Delhi High Court
Subhash Chand Aggarwal (Deceased) Thr ... vs Yashveer Singh & Anr on 1 February, 2018
Author: J.R. Midha
Bench: J.R. Midha
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Decision: 1st February, 2018
+ RFA 354/2017 & CM Appl. No.13287/2017
SUBHASH CHAND AGGARWAL
(DECEASED) THR HIS LRS ..... Appellants
Through: Mr. B.K. Sood and Mr. Harish Gaur,
Advocates
versus
YASHVEER SINGH & ANR ..... Respondents
Through: None
CORAM:
HON'BLE MR. JUSTICE J.R. MIDHA
JUDGMENT
1. The appellants have challenged the judgment dated 30th January, 2017, whereby their suit for specific performance has been dismissed by the Trial Court. The appellants are the legal representatives of the plaintiff whereas the respondents were the defendants before the learned Trial Court. For the sake of convenience, the appellants and the respondents are referred to as per their ranks before the Trial Court as "the plaintiff" and "the defendants" respectively.
2. On 29th May, 2004, the plaintiff entered into an agreement with the defendants to purchase an industrial plot in Khasra No.81/155, measuring 300 sq. yards (6 biswa) situated at village Bakoli, Delhi, hereinafter referred to as "the suit property" for a consideration of Rs.6,06,300/-. The plaintiff RFA 354/2017 Page 1 of 45 paid the earnest money of Rs.1 lakh to the defendants and the balance amount of Rs.5,06,300/- was agreed to be paid on or before 28th July, 2004 at the time of execution and registration of relevant documents in favour of the plaintiff. Relevant portion of the agreement is reproduced hereunder: -
―NOW THIS AGREEMENT WITNESSETH AS UNDER:
1. That the entire consideration amount of the said property with the lease hold rights of the land under the said property is fixed between the parties at Rs.6,06,300/- (Rupees Six lacs six thousand three hundred only), out of which the first party has received Rs.1,00,000/- (Rupees one lakh only), as the earnest money/bayana on dated 29.05.2004, from the second party, prior to the execution of this Agreement the first party doth hereby acknowledge the Receipt of the same, and balance sum of Rs.5,06,300/- (Rupees five lacs six thousand three hundred only) shall be paid by the second party to the first party on or before 28.07.2004, and at the same time the first party shall execute and get regd. relevant documents of the said property in favour of the second party.
2. That the first party shall deliver the vacant possession of the said property at the time of receiving the full and final payment.
3. That the first party hereby assure the second party that the above said property under sale and transfer is free from all kinds of encumbrances i.e. sale, mortgage, gift, liens, legal flaws, courts decrees, court injunctions, court attachments, and there is no other legal defect in the title of the first party and power to sell the same, whatsoever and if it is proved otherwise the first party shall be liable and responsible for the same.
4. That the first party shall apply and get the sale permission for the sale of the said property from the office of the concerned authority, if required and on receipt of the said sale permission, the first party shall execute a proper sale deed of the said property in favour of the second party or his/her nominee/s and shall get the same registered in the office of the Sub-Registrar Concerned, within one month from the date of receipt of the said sale permission, at the cost of the second party or his/her nominee/s.RFA 354/2017 Page 2 of 45
5. That any dues, penalities, taxes of he said property for the period prior to handing over the vacant possession of the said property shall be paid and borne by the first party and afterwards by the second party to the concerned authority.
6. That if the first party refuses to sell the said property within stipulated period as mentioned above, then he/she (first party) shall be liable to pay the earnest money as double to the second party, in case if the second party denies to purchase the said property within same time, then his/her/their earnest money/bayana shall be forfeited by the first party and after it the first party shall have right to resell the said property to any person at any rate.‖ (Emphasis Supplied)
3. On 24th July, 2004, the plaintiff sent a legal notice dated 21st July, 2004 to the defendants stating that the defendants had agreed to apply and get the permission for sale of the plot from the concerned authority and the sale deed was to be executed within one month of the date of receipt of such permission. The plaintiff enquired about the status of the sale permission.
On 24th July, 2004, the plaintiff also sent a telegram to the defendants enquiring about the status of sale permission. The relevant portion of the notice dated 21st July, 2004 is reproduced hereunder:
―You entered into an agreement to sell with our client for sale of industrial plot bearing no.81/155, admeasuring 300 Sq. Yards (6 Biswas) situated at village Bakoli, Delhi of which you claimed yourself to the exclusive owner and in possession, for a total consideration of Rs.6,06,300/- (Rs. Six Lakhs Six Thousand and Three Hundred Only) vide agreement to sell dated the 29 th May, 2004. It was represented to our client that the said plot was free from all sort of encumbrances. At the time of entering into agreement to sell, a sum of Rs.1,00,000/- (Rs. One Lakh only) was duly received by you from our client as an earnest money (Bayana) and balance amount was required to be paid to you by or before 28th July, 2004, at the time of execution and registration of sale deed by you in favour of our client, when vacant and peaceful possession of the plot was to be handed over to our RFA 354/2017 Page 3 of 45 client. It was also agreed that you shall apply and get the permission for sale of the plot from the office of concerned Authority and thereafter the sale deed was to be executed, with in one month from the date of receipt of such permission. We have instructions from our client to say that despite the fact that transaction is required to be completed by 28th July, 2004, as per the agreement, you have till date not communicated to our client about your having obtained requisite permission from the office of the concerned Authority for sale of the plot to our client. As a matter of fact, on our client approaching you to ascertain the details of the permission, if obtained, so as to complete the transaction with in the time, you gave vague answers by suggesting that permission has since been applied for but later on avoided meeting with our client, with the result our client apprehends that you may not proceed with this transaction at all. It has also come to the knowledge of our client that you are contemplating selling the said plot to some one else in derogation's to the rights of our client at higher price, which you can not do.
In the premises, we have instructions from our client to call upon you, which we hereby do, to communicate to our client forthwith in writing of your having received the permission for sale of the plot in question to our client and or the same being not required before executing the sale deed and complete the transaction with in the time agreed to under the Agreement to Sell, as our client is required to make the balance payment of Rs.5,06,300/- (Rs. Five Lakhs Six Thousand and Three Hundred only) at the time of execution and registration of sale deed and delivery of possession of the plot to our client, which our client is ready and willing to do, failing which our client has instructed us to institute and initiate appropriate legal proceedings/action against you entirely at your risks and consequences as to the costs, without any further reference to you in the matter. Please be advised that a copy of the notice has been retained in our office for further action in the matter. Please be further advised that in the event of failure on your part to complete the transaction as aforesaid, you shall be liable to costs of this notice also.‖ RFA 354/2017 Page 4 of 45
4. On 30th July, 2004, the defendants replied to the show cause notice in which the defendants stated that the plaintiff did not come forward and contact the defendants for making the payment of Rs.5,06,300/- by the stipulated date of 28th July, 2004 and, therefore, the defendants forfeited the earnest money of Rs.1 lakh. The defendants further stated that they were not required to communicate to the plaintiff about the sale permission and the defendants were ready and competent to execute the required documents in favour of the plaintiff. Relevant portion of the reply dated 30th July, 2004 is reproduced hereunder: -
―Under instructions and on behalf of my above mentioned clients, I have to inform you that your client Shri Subhash Chander Aggarwal son of late Shri Geeta Ram, R/o B-1460, Shastri Nagar, Delhi-110052 did not come forward and contacted our clients for making payment of remaining amount of Rs.5,06,300/- by the stipulated dated 28th July, 2004 and avoided the payment of the said amount and under the terms of agreement between your client and our clients, your client on his own default has forfeited the amount of earnest money of Rs.1.00 lac to our clients. Our clients have been waiting that your client will come to them for getting the execution of necessary documents in his favour by our clients, but he failed to contact my clients and with malafide intention sent the notice under reply just before the expiry date to avoid payment of the remaining amount. My clients never refused to sell the plot within the stipulated period.
You are further informed that as per agreement my clients were not required to communicate to your client about the sale permission of the concerned authorities and my clients were always ready and competent to execute the required documents in favour of your client or his nominee. My client were waiting that your client will contact them and make the remaining payment of Rs.5,06,300/- by the stipulated date, but your client failed to contact my clients by the stipulated time and due to default on the part of your client and non payment of the outstanding amount, your client is guilty of frustrating the contact and his earnest RFA 354/2017 Page 5 of 45 money paid to our client is liable to be forfeited and the same stands forfeited.
That your calling upon my clients to communicate to your client in writing of having received the permission for sale of the plot in question or the same being not required before executing the sale deed and complete the transaction within time agreed under the Agreement to Sell is not practicable as the stipulated time has already expired and your client has not made the payment of remaining Rs.5,06,300/- within the stipulated time and my clients are not in favour of extending the time as it was not a part of the sale agreement between the parties.‖ (Emphasis Supplied)
5. The Plaintiff did not respond to defendants‟ reply dated 30th July, 2004 but after nine months i.e. on 07th April, 2005, the plaintiff instituted a suit for specific performance against the defendants on the averments that the defendants had agreed to apply and get the permission of sale of the plot from the competent authority and to execute the sale deed within one month of the date of the receipt of the permission; the defendants did not communicate about the requisite permission from the concerned authorities;
the price of the suit property escalated in the meantime and the defendants turned dishonest and started negotiating with other people for sale of the suit property; the plaintiff served legal notice dated 21 st July, 2004 on the defendants calling upon them to supply the sale permission; and the plaintiff was ready and willing to make the payment of balance sale consideration within one month of receipt of the sale permission; and the plaintiff also sent a telegram to the defendants on 24th July, 2004; the defendants sent a reply dated 30th July, 2004 to the legal notice.
6. The defendants contested the suit on various grounds, inter alia, that the defendants were ready and willing to abide by the agreement by executing the power of attorney and related documents in favour of the RFA 354/2017 Page 6 of 45 plaintiff; the plaintiff did not contact the defendants for making the balance payment of sale consideration and execution of the documents; no sale permission was required from any authority for execution of the general power of attorney and other related documents; the plaintiff defaulted in making the payment of Rs.5,06,300/- by the stipulated date of 28th July, 2004 and forfeited his right to get the suit property; earnest money of Rs.1 lakh has been forfeited by the defendants on account of failure of the plaintiff to make the payment of the balance sale consideration on or before the stipulated date; and the plaintiff was never in a position to make the payment of the balance sale consideration.
7. Issues before the Trial Court The following issues were framed by the learned Trial Court on 13 th March, 2008:
―(1) Whether the suit of the plaintiff for specific performance is not maintainable because of Clause-6 of Agreement to Sell? (OPD) (2) Whether the time was essence of the Contract under the Agreement to Sell, if so, its effect? (OPD) (3) Whether the defendants were required to obtain permission before execution of the Sale Deed? If yes, what is the effect of sale permission having not been obtained within the time? Onus on the parties.
(4) Whether the plaintiff was ready and willing to perform his part of the Contract? (OPP) (5) Whether the plaintiff is entitled to a decree for specific performance? (OPP) (6) If the plaintiff is not held to be entitled for decree for specific performance for any reasons, whether the plaintiff is entitled to, in the alternative for the amount of damages claimed in the suit? If so, to what amount the plaintiff is entitled to? (OPP) RFA 354/2017 Page 7 of 45 (7) Whether the plaintiff is entitled to the interest on the amount of damages? If so, at what rate and from what period? (OPP) (8) Relief.‖
8. The plaintiff appeared in the witness box as PW-1 and reiterated the averments made in the plaint. In cross-examination, he admitted that he was not aware about the status that no objection for sale of immovable property in the area concerned was being made available or not. Defendant appeared in the witness box as DW-1 and reiterated the averments made in the written statement. DW-1 deposed that the suit property was to be transferred on the basis of power of attorney and related documents and not on the basis of sale deed. He further deposed that all the industrial plots in the village Bakoli were transferred on the basis of power of attorney and not on the basis of sale deed. He further deposed that the sale deed in respect of the suit property could not have been executed in view of prohibition by Rule 6(j)(v) of Delhi Holding (Consolidation and Prevention of Fragmentation) Rules, 1959 amended vide notification dated 12th June, 1996 and therefore, the question of obtaining any sale permission did not arise.
9. During the pendency of the suit, the plaintiff filed a writ petition bearing W.P(C) 8359/2009 challenging the vires of Rule 6(j)(v) of Delhi Holding (Consolidation and Prevention of Fragmentation) Rules, 1959 on the ground that the plaintiff had filed two suits for specific performance including the suit in question in which the defendants raised an objection relying on Rule 6(j)(v) of Delhi Holding (Consolidation and Prevention of Fragmentation) Rules, 1959. Vide judgment dated 25th July, 2011, the Division Bench of this Court allowed the writ petition and struck down Rule 6(j)(v) of Delhi Holding (Consolidation and Prevention of Fragmentation) RFA 354/2017 Page 8 of 45 Rules, 1959. The Division Bench of this Court, however, clarified that the restrictions and conditions imposed by the Reforms Act on the transfer, use of land etc. shall continue to apply.
10. Findings of the Trial Court Issue No.1 - Clause 6 of the agreement providing an alternative remedy to claim double of the earnest money does not disentitle the plaintiff to claim specific performance. Issue No.1 was decided in favour of the plaintiff.
Issue No.2 - Time was not the essence of the agreement to sell dated 29th May, 2004. Issue No.2 was decided against the defendants.
Issue No.3 - No sale permission was required/obtainable to effect the sale of the suit property. Issue No.3 was decided in favour of the defendants.
Issue No.4 - The Plaintiff has failed to prove his readiness and willingness. Issue No.4 was decided against the plaintiff. Issue No.5 - The plaintiff has not been able to prove his readiness and willingness and, therefore, not entitled to a decree of specific performance. Issue No.5 was decided against the plaintiff. Issues No.6 and 7 - The plaintiff is not entitled to decree of specific performance or the damages. However, the plaintiff is entitled to refund of earnest money of Rs.1 lakh from the defendants along with interest @ 15% per annum from the date of agreement to sell till realization.
RFA 354/2017 Page 9 of 4511. Appellants‟ contentions Learned counsel for the appellants urged at the time of hearing that the defendants were required to obtain the sale permission before execution of the sale deed and the defendants committed default by failing to obtain the sale permission before execution of the sale deed. According to the plaintiff, the defendants were not ready to proceed with the agreement. The plaintiff claimed to be always ready and willing to perform his part of the agreement and the plaintiff was ready with the sale consideration. It was further pleaded that the plaintiff was financially capable and willing to make the balance payment as he had sold a plot at Adarsh Nagar, Ranjan Babu Road, Delhi on 02nd June, 2004 and the consideration was available with the plaintiff. It was submitted that the plaintiff could have made the payment of the balance sale consideration if the defendants had provided the sale permission or the no objections certificate. Since the defendants did not obtain the required sale permission, the question of payment did not arise. It was submitted that the plaintiff did not agree for General Power of Attorney (GPA) and other related documents as the GPA can be revoked. It was further submitted that it was always the choice of the buyer to have the sale deed executed. The plaintiff also challenged the finding of the Trial Court that no sale permission was required. It is submitted that the plaintiff filed a writ petition bearing W.P.(C) No.8359/2009 challenging the vires of Rule 6(j)(v) of Delhi Holding (Consolidation & Prevention of Fragmentation) Rules, 1959 in which this Court stayed the proceeding in the suit. The writ petition was allowed by judgment dated 25 th July, 2011. It was further submitted that the Trial Court vide order dated 20 th January, 2016 directed the plaintiff to place on record the certified copies of the statement of bank RFA 354/2017 Page 10 of 45 accounts of LR‟s of plaintiff in pursuance to which the documents were placed on record but were not referred to by the Trial Court.
Legal Position
12. Section 16(c) of the Specific Relief Act, 1963 12.1. In a suit for specific performance, the plaintiff has to prove a valid sale agreement; the breach of the contract by the defendants; and readiness and willingness of the plaintiff to perform his part of the contract. 12.2. Section 16(c) of the Specific Relief Act mandates "readiness" and "willingness" on the part of the plaintiff as a condition precedent to seek specific performance. Section 16 (c) is reproduced hereunder:-
―Section 16. Personal bars to relief.-
Specific performance of a contract cannot be enforced in favour of a person-
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(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 terms the performance of which has been prevented or waived by the defendants.
Explanation.- For the purposes of clause (c),-
(i) where a contract involves the payment of money, it is not essential for the plaintiff to actually tender to the defendants or to deposit in court any money except when so directed by the court;
(ii) the plaintiff must aver performance of, or readiness and willingness to perform, the contract according to its true construction.‖ 12.3. The "readiness" and "willingness" are two separate issues. The former depends on the availability of requisite funds whereas the latter depends on the intention of the purchaser.RFA 354/2017 Page 11 of 45
12.4. The "readiness" has to be proved by the purchaser by leading evidence relating to the availability of the funds whereas the intention has to be inferred from his conduct and circumstances.
12.5. If there is no availability of funds with the purchaser, he can be non- suited on the ground of non-readiness alone.
12.6. If the plaintiff is able to prove the availability of the balance sale consideration with him at the time fixed for performance in the agreement, it is an indication of his readiness but his willingness/intention to perform cannot be inferred from readiness alone.
12.7. When the parties enter into an agreement relating to an immovable property, they amicably agree on the sale consideration, earnest money as well as the payment of the balance sale consideration. If both the parties are ready and willing, they usually complete the transaction within the stipulated time in the following manner:-
12.7.1. The purchaser makes arrangement for the balance sale consideration within the stipulated time.
12.7.2. The purchaser informs the seller about the arrangement having been made.
12.7.3. The purchaser drafts the sale deed and sends the draft sale deed to the seller for approval.
12.7.4. The seller approves the draft sale deed and returns it back to the purchaser.
12.7.5. The purchaser purchases the requisite stamp duty for the sale deed.
12.7.6. The purchaser prepares the sale deed on the requisite stamp papers.RFA 354/2017 Page 12 of 45
12.7.7. Both the parties fix the date, time and place for payment of balance sale consideration, execution of sale deed, registration of the sale deed and handing over of the possession.
12.7.8. The parties complete the sale transaction on the agreed date, time and place.
12.7.9. In normal parlance, both the parties remain in touch either personally or through the property dealer.
12.8. The problem arises when one of the parties turns dishonest.
However, the party in breach purports to be ready and willing and creates fake evidence to that effect. At times, both the parties visit the office of Sub-Registrar on the last day of performance for obtaining a receipt of having attended the office of the Sub-Registrar to later on contend that they were ready and willing to perform and were waiting for other party. If the seller is in breach, he creates false evidence of readiness to avoid specific performance by the purchaser and to illegally forfeit the earnest money. On the other hand, if the purchaser is in breach, he creates false evidence of readiness and willingness to file a case of specific performance. 12.9. It is the duty of the Court to find out which party has not performed and is trying to wriggle out of the contract.
12.10. The Court has to take into consideration the ordinary course of human conduct and common sense to draw necessary inference. Drawing presumptions is the backbone of the judicial process. 12.11. The silence or absence of correspondence by any party may be indicative of his dishonest intention. The dishonest intention of the seller can be inferred where the purchaser repeatedly contacts the seller for providing copies of the title documents or approval of the draft sale deed or RFA 354/2017 Page 13 of 45 fixing time for payment of balance sale consideration or execution/ registration of the sale deed but the seller does not respond or avoids contact. On the other hand, the dishonest intention of the purchaser can be inferred where the purchaser does not contact the seller for approval of the sale deed and fixing date, time and place for payment of balance sale consideration and execution/registration of the sale deed and unilaterally visits the office of the Sub-Registrar to prepare a false ground that he was ready and willing to complete the sale. By the time the suit is finally decreed, the purchaser would get the property at the price fixed in the agreement although the prices would have increased manifold. The Court has to minutely examine the conduct of the parties in order to ascertain the truth. The purchaser would not be entitled to a decree merely because he had the sale consideration with him and had visited the office of the Sub-Registrar before the time fixed in the agreement.
12.12. Upon refusal of the seller to complete the sale in terms of the agreement, the purchaser is expected to issue a notice to place on record the refusal on the part of the seller to furnish copies of the documents or giving a response to the draft sale deed or fixing the schedule for execution and registration of sale deed. The purchaser can also notify the date and time for visiting the office of the Sub-Registrar along with the proof of the balance sale consideration to the seller. The purchaser is also expected to immediately file a suit for specific performance. Any delay in this regard may indicate his intention that he was not ready and willing and the Court may refuse to grant specific performance.
12.13. In a rising market, the purchaser makes a profit by the delay. He may tie down a seller by creating false excuses and use the money for RFA 354/2017 Page 14 of 45 buying some other property. If the purchaser is in a property trade, he may tie down several properties and then decide on which one he can make more profit on. These factors have to be taken into consideration by the Court for deciding the „readiness‟ and „willingness‟.
12.14. Once a seller has entered into an agreement to sell an immovable property, he is looking for the sale consideration within the period stipulated in the agreement. If he does not get the money within the stipulated period, his plan to use the money for whatever purpose he has intended would get frustrated. He may have a plan to buy some other property or for some other purpose. Secondly, the delay in completion of sale also causes injustice to the seller as the property prices keep on increasing in normal parlance. As such more the delay, the seller may suffer loss due to rise in property price and greater is the profit which the purchaser would derive by tying down a property and not paying the sale consideration within the stipulated period. 12.15. The relevant judgments relating to Section 16(c) of the Specific Relief Act, 1963 are as under:-
12.15.1. In J.P. Builders v. A. Ramadas Rao, (2011) 1 SCC 429, the Supreme Court explained the distinction between "readiness" and "willingness". The former refers to financial capacity and the latter to the conduct of the plaintiff wanting performance. 12.15.2. In N.P. Thirugnanam v. Dr. R. Jagan Mohan Rao, (1995) 5 SCC 115, the Supreme Court held that the Court must take into consideration the conduct of the plaintiff prior and subsequent to the filing of the suit along with other attending circumstances to adjudge the "readiness" and "willingness" of the plaintiff. The amount of balance sale consideration must be proved to be available RFA 354/2017 Page 15 of 45 with the purchaser right from the date of execution till the date of decree. The Court upheld the dismissal of the suit for specific performance on various grounds inter alia that the plaintiff was dabbing in real estate business without means to purchase the suit property and the very contract was speculative in nature.
12.15.3. In R.C. Chandiok v. Chuni Lal Sabharwal, (1970) 3 SCC 140, the Supreme Court held that "readiness" and "willingness" cannot be treated as a straitjacket formula. It has to be determined from the entirety of facts and circumstances relevant to the intention and conduct of the party concerned.
13. Section 20 of the Specific Relief Act, 1963 13.1. Section 20 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. Section 20 is reproduced hereunder:-
"Section 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 property 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 void able, gives the plaintiff an unfair advantage over the defendants; or
(b) Where the performance of the contract would involve some hardship on the defendants which he did not foresee, whereas its non-performance would involve no such hardship on the plaintiff, or RFA 354/2017 Page 16 of 45
(c) Where the defendants entered into the contract under circumstances, which though not rendering the contract void able, makes it inequitable to enforce specific performance. (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.‖ 13.2. The specific performance is an equitable relief. Section 20 of the Specific Relief Act, 1963 preserves judicial discretion. The Court is not bound to grant specific relief merely because it is lawful to do so. The relief sought under Section 20 is not automatic as the Court is required to see the totality of the circumstances which are to be assessed by the Court in the light of facts and circumstances of each case.
13.3. The specific performance is usually granted where substantial sale consideration has been paid and the possession of the property has been delivered to the purchaser.
13.4. In the event of any delay/inaction on the part of the purchaser, it would be inequitable to give the relief of specific performance to the purchaser. The rationale behind refusal of the Court to grant the specific performance where long time has gone by is that the prices of the property may have increased many times with the passage of time and it would be injustice to a person who has not received the sale consideration within the time stipulated in the agreement.
13.5. If under the terms of the contract, the plaintiff gets an unfair advantage over the defendants, the Court may not exercise its discretion in favour of the plaintiff. So also specific relief may not be granted if the RFA 354/2017 Page 17 of 45 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. 13.6. If the sale consideration fixed under the agreement is given to the seller years after the agreement, great prejudice may be caused to the seller who may have intended to purchase another property with the sale consideration.
13.7. While a purchaser cannot be made to suffer because of Court delays, one cannot lose sight of the fact that he retained the sale consideration with him and the seller could not use the money when he wanted. The Court also has to consider that whereas the value of the property may have risen manifold with the passage of time, the value of the sale consideration would have reduced due to inflation. These factors have to be taken into consideration by the Court.
13.8. The party who seeks specific performance being an equitable relief, must come to the Court with clean hands. In other words, the party who makes false allegations and/or does not come with clean hands is not entitled to the equitable relief.
13.9. While exercising the discretion, the Court would take into consideration the circumstances of the case, the conduct of parties and the motive behind the litigation.
13.10. The relevant judgments relating to Section 20 of the Specific Relief Act, 1963 are as under:-
13.10.1. In K.S. Vidyanadam v. Vairavan, (1997) 3 SCC 1, the Supreme Court held that in case of delay/inaction on the part of the plaintiff for two and a half years, it would be inequitable to give a relief of specific RFA 354/2017 Page 18 of 45 performance to the plaintiff. The finding of the Supreme Court is reproduced hereunder:
―13. In the case before us, it is not mere delay. It is a case of total inaction on the part of the plaintiff for 2½ years in clear violation of the terms of agreement which required him to pay the balance, purchase the stamp papers and then ask for execution of sale deed within six months. Further, the delay is coupled with substantial rise in prices - according to the defendantss, three times - between the date of agreement and the date of suit notice. The delay has brought about a situation where it would be inequitable to give the relief of specific performance to the plaintiff."
(Emphasis supplied) 13.10.2. In Saradamani Kandappan v. S. Rajalakshmi, (2011) 12 SCC 18, the Supreme Court declined to grant the discretionary relief of specific performance to the purchaser who had made payment of nominal advance to the seller. The finding of the Supreme Court is reproduced hereunder:-
―36....The third quarter of the twentieth century saw a very slow but steady increase in prices. But a drastic change occurred from the beginning of the last quarter of the twentieth century. There has been a galloping inflation and prices of immovable properties have increased steeply, by leaps and bounds. Market values of properties are no longer stable or steady. We can take judicial notice of the comparative purchase power of a rupee in the year 1975 and now, as also the steep increase in the value of the immovable properties between then and now. It is no exaggeration to say that properties in cities, worth a lakh or so in or about 1975 to 1980, may cost a crore or more now.
37. The reality arising from this economic change cannot continue to be ignored in deciding cases relating to specific performance. The steep increase in prices is a circumstance which makes it inequitable to grant the relief of specific performance where the purchaser does not take steps to complete the sale within the agreed period, and the vendor has not been responsible for any delay or non-performance. A RFA 354/2017 Page 19 of 45 purchaser can no longer take shelter under the principle that time is not of essence in performance of contracts relating to immovable property, to cover his delays, laches, breaches and 'non-readiness'. The precedents from an era, when high inflation was unknown, holding that time is not of the essence of the contract in regard to immovable properties, may no longer apply, not because the principle laid down therein is unsound or erroneous, but the circumstances that existed when the said principle was evolved, no longer exist. In these days of galloping increases in prices of immovable properties, to hold that a vendor who took an earnest money of say about 10% of the sale price and agreed for three months or four months as the period for performance, did not intend that time should be the essence, will be a cruel joke on him, and will result in injustice. Adding to the misery is the delay in disposal of cases relating to specific performance, as suits and appeals therefrom routinely take two to three decades to attain finality. As a result, an owner agreeing to sell a property for rupees one lakh and received rupees ten thousand as advance may be required to execute a sale deed a quarter century later by receiving the remaining rupees ninety thousand, when the property value has risen to a crore of rupees.
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43. Till the issue is considered in an appropriate case, we can only reiterate what has been suggested in K.S. Vidyanadam [(1997) 3 SCC 1]:
(i) The courts, while exercising discretion in suits for specific performance, should bear in mind that when the parties prescribe a time/period, for taking certain steps or for completion of the transaction, that must have some significance and therefore time/period prescribed cannot be ignored.
(ii) The courts will apply greater scrutiny and strictness when considering whether the purchaser was ―ready and willing‖ to perform his part of the contract.
(iii) Every suit for specific performance need not be decreed merely because it is filed within the period of limitation RFA 354/2017 Page 20 of 45 by ignoring the time-limits stipulated in the agreement.
The courts will also "frown" upon suits which are not filed immediately after the breach/refusal. The fact that limitation is three years does not mean that a purchaser can wait for 1 or 2 years to file a suit and obtain specific performance. The three-year period is intended to assist the purchasers in special cases, as for example, where the major part of the consideration has been paid to the vendor and possession has been delivered in part-performance, where equity shifts in favour of the purchaser.‖ (Emphasis supplied) 13.10.3. In Parakunnan Veetill Joseph's Son Mathew v. Nedumbara Kuruvila's Son, 1987 Supp SCC 340, the Supreme Court held that 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. 13.10.4. In Lourdu Mari David v. Louis Chinnaya Arogiaswamy, (1996) 5 SCC 589, the Supreme Court held that the party seeking equitable jurisdiction and specific performance being equitable relief, must come to the Court with clean hands. In other words the party, who makes false allegations and/or does not come with clean hands is not entitled to the equitable relief.
13.10.5. In K. Narendra v. Riviera Apartments (P) Ltd., (1999) 5 SCC 77, the Supreme Court held that the performance of the contract involving some hardship on the defendant which he did not foresee while non- performance 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. However, mere inadequacy of consideration or the mere fact that the contract is onerous to the defendants or improvident in RFA 354/2017 Page 21 of 45 its nature, shall not constitute an unfair advantage to the plaintiff over the defendants or unforeseeable hardship on the defendants. 13.10.6. In A.C. Arulappan v. Ahalya Naik (smt), (2001) 6 SCC 600, the Supreme Court held that 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. Also, specific relief may 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. 13.10.7. In Bal Krishna v. Bhagwan Das, (2008) 12 SCC 145, the Supreme Court held that while exercising the discretion, the Court would take into consideration the circumstances of the case, the conduct of parties, and their respective interests under the contract. No specific performance of a contract, though it is not vitiated by fraud or misrepresentation, can be granted if it would give an unfair advantage to the plaintiff and where the performance of the contract would involve some hardship on the defendant, which he did not foresee.
13.10.8. In G. Jayashree v. Bhagwandas S. Patel, (2009) 3 SCC 141, the Supreme Court held that the plaintiff is expected to approach the Court with clean hands. His conduct plays an important role in the matter of exercise of discretionary jurisdiction by a Court of law. The Courts ordinarily would not grant any relief in favour of the person who approaches the Court with a pair of dirty hands.
13.10.9. In Krishna Sweet House v. Gurbhej Singh, MANU/DE/2851/2012, this Court held that in certain cases where substantial consideration i.e. at least 50% of the consideration is paid, or RFA 354/2017 Page 22 of 45 possession of the property is delivered under the agreement to sell in addition to paying advance price, the proposed buyer is vigilant for his rights and he files the suit soon after entering into the agreement to sell, then in accordance with totality of facts and circumstances, Courts may decree specific performance.
13.10.10. In Laxmi Devi v. Mahavir Singh, MANU/DE/1930/2012, this Court held that unless substantial consideration is paid out of the total amount of sale consideration, the Courts would lean against granting the specific performance inasmuch as by the loss of time, the balance sale consideration which is granted at a much later date, is not sufficient to enable the proposed seller to buy an equivalent property which could have been bought from the balance sale consideration if the same was paid on the due date.
13.10.11. In Jinesh Kumar Jain v. Iris Paintal, MANU/DE/3387/2012, this Court held that the plaintiff is entitled to decree of specific performance where the plaintiff has done substantial acts in consequence of a contract/agreement to sell. Substantial acts obviously would mean and include payment of substantial amounts of money. The plaintiff may have paid 50% or more of the consideration or having paid a lesser consideration he could be in possession pursuant to the agreement to sell or otherwise is in the possession of the subject property or other substantial acts have been performed by the plaintiff, and acts which can be said to be substantial acts under Section 20(3) of Specific Relief Act. However, where the acts are not substantial i.e. merely 5% or 10% etc. of the consideration is paid i.e. less than substantial consideration is paid, (and for which a rough benchmark can be taken as 50% of the consideration), and/or plaintiff is not in possession of RFA 354/2017 Page 23 of 45 the subject land, the plaintiff is not entitled to the discretionary relief of specific performance.
13.10.12. In Sushil Jain v. Meharban Singh, 2012 (131) DRJ 421, this Court held that the plaintiff cannot be held entitled to the discretionary relief of specific performance inter alia for the reasons that not only the prices would have gone up about 20 to 30 times during this period but also that the plaintiff has taken benefit of the balance of about 87% of the consideration which he would have wisely invested in any other assets including in an immovable property.
14. Findings 14.1. The plaintiff paid earnest money of Rs.1 lakh to the defendants and the balance sale consideration of Rs.5,06,300/- was to be paid by the plaintiff on or before 28th July, 2004 whereupon the defendants were required to execute relevant documents of the suit property in favour of the plaintiff.
14.2. The plaintiff‟s claim that the balance sale consideration of Rs.5,06,300/- was payable after the sale permission for execution of the sale deed, is absolutely false. Clause 1 of the agreement clearly records that the balance sale consideration of Rs.5,06,300/- was to be paid by the plaintiff on or before 28th July, 2004 at the time of execution of the relevant documents. The defendants‟ claim that the they were required to execute the power of attorney and other documents, at the time of payment of balance sale consideration, is correct. The relevant portion of Clause 1 of the agreement to sell is reproduced hereunder:-
―1. That the entire consideration amount of the said property with the lease hold rights of the land under the said property is fixed between the parties at Rs.6,06,300/- (Rupees Six lacs six thousand three hundred RFA 354/2017 Page 24 of 45 only), out of which the fist party has received Rs.1,00,000/- (Rupees one lakh only), as the earnest money/bayana on dated 29.05.2004, from the second party, prior to the execution of this Agreement the first party doth hereby acknowledge the Receipt of the same, and balance sum of Rs.5,06,300/- (Rupees five lacs six thousand three hundred only) shall be paid by the second party to the first party on or before 28.07.2004, and at the same time the first party shall execute and get regd. relevant documents of the said property in favour of the second party.‖ 14.3. This Court accepts the defendants‟ defence that they were obliged to execute the general power of attorney and related documents upon receipt of the balance sale consideration of Rs.5,06,300/- by 28th July, 2004 as the suit property was a lease hold property in respect of which the sale was not permitted. This Court agrees with the defendants that the plaintiff was well aware of this position as the payment of balance sale consideration was not linked to execution of the sale deed. Clause 4 imposed an additional obligation on the defendants which was not linked in any manner to the payment of the balance sale consideration and handing over the possession.
If the parties intended the sale deed to be executed at the time of payment of balance sale consideration, the parties would have used the words "sale deed" in para 1 instead of using the words "relevant documents". 14.4. The time of payment of balance sale consideration of Rs.5,06,300/- was the essence of the contract which is clear from the unequivocal wording of clause 1 of the agreement. The contrary finding of the Trial Court holding that time was not the essence of the contract is not correct.
14.5. This Court accepts the defendants‟ defence that the defendants were ready and willing to accept the balance sale consideration and to execute the GPA and other relevant documents by 28th July, 2004 and to RFA 354/2017 Page 25 of 45 handover the vacant and peaceful possession of the suit property against payment of the balance sale consideration by the plaintiff. Since the time was the essence of the contract, the defendants were within their right to get the balance sale consideration within the stipulated time. 14.6. The defendants claim that the plaintiff did not contact the defendants before the legal notice dated 21st July, 2004, is accepted. The plaintiff‟s claim to have contacted the defendants for payment of balance sale consideration before issuing the legal notice dated 21st July, 2004, is unconvincing and is rejected. The plaintiff has even not given any date, time or the mode of contacting the defendants. The plaintiff appears to be a dishonest litigant who did not contact the defendants and instead issued a legal notice to raise a false claim of "willingness". This Court is of the view that the plaintiff deliberately did not contact the defendants as the defendants were ready to accept the balance sale consideration and execute the power of attorney and other related documents and to handover the possession of the suit property.
14.7. The plaintiff was never ‗willing' to make the payment of the balance sale consideration of Rs.5,06,300/- to the defendants. The balance sale consideration of Rs.5,06,300/- was to be paid by the plaintiff to the defendants on or before 28th July, 2004. If the plaintiff would have been ready and willing to make the payment of the balance sale consideration to the defendants, the plaintiff would have contacted the defendants as there was no dispute between the parties at that stage. However, the plaintiff issued a legal notice on 21st July, 2004 through his lawyer setting up a false plea that the defendants were required to get the sale permission and get the sale deed executed within one month of receipt of the same. It is quite RFA 354/2017 Page 26 of 45 strange and unnatural for the plaintiff to have issued a legal notice through a lawyer though there was no dispute between the parties at that time. The dishonest intention of the plaintiff is clear from the fact that the legal notice dated 21st July 2004 was posted by Registered AD and UPC on 24th July 2004 at 11:04:58 and 11:05:06. The telegrams was sent on 24th July, 2004 at 18:35 and 18:37 meaning thereby that the legal notices and the telegrams were both sent on 24th July, 2004 but the legal notice was ante-dated to show willingness to institute a suit for specific performance. It appears that the plaintiff issued the legal notice dated 21st July, 2004 with the dishonest intention of creating false evidence of "willingness". The plaintiff‟s plea is inherently unconvincing and cannot be accepted.
14.8. The plaintiff‟s conduct appears to be improbable, artificial, indifferent, irresponsible and inconsistent. A prudent purchaser would not have behaved in this manner and applying the test of common course of natural events and human conduct, it is presumed that the plaintiff was not willing to perform his part of the contract. The plaintiff‟s conduct is a strong indication of the intention of the plaintiff that he was not willing to perform his part of the contract. The natural inference which can be drawn under Section 114 of Evidence Act is that the plaintiff wanted to build-up a false plea of willingness in order to institute a suit for specific performance. 14.9. With respect to the plaintiff‟s plea that the plaintiff had sufficient funds to make the payment of sale consideration of Rs.5,06,300/- to the defendants before 28th July, 2004, no evidence has been led by the plaintiff to place on record the availability of funds on or before 28 th July, 2004. The bald statement, in cross-examination, that the plaintiff had sold a property is Adarsh Nagar in 2004 without placing on record the relevant documents and RFA 354/2017 Page 27 of 45 the bank statements is not sufficient to discharge the onus on the plaintiff with respect to the availability of funds.
14.10. The plaintiff has not proved the availability of the balance sale consideration of Rs.5,06,300/- with him at any stage. The plaintiff is a dishonest litigant who had no means to pay the balance sale consideration and instituted a false claim with the hope that he would arrange the funds, if the suit is decreed in his favour.
14.11. The plaintiff claimed to have filed the statement of bank accounts before the Trial Court on 20th January, 2016. However, these statements were not proved in accordance with law. That apart, these statements do not pertain to the relevant period when the plaintiff was required to show availability of funds with him. The bank statements of the LR‟s of the plaintiff have no relevancy to determine the availability of funds with the plaintiff on 29th July, 2004.
14.12. According to the plaintiff, the sale permission was required for execution of the sale deed whereas according to the defendants, the sale deed could not have been executed in view of Rule 6(j)(v) of Delhi Holding (Consolidation and Prevention of Fragmentation) Rules, 1959. The plaintiff had filed W.P.(C) No.8359/2009 during the pendency of the suit for striking down Rule 6(j)(v) of Delhi Holding (Consolidation and Prevention of Fragmentation) Rules, 1959 meaning thereby that the sale deed could not have been executed at the time of agreement to sell and the defendants‟ contention that the GPA and other relevant registered documents had to be executed, is correct. The very fact that the plaintiff has challenged the aforesaid Rule shows that no sale deed could have been executed between RFA 354/2017 Page 28 of 45 the parties at the relevant time and the only mode of transfer was by execution of power of attorney and related documents. 14.13. Even assuming for the sake of arguments that the sale permission was required for executing of the sale deed, this Court is of the view that the obligation of the plaintiff to apply for sale permission was not linked to the balance sale consideration. The balance sale consideration was to be paid by the plaintiff on or before 28th July, 2004 and the time was the essence of the contract with respect of the plaintiff‟s obligation to pay the balance consideration. With respect to the plaintiff‟s obligation to obtain the sale permission in clause 4 of the agreement, the time was not the essence and the plaintiff could not have called upon the defendants to apply for the sale permission without discharging the obligation under clause 1 by making payment of the balance sale consideration on or before 28th July, 2004. Since the plaintiff defaulted in payment of balance sale consideration to the defendants by 28th July, 2004, the stage for plaintiff seeking enforcement of clause 4 did not arise and the plaintiffs‟ plea in this regard is not relevant for determining entitlement of the plaintiff to the specific performance. 14.14. The plaintiff‟s contention that he had not agreed to the execution of the General Power of Attorney as it can be revoked, is not correct. It is well settled that General Power of Attorney executed for a consideration is irrevocable under Section 202 of the Contract Act, 1872 and such a power of attorney cannot be revoked even upon the death of the executant. Section 202 of the Contract Act, 1872 provides that the Power of Attorney coupled with interest is irrevocable and cannot be revoked/terminated even upon the death of the principal. Section 202 of the Contract Act is reproduced hereunder:-
RFA 354/2017 Page 29 of 45"SECTION 202. Termination of agency where agent has an interest in subject-matter:-
Where the agent has himself an interest in the property which forms the subject-matter of the agency, the agency cannot, in the absence of an express contract, be terminated to the prejudice of such interest.
Illustrations
(a) A gives authority to B to sell A's land, and to pay himself, out of the proceeds, the debts due to him from A. A cannot revoke this authority, nor can it be terminated by his insanity or death.
(b) A consigns 1,000 bales of cotton to B, who has made advances to him on such cotton, and desires B to sell the cotton, and to repay himself, out of the price, the amount of his own advances. A cannot revoke this authority, nor it is terminated by his insanity or death."
(Emphasis supplied) 14.15. In Hardeep Kaur v. Kailash, 193 (2012) DLT 168, this Court examined the law with respect to the validity of General Power of Attorney under Section 202 of the Indian Contract Act and held that the General Power of Attorney for a consideration in respect of an immovable property cannot be revoked. In Suraj Lamp and Industries Private Limited v. State of Haryana, 183 (2011) DLT 1 (SC), the Supreme Court held that General Power of Attorney transactions convey limited rights under Section 53A of the Transfer of Property Act, 1882 and Section 202 of the Contract Act, 1872. The Supreme Court held that General Power of Attorney transactions cannot be treated as complete transfer but they can be treated as existing agreement of sale and the attorney holder can execute the deed of conveyance in exercise of the power granted. The Supreme Court further held that the General Power of Attorney transactions executed before the date of the judgment can be relied upon to apply for regularization of allotments/leases. The observations of the Supreme Court are as under:-
RFA 354/2017 Page 30 of 45―12. Any contract of sale (agreement to sell) which is not a registered deed of conveyance (deed of sale) would fall short of the requirements of Sections 54 and 55 of Transfer of Property Act and will not confer any title nor transfer any interest in an immovable property (except to the limited right granted under Section 53A of Transfer of Property Act). According to Transfer of Property Act, an agreement of sale, whether with possession or without possession, is not a conveyance. Section 54 of Transfer of Property Act enacts that sale of immoveable property can be made only by a registered instrument and an agreement of sale does not create any interest or charge on its subject matter. Scope of Power of Attorney
13. A power of attorney is not an instrument of transfer in regard to any right, title or interest in an immovable property. The power of attorney is creation of an agency whereby the grantor authorizes the grantee to do the acts specified therein, on behalf of grantor, which when executed will be binding on the grantor as if done by him (see Section 1A and Section 2 of the Powers of Attorney Act, 1882). It is revocable or terminable at any time unless it is made irrevocable in a manner known to law. Even an irrevocable attorney does not have the effect of transferring title to the grantee. In State of Rajasthan v. Basant Nehata, 2005 (12) SCC 77, this Court held:
―A grant of power of attorney is essentially governed by Chapter X of the Contract Act. By reason of a deed of power of attorney, an agent is formally appointed to act for the principal in one transaction or a series of transactions or to manage the affairs of the principal generally conferring necessary authority upon another person. A deed of power of attorney is executed by the principal in favour of the agent. The agent derives a right to use his name and all acts, deeds and things done by him and subject to the limitations contained in the said deed, the same shall be read as if done by the donor. A power of attorney is, as is well known, a document of convenience. Execution of a power of attorney in terms of the provisions of the Contract Act as also the Powers of Attorney Act is valid. A power of attorney, we have noticed hereinbefore, is executed by the donor so as to enable the donee to act on his behalf. Except in cases where power of attorney is coupled with interest, it is revocable. The donee in exercise of his power under such power of attorney only acts in place of the donor subject of course to the powers granted to him by reason thereof. He cannot use the power of attorney for his own benefit. He acts in a RFA 354/2017 Page 31 of 45 fiduciary capacity. Any act of infidelity or breach of trust is a matter between the donor and the donee.‖ An attorney holder may however execute a deed of conveyance in exercise of the power granted under the power of attorney and convey title on behalf of the grantor."
15. Therefore, a SA/GPA/WILL transaction does not convey any title nor create any interest in an immovable property. The observations by the Delhi High Court, in Asha M. Jain v. Canara Bank, 94 (2001) DLT 841 that the "concept of power of attorney sales have been recognized as a mode of transaction" when dealing with transactions by way of SA/GPA/WILL are unwarranted and not justified, unintendedly misleading the general public into thinking that SA/GPA/WILL transactions are some kind of a recognized or accepted mode of transfer and that it can be a valid substitute for a sale deed. Such decisions to the extent they recognize or accept SA/GPA/WILL transactions as concluded transfers, as contrasted from an agreement to transfer, are not good law.
16. We therefore reiterate that immovable property can be legally and lawfully transferred/conveyed only by a registered deed of conveyance. Transactions of the nature of 'GPA sales' or 'SA/GPA/WILL transfers' do not convey title and do not amount to transfer, nor can they be recognized or valid mode of transfer of immoveable property. The courts will not treat such transactions as completed or concluded transfers or as conveyances as they neither convey title nor create any interest in an immovable property. They cannot be recognized as deeds of title, except to the limited extent of Section 53A of the Transfer of Property Act. Such transactions cannot be relied upon or made the basis for mutations in Municipal or Revenue Records. What is stated above will apply not only to deeds of conveyance in regard to freehold property but also to transfer of leasehold property. A lease can be validly transferred only under a registered Assignment of Lease. It is time that an end is put to the pernicious practice of SA/GPA/WILL transactions known as GPA sales.‖ ―18. We have merely drawn attention to and reiterated the well- settled legal position that SA/GPA/WILL transactions are not 'transfers' or 'sales' and that such transactions cannot be treated as completed transfers or conveyances. They can continue to be treated as existing agreement of sale. Nothing prevents affected parties from getting registered Deeds of Conveyance to complete their title. They said 'SA/GPA/WILL transactions' may also be used to obtain specific performance or to defend possession under Section 53A of Transfer of RFA 354/2017 Page 32 of 45 Property Act. If they are entered before this day, they may be relied upon to apply for regularization of allotments/leases by Development Authorities. We make it clear that if the documents relating to 'SA/GPA/WILL transactions' has been accepted acted upon by DDA or other developmental authorities or by the Municipal or revenue authorities to effect mutation, they need not be disturbed, merely on account of this decision.
19. We make it clear that our observations are not intended to in any way affect the validity of sale agreements and powers of attorney executed in genuine transactions. For example, a person may give a power of attorney to his spouse, son, daughter, brother, sister or a relative to manage his affairs or to execute a deed of conveyance. A person may enter into a development agreement with a land developer or builder for developing the land either by forming plots or by constructing apartment buildings and in that behalf execute an agreement of sale and grant a Power of Attorney empowering the developer to execute agreements of sale or conveyances in regard to individual plots of land or undivided shares in the land relating to apartments in favour of prospective purchasers. In several States, the execution of such development agreements and powers of attorney are already regulated by law and subjected to specific stamp duty. Our observations regarding 'SA/GPA/WILL transactions' are not intended to apply to such bona fide/genuine transactions.‖ (Emphasis supplied) 14.16. In Ramesh Chand v. Suresh Chand, 188 (2012) DLT 538, this Court held that the Power of Attorney given for a consideration coupled with interest is irrevocable under Section 202 of the Contract Act, 1872 and subsists even after the death of the executant. This Court further held that the purchaser may not be a classical owner as would be an owner under the registered sale-deed but surely he would have better rights/entitlement of possession than the person who is in actual physical possession. This Court held that the Supreme Court in Suraj Lamp and Industries Private Limited (supra) has reiterated the rights in an immovable property under Section 53A of the Transfer of Property Act, 1882 as well as Section 202 of the Indian RFA 354/2017 Page 33 of 45 Contract Act, 1872. The observations of this Court are reproduced hereunder:-
"3. ...The Supreme Court has however reiterated that rights which are created pursuant to Section 53A of the Transfer of Property Act, 1882 dealing with the doctrine of part performance (para 12), an irrevocable right of a person holding a power of attorney given for consideration coupled with interest as per Section 202 of the Contract Act, 1872 (para 13) and devolution of interest pursuant to a Will (para 14). Therefore, no doubt, a person strictly may not have complete ownership rights unless there is a duly registered sale deed, however, certain rights can exist in an immovable property pursuant to the provisions of Section 53A of the Transfer of Property Act, 1882, Section 202 of the Contract Act, 1872. There also takes place devolution of interest after the death of the testator in terms of a Will."
"4. ...The object of giving validity to a power of attorney given for consideration even after death of the executants is to ensure that entitlement under such power of attorney remains because the same is not a regular or a routine power of attorney but the same had elements of a commercial transaction which cannot be allowed to be frustrated on account of death of the executant of the power of attorney."
xxx xxx xxx ―12. In view of the aforesaid facts and the validity of the documents, being the power of attorney and the Will dated 16.5.1996, the respondent No.1/plaintiff would though not be the classical owner of the suit property as would an owner be under a duly registered sale deed, but surely he would have better rights/entitlement of possession of the suit property than the appellant/defendant No.1. In fact, I would go to the extent saying that by virtue of para 14 of the judgment of the Supreme Court in the case of Suraj Lamps & Industries Pvt. Ltd. (supra) taken with the fact that Sh. Kundan Lal has already died, the respondent No.1/plaintiff becomes an owner of the property by virtue of the registered Will dated 16.5.1996. A right to possession of an immovable property arises not only from a complete ownership right in the property but having a better title or a better entitlement/right to the possession of the property than qua the person who is in actual physical possession thereof. The facts of RFA 354/2017 Page 34 of 45 the present case show that the respondent No.1/plaintiff has undoubtedly better entitlement/title/rights in the suit property so as to claim possession from the appellant/defendant No.1/brother.‖ (Emphasis supplied) 14.17. The lease hold properties, in respect of which the sale was restricted/prohibited in Delhi, were transferred on the basis of power of attorney and related documents. In fact, Delhi Development Authority as well as L & DO, in their Schemes for conversion, recognized the power of attorney transactions and permitted the conversion of the lease hold properties transferred on the basis of power of attorney. The Supreme Court in Suraj Lamp and Industries Private Limited v. State of Haryana (supra) also took note of the power of attorney transactions and held that the power of attorney transactions before the date of the judgment can be relied upon for regularization of allotment/leases.
14.18. The present case relates to the period prior to the Supreme Court decision in Suraj Lamp and Industries Private Limited v. State of Haryana (supra) and the parties agreed to complete the transaction by executing General Power of Attorney and other relevant documents and, therefore, the words "relevant documents" have been used in para 1 of the affidavit. The execution of "sale deed" in para 4 of the affidavit was an additional obligation for which no time limit has been prescribed in clause 4. Clause 4 uses the term "if required" meaning thereby that time was not the essence for the defendants to discharge the obligation under clause 4.
14.19. The plaintiff has committed the breach of the agreement and is not entitled to the decree of specific performance against the defendants. 14.20. Even assuming for the sake of argument that the plaintiff was ready and willing to perform his part of the contract, the plaintiff is still not RFA 354/2017 Page 35 of 45 entitled to the discretionary relief under Section 20 of the Specific Relief Act because of enormous rise of property prices during the last 13 years. Constant rise in property prices have been recognized by the Courts to refuse exercise of discretion under Section 20 of the Specific Relief Act. If the sale consideration fixed under the agreement is given to the seller years after the agreement, great prejudice would be caused to the seller. 14.21. Once a seller has entered into an agreement to sell an immovable property, he is looking for the sale consideration within the period stipulated in the agreement. If he does not get the money within the stipulated period, his plan to use the money for whatever purpose he has intended would get frustrated. He may have a plan to buy some other property or for some other purpose. Secondly, the delay in completion of sale also causes injustice to the seller as the property prices keep on increasing in normal parlance. As such more the delay, the seller may suffer loss due to rise in property price and greater is the profit which the purchaser would derive by tying down a property and not paying the sale consideration within the stipulated period. 14.22. Moreover, the plaintiff has not approached the Court with clean hands and has made false claim and is, therefore, disentitled to the equitable relief on this ground also. The party, who seeks specific performance being an equitable relief, must come to the Court with clean hands.
15. Plaintiff has raised a false claim 15.1. The plaintiff has misused the process of law by raising a false claim. The plaintiff has shamelessly resorted to falsehood and unethical means. The plaintiff has no respect for truth and has made false statements on oath. This case warrants prosecution as well as imposition of penal costs on the appellant.
RFA 354/2017 Page 36 of 4515.2. The plaintiff has made false statement on oath that the defendants were required to get the sale permission from the concerned authority and the sale deed was to be executed within one month of the date of permission and the balance sale consideration was payable at the time of registration of the sale deed. The relevant portion of the evidence by way of affidavit of PW-1 is reproduced hereunder:
―3. ...The defendants were to get the sale permission for the sale of the property from the office of the concerned authority and on receipt of the said permission, communication of the said fact was to be made to the deponent/plaintiff, who was to then get the proper Sale Deed executed, within one month from the date of the receipt of permission.
4. The balance amount of sale consideration was to be made by the deponent/plaintiff under the Agreement to Sell on or before July 28, 2004, at the time when the defendants were to execute and register the Sale Deed in favour of the deponent/plaintiff or his nominee.
Possession of the property was also to be delivered at that time.‖ 15.3. The aforesaid statement is absolutely false as there is no such clause in the agreement. Clause 1 of the agreement dated 29th May, 2004 requires the plaintiff to make the payment of balance sale consideration of Rs.5,06,300/- to the defendants on or before 28th July, 2004 at the time of execution of the relevant documents. Clause 4 of the agreement imposes an additional obligation on the defendants to apply for sale permission, if required and to execute the sale deed thereafter. On careful consideration of Clauses 1 and 4 of the agreement and the statement of the parties, this Court is satisfied that the defendants were required to execute the power of attorney and related documents at the time of receipt of balance sale consideration.
RFA 354/2017 Page 37 of 4515.4. From the plaintiff‟s conduct, it is clear that the plaintiff was never ready and willing to make payment of the balance sale consideration within the stipulated period on or before 28th July, 2004 and the plaintiff issued a legal notice dated 21st July, 2004 to create false evidence of willingness. This Court is of the view that the plaintiff is a dishonest litigant who had no intention to pay the balance sale consideration by 28 th July, 2004 and he instituted a frivolous suit to grab the defendants‟ property in the hope that by the time the litigation is over, he would get the property at the price mentioned in the agreement and would arrange the money by that time. 15.5. False claims and defences are really serious problems with real estate litigation, predominantly because of ever escalating prices of the real estate. Litigation pertaining to valuable real estate properties is dragged on by unscrupulous litigants in the hope that the other party will tire out and ultimately would settle with them by paying a huge amount. 15.6. It is a matter of common experience that Court's otherwise scarce time is consumed or more appropriately, wasted in a large number of uncalled for cases. It is the duty of the Courts to see that such wrong doers are discouraged at every step and even if they succeed in prolonging the litigation, ultimately they must suffer the costs of all these years long litigation. Imposition of actual, realistic or proper costs and/or ordering prosecution in appropriate cases would go a long way in controlling the tendency of filing false cases.
15.7. The greatest challenge before the judiciary today is the frivolous litigation. The judicial system in the country is choked with false claims and such litigants are consuming Courts‟ time for a wrong cause. False claims are a huge strain on the judicial system. In Subrata Roy Sahara v. Union of RFA 354/2017 Page 38 of 45 India, (2014) 8 SCC 470, the Supreme Court observed that the Indian judicial system is grossly afflicted with frivolous litigation and ways and means need to be evolved to deter litigants from their compulsive obsession towards senseless and ill-considered claims. Relevant portion of the said judgment is as under:
"191. The Indian judicial system is grossly afflicted, with frivolous litigation. Ways and means need to be evolved, to deter litigants from their compulsive obsession, towards senseless and ill-considered claims.
(Emphasis supplied) 15.8. The Supreme Court and this Court have time and again held that heavy costs should be imposed in frivolous cases and in appropriate cases, prosecution be ordered to maintain purity and sanctity of judicial proceedings. It is necessary to examine the relevant judgments in this regard. 15.9. In Maria Margarida Sequeria Fernandes v. Erasmo Jack de Sequeria, 2012 (3) SCALE 550 the Supreme Court held that false claims and defences are serious problems with real estate litigation, predominantly because of ever escalating prices of the real estate. The Supreme Court held as under:-
"False claims and false defences
84. False claims and defences are really serious problems with real estate litigation, predominantly because of ever escalating prices of the real estate. Litigation pertaining to valuable real estate properties is dragged on by unscrupulous litigants in the hope that the other party will tire out and ultimately would settle with them by paying a huge amount. This happens because of the enormous delay in adjudication of cases in our Courts. If pragmatic approach is adopted, then this problem can be minimized to a large extent.‖ 15.10. In Maria Margarida Sequeria Fernandes (supra), the Supreme Court further held that heavy costs and prosecution should be ordered in RFA 354/2017 Page 39 of 45 cases of false claims and defences. The relevant portion of the judgement is reproduced hereunder:-
―85. This Court in a recent judgment in Ramrameshwari Devi and Ors. (supra) aptly observed at page 266 that unless wrongdoers are denied profit from frivolous litigation, it would be difficult to prevent it. In order to curb uncalled for and frivolous litigation, the Courts have to ensure that there is no incentive or motive for uncalled for litigation. It is a matter of common experience that Court's otherwise scarce time is consumed or more appropriately, wasted in a large number of uncalled for cases. In this very judgment, the Court provided that this problem can be solved or at least be minimized if exemplary cost is imposed for instituting frivolous litigation. The Court observed at pages 267-268 that imposition of actual, realistic or proper costs and/or ordering prosecution in appropriate cases would go a long way in controlling the tendency of introducing false pleadings and forged and fabricated documents by the litigants. Imposition of heavy costs would also control unnecessary adjournments by the parties. In appropriate cases, the Courts may consider ordering prosecution otherwise it may not be possible to maintain purity and sanctity of judicial proceedings.‖ (Emphasis supplied) 15.11. In Dalip Singh v. State of U.P., (2010) 2 SCC 114, the Supreme Court observed that a new creed of litigants have cropped up in the last 40 years who do not have any respect for truth and shamelessly resort to falsehood and unethical means for achieving their goals. The observations of the Supreme Court are as under:-
―1. For many centuries, Indian society cherished two basic values of life i.e., 'Satya' (truth) and 'Ahimsa' (non-violence). Mahavir, Gautam Buddha and Mahatma Gandhi guided the people to ingrain these values in their daily life. Truth constituted an integral part of the justice-delivery system which was in vogue in the pre-Independence era and the people used to feel proud to tell truth in the courts irrespective of the consequences. However, post-Independence period has seen drastic changes in our value RFA 354/2017 Page 40 of 45 system. The materialism has over shadowed the old ethos and the quest for personal gain has become so intense that those involved in litigation do not hesitate to take shelter of falsehood, misrepresentation and suppression of facts in the court proceedings.
2. In last 40 years, a new creed of litigants has cropped up. Those who belong to this creed do not have any respect for truth. They shamelessly resort to falsehood and unethical means for achieving their goals. In order to meet the challenge posed by this new creed of litigants, the courts have, from time to time, evolved new rules and it is now well established that a litigant, who attempts to pollute the stream of justice or who touches the pure fountain of justice with tainted hands, is not entitled to any relief, interim or final."
(Emphasis supplied) 15.12. In Satyender Singh v. Gulab Singh, 2012 (129) DRJ 128, the Division Bench of this Court following Dalip Singh v. State of U.P. (supra) observed that the Courts are flooded with litigation with false and incoherent pleas and tainted evidence led by the parties due to which the judicial system in the country is choked and such litigants are consuming Courts‟ time for a wrong cause. The observations of this Court are as under:-
―2. As rightly observed by the Supreme Court, Satya is a basic value of life which was required to be followed by everybody and is recognized since many centuries. In spite of caution, courts are continued to be flooded with litigation with false and incoherent pleas and tainted evidence led by the parties. The judicial system in the country is choked and such litigants are consuming courts„ time for a wrong cause. Efforts are made by the parties to steal a march over their rivals by resorting to false and incoherent statements made before the Court. Indeed, it is a nightmare faced by a Trier of Facts; required to stitch a garment, when confronted with a fabric where the weft, shuttling back and forth across the warp in weaving, is nothing but lies. As the threads of the weft fall, the yarn of the warp also collapses; and there is no fabric left.‖ (Emphasis supplied) RFA 354/2017 Page 41 of 45 15.13. The plaintiff filed a false claim before this Court which is an offence under Section 209 of the Indian Penal Code. Raising a false claim before the Court is an offence under Section 209 of the Indian Penal Code punishable with punishment of imprisonment upto two years and fine.
Section 209 of the Indian Penal Code is reproduced hereunder:
―Section 209 - Dishonestly making false claim in Court -- Whoever fraudulently or dishonestly, or with intent to injure or annoy any person, makes in a Court of Justice any claim which he knows to be false, shall be punished with imprisonment of either description for a term which may extend to two years, and shall also be liable to fine.‖ 15.14. In H.S. Bedi v. National Highway Authority of India, 2016 (155) DRJ 259, this Court discussed the scope of the Section 209 of the Indian Penal Code. Relevant portion of the said judgment is reproduced hereunder:-
―15.1 Section 209 of the Indian Penal Code makes dishonestly making a false claim in a Court as an offence punishable with imprisonment upto two years and fine.
15.2 The essential ingredients of an offence under Section 209 are: (i)The accused made a claim; (ii)The claim was made in a Court of Justice; (iii) The claim was false, either wholly or in part;
(iv)That the accused knew that the claim was false; and (v)The claim was made fraudulently, dishonestly, or with intent to injure or to annoy any person.
15.3 A litigant makes a ‗claim' before a Court of Justice for the purpose of Section 209 when he seeks certain relief or remedies from the Court and a ‗claim' for relief necessarily impasses the ground for obtaining that relief. The offence is complete the moment a false claim is filed in Court.
15.4 The word ―claim‖ in Section 209 of the IPC cannot be read as being confined to the prayer clause. It means the ―claim‖ to the existence or non-existence of a fact or a set of facts on which a party to a case seeks an outcome from the Court based on the substantive law and its application to facts as established. To RFA 354/2017 Page 42 of 45 clarify, the word ―claim‖ would mean both not only a claim in the affirmative to the existence of fact(s) as, to illustrate, may be made in a plaint, writ petition, or an application; but equally also by denying an averred fact while responding (to the plaint/petition, etc.) in a written statement, counter affidavit, a reply, etc. Doing so is making a ―claim‖ to the non-existence of the averred fact. A false ―denial‖, except when the person responding is not aware, would constitute making a ―claim‖ in Court under Section 209 IPC.
15.5 The word ‗claim' for the purposes of Section 209 of the Penal Code would also include the defence adopted by a defendant in the suit. The reason for criminalising false claims and defences is that the plaintiff as well as the defendant can abuse the process of law by deliberate falsehoods, thereby perverting the course of justice and undermining the authority of the law.
15.6 Whether the litigant's ‗claim' is false, is not considered merely from whatever he pleads (or omits to plead): that would be to elevate form over substance. To make out the offence, the Court does not merely inspect how a litigant's pleadings have been drafted or the case has been presented. The real issue to be considered is whether, all said and done, the litigant's action has a proper foundation which entitles him to seek judicial relief. 15.7 Section 209 was enacted to preserve the sanctity of the Court of Justice and to safeguard the due administration of law by deterring the deliberate making of false claims. Section 209 was intended to deter the abuse of Court process by all litigants who make false claims fraudulently, dishonestly, or with intent to injure or annoy.
15.8 False claims delay justice and compromise the sanctity of a Court of justice as an incorruptible administrator of truth and a bastion of rectitude.
15.9 Filing of false claims in Courts aims at striking a blow at the rule of law and no Court can ignore such conduct which has the tendency to shake public confidence in the judicial institutions because the very structure of an ordered life is put at stake. It would be a great public disaster if the fountain of justice is allowed to be poisoned by anyone resorting to filing of false claims. 15.10 The Courts of law are meant for imparting justice between the parties. One who comes to the Court, must come with RFA 354/2017 Page 43 of 45 clean hands. More often than not, process of the Court is being abused. Property-grabbers, tax-evaders, bank-loan-dodgers and other unscrupulous persons from all walks of life find the Court- process a convenient lever to retain the illegal gains indefinitely. A person, who's case is based on falsehood, has no right to approach the Court. He can be summarily thrown out at any stage of the litigation.
15.11 The disastrous result of leniency or indulgence in invoking Section 209 is that it sends out wrong signals. It creates almost a licence for litigants and their lawyers to indulge in such serious malpractices because of the confidence that no action will result.
15.12 Unless lawlessness which is all pervasive in the society is not put an end with an iron hand, the very existence of a civilized society is at peril if the people of this nature are not shown their place. Further if the litigants making false claims are allowed to go scot free, every law breaker would violate the law with immunity. Hence, deterrent action is required to uphold the majesty of law. The Court would be failing in its duties, if false claims are not dealt with in a manner proper and effective for maintenance of majesty of Courts as otherwise the Courts would lose its efficacy to the litigant public.‖ (Emphasis supplied)
16. Before closing, this Court would like to place it on record that this appeal was listed for admission on 18th April, 2017 when this Court partly heard the matter and requisitioned the Trial Court record to hear the matter further and the case was fixed for 04th May, 2017. On 4th May, 2017, the appellants sought an adjournment and the case was adjourned to 24 th July, 2017 when again the appellants sought an adjournment and the appeal was adjourned to 08th September, 2017. On 08th September, 2017, this Court heard the matter at length and also examined the Trial Court record considering that this is a regular first appeal. This Court is satisfied that there RFA 354/2017 Page 44 of 45 is no merit in the appeal and, therefore, the appeal is dismissed on merits without issuing notice to the defendants.
Conclusion 17.1. There is no merit in this appeal. This appeal is consequently dismissed along with costs of Rs.2 lakh to be deposited by the appellants with Delhi High Court Legal Services Committee within four weeks. 17.2. The dismissal of the suit for specific performance is upheld for the reasons given hereinabove and all contrary findings of the Trial Court are set aside.
17.3. Show cause notice is hereby issued to the appellants to show cause as to why a complaint be not made against the appellants under section 340 Code of Criminal Procedure, 1973 for raising a false claim before this Court under Section 209 IPC.
17.4. Pending application is disposed of.
FEBRUARY 1 , 2018 J.R. MIDHA
rsk (JUDGE)
RFA 354/2017 Page 45 of 45