as would found an action for deceit, may not be necessary to exclude the rule. No doubt Blackett-Ord V-C had in mind that fraud must be strictly alleged and proved in all ordinary circumstances. But in my judgment, unwillingness to use best endeavours to carry out a contractual promise is bad faith, and for there to be bad faith which takes the case out of this exceptional rule it is not necessary that there should be either a deliberate attempt to prevent title being made good or anything more than the unwillingness which I find it inevitable to infer in this case. If a man makes a promise and does not use his best endeavours to keep it, it cannot take much and, in my judgment, may not need more to make him guilty of bad faith and to entitle the victim of his bad faith to his full share of Page 50 of 56 C/FA/2807/2016 JUDGMENT damages to compensate him for what he has lost by reason of that breach of contract and bad faith."
[91] In so far as the principle relating to assessing damages in substitution for an order of specific performance is concerned, the learned Judge opined that a court of equity should follow law and address itself to find the proper substitute, stating that the equitable remedy of specific performance has features markedly different from damages at common law for breach of contract.
[92] Having noticed the law operating in the filed vis-a-vis the conduct of the parties, we decline to grant a decree for specific performance of contract and opine that in its stead and place a decree for compensation should be granted.
[93] What should be the amount of compensation is now the question.
[94] Law as declared by this Court is that the quantum and measure of damages would vary from case to case.
[95] We may notice a few of them.
[96] In Lalit Kumar Jain & Anr. V/s. Jaipur Traders Corporation Pvt. Ltd., (2002)5 SCC 383, this Court, while directing dismissal of the suit, opined:
"However, in view of the fact that the defendants are not free from blame as discussed above and they have utilized the Page 51 of 56 C/FA/2807/2016 JUDGMENT property to the best of their advantage right from day one without, at the same time, paying the balance sale price for several years, we put it to the counsel for the appellants whether they are willing to pay to the plaintiff a substantial amount over and above the sale price already deposited in the Court, in order to do justice to the parties. In fact, in the course of arguments by the learned counsel for the appellants, there was an indication that the appellants were prepared to offer a reasonable amount, without prejudice to their contentions. The learned counsel for the appellants has filed a letter dated 18.04.2002 stating that "the appellants can pay and agree to pay a further sum of Rs.35 lakhs (Rupees thirty-five lakhs) in 3 instalments of Rs.15 lakhs and Rs.10 lakhs and Rs.10 lakhs", in three weeks, by the end of August and by the end of November 2002 respectively. When we suggested to the learned counsel that it would be fair if some more amount is offered, the learned counsel for the appellants agreed on behalf of his clients for payment of Rs.40 lakhs in lump sum within a period of six months commencing from today. Having regard to the offer made in the letter coupled with the oral representation made today and to mete out justice to the parties, we direct that the undertaking to pay the sum of Rs.40 lakhs within six months should form part of the decree in the suit. This shall be in addition to the sale price already deposited in the Court. The same shall be deposited in the Court within a period of six months and the plaintiffs are entitled to withdraw the same in addition to the amount already deposited."
[97] In Manjunath Anandappa urf Shivappa Hanasi V/s.
Page 52 of 56C/FA/2807/2016 JUDGMENT Tammanasa & Ors., (2003)10 SCC 390, was a member, a decree for specific performance was declined as the plaintiff did not approach the court within a reasonable time.
[98] In P.D'Souza V/s. Shondrilo Naidu, (2004)6 SCC 649, this Court rejected the contention that inadequacy of consideration may be ground for refusing relief of specific performance, which may cause hardship stating:
"It is not a case where the defendant did not foresee the hardship. It is furthermore not a case that non-performance of the agreement would not cause any hardship to the plaintiff. The defendant was the landlord of the plaintiff. He had accepted part-payments from the plaintiff from time to time without any demur whatsoever. He redeemed the mortgage only upon receipt of requisite payment from the plaintiff. Even in August, 1981 i.e. just two months prior to the institution of suit, he had accepted Rs.20,000 from the plaintiff. It is, therefore, too late for the appellant now to suggest that having regard to the escalation in price, the respondent should be denied the benefit of the decree passed in his favour. Explanation I appended to Sec.20 clearly stipulates that merely inadequacy of consideration, or the mere fact that the contract is onerous to the defendant or improvident in its nature would not constitute an unfair advantage within the meaning of sub-sec. (2) of Sec. 20."
[99] The Court noticed that somewhat a different note was struck in Nirmala Anand V/s. Advent Corpn. (P) Ltd & Ors., (2002)5 SCC 481, and opined:
Page 53 of 56C/FA/2807/2016 JUDGMENT "The said decision cannot be said to constitute a binding precedent to the effect that in all cases where there had been an escalation of prices, the court should either refuse to pass a decree on specific performance of contract or direct the plaintiff to pay a higher sum. No law in absolute terms to that effect has been laid down by this Court nor is discernible from the aforementioned decision."
[100] In Surinder Singh V/s. Kapoor Singh (Dead) through LRs. & Ors., (2005)5 SCC 142, it was emphasized that discretionary jurisdiction must be exercised reasonably and having regard to the fact situation obtaining in each case. The present market value of the property is also a relevant fact. The prices must have gone up manifold. It is situate in a metropolitan town. It has a great potential value.
[101] As noticed hereinbefore, the conduct of both the parties are blameworthy. The value of the property is now said to be a few crores. The appellants had deposited a sum of Rs.10 lakhs as far back as on 12.06.1984. The said amount must be directed to be refunded to the appellants with interest @15% per annum. Although we decline to grant any relief of specific performance of contract to which the Appellants were otherwise entitled to, we are of the opinion that it is a fit case where the respondents should be asked to compensate the Appellants. In view of the fact that the Sarafs are also responsible for bringing out such a situation, we are of the opinion that interest of justice would be met if the respondents are directed to pay a sum of Rs.50,00,000.00 to Page 54 of 56 C/FA/2807/2016 JUDGMENT the Appellants herein by way of compensation. Such amount should be in addition to the sum of Rs.10,00,000.00 deposited by the Appellants together with interest at the rate of 12% per annum thereupon. This order shall not preclude Manoj Kumar Poddar to bring an independent action against the respondents herein, if he so desires.
(i) The property in suit for all intent and purport was acquired for the benefit of the Company.
(ii) Only because at the time of acquisition of the property by Sarafs, the Company was unincorporated, the same would not mean that no title could have been passed in favour of the Company.
(iii) In view of their conduct, Sarafs were estopped and precluded from denying and disputing the title of the Company over the property in dispute.
(iv) Withdrawal of suit No. 1252 of 1982 by the appellants did not create any embargo in raising a contention that the award of the arbitrator and the consequent decree passed were void ab initio and of no effect.
(v) The agreement for sale dated 11.6.1984 was not a transaction for loan.
(vi) Saraf's conduct was condemnable so far as they not only raised false and frivolous pleas but also initiated frivolous proceedings in courts of law.
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(vii) The subject matter of the agreement was not only the house in question but also the entire lands.
(viii) Prima facie the demolition of the house took place at the instance of the appellants.
(ix) However, it is not a case where the appellants are entitled to a decree for specific performance of contract.
(x) The respondents should refund the amount of advance of Rs.10,00,000.00 (ten lakhs) with interest and furthermore pay compensation to the extent of Rs.50,00,000.00 (fifty lakhs)."
72. In view of the above, this First Appeal is partly allowed. The judgment, order and decree passed by the trial Court in the Regular Civil Suit No.1404 of 1996 is hereby quashed and set- aside and the same is substituted by a lumpsum amount of Rs.7,50,000=00 (Rupees Seven Lac Fifty Thousand) by way of compensation to be paid to the respondent - original plaintiff.
73. The Ahmedabad Municipal Corporation is directed to pay to the respondent - original plaintiff an amount of Rs.7,50,000=00 (Rupees Seven Lac Fifty Thousand) within a period of six weeks from today.
(J.B.PARDIWALA, J.) /MOINUDDIN Page 56 of 56