Supreme Court of India
G. JAYASHREE & ORS.versusBHAGWANDAS S. PATEL & ORS.
- Citation
- 2008 INSC 1501
- Decided
- 19 December 2008
- Disposal
- Dismissed
- Bench
- S B SINHA
Holding
The agreement of sale could not be enforced because the recorded compromise rescinded the contract and the plaintiff's delay and conduct precluded specific performance.
Summary
The appellants (joint purchasers) entered into an agreement of sale with the respondents (vendors) for land development, which required the purchasers to obtain a layout plan. After disputes, one co‑purchaser entered into a compromise with the vendors, effectively rescinding his part of the contract. The remaining purchaser filed suits for specific performance and mandatory injunction. The trial court granted relief, but the High Court set aside the decree, holding the contract could not be enforced. The Supreme Court affirmed that the compromise rendered the contract unenforceable against the remaining purchaser, noting his delay, failure to promptly seek specific performance, and lack of clean‑handed conduct, and therefore dismissed the appeals.
Issues considered
- Whether a joint promisee can enforce a contract for specific performance when another co‑promisee has entered into a compromise that rescinds his interest.
- Whether the consent decree/compromise between one co‑purchaser and the vendors extinguishes the enforceability of the original agreement of sale.
- Whether the plaintiff's delay and conduct (failure to file specific performance promptly) bars the grant of specific performance under the doctrine of clean hands.
- Whether the court's discretionary jurisdiction to grant specific performance should be exercised in view of the facts and the principle that time is not of the essence in immovable property contracts.
- Whether Order 11 Rule 2 (and Order II Rule 2) of the Code of Civil Procedure applies to the suit for specific performance.
Legislation cited
- Code of Civil Procedure, 1908s. Order 11 Rule 2, s. Order II Rule 2
- Indian Contract Act, 1872s. 45
- Limitation Act, 1963
Subjects
Specific performanceAgreement of saleJoint promiseeCompromise decreeDiscretionary jurisdictionClean hands doctrineDelay in filing suitNovation
Judgment
[2008] 17 S.C.R. 1454
A G. JAYASHREE & ORS.
v.
BHAGWANDAS S. PATEL & ORS. •'T--
(Civil Appeal No. 4451 of 2008)
DECEMBER 19, 2008
B
(S.B. SINHA AND CYRIAC JOSEPH, JJ.]
Specific Performance - Agreement of sale for
development of land - Failure on the part of vendee to
..
~
c develop - Vendors seeking enforcement of terms of
agreement - One of the vendees rescinding from the contract
by way of compromise - Another vendee filing suits seeking
direction for vendors to get fresh layout plan for the land and
for specific performance of contract - Suits decreed - Set
aside by High Court - On appear, held: Suits not liable to be
D decreed - There was delay in raising the fresh demand by
the vendee - Enforcement of the contract by the joint
promisee is not maintainable in the facts of the case - The
trial court wrongly exercised its discretionary jurisdiction for
enforcing the agreement as the plaintifflvendee had not
."
E approached the court with clean hands.
Appellants' predecessor-in-interest ('G' and 'M')
entered into an agreement for sale with respondent Nos.
1 to 3 (owners of land Survey No. 36). They had also
purchased the adjacent land from other vendors. As per
F the terms of the agreement vendees were required to
obtain permission for layout. The vendees applied for r
composite layout for the entire land i.e. also the land
which was not the subject matter of the agreement.
As, grant of layout could have been applied for only
G by the owners, the vendees paid the amount towards
layout permit fees and development charges to the
respondents 1 to 3 for the entire land. The layout was
granted by the authority concerned subject to certain '{
conditions. The conditions were not complied with.
H 1454
G. JAYASHREE & ORS. v. BHAGWANDAS S. PATEL & 1455
ORS.
Vendors asked the vendees to develop the land in terms A
of the agreement. Vendees wanted to have a fresh layout
·~ only in respect of the land Survey No. 36. Differences
arose between the vendees and developers of the
neighbouring plots and also between the vendees
in terse. 8
Vendee 'M' filed a suit against respondents 1 to 3
alleging breach of contract.- After death of vendee 'M' his
legal representatives compromised the matter with
.. respondent Nos. 1 to 3.
,. Vendee 'G' filed suit for mandatory injunction to c
obtain separate layout for the land in survey No. 36.
Thereafter he filed another suit for specific performance
of agreement of sale. Trial Court decreed the suits. High
Court set aside the decree. Hence the present appeals.
Dismissing the. appeals, the Court D
HELD: 1.1 A suit for enforcement of a contract on the
part of the joint promisee is maintainable. But the same
.}' is not applicable to the facts of the present case. Keeping
in view the consent decree passed by a competent court
of law in terms of consent entered into by and between E,
the joint vendee and defendants 1 and 3, the agreement
of sale in the same form could not have been enforced.
The matter might have been different, had the
compromise not been recorded. A part of the contract
stood rescinded; it has been worked out. [Paras 26 and
F
30] [1469-E; 1472-G-H; 1473-A]
Jagdeo Singh and Ors. v. Bisambhar and Ors. AIR 1937
Nagpur 186; Jahar Roy (Dead through L.Rs.) and Anr. v.
Premji Bhimji Mansata and Anr. (1978) 1 SCR 770; Jahar
Roy (Dead through L.Rs.) and Anr. v. Premji Bhimji Mansata
G
and Anr.; Ponnuswami Gounder v. Boyan and Ors. AIR 1979
MADRAS 130 and Safiur Rahman v. Maharumunnissa Bibi
(1897) ILR 24 Calcutta 832 , referred to.
l 1.2. Vendee G. not being a party to the compromise,
may not be bound thereby but at least being a party to
H
1456 SUPREME COURT REPORTS [2008] 17 S.C.R.
A the suit, he keeping in view the interest he had in the
matter, should have opposed recording of the said
compromise. He without any further delay shoµld have
also filed a suit for specific performance of contract. He
even did not file a suit for specific performance
immediately thereafter. He first filed a suit for mandatory
8
injunction. The fact that he did not choose to file a suit
for specific performance of contract at the first instance
speaks volumes about his conduct. It may be true that
in terms of the agreement, draft layout was to be obtained
in respect of Plot No. 36 but the very fact that the parties
C proceeded on the basis that all the lands would be
developed together and steps having been taken in this
behalf; it was too late for vendee 'G' to raise a fresh
demand. [Paras 24 and 30)(1468-F-G; 1472~G-H; 1473-A]
Nirma/a Anand v. Advent Corporation (P) Ltd. and Ors.
D (2002) 8 SCC 146, distinguished.
K.S. Vidyanadam and Ors. v. Vairavan (1997) 3 SCC 1
and Mademsetty Satyanarayana v. G. Yellogi Rao (1965) 2
SCR 221, referred to.
1.3. The civil courts, in the matter of enforcement of
E an agreement to sell, exercise a discretionary jurisdiction.
Discretionary jurisdiction albeit must be exercised
judiciously and not arbitrarily or capriciously. A plaintiff
is expected to approach the court with clean hands. His
conduct plays an important role in the matter of exercise
F of discretionary jurisdiction by a court of law. [Para 30]
[1473-0-E] .
Mohammadia Cooperative Building Society Limited v.
Lakshmi Srinivasa Cooperative Building Society Limited and
Ors. (2008) 7 SCC 310, relied on.
G Rame Gowda (dead) by LRs. v. M. Varadappa Naidu
(dead) by LRs. and Anr. (2004) 1 SCC 769, held inapplicable.
Sanjana M. Wig (Ms.) v. Hindustan Petroleum Corpn. Ltd.
(2005) a sec 242, referred to. ·r
1.4. Trial judge applied the principle of novation of
H contract having regard to the subsequent conduct of the
G. JAYASHREE & ORS. v. BHAGWANDAS S. PATEL & 1457
ORS.
parties. The said principle, is applicable as against the A
vendee 'G'. The agreement in question is not an
agreement for sale simplicitor. The parties thereto were
aware that only for the purpose of development of the
said plot the agreement had been entered into. If that be .
so, the vendors were right in enforcing the terms of the B
said agreement/contract keeping in view the
aforementioned purpose in mind. The joint promisee
might not have rescinded the contract prior to the filing
of the suit for damages against the defendants 1 to 3
(vendors) but when he filed the suit claiming refund of the
amount of advance which he had paid by way of his C
share as also the damages, the contract stood rescinded
so far as he was concerned. His claim might have been
based on the purported breach of the terms of the
contract on part of defendants No. 1 to 3, but they had
arrived at a compromise. True it is that vendee 'G' filed a D
written statement in the suit filed by the joint vendee. He
expressed his intention to pay the amount of
consideration for the entire land but evidently the suit did
not go to trial. He did not insist therefor. When an
application for settlement arrived at between the joint E
vendee and the defendant Nos.1 to 3 was filed, he did not
object thereto. As he had appeared even before the High
Court through counsel, it was obligatory on his part to
oppose the said compromise between the vendors and
his co-vendee. [Para 25] (1468-G-H; 1469-A-E]
F
Case Law Reference:
AIR 1937 Nagpur 186 Referred to. Para 26
(1978) 1 SCR 770 Referred to. Para 27
AIR 1979 Madras 130 Referred to. Para 29
(1897) ILR 24 Calcutta 832 Referred to. Para 29 G
(2008) 7 sec 310 Relied on. Para 30
(2005) 8 SCC 242 Referred ·to. Para 31
(1997) 3 SCC 1 Referred to. Para 32
(1965) 2 SCR 221 Referred to. Para 32
(2002) 8 SCC 146 Distinguished. Para 33 H
1458 SUPREME COURT REPORTS [2008] 17 S.C.R.
A (2004) 1 SCC 769 Held inapplicable. Para 33
CIVIL AP PELLATE JURISDICTION : Civil Appeal No.
4451 of 2008.
From the final Judgment and Order dated 13.11.2007 of
the High Court of Judicature of Andhra Pradesh at Hyderabad
B in Appeal No. 1964 of 1995.
WITH
C.A. No. 4452 of 2008
R.F. Nariman, L. Nageshwara Rao, D. Srinivas Prasad
c and D. Mahesh Babu for the Appellants.
P.P. Rao, 0. Bharathi Reddy, D. Ramakrishna Reddy, P.
Niroop, Chandan Kumar, N. Rajaraman and Abdul Azeem for
the Respondents.
The Judgment of the Court was delivered by
D S.B. SINHA, J. 1. Plaintiffs in a suit for grant of decree
for specific performance of contract are before us aggrieved
by and dissatisfied with the judgment and decree dated
13.11.2007 passed by a Division Bench of the Andhra Pradesh
High Court reversing a judgment and decree dated 25.10.1995
E of the Additional Subordinate Judge, Ranga Reddy district at
Saroornagar, Hyderabad in Original Suit No. 191 of 1987
dismissing the said suit.
2. The basic facts of the matter are not in dispute.
Respondents No. 1 to 3 are owners of the land measuring
·F11 Acres and 39 Gunthas in Survey No. 36 situated at village
Satamrai of Shamshabad Mandal in the district of Ranga >-
Reddy. The said land abuts National Highway No. 7 between
Hyderabad and Bangalore. The said respondents entered into
an agreement for sale with Mohammed Kasim Ali and G.
G Srinivas Reddy, whose heirs and legal representatives are the
appellants, for sale of the said property for a sum of Rs. .o.
18,00,000/-, out of which a sum of Rs. 1,00,000/- was paid as
earnest money. l
Some of the important clauses contained in the said
H agreement for sale read as under:
G. JAYASHREE & ORS. v. BHAGWANDAS S. PATEL & 1459
ORS. [S.S. SINHA, J.]
"1. The total consideration being Rs. 18 lakhs, the A
Vendees have paid a sum of Rs.1,00,000/-
(Rupees One lakh only) to the Vendor as the
earnest money. The balance sum of Rs.17 lakhs
shall be paid within 6 months of release of tentative
layout HUDA. B
2. The sale shall take effect within 6 months from the
release of tentative layout from B.U.D.A ..
(Bhagyanagar Urban Development Authority).
t
, 3. The actual physical possession of the property shall
remain with the Vendors only. However, the Vendors c
hereby give permission to the Vendees to go over
the property and divide the property into different
plots. The expenses for dividing plots and leaving
roads shall also be borne by the Vendees. The
Vendees are entitled at their own expenses to ,0
obtain the layout permission from Competent
Authority. The Vendees are also hereby permitted
y to use the Telephone however they shall be liable
to pay Telephone bills.
xxx xxx xxx .E
5. The above stipulated time for sale to take effect
may be extended by the Vendor. But unless the
stipulated time is extended in writing by the
Vendors, the Vendees shall be liable to pay Bank
interest (the interest at which bank lands to its
customers) to the Vendors on the unpaid purchase
F
-4
money after two months of stipulated time.
xxx xxx xxx
7. The Vendors are owners of 11 acres 39 gunthas
falling in S. No. 36. However, the Vendors have G
fenced the property giving set back from the Road.
The Vendees shall be entitled to obtain
compensation for the unfenced land from the
concerned Government authorities.
8. As the Vendees are in the business of selling plots, H
1460 SUPREME COURT REPORTS [2008] 17 S.C.R.
A the Vendees shall be liable to pay the sale
consideration of each plot proportionately on the
same day to the Vendors when the Vendors effect r -
sale of that particular plot."
3. Indisputably, besides the above agreement of sale, the
B said two vendees had also entered into an Agreement of sale
with one S. Yadagiri, his sons and some others for sale of land
measuring 90 Acres in Survey No. 643 to 658, which is adjacent
to the land of the respondents.
4. Pursuant to or in furtherance of the said agreements of -·
...
c sale, the said vendees had applied for a joint layout for the
entire land of 101.39 acres and a sum of .Rs.1,54,725/- was
paid by the said vendees towards layout permit fee and
developmental charges vide undated receipt. The relevant
portion of the said receipt reads as under:
D "It is not part of sale consideration, for any reason, the
amount is refunded, the same should be returned without
any delay to the PURCHASERS. The Agreement period
will be 8 MONTHS after the release of TENTATIVE ~
LAYOUT from HUDA for SURVEY No. 36 of SATMRAI
E Village and'for_SURVEY NUMBERS 645, 647, 653, 654,
655/1, 657, 658, 666/2 and PART SURVEY NUMBERS
644, 646, 651, 655 -is 15 MONTHS after the release of
TENTATIVE LAYOUT from HUDA. After the above period
for the unpaid balance of sale consideration the Bank
interest will be charged."
F .. ..
5. ·The period of agreement in terms of the said receipt )-
wa_s eight months from the date of release of the tentative layout
by Hyderabad Urban Development Authority (for short,
"HUDA")
.
6. Indisputably, the owners filed an application for grant of
G
layout not only in respect of Survey No. 36 but also for grant of ,..
layout permission in respect of other plots. By a communication
dated 26.4.1985, the said Shri Yadagiri was informed about ').
the grant of layoul-.not only in respect of the land of which he
was the owner but also in respect of Survey No. 36 subject to
H the following conditions: -.r·
~. •·
G. JAYASHREE & ORS. v. BHAGWANDAS S. PATEL & 1461
ORS. [S.B. SINHA, J.]
"(i) The Road shall be formed as per the specifications A
(enclosed a copy of the specifications).
(ii) No plot shall be utilized, sold, leased or otherwise
disposed of for the residential purpose unless the
layout is finally approved by Hyderabad Urban
Development Authority. B
(iii) As regards to amenities like water, drainage,
electricity, etc; your own arrangement shall be
made as the public system is not available in this,
•
,
area."
c
It was furthermore directed:
"You are therefore requested to form the roads as stated ·
above within a period of three months from the date of ·
receipt of the draft layout plan and to inform the same to
Hyderabad Urban Development Authority. The final ,
approval of the layout plan will be considered only if you D
fulfill the above said conditions."
Admittedly, no road was constructed. Plaintiffs wanted to
have a fresh layout only in respect of Survey No. 36.
7. It is at that stage the owners of the land -- defendants , E
Nos. 1 to 3 - by a notice dated 3. 7 .1985 served upon the
vendees through their Advocate requested them to lay the
roads as directed by HUDA by 31.7.1985 failing which the said
agreement of sale would be deemed to have been terminated
and the earnest money of Rs.1,00,000/- paid by the said
vendees would stand forfeited. It was contended therein that ,F
after the aforementioned draft layout plan was received, the
vendees develope~ "inter se misunderstandings and
untrustworthiness resulting in serious inimical attitude amongst
themselves".
It was furthermore contended: G
"9. My clients state that unless you continue to keep up and
fulfill your obligations at every stage as agreed in the
Contract of sale, you will be consequently in trouble in
fulfilling the time scheduled with regard to the payments of
the balance sale consideration in installments to my clients H
1462 SUPREME COURT REPORTS [2008] 17 S.C.R.
A and ultimately you will be failing in completing the sale
transaction within the time scheduled if you do not
commence and complete the road formation work as per
the approved draft layout plan within the time fixed by r
HUDA.
B 10. My Clients· state that they are in no way concerned with
your inter se mis-understandings and disputes. My clients
are only interested in completing the sale transaction of the
land covered by Contract of sale within the time fixed in
the contract of sale." l!
c 8. The vendees responded to the said notice stating that ,,.,
the joint layout had resulted in much inconvenience to develop
the portion of the land belonging to the owners as it was one
of the conditions_of the tentative layout that unless entire land
was developed, the final layout would not be released. Under
these circumstances, it was furthermore contended that the only
D
alternative left was that the owners had to take a separate layout
for their lands. It was stated that the vendees 'were ready and
prepared to develop the said land immediately as and when
the owners obtain a separate layout for the land held by them'. ..,.
9. Indisputably, Mohammed Kasim Ali did not want to
E
involve himself in the matter of purchase of the said land in
terms of the said agreement of purchase. Alleging breach of
the terms of the said agreement on the part of the defendant
nos. 1 to 3, he filed a suit bearing O.S. No. 19 of 1986 in the
Court of V Addi Judge, City Civil Court at Hyderabad praying,
F inter alia, for the following reliefs:
"(a) A decree for Rs.90,000/- by way of refund may be
passed in favour of the plaintiff and against the
persons and the properties of defendants 1 to 3.
(b) A decree may be granted awarding future bank
G
interest on Rs.90,000/- in favour of the plaintiff and
_;.
against the persons and the properties of
defendants 1 to 3.
(c) A decree may be passed for Rs.1,50,000/- in r
favour of the plaintiff as against the persons and
H
G. JAYASHREE & ORS. v. BHAGWANDAS S. PATEL & 1463
ORS. [S.S. SINHA, J.]
properties of defendants 1 to 3 as damages. A
(d) A decree of further interest on Rs.1,50,000/- may
--{ be granted in favour of plaintiff as against the
persons and properties of the defendants 1 to 3."
10. Indisputably, an interim order was passed therein. The
matter was taken to the High Court. The said Mohamme~ B
Kasim Ali died on 19.4.1987 and after his death his wife, the
legal representative, entered into a compromise with the
owners of the land out of the court.
;.
11. Indisputably, G. Srinivas Reddy filed a suit bearing O.S.
I No. 171 of 1986 on the file of the Munsif Magistrate, West and c
South, Ranga Reddy, for grant of mandatory injunction.
12. The owners also filed a suit for damages being O.S.
No. 679 of 1986. G. Srinivas Reddy filed a written statement·
therein, stating:
D
"9. The defendants further submits that there is no cause ,
of action at all to file the present suit. The suit itself as a
., motivated and is a counter blast to the claim made by the ,
defendants to secure a separate layout for the land
covered by agreement of sale dated 23.4.1984. This
defendant is very much earnest to go ahead with the sale · E
~
transaction. In that view only he filed O.S. No.171 of 1986
on the file of the Munsif Magistrate, West and South, ,
Ranga Reddy seeking directions against the vendors
herein for securing separate layout from HUDA with regard
to the land covered by a-greement of sale dated F
23.4.1984. And also filed O.S. No. 191 of 1987 on the file
-'/- of Addi. Subordinate Court, Ranga Reddy District for
specific performance of the agreement. The plaintiffs
herein also have made their appearance in the said suit. I
10. Under these circumstances, it is submitted that this G
/'
defendant is ready and willing to perform his obligations
under the agreement of sale at all times, and for the
reasons not known to this defendant the plaintiffs are
i avoiding purposely to secure separate layout in respect of
the land and thereby causing hurdles for proceedings with
H
1464 SUPREME COURT REPORTS [2008] 17 S.C.R.
A the sale transaction."
The said suit was, however, dismissed for default.
13. Indisputably, O.S. No. 171of1986 filed by G. Srinivas r ..___
Reddy on the file of the Munsif Magistrate, West and South,
Ranga Reddy, for grant of mandatory injunction was transferred
B to the Court of Additional Subordinate Judge, Ranga Reddy
district at Saroornagar and was renumbered as O.S. No. 21
of 1993.
14. G. Srinivas Reddy, thereafter filed another suit for
• ~'
I
specific performance of the agreement of sale bearing O.S. No.
c 191 of 1987 in the Court of Additional Subordinate Judge ~
Ranga Reddy district at Saroornagar through his constituted '-
attorney.
·Issues were framed in both the suits separately. Issue No.
2 framed in O.S. No. 21 of 1993 reads as under:
D
. "Whether the Defendants 1 to 3 are liable under the suit
·agreement of sale to obtain a separate layout for the suit
land from the Urban Development Authority concerned?
·-..:
15. The learned trial judge was of the opinion that there
/·
E existed an enabling clause being clause (3) in the Agreement
of sale. According to the learned trial judge, however, as the ~
defendant Nos. 1 to 3 had signed the requisite documents
and also received the required fee and charges for the purpose
of depositing the same with HUDA with a view to obtain the
provisional layout plan, they have accepted their responsibility
F
to obtain layout for the suit land from the Urban Development
Authority. It was furthermore held: ~~
"No doubt it is for the plaintiff and 04 to pay the necessary
expenses and also make efforts to obtain the sanction from
G HUDA being the vendees. The responsibility of D1 to 03
or their G.P.A. is to sign the necessary documents required
for obtaining layout sanction and also to deposit the
amounts paid by the Plaintiff and D4 required for the fee
and charges as they did in the instant case. Since the
H
G. JAYASHREE & ORS. v. BHAGWANDAS S. PATEL & 1465
ORS. [S.S. SINHA, J.]
Defendants 1 to 3 agreed to convey the suit property in A
favour of plaintiff and D4 or their nominees, D1 to D3 are
bound to obtain a separate layout for the suit land, at the
request of the Plaintiff and 04."
Opining that although the agreement was indivisible, it was
held: B
"Moreover it cannot be said that each bit of the suit land
got equal potentiality. The suit land consists of more than
11 acr~s and it is revealed that the suit land is adjacent to
• the road. Therefore, the piece of land which is quite
adjacent to the road will have more value than the land c
-I
beyond the land adjacent to the road. Therefore, the
Plaintiff can opt for the specific performance of the entire
suit agreement and the suit filed by the 4th Defendant vide
O.S. No. 19of1986 on the file of the 5th Additional Judge,
City Civil Court will not have any adverse effect on the D
rights of the Plaintiff. At the most the plaintiff can be
compelled to pay the balance of sale consideration which
remained to be paid after the amount paid by the Plaintiff
•r as earnest money."
16. As regards the issue as to whether the appellants were
ready and willing to perform their part of the contract, it was F
opined that as plaintiffs could purchase the land even without
layout and keeping in view the fact that the sale deed was to
be executed within a period of eight months from the date of
grant of approval for tentative layout plan, the learned trial judge
held that there was not much delay in filing the suit for F
enforcement of the agreement on the part of the plaintiff and
-1-
he had all along been ready and willing to perform his part of
the contract. The learned judge, furthermore, opined that a suit
for specific performance of contract at the instance of the
plaintiff alone was maintainable although Mohammed Kasim Ali G
was not to be a party to the deed of sale. The High Court, on
the other hand, reversed the said findings of the learned trial
judge holding that: (1) in terms of clause 3 of the agreement, it
1 was'for the vendees to obtain the tentative layout plan; (2) in
view of the stand taken by Mohammed Kasim Ali resulting in H
1466 SUPREME COURT REPORTS [2008) 17 S.C.R.
A entering into a compromise between him and the owners of the
land, the contract was not kept alive and in view of the fact that
the suit was instituted by the joint purchaser, the plaintiff could
not enforce agreement of sale against the wish of the joint r
purchaser; and (3) the suit for specific performance of the
B contract having been filed five days before expiry of three years
from the date of expiry of contract was a clear pointer to show
that the plaintiff was not ready and willing to perform his part of
contract.
17. Mr. R.F. Nariman, learned Senior Counsel appearing ..
c on behalf of the appellants raised the following contentions:
~
i. A suit for specific performance can be instituted
even at the instance of any of the joint promisees
as a common layout work was not contemplated
under the agreement and, thus, the High Court
D committed a serious error in arriving at a finding
that the appellants were not ready and willing to
perform his part of the contract.
ii. The suit having been filed within the prescribed
period of limitation, the High Court committed a
E
serious error of law in opining that time was of ""'
essence of the contract and, thus, the suit for
specific performance was not maintainable and it
should have been filed much earlier, although in fact
the same had been filed within a period of one and
half years from the date of refusal on the part of the
F owners - defendants 1 to 3, to abide by the terms
of the contract.
~'-
iii. Order 11 Rule 2 of the Code of Civil Procedure being
not applicable in a case of this nature, the High
Court committed a serious error in applying the
G principles thereof.
18. Mr. P.P. Rao, learned Senior Counsel appearing on
behalf of the respondents, on the other hand, urged:
i. The agreement in question being a development
.,
agreement should be construed having regard to
H
G. JAYASHREE & ORS. v. BHAGWANDAS S. PATEL & 1467
ORS. [S.B. SINHA, J.]
the purport and object for whic)1 the same was A
executed.
-1 ii. All parties having proceeded on the basis that
development agreement in respect of two different
plots of land would be given effect to jointly and a
layout having been obtained for both the plots B,
together, the plaintiff could not have been insisted
at a later stage for individual or separate layout in
respect of the plot in Survey No. 36.
iii. In any event, in a case of this nature, this Court
should not exercise its discretionary jurisdiction c
under Article 136 of the Constitution of India as the
High Court has refused to pass a decree of
specific performance of contract.
19. Indisputably, Appellants' predecessor-in-interest Shri
G. Srinivas Reddy and late Mohammed Kasim Ali entered into
an agreement jointly. The parties proceeded on the basis that
not only plot in Survey No. 36 which was the subject matter of
the agreement but also other plots, notice whereof had been
taken heretobefore, were required to be developed together
and permission for common layout should be obtained from the E
competent authority therefor. Applications for grant of layout
could have been filed only by the owners. In terms of the
agreement, however, it was for the vendees to obtain the same.
Concededly, defendants 1 to 3 signed all papers in relation
thereto. They had no doubt received a sum of Rs.1,54, 725/-
from the vendees on that account, but it has not been disputed F
_-::( that they deposited the amount with the competent authority of
HUDA for obtaining the said layout plan. In fact, the combined
proposal was placed before the said authority which was
granted as would appear from its letter dated 26.4.1985
addressed to Shri S. Yadagiri. The said sanction was granted G
subject to certain conditions, one of them being that a road was
to be formed as per the specifications.
r 20. Indisputably, at least for a period of three months no
decision was taken. There is also nothing on record to show
that any decision was taken prior to or immediately after the H
1468 SUPREME COURT REPORTS [2008] 17 S. C.R.
A receipt of the said letter dated 26.4.1985; appellants contended
that a proposal for a draft layout should be filed with the authority
only in respect of plot No. 36.
21. Indisputably, again not only the vendees and
developers of the neighbouring plot fell apart, disputes and
B differences having arisen amongst the vendees inter se.
22. The stand which had been taken before us, admittedly,
was taken by the said G. Srinivas Reddy only in reply to the
defendant No.1 's legal notice dated 3. 7 .1985. The said notice
was responded to by the Advocate appointed by G. Srinivas
c Reddy alone. No such demand was, thus, raised by
Mohammed Kasim Ali.
23. In the matter of performance of the said agre~ent,
the appellants did not raise the same contentions, as has 'tteen
raised before us as regards the performance of contract on The
o part of the vendors. At that point of time they did not say that
the vendors committed any breach of the condition of the
agreement for sale. Even in the said reply dated 25. 7 .1985, i~
had not been pointed out that said G. Srinivas Reddy alone
. was ready and willing to develop the plot being Survey No. 36,
E irrespective of the stand taken by the Mohammed Kasim Ali.
24. Admittedly, the agreement was entered into on
23.4.1984. The contract was to be performed within a period
of eight months. A joint tentative layout plan for both the lands
was granted on 26.4.1984. Nothing has been placed on record
F to _show as to when the disputes and differences between the
vendees inter se began or when the disputes and differences
between the developers of two plots started. It may be true that
in terms of the agreement, draft layout was to be obtained in
respect of Plot No. 36 but the very fact that the parties
proceeded on the basis that all the lands would be developed
G together and steps having been taken in this behalf; it was too
late for G. Srinivas Reddy to raise a fresh demand.
25. The learned trial judge applied the principle of novation
)-
of contract having regard to -the subsequent conduct of the '
parties. The said principle, in our opinion, is applicable as
H
G. JAYASHREE & ORS. v. BHAGWANDAS S. PATEL & 1469
ORS. [S.B. SINHA, J.]
against the said G. Srinivas Reddy. The agreement in question A
is not an agreement for sale simplicitor. The parties thereto
,--( were aware that only for the purpose of development of the said
plot the agreement had been entered into. If that be so, the
vendors were right in enforcing the terms of the said agreement/
contract keeping in view the aforementioned purpose in mind. ,9
The joint promisee might not have rescinded the contract prior
to the filing of the suit for damages against the defendants 1
to 3 but then when he filed the suit claiming refund of the amount
t of advance which he had paid by way of his share as also the
damages, the contract stood rescinded so far as he was
-f
concerned. His claim might have been based on the purported c
breach of the terms of the contract on part of defendants No. 1
to 3, but they had arrived at a compromise. True it is that G.
Srinivas Reddy filed a written statement in the suit filed by the
Mohammed Kasim Ali. He expressed his intention to pay the
amount of consideration for the entire land but evidently the suit D
did not go to trial. He did not insist therefor. When an application
for settlement arrived at between Mohammed Kasim Ali and
the defendant Nos.1 to 3 was filed, he did not object thereto.
~
As he had appeared even before the High Court through
counsel, it was obligatory on his part to oppose the said
~
compromise between the vendors and his co-vendee.
26. Mr. Nariman may be right that a suit for enforcement
of a contract on the part of the joint promisee is maintainable.
Reliance has been placed by Mr. Nariman on a decision of
Jagdeo Singh & ors. v. Bisambhar & ors. [AIR 1937 Nagpur F
186], wherein the learned judge laid down the law thus:
-~:
"That would certainly appear to cover a case where one
or more co-contractors want to enforce the contract
against the will of the others. The wording is not 'either side
thereto' or even 'either party thereto', but any party thereto'. G
The word 'any' indicates one out of a number of persons
~ more than two. If only two parties are contemplated the
correct adjective would be 'either' or at the most 'both'. The
' argument advanced was that the contract cannot be
enforced piecemeal and that the Courts cannot make a
~
1470 SUPREME COURT REPORTS [2008) 17 S.C.R.
A new contract for the parties. Of course not; but the plaintiffs
are not doing that. They want the original contract enforced
just as it was made. They want to buy the property and
want the Court to compel their co-contractors Anantram to
r,
buy it along with them just as he had promised to do, and
B ask the Court to compel the defendants to sell it to all four
in exact accordance with the agreement. So long as the
plaintiffs are willing to pay the vendors the full price
bargained for and ask them to sell to the very persons with
whom they had contracted I am unable to see how there
is any variation. Any quarrel the purchasers may have "
c among themselves is not being introduced into this suit. ~
Each party is getting exactly what he bargained for and it
is no concern of the vendors how these purchasers choose
to arrange about the payment of the purchase price as
between themselves. That is not a part of the agreement.
D All that the purchasers undertook to do was to pay the
money to their vendors and that is being done. There is
no section in the Act which prohibits this. Therefore I am
clear that the plaintiff~ have a right to sue for specific
performance even though one of their co-contractors now
·,!
E refuses to join them. Of course, it is essential in such a
case that all the parties to the contract should be before
the Court. If any are omitted then I can understand
difficulties arising. But when as here they have all been
joined on one side or the other I am of opinion the suit can
proceed."
F
It may, however, immediately be noticed that the court
therein proceeded on the basis that the original contract was ):._
required to be enforced just as it was made even though one
of their co-vendees refused to join them then and only on that
basis the said principle was evolved.
G
27. Reliance has also been placed by Mr. Nariman on
Jahar Roy (Dead through L.Rs.) & Anr. v. Premji Bhimji
Mansata & Anr. [(1978) 1 SCR 770) wherein, in terms of the
agreement, defendants were to· be entitled to all box-office l
collections, but they were to contribute a sum of Rs. 5275/-
H
G. JAYASHREE & ORS. v. BHAGWANDAS S. PATEL & 1471
ORS. [S.B. SINHA, J.]
every month towards the expenses and was also to pay the A
same within the time prescribed. This Court, having regard to
the provisions contained in Section 45 of the Indian Contract
Act, held as under:
"The section thus deals with devolution of joint rights in the
case of joint promises, but it does not deal with a case B
where, a joint promise, does not want to joint as a co-
plaintiff and is arrayed as a proforma-defendant with the
specific plea that no relief is claimed against him. The
~ judgment and the decree in this case have in fact enured
-.~ to his benefit also." c
28. This Court, furthermore, while opining that a person
cannot be compelled to be a plaintiff, for as is obvious, he
cannot be compelled to bring an action at law if he does not
want to do so, held:
"At the same time, it is equally true that a person cannot D
be prevented from bringing an action, by any rule of law
or practice, merely because he is a joint promisee and the
other promisee refuses to join as a co-plaintiff. The proper
and the only course in such cases is to join him as a
proforma-defendant."
E
29. The dicta laid down in Jahar Roy (Dead through L.Rs.)
& Anr. v. Premji Bhimji Mansata & Anr. (supra) was followed
by the Madras High Court in Ponnuswami Gounder v. Boyan
& ors. [AIR 1979 MADRAS 130]. The Madras High Court held
that the decision of the Calcutta High Court in Safiur Rahman F,
..,, v. Maharumunnissa Bibi [(1897) ILR 24 Calcutta 832] was not
good law opining that as both the vendees had different rights,
one can purchase the right of the other, stating:
"In my opinion, the ratio of the judgment is that where the
plaintiff is entitled to the relief, merely because some of
G
them have refused to join him as plaintiffs or even where
• ~
they do not want the specific performance of the
agreement, his right could not be jeopardised by such
refusal by the other parties. In such a case, I am of the view
that if the defendants do not want to pay the money, the
H
...(
1472 SUPREME COURT REPORTS [2008] 17 S.C.R.
A plaintiffs would have to pay the entirety of the consideration
payable under the agreement to convey or reconvey, as
the case may be and on such deposit of the entire money,
he would be entitled to get a conveyance of the entirety of
the property though it should normally be in favour of the
B plaintiff and the defendants in whose favour· the agreement
was executed. After the conveyance is executed as such,
the rights of the plaintiff and the other defendants in whose
favour the agreement was executed will have to be worked
out. The specific performance as such therefore could not ~
be denied to the plaintiff merely on the ground that ~
c defendants 2 and 3 have refused to join as plaintiffs or that
they do not want the conveyance. It may also be pointed
out that in a case of this nature, it will not be possible for
one co-promisee to give up his rights so as to prejudice
the rights of the other co-promisees. Therefore, the first
D defendant also would not be entitled to claim that he will
execute only with reference to half of the suit properties on
the ground that if the conveyance is executed in favour of
the plaintiffs and defendants 2 and 3, defendants 2 and 3
would be entitled to half of the properties conveyed. The
,.
E rights as between the plaintiffs and the defendants would
have to be worked out with reference to the agreements
between them and it is not open to the first defendant to
plead that the second and third defendant's right should
be separated from that of the plaintiffs. "
F (~mphasis supplied)
30. We would proceed on the basis that the ratio has
correctly been laid down in the aforeme~tioned decisions. The
question, however is, is it applicable to the fact of the present
case? The answer thereto must, in our opinion, be rendered in
G the negative.
Keeping in view the consent decree passed by a
competent court of law ,in terms of consent entered into by and
between Mohd. Kasim Ali and defendants 1 and 3, the 'r
agreement of sale in the same form could not have been
H enforced. The matter might have been different had the
G. JAYASHREE & ORS. v. BHAGWANDAS S. PATEL & 1473
ORS. [S.B. SINHA, J.]
compromise not been recorded. A part of the contract stood A
rescinded; it has beenworked out. We, however, must place
-< on record that the terms of the compromise are not placed
before us.
Presumably, that proportionate amount of advance taken
must have been refunded; some damages also must have B
been paid. G. Srinivas Reddy not being a party thereto may
not be bound thereby but at least being a party to the suit he,
1
;>
keeping in view the interest he had in the matter, should have
·cf
' opposed recording of the said compromise. He without any:
further delay should have also filed a suit for specific c
performance of contract. He even did not file a suit for specific'
performance immediately thereafter. He first filed a suit for
mandatory injunction. We are not concerned with the
1
maintainability thereof. We would assume that the said suit was
maintainable. But the fact that he did not choose to file a suit
for specific performance of contract at the first instance speaks D
volumes about his conduct. The civil courts, in the matter of
enforcement of an agreement to sell, exercise a discretionary
' jurisdiction. Discretionary jurisdiction albeit must be exercised
judiciously and not arbitrarily or capriciously. A plaintiff is
expected to approach the court with clean hands. His conduct
plays an important role in the matter of exercise of discretionary
E
jurisdiction by a court of law. In Mohammadia Cooperative
Building Society Limited v. Lakshmi Srinivasa Cooperative
Building Society Limited & ors. [(2008) 7 SCC 310], this Court'
-.._ held: F
- ,., "71. Grant of a decree for specific performance of contract
is a discretionary relief. There cannot be any doubt
whatsoever that the discretion has to be exercised
judiciously and not arbitrarily. But for the said purpose, the
1
conduct of the plaintiff plays an important role. The courts G
,· ordinarily would not grant any relief in favour of the person1
who approaches the court with a pair of dirty hands."
~ 31. In Sanjana M. Wig (Ms.) v. Hindustan Petroleum
Corpn. Ltd. [2005) 8 sec 242] in regard to exercise of the
-- discretionary jurisdiction, this Court held that the same depends H
1474 SUPREME COURT REPORTS [2008] 17 S.C.R.
A upon the facts and circumstances of each case wherefor no
hard and fast rule can be laid down.
32. We may notice that B.P. Jeevan Reddy, J. in K.S.
Vidyanadam & ors. v. Vairavan [(1997) 3 SCC 1) held that a
new look is required to be given and the rigour of the rule is
B required to be relaxed by courts as regards the principle that
time is not of the essence of the contract in case of immovable
properties as when the said principle was evolved the prices
and values were stable and inflation was unknown, stating:
"The learned Counsel for the plaintiff says that when the
c parties entered into the contract, they knew that prices are
rising; hence, he says, rise in prices cannot be a ground
for denying specific performance. May be, the parties knew
of the said circumstance but they have also specified six
months as the period within which the transaction should
D be completed. The said time-limit may not amount to
making time the essence of the contract but it must yet
have some meaning. Not for nothing could such time-limit
would have been prescribed. Can it be stated as a rule of
law or rule of prudence that where time is not made the
essence of the contract, all stipulations of time provided
E in the contract have no significance or meaning or that they
are as good as nonexistent? All this only means that while
exercising its discretion, the court should also bear in mind
that when the parties prescribes certain time-limit(s) for
taking steps by one or the other party, it must have some
F significance and that the said time-limit(s) cannot be
ignored altogether on the ground that time has not been
made the essence of the contract [relating to immovable
properties]."
This court therein noticed the decision rendered in
G Mademsetty Satyanarayana v. G. Yel/ogi Rao [(1965) 2 SCR
221) where Subba Rao, J. (As His Lordship then was) made
a distinction between Indian law and the English law on the
subject to hold that some delay may not be a bar in granting a
\
relief of specific performance as the limitation for filing such suit
H is prescribed under the Limitation Act, 1963, stating: _,,,,_
G. JAYASHREE & ORS. v. BHAGWANDAS S. PATEL & 1475
ORS. [S.8. SINHA, J.]
"13. In the case before us, it is not mere delay. It is a case A
of total inaction on the part of the plaintiff for 2 1/2 years
--< in clear violation of the terms of agreement which required
liim 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· 8
- according to the defendants, 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."
33. Mr. Nariman, however, would contend that somewha' c
t
different view has been taken by this Court in Nirmala Anand
v. Advent Corporation (P) Ltd. & ors. [(2002) 8 SCC 146],
: wherein this Court in a situation of this nature had directed
payment of a higher price. Each case is, thus, required to be
considered on its own facts. No hard and fast rule, therefore,
can be laid down. While determining the lis in a suit for specific D
performance of contract, no legal principle in absolute termsI
can be laid down. Relief in a matter of this nature has to be
-t granted keeping in view a large number of facts.
Our attention has also been drawn to a decision of this
Court in Rame Gowda (dead) by LRs. v. M. Varadappa Naidu E
,-
(dead) by LRs. & anr. (2004) 1 sec 769, which, in our opinion,
has no application in this case.
34. Keeping in view the facts and circumstances of this
case, we think, it is not a case where we should exercise our
discretionary jurisdiction under Article 136 of the Constitutiqn F
-.
- " of India. We refuse to interfere with the discretionary jurisdiction
exercised by the High Court particularly when the learned trial
court had not adverted to this aspect of the matter at all.
35. For the views we have taken, we do not think it
necessary to deal with other contentions raised by Mr. Rao G
including the applicability of the provisions of Order II Rule 2 of
1
the Code of Civil Procedure. The appeals are dismissed with
costs: Counsel fee assessed at Rs. 25,000/-.
,,,..
' K.K.T. Appeals dismissed.
H
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