Holding

The plaintiff proved readiness and willingness, the liquidated‑damages clause does not preclude specific performance, and the court may grant specific performance under Section 20 despite the defendant's hardship.

Summary

The plaintiff, P. D'Souza, sued Shondrilo Naidu for specific performance of a sale agreement in which the parties were to exchange a building for a fixed price by 5‑Dec‑1978. The defendant had mortgaged the property, failed to produce original title documents and did not redeem the mortgage, thereby preventing execution of the sale deed. The plaintiff paid part‑consideration, repeatedly offered further sums and, in August 1981, the defendant accepted Rs 20,000, effectively reviving the contract. The trial court held the plaintiff was not ready and willing to perform; the High Court reversed, finding she was ready and willing and that the court could exercise its discretion under S. 20 of the Specific Relief Act despite alleged hardship. On appeal, the Supreme Court affirmed the High Court, holding that the plaintiff had discharged the onus of proving readiness and willingness, that a liquidated‑damages clause does not bar specific performance, that time was not of the essence, and that the court may grant specific performance notwithstanding price escalation. The appeal was dismissed.

Issues considered

The plaintiff must prove readiness and willingness to perform her part of the contract for specific performance.
Whether the presence of a liquidated‑damages clause in the agreement bars a decree of specific performance.
Whether the court should exercise its discretionary jurisdiction under Section 20 of the Specific Relief Act in view of the defendant's alleged hardship and price escalation.
Whether time was of the essence of the contract.

Legislation cited

Code of Civil Procedure, 1908s. 10
Indian Contract Act, 1872
Specific Relief Act, 1963s. 10, s. 20(2), s. 23

Subjects

Specific performanceReadiness and willingnessLiquidated damagesSection 20 Specific Relief ActHardshipTime of essenceContract of saleMortgagePrice escalation

Judgment

A P. D'SOUZA
V.

SHONDRILO NAIDU

JULY 28, 2004

B [S.B. SINHA AND S.H. KAPADIA, JJ.]

Specific Relief Act, 1963:

Section JO-Suit for specific performance of contract-Grant of-
Readiness and. willingness of plaintiff to perform his part of contract-
C Onus to prove-Held: plaintiffmust establish the same-Discharge ofonus
depends upon facts and circumstance ofeach case-Furthermore, readiness
and willingness of plaintiff to perform his part of contract also depends
on whether defendant did eve1ything required of him to be done in terms
ofagreement-On facts, finding offact ofHigh Court on basis ofmaterials
on records that plaintiffe were always ready and willing to perform their
D part ofcontract-On arriving at the said finding High Court had not taken
into consideration any irrelevant fact or failed to take into consideration
any relevant fact-Also defendant having consciously waived his right
cannot contend that time was the essence of the contract and plaintiff was
not ready and willing to perform her part of the contract-Contract Act,
E 1872--Code of Civil Procedure, 1908.
Section 10-Agreement of sale-Damage clause in terms thereof, in
case seller breaches the terms-Suit for specific performance of contract-
Maintainability of-Held: Existence of damage clause does not make suit
for specific performance not maintainable-Contract Act, 1872.
F Section 20(2), Explanation I-Agreement for sale-Suit for specific
performance of contract by buyer-Escalation of prices-If ground to
refuse the benefit of decree in view of hardship faced by seller-Held: It
is not a case that seller did not foresee hardshiJr-Also not a case that non-
performance of agreement would not cause hardship to plaintiff-Thus
G court should exercise its discretionary jurisdiction and decree the suit.
Appellant-defendant entered into an agreement of sale of a
building with the respondent-plaintiff, who was occupying the same as
tenant. In terms of the agreement, parties were to perform their
respective parts of the contract within a fixed period, expiring on
H 5.12.1978 and also the total consideration for the transfer was fixed.
186
P.D'SOUZA v. SHONDRILO NAIDU 187

- Appellant mortgaged the suit property in favour of LIC. Respondent A
paid part payment of the consideration. Despite assurance appellant
did not produce original documents nor redeemed the mortgage and
as such sale deed could not be executed. Appellant demanded some
more amount in 1980. It sought extension of time for registration of
sale deed by 3I.12.1981 and also enhancement of rent, which was
increased. Thereafter, respondent asked the appellant to execute sale B
deed and also conveyed her readiness and willingness to perform her
part of the co11tract. However, appellant cancelled the agreement and
also forfeited the amount paid by the respondent. Respondent then
filed suit for specific performance of agreement of sale against appellant.
Trial court dismissed the suit holding that respondent was not ready C
and willing to perform ~er part of the contract. However, High Court
allowed the appeal holding that respondent was ready and willing to
perform her part of the contract and rejecting the submission that the
court should not exercise its discretionary jurisdiction under section
20 of the Specific Relief Act on the ground of hardship of the appellant. D
Hence the present appeal.

Appellant-defendant contended that ttie onus to prove that she
was all along ready and willing to perform her part of the contract was
on the respondent and that she admittedly did not perform her part
of the contract by 5.12.1978 shows that she had not been able to do E
so; that as the agreement provided for a damage clause in terms
whereof, appellant had an option to pay the liquidated damages and
as such the decree for specific performance of contract could not have
been passed; and that this Court having regard to the escalation in
price, should refuse to exercise its discretionary jurisdiction in granting
a decree for specific performance. F
Respondent-plaintiff contended that a finding of fact has been
arrived at by High Court that the respondent had all along been ready
and willing to perform her part of the contract; that the appellant did
not hand over the original documents and furthermore did not
discharge the mortgage; that the mortgage was redeemed by the G
defendant upon receipt of the requisite amount from the plaintiff; that
the appellant accepted a sum of Rs. 20,000 in August, 1981 and after
two months suits had ueen filed; and that the High Court correctly
exercised its discretionary jurisdiction.
Dismissing the appeal, the Court H
188 SUPREME COURT REPORTS [2004] SUPP.~ S.C.R.
A HELD 1.1. In a suit for specific performance of contract the
plaintiff must establish his readiness and willingness to perform his
part of the contract. The question as to whether the onus was
discharged by plaintiff or not will depend upon the fact and
. circumstances of each case. No strait-jacket formula can be laid down
in this behalf. High Court upon consideration of the materials on
B records had arrived at a finding of fact that the plaintiffs had all along
been ready and willing to perform their part of the contract. Moreover,
it had not been shown that while arriving at the said finding the High
Court had taken into consideration any irrelevant fact or failed to take
into consideration any relevant fact. [193-B-D)

C 1.2. In the instant case, respondent-plaintiff had made the requisite
averments in the plaint that she was ready and willing to perform her
part of contract. But this would also depend upon the question as to
whether the appellant-defendant did everything which was required of
him to be done in terms of the agreem~nt for sale. It is not disputed that
the rent was enhanced as sought by the appellant. Respondent assumed
D that the sale deed would be executed and registered by 31.12.1981, the
extended time sought by the appellant. Furthermore, appellant had not
produced the original documents nor redeemed the mortgage and as
such the sale deed could not have been executed and in that view of the
matter, the question ofrespondent's readiness and willingness to perform
E her part of the contract would not arise. Also in August, 1981 the
appellant accepted a sum of Rs. 20,000 from respondent, thereby himself
reviving the contract at a later stage and consciously waiving his right.
Time, having regard to the factual situation cannot be said to be of the
essence of the contract and appellant cannot now turn round and
contend that time was of the essence of the contract and it was obligatory
F on the part of plaintiff to show readiness and willingness as far back on
5.12.1978. [193-E-H; 194-A-B)

Ardeshir H. Mama v. Flora Sassoon, AIR (1928) PC 208,
distinguished.
G 2. Clause (7) of the Agreement of Sale as regard payment of
damages would be attracted only in a case where the vendor commits
breach of the terms. It was for the respondent to file a suit for specific
performance of contract despite having any option to invoke the said
provision. The submission that only because such a clause exists, a suit
for specific performance of contract would not be maintainable, cannot
H be accepted. 1195-A-B)
P.D'SOUZA v. SHONDRILO NAIDU 189

Dadarao and Anr. v. Ramrao and Ors., [1999) 8 sec 416, per A
incurium.

ML. Devender Singh & Ors. v. Syed Khaja, [1974] l SCR 312; A.
Abdul Rashid Khan (Dead) and Others v. P.A.KA. Shahul Hamid and Ors.,
[2000) 10 SCC 636 and Government of W.B. v. Tarun K.Roy and Others,
120041 1 sec 347, relied on. B
Manzoor Ahmed Magrav v. Gutam Hassan Aram and Others, AIR
(2000) SC 191, referred to.

3. Explanation appended to Section 20 of the Specific Relief Act
clearly stipulates that mere inadequacy of consideration or mere fact C
that the contract is onerous to appellant or improvident in its nature
would not constitute an unfair advantage within the meaning of Section
20(2). In the instant case, it is not a case where the appellant did not
foresee the hardship. Furthermore, it is not a case that non-performance
of the agreement would not cause any hardship to the respondent. D
Appellant had accepted part payments from the respondent from time
to time without any demur whatsoever. He redeemed the mortgage
only upon receipt of requisite payment from the respondent. Even just
two months prior to the institution of suit, he had accepted Rs. 20,000
from the respondent. Therefore, it is too late for the appellant now to
suggest that having regard to the escalation in price, respondent should E
be denied the benefit of the decree passed in his favour. The submission
to the effect that this Court should not exercise its discretionary
jurisdiction in view of hardship which would be faced by the appellant
cannot be accepted. Furthermore, such a plea was not raised before
the High Court. (199-D-E; 199-C-DJ
F
Nirma/a Anand v. Advent Corporation (P) Ltd. and Others, (2002)
5 sec 481, referred to.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5333 of
1999.
G
From the Judgment and Order dated 9.11.1998 of the Kamataka High
Court in R.F.A. No. 408 of 1992.

S.N. Bhat for the Appellant.

M.N. Krishnamani, B. Sridhar and K. Ram Kumar for the Respondent. H
190 SUPREME COURT REPORTS [2004] SUPP. 3 S.C.R.

A The Judgment of the Court was delivered by

S.B. SINHA, J. : A suit for specific performance of contract for
enforcing an agreement for sale dated 6.6.1977 was filed by the respondent
herein against Shri P. D'souza, the predecessor-in-interest of the appellant.
In terms of the said agreement, the parties hereto were required to perform
B their respective parts of contract within a period of 18 months expiring on
5.12.1978. The total consideration for the said transfer was fixed at Rs.
1,55,000.

It is not in dispute that the father or the plaintiff-respondent Shri SJ.
Naidu was in occupation of the first floor of the premises in question as
C a tenant whereas plaintiff was a tenant on the ground floor thereof. A suit
for their eviction was filed but the same was dismissed.

It is also not in dispute that the suit property was mortgaged by the
defendant-appellant in favour of the Life Insurance Corporation of India.
D It is averred that despite assurances given to the plaintiff by the defendant
that all original documents, title deeds and encumbrance certificate would
be produced by May, I 98 I, the same had not been done within the said
period.

It also stands admitted that pursuant to or in furtherance of the said
E agreement, the following payments have been made in part payment of the
consideration.

(a) A sum of Rs. 2,500 on 11.11.1976.

(b) A sum of Rs. 10,000 was paid by four cheques of Rs. 2500 each before
F the agreement was executed.

(c) A further sum of Rs. 2,500 was paid subsequently and an amount of
Rs. 20,000 was paid on 29.12.1977.

The defendant allegedly demanded some amount on 29.11.1980 from
the plaintiff and further wanted extension of time for registering the sale
G deed till 31.12.1981. A letter was also addressed to the plaintiff's father
to enhance the rent pursuant whereto and in furtherance whereof the rent
was enhanced from Rs. 440 to Rs. 500 per month. The plaintiff by a letter
dated 21.5.1981 called upon the defendant to execute the deed of sale
wherein she conveyed her readiness and willingness to perform her part
H cf contract and in response thereto the defendant by a letter dated 25.5. I 981
P.D'SOUZA v. SHONDRILO NAIDU (SINHA, J.) 191

purported to have cancelled the agreement and sought to forfeit a sum of A
Ps. 35,000 paid by the plaintiff.

A notice to execute the deed of sale was issued to which a reply was
sent by the defendant on 4.6.1981. A further notice was issued by the
Plaintiff on 29.6.1981 calling upon the defendant to execute the deed of
sale. On or about 6.8.1981 the plaintiff sent a draft sale deed in order to B
enable the defendant to claim the requisite clearance under Section 230A
of the Income Tax Act. A notice dated 7.9.1981 was also issued by the
plaintiff to which the defendant did not reply. The plaintiff advanced in
all Rs. 55,000 including Rs. 6,000 towards consideration on 9.9.1981 to
enable the defendant to defray the expenses for obtaining the Income Tax C
clearance certificate.

In the aforementioned situation, a suit for specific performance of the
agreement of sale was filed.

Once of the issue which was raised by the defendant in his written
statement was that the plaintif had never been ready and willing to perform D
her part of contract.

The learned Trial Court having regard to the pleadings of the parties
inter alia framed the following issues:

"(4) Does the plaintiff prove that she was and has always been E
ready and willing to perform her part of the contract?

(7) Whether the suit is within time?"

The Trial Coui1 answered the issue No. 4 in the negative and
dismissed the suit. An appeal thereagainst was filed by plaintiff-respondent F
before the High Court.

The High Court accepted the contentions advanced on behalf of the
plaintiff and held that on the basis of materials on record it was proved
that the Plaintiff has all along been ready and willing to perform her part
of contract holding: G
"The question is whether on a particular day i.e., before the expiry
of the period, for which extension has been granted, the plaintiff
was ready to perform her pai1 of the contract. The fact that
subsequently the money was withdrawn does not indicate that
readiness and willingness has gone. The very fact that the money H
A
192 SUPREME COURT REPORTS [2004) SUPP. 3 S.C.R.

was available in D.D. is abundantly clear that the plaintiff was
ready and willing."
-
The High Court furthermore rejected the contention of the defendant
to the effect that the Court should not exercise its discretionary jurisdiction
under Section 20 of the specific Relief Act on the ground of hardship of
B the defendant.

Further submission of the defendant to the effect that he was prepared
to pay back money with the interest at higher rate was also not acceded
to.

C Mr. S.N. Bhat, learned counsel appearing on behalf of the appellant
raised three contentions in support of this appeal. It was firstly submitted
that the onus to prove that she was all along ready and willing to perform
her part of contract was on the plaintiff and the very fact that she admittedly
did not perform her part of the contract by 5.12.1978 is itself a pointer to
D show that she had not been able to do so. Reliance in this behalf has been
placed on Ardeshir H Mama v. Flora Sassoon, AIR (1928) PC 208.

Further contention of Mr. Bhat is that as the agreement provided for
a damage clause in terms whereof, the Appellant had a option to pay the
liquidated damages and in that view of the matter decree for specific
E performance of contract could not have been passed. Reliance in this behalf
has been placed on Dadarao and Another v. Ramrao and Others, [1999)
8 sec 416.

Mr. Bhat would further submit that in a case of this nature where the
decree for specific performance of contract has not taken effect for a kmg
F time, this Court having regard to the escalation in price, refuse to exercise
its discretionary jurisdiction in granting a decree for specific performance
of contract. Reliance in this behalf has been placed on Nirmala Anand v.
Advent Corporation (P) Ltd. and Others, [2002] 5 SCC 481.

Mr. M.N. Krishnamani, learned semor counsel appearing on behalf
G of the respondent, on the other hand, would submit that a finding of fact
has been arrived at by the High Court to the effect that the respondent had
all along been ready and willing to perform her part of the contract. It was
urged that the defendant-appellant did not hand over the original documents
and furthermore, did not discharge the mortgage. The learned counsel
H would contend that the mortgage was redeemed by the defendant upon

b
P.D'SOUZA v. SHONDRILO NAIDU [SINHA, J.] 193
•.
receipt of the requisite amount from the plaintiff, the High Court must be A
held to have correctly exercised its discretionary jurisdiction.

The learned counsel furthermore would draw our attention to the fact
that the defendant-appellant accepted a sum of Rs. 20,000 in August, 1981
and within the period of two months thereafter the suit had been filed.
B
It is indisputable that in a suit for specific performance of contract
the plaintiff must establish his readiness and willingness to perform his part
of contract. The question as to whether the onus was discharged by the
plaintiff or not will depend upon the fact and circumstance of each case.
No strait-jacket formula can be laid down in this behalf. c
The High Court upon consideration of the materials on records had
arrived at a finding of fact that the plaintiffs had all along been ready and
willing to perform their part of contract. The said findings are binding upon
this Court as it had not been shown that while arriving at the said finding
the High Court had taken into consideration any irrelevant fact or failed D
to take into consideration any relevant fact.

It is not a case where the plaintiff had not made the reqms1te
averments in the plaint. The readiness and willingness on the part of the
plaintiff to perform his part of contract would also depend upon the
question as to whether the defendant did everything which was required
E
of him to be done in terms of the agreement for sale. The plaintiff was a
tenant of the defendant.

It is not disputed that the defendant by a letter dated 29th November,
1980 requested the plaintiff to enhance the rent from Rs. 440 to Rs. 500. F
Therein she further assumed that the sale deed would be executed and
registered by 31st December, 1981 which could not be done for unavoidable
reasons. The fact that the plaintiff had paid different amounts to the
defendant from time to time which were accepted by him stands admitted.

It appears from the records that the defendant herself did not produce G
the original documents nor redeemed the mortgage. If the mortgage was
not redeemed and the original documents were not produced, the sale deed
..
.....
could not have been executed and in that view of the matter, the question
of plaintiff's readiness and willingness to perform his part of contract
would not arise. H
194 SUPREME COURT REPORTS [2004] SUPP. 3 S.C.R.
·'
A In August, 1981 the defendant accepted a sum of Rs. 20,000 from
the plaintiff. The contention raised on behalf 12f the appellant to the effect
that the plaintiff has failed to show his readiness and willingness tu perform
his part of contract by 5.12.1978 is stated to be rejected inasmuch as the
defendant himself had revived the contract at a later stage. He as would
appear from the findings recorded by the High Court even sought for
B extension of time for registering the sale deed till 31.12.1981. It is
therefore, too late in the day for the defendant now to contend that it was
obligatory on the part of plaintiff to show readiness and willingness as far
back on 5.12.1978.

c thus, beTime, having regard to the fact situation obtaining herein, cannot
said to be of the essence of the contract. In any event, the defendant
consciously waived his right. He, therefore, now cannot turn round and
contend that the time was of the essence of the contract and the plaintiff
was not ready and willing to perform her part of contract in December,
1978.
D
In Ardeshir H Mama (supra) in the fact of the matter it was held that
there was no completed contract. The said decision has no application in
the fact of the present case.

The clause as regard payment of damages as contained in Clause (7)
E of agreement of sale reads as under :
"7. That if the vendor fails to discharge the mortgage and also
commits any breach of the tenns in this agreement and fails to
sell the property, then in that even he shall return the advance of
Rs. I 0,000 paid as aforesaid and shall also be liable to pay a
F further sum of Rs. 20,000 as liquidated damages for the breach
of the agreement."

The mortgage was, thus, required to be redeemed. From Exhibit P40
dated 15th June, 1979 it appears that the Life Insurance Corporation of
G India admitted the execution of the discharge and the Mortgagor (defendant)
was authorized to present the same for registration. The mortgage deed was
executed as far back on 3.6.1963. A further charge was created by a deed
dated 10.7.1964. The entire mortgage money was paid only on or about
15th June, 1979. ..
H
•
P.D'SOUZA v. SHONDRILO NAIDU [SINHA, J.) 195

Clause (7) of the Agreement of Sale would be attracted only in a case A
where the vendor is in breach of the term. It was for the plaintiff to file
a suit for specific performance of contract despite having any option to
invoke the said provision. It would not be correct to contend that only
because such a clause exists, a suit for specific performance of contract
would not be maintainable.
B
Section 23 of the Specific Relief Act,1:j)983 read as under :

"23. (I) A contract, otherwise, proper to be specifically enforced,
may be so enforced, though a sum be named in it as the amount
to be paid in case of its breach an~ the party in default is willing C
to pay the same, if the court, having regard to the terms of the
contract and other attending circumstances, is satisfied that the
sum was named only for the purpose of securing performance of
the contract and not for the purpose of1 giving to the party in
default an option of paying money in lieu of specific performance.

(2) When enforcing specific performance under this section, the
D
court shall not also decree payment of the sum so named in the
contract."

In ML. Devender Singh & Ors. v. Syed Khaja, [1974) 1 SCR 312,
the following statement of law appears: E
"The question always is: What is the contract? Is it that one certain
act shall be done, with a sum annexed, whether by way of penalty
or damages, to secure the performance of this very act? Or, is it
that one of the two things shall be done at the election of the party
who has to perform the contract, namely, the·performance of the F
act or the payment of the sum of money? If the former, the fact
of the penal or other like sum being annexed will not prevent the
Court's enforcing performance of the very act, and thus carrying
into execution the intention of the parties; ifthe latter, the contract
a
is satisfied by the payment of sum of money, and there is no
ground for proceeding against the party having the election to G
compel the performance of the other alternative.

From what has been said it will be gathered that contracts of the
kind now under discussion are divisible into three classes:

(i) Where the sum mentioned is strictly a penalty-a sum named H
196 SUPREME COURT REPORTS [2004] SUPP. 3 S.C.R.

A by way of securing the performance of the contract, as the penalty
is a bond;

(ii) Where the sum named is to be paid liquidated damages for
a breach of the contract;

B (iii) Where the sum named is an amount the payment of which
may be substituted for the performance of the act at the election
of the person by whom the money is to be paid or the act done.

Where the stipulated payment comes under either of the two first
- mentioned heads, the Court will enforce the contract, if in other
c respects it can and ought to be enforced just in the same way as
a contract not to do a particular act, with a penalty added to secure
its performance or a sum named as liquidated damages, may be
specifically enforced by means of an injunction against breaking
it. On the other hand, where the contract comes under the third
D head, it is satisfied by the payment of the money, and there is no
ground for the Court to compel the specific performance of the
other alternative of the contract."

This Court further stated:

"20. The fact that the parties themselves have provided a sum to
E
be paid by the party breaking the contract does not, by itself,
remove the strong presumption contemplated by the use of the
words "unless and until the contrary is proved". The sufficiency
or insufficiency of any evidence to remove such a presumption
is a matter of evidence. The fact that the parties themselves
F specified a sum of money to be paid in the event of its breach is,
no doubt, a piece of evidence to be considered in deciding whether
the presumption has been repelled or not. But, in our opinion, it
is nothing more than a piece of evidence. It is not conclusive or
decisive.
G 2 I. The second assumption underlying the contentions on behalf
the Defendants-Appellants is that, once the presumption, contained
in explanation to Section 12 of the old Act, is removed, the bar
contained in Section 21 of the old Act, against the specific
enforcement of a contract for which compensation in money is an
H adequate relief, automatically operates, overlooks that the condition
P.D'SOUZA v. SHONDRILO NAIDU (SINHA, J.] 197

for the imposition of the bar is actual proof that compensation in A
money is adequate'on the facts and circumstances of a particular
case before the Ce,urt. The effect of the presumption is that the
party coming to Collrt for the specific performance of a contract
for sale of immovalp.le property need not prove anything until the
other side has removed the presumption. After evidence is led to B
remove the presumption, the .plaintiff may still be in a position
to prove by other evidence in the case, that payment of money
does not compensate him adequately."

A distinction between liquidated damages and penalty may be
important in common law put as regards equitable remedy the same does C
not play any significant role.

In Manzoor Ahmed Magrav v. Gu/am Hassan Aram and Others, AIR
(2000) SC 191, this Court reiterated the ratio laid down in ML. Devender
Singh (supra) (See also A. Abdul Rashid Khan (Dead) and Others v.
P.A.K.A. Shahul Hamid and Others, (2000] 10 sec 636). D
In Dadarao (supra) whereupon Mr. Bhat placed strong reliance, the
binding decision of ML. Devender Singh (supra) was not noticed. This
Court furthermore failed to notice and consider the provisions of Section
23 of the Specific Relief Act, 1963. The said decision, thus, was rendered E
per incurium.

Furthermore, the relevant term stipulated in Dadarao (supra) was as
under:

"Tukaram Devsarkar, aged about 65, agriculturist, r/o Devsar, F
purchaser (GHENAR) - Balwantrao Ganpatrao Pande, aged 76
years, r/o Duadi Post Devsar, vendor (DENAR), who hereby give
in writing that a paddy field situated at Dighadi Mouja, Survey
No. 7/2 admeasuring 3 acres belonging to me hereby agree to sell
to you for Rs. 2000 and agree to receive Rs. 1000 from you in G
presence of V. D. N. Sane. A sale deed shall be made by me at
my cost by 15.4.1972. In case the sale deed is not made to you
or ifyou refuse to accept, in addition of earnest money an amount
of Rs. 500 shall be given or taken and no sale deed will be
executed. The possession of the property has been agreed to be
delivered at the time of purchase. This agreement is binding on H
198 SUPREME COURT REPORTS (2004] SUPP. 3 S.C.R.
)-,

A the legal heirs and successors and assigns.

(Emphasis supplied)

. Interpreting the said term, it was held:
. '
B ."6. The relationship between the parties has to be regulated by the
terms of the agreement between them. Whereas the defendants in
the suit had taken up the stand th~t the agreement dated 24.4.1969
was really in the nature of a loan transaction, it is the plaintiff who
contended that it was an agreement to sell. As we read the
agreement, it contemplates di.at on or before 15.4.1972 the sale
c deed would be executed .. But what is important is that the
agreement itself provides as to what is to happen if either the seller
refuses to 'sell or the purchaser refuses to buy. In that event the
agreement provides that in addition to the earnest money of Rs.
1000 a sum of Rs. 500 was to be given back to Tukaram Devsarkar
D and that "no sale deed will be executed". The agreement is very
categorical in envisaging that a sale deed is to be executed only
if both the parties agree to do so and in the event of any one of
them resiling from the same there was to be r.o question of the
other party being compelled to go ahead with the execution of the
sale deed. In the event of the sale deed not being executed Rs.
E
500 in addition to the return of Rs. 1000, was the only sum
payable. This sum of Rs. 500 perhaps represented the amount of
quantified damages or, as the defendants would have it, interest
payable on Rs. 1000.

F 7. If the agreement had not stipulated as to what is to happen in
the event of the sale not going through, then perhaps the plaintiff
could have asked the Court for a decree of specific performance
but here the parties to the agreement had agreed that even if the
seller did not want to execute the sale deed he would only be
required to refund the amount of Rs. I 000 plus pay Rs. 500 in
G addition thereto. There was thus no obligation on Balwantrao to
I-

complete the sale transaction.

Apart from the fact that agreement of sale did not contain a similar
clause, Dadarao (supra) does not create a binding precedent having not
H noticed the statutory provisions as also an earlier binding precedent. (See
P.D'SOUZA v. SHONDRILO NAIDU [SINHA, J.] 199

Government of WB. v. Tarun K. Roy and Others, [2004] l sec 347 para A
26).

The second contention of Mr. Bhat therefore, cannot also be accepted.

The third contention of the learned counsel to the effect that this Court
should not exercise its discretionary jurisdiction in view of hardship which B
would be faced by the defendant is stated to be rejected. Such a plea was
not raised before the High Court.

It is not a case where the d~fendant did not foresee the hardship. It
is furthermore not a case that non-performance of the agreement would not
cause any hardship to the plaintiff. The defendant was a landlord of the C
plaintiff. He had accepted part, payments from the plaintiff from time to -: .··
time without any demur whatsoever. He redeemed the mortgage only upon ..
receipt of requisite payment from the plaintiff. Even in August, 1981, i.e.
just two months prior to the institution of suit, he had accepted Rs. 20,000 · ·
from the Plaintiff. It is, therefore, too late for the Appellant now to suggest D
that having regard to the escalation in price, the Respondent should be
denied the benefit of the decree passed in his favour. Explanation 1
appended to Section 20 clearly stipulates that merely inadequacy of
consideration or the mere fact that the contract is onerous to the defendant
or improvident in its nature would not constitute an unfair advantage within
the meaning of sub-section (2) of Section 20. E
The decision of this Court in Nirmala Anand (supra) may be
considered in the aforementioned context.

Raju, J. in the fact and circumstance of the matter obtaining therein
held that it would not only be unreasonable but too inequitable for courts F
to make the appellant the sole beneficiary of the escalation of real estate
prices and the enhanced value of the flat in question preserved all along
by the respondents No. 1 and 2 by keeping alive the issues pending with
the authorities of the Government and the municipal body. It was in the

., facts and circumstances of the case held : G
"23 ... Specific performance being an equitable relief, balance of
equities have also to be struck taking into account all these
.. relevant aspects of the matter, including the lapses which occurred
and parties respectively responsible therefor. Before decreeing
specific performance, it is obligatory for courts to consider H
200 SUPREME COURT REPORTS [2004] SUPP. 3 S.C.R.

A whethe~ by doing so any unfair advantage would result for the
plaintiff over the defendant, the extent of hardship that may be
caused to the defendant and if it would render such enforcement
--
inequitable, besides taking into (sic consideration) the totality of
circumstances of each case ...."

B The Court for arriving at the 1aid finding gave opportunities to the
parties to settle the matter and the respondents No. I and 2 were prepared
to pay upto Rs. 60 lakhs as against the d~mand of the appellant to the fine
of rupees one and a half crores which was subsequently reduced upto Rs.
120 lakhs. In view of the respective stand taken by the parties, the Court
C inter a/ia directed the respondents No. I and 2 to pay a sum of Rs. 40 lakhs
in addition to the sum already paid by them.

Bhan, J. however, while expressing his dissention in part observed:

"38. It is well-settled that in case of contract for sale of immovable
D property the grant of relief of specific performance is a rule and
its refusal an exception based on val id and cogent grounds.
Further, the defendant cannot take advantage of his own wrong
and then plead that decree for specific performance would be an
unfair advantage to the plaintiff.

E 40. Escalation of price during the period may be a relevant
consideration under certain circumstances for either refusing to
grant the decree of specific performance or for decreeing the
specific performance with a direction to the plaintiff to pay an
additional amount to the defendant and compensate him. It would
depend on the facts and circumstances of each case."
F
The learned Judge further observed that delay in performance of the
contract due to pendency of proceedings in court cannot by itself be a
ground to refuse relief of specific performance in absence ofany compelling
circumstances to take a contrary view. However, the learned judge noticed
G 'the events which occurred subsequent to the passing of the decree and held:

"45. The appellant has always been ready and willing to perform
her part of the contract at all stages. She has not taken any

H
advantage, of\\her· own wrong. The appellant is in no way
responsible for the delay at any stage of the proceeding. It is the -
P.D'SOUZA v. SHONDRILO NAIDU [SINHA, J.] 201

respond!!nts who have always been and are trying to wriggle out A
of the contract. The respondents cannot take advantage of their
own wrong and then plead that the grant of decree of specific
performance would amount to an unfair advantage to the appellant.

46. Requiring the appellant to pay further sum of Rs. 40 lakhs
would/may amount to frustrating the agreement itself as the B
appellant may not be in a position to pay the sum of Rs. 40 lakhs.
Respective counsel for the parties had quoted the figure of a
particular sum which could be paid to the appellant in lieu of
avoiding the decree of specific performance. The appellant had
not made an offer to pay any additional sum over and above the C
quoted price to sell by way of compensation. It does not indicate
the financial position of the appellant to pay the additional sum
of Rs. 40 lakhs. With due respect, in my view, it would be unfair
to grant the decree of specific performance by one hand and take
it back by the other.
D
47. For the reasons stated above, I am of the view that the
appellant is entitled to the specific performance of agreement to
sell the flat No. 71 on the 7th floor of Divya Prabha Building
on the price mentioned in the agreement to sell which would be
subject to the terms (iii), (iv), (v) and (vi) of the last paragraph E
of the judgment of my learned Brother. There would be no order
as to costs.

The said decision cannot be said to constitute a binding precedent to
the effect that in all cases where there had been an escalation of prices the
court should either refuse to pass a decree on specific performance of F
or
contract dfrect the plaintiff to pay a higher sum. No law in absolute terms
to that effe2t has been laid down by this Court nor is diss;ef!lible from the
aforementioned decision. ·.-,.• ·" . " . -
. '~ ~ .

For the reasons aforementioned, we do not find any merit in this
appeal which is accordingly dismissed·:· However, in the facts and G
circumstances of the case, there shall be no order as to the costs.

N.J. Appeal dismissed.