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In Sardar Singh vs. Krishna Devi (Smt) and Another [1994 (4) SCC 18] it was held that since Section 20 (1) of the Specific Relief Act, 1963 provides that the jurisdiction to decree specific performance is discretionary, the Court is not bound to grant such relief merely because it is lawful to do so observing at the same time that the exercise of such discretion must not be arbitrary but sound and reasonable guided by judicial principles and capable of correction by Appellate Court. The circumstances specified in Section 20 were considered to be illustrative and not exhaustive and that the Court should take into consideration circumstances in each case, the conduct of the parties and the respective interest under the contract. In K. Narendra vs. Riviera Apartments (P) Ltd. [1999 (5) SCC 77], this Court dealt with the case of an agreement followed by a supplementary agreement to sell a plot and the structure thereon and where the agreement also envisaged the obtaining of permission for the conveyance from the Land & Development Officer as well as approval for the construction plan. Factually, the construction plan submitted was said to have been rejected on more than one reason, and the building plan was also rejected more than once. In respect of a portion of land hit by Urban Ceiling Law, only a conditional exemption alone seems to have been granted. Under such circumstances when the suit came to be filed seeking for annulment of the sale agreement on the ground of impossible of performance and the other party filed a suit for specific performance, this Court dealt with such claims in the light of Section 20 of the Specific Relief Act and observed as follows:

"29. 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; 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. 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. The doctrine of comparative hardship has been thus statutorily recognized in India. However, mere inadequacy of consideration or the mere fact that the contract is onerous to the defendant or improvident in its nature, shall not constitute an unfair advantage to the plaintiff over the defendant or unforeseeable hardship on the defendant. The principle underlying Section 20 has been summed up by this Court in Lourdu Mari David v. Lous Chinnaya Arogiaswamy by stating that the decree for specific performance is in the discretion of the Court but the discretion should not be used arbitrarily; the discretion should be exercised on sound principles of law capable of correction by an appellate court."

(d), this Court on the principles which should normally guide the exercise of discretion under Section 20 by the Courts, observed as below:

"59. The grant of decree for specific performance is a matter of discretion under Section 20 of the Specific Relief Act, 1963. The court is not bound to grant such relief merely because it is lawful to do so but the discretion is not required to be exercised arbitrarily. It is to be exercised on sound and settled judicial principles. One of the grounds on which the court may decline to decree specific performance is where it would be inequitable to enforce specific performance. The present is clearly such a case. It would be wholly inequitable to enforce specific performance for (i) residential houses for weaker sections of the society cannot be constructed in view of the existing master plan and, thus, no benefit can be given to the said section of the society; (ii) in any case, it is extremely difficult, if not impossible, to continuously supervise and monitor the construction and thereafter allotment of such houses; (iii) the decree is likely to result in uncalled-for bonanza to the plaintiff; (iv) patent illegality of order dated 20.6.1998;

In a recent pronouncement reported in V. Pechimuthu vs. Gowrammal [2001 (7) SCC 617], this Court observed that 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. Reference has also been made above to a decision of this Court in Gobind Ram vs. Gian Chand (supra) wherein, in order to mitigate the hardship resulting to the vendor due to lapse of time and escalation of prices of urban property, further compensatory amount was ordered to be paid, even though in that case the trial court granted a decree for specific performance for consideration recited in the document and the balance of consideration was also deposited by the purchaser in full, thereon.