RACHAKONDA NARAYANAversusPONTHALA PARVATHAMMA AND ANR.

                      RACHAKONDA NARA YANA                                           A
                               v.
                 PONTHALA PARVATHAMMA AND ANR.

                              AUGUST 23, 2001

               (V.N. KHARE AND SHIVARAJ V. PATIL, JJ.]                               B


      Specific ReliefAct, 1963-Sec. 12(3)-Specific performance of a part of
contract-Claim for-Plea not raised when the suit was filed but raised only
at the appellate stage-Defaulting Party's inability to perform whole contract C
brought out only at appellate stage-Held, relief of specific performance of
part of contract could be claimed at appellate stage also.

      Code of Civil Procedure, 1908-Sec. 96-Appeal-Nature and scope
of-Held, appeal is a continuation of suit-Appellate court can go into any
question relating to rights of parties which a trial court is entitled to.           D
      Practice and Procedure :

      Plea-Plea regarding.part performance of contract-raising of-Held,
could be raised even at the appellate stage when the fact of defaulting party's
inability to perform whole contract is brought to notice-Specific Relief Act,        E
1963.

       Respondent-defendant executed an agreement to sell two plots of Iand-
Plot A and Plot B-in favour of appellant-plaintiff and a certain sum was paid
as earnest money. Subsequently, the appellant received notice from one 'B'
that he was the real owner of Plot B land and defendant had no right to sell         F
the same. The appellant in turn sent a notice to the defendant for executing
the sale deed. However, the defendant evaded to perform his part of contract.
Consequently the appellant filed a suit for specific performance of agreement
to sell plot A land only after proportionate deduction of the price for plot 'B'
land or in the alternative to substitute the Patta land for the price agreed
between the parties. The trial court dismissed the suit holding that the plaintiff   G
was not entitled to seek enforcement of new contract either by way of
substitution of the patta land or for proportionate deduction of agreed price
of the land.

      Before the first appellate court, for the first time the defendant took        H
                                       71
    72                        SUPREME COURT REPORTS (2001] SUPP. 2 S.C.R.

A   the plea that he had no title in respect of plot B land and the same belonged
    to his wife who had refused to assign the same in his favour. Consequently,
    plaintiff moved an application for amendment of the plaint to the effect that
    he was ready and willing to purchase a plot A land by paying the entire sale
    consideration and was relinquishing his claim in respect of the land contained
B   in Plot B. The first appellate court allowed the amendment and decreed the
    suit in respect of the land comprised in Plot A.

         However, High Court took the view that since the plaintiff did not claim
  benefit under Sec.12(3) of the Specific Relief Act, 1963 and claimed
  performance of only part of the agreement and was not ready and willing to
C perform his part of the whole contract, he was not entitled to decree for
  specific performance of the agreement to sell. Consequently, the second appeal
  was allowed and the suit stood dismissed. Aggrieved, the plaintiff filed the
  present appeal.

          On behalf of the appellant it was contended that the relief under
D Sec.12(3) of the Act can be claimed even at the appellate stage and the High
    Court was wrong in holding that such relief ought to have been claimed when
    the suit was filed.

          On behalf of respondent it was contended that in view of Sec. 16(c) of
    the Act, the plaintiff was to aver in the plaint itself and establish that he had
E   performed or had been ready and willing to perform the essential terms of
    the contract. An amendment to the pleading at a later point of time to bring
    in the statement was to be refused after the parties have gone into evidence.

          Allowing the appeal, the Court

F        HELD : I.I High Court was not justified in holding that the plaintiff
    was not entitled to claim relief under Section 12(3) of the Specific Relief Act,
    1963 at the appellate stage by amendment in the plaint since the claim was
    not made at the time of filing of the suit. 178-EI

          1.2. It is not necessary that relief under Sec.12(3) of the Act has to be
G pleaded in the plaint when the suit is laid out. It can also be taken at the
    appellate stage. An appeal is a continuation of a suit. When an appellate court
    hears an appeal, the whole matter is at large. The appellate court can go into
    any question relating to rights of the parties which a trial court was entitled
    to dispose of provided the plaintiff possesses that right on the date of filing of
H   the suit. [77-E, 78-B-CJ
     RACHAKONDA NARAYANAv. PONTHALA PARVATHAMMA [V.N. KHARE, J)               73

        1.3. If the ingredients of Sec.12(3) are satisfied, the discretionary relief A .
of specific performance is ordinarily granted unless there is delay or laches
or any other disability on the part of other party. In the instant case, for the
first time at the appellate stage, the defendant stated that he had no title in
respect of plot B land which belonged to his wife who had refused to assign
the said plot of land in his favour. Under such circumstances it was open to B
the plaintiff to move for amendment of the plaint pleading therein the
ingredients for part performance of the contract as provided under Sec. 12(3)
of the Act. The plaintiff filed an application for amendment of the plaint
relinquishing his claim in respect of plot B land as well as compensation for
the loss he sustained for non-performance of part of the contract while
agreeing to pay the entire contracted amount. It is not disputed that the C
plaintiff had deposited the entire contracted amount in the trial con rt. Under
such circumstances the first appellate court was justified in allowing the
amendnient of the plaint and thereafter decreeing the suit of the plaintiff.
                                                             [77-D; 77-H; 78-A-DJ

      Kalyanpur Lime Works Ltd v. State of Bihar and Anr., [19541 SCR 958,         D
relied on.

    A.L. Parthasarathi Mudaliar v. Venkata Kondiah Chettiar, AIR (1965)
Madras 188, approved.

      A Treatise on the Specific Performance of Contracts by J.N Pomeroy,          E
referred to.

        CIVIL APPELLATE JURISDICTION               Civil Appeal No. 9166 of
1996.

     From the Judgment and Order dated 20.11.95 of the Andhra Pradesh              F
High Court in L.P.A. No. 148 of 1989.

        A.Subba Rao and A.D.N. Rao for the Appellant.

        S.U.K. Sagar for the Respondents.
                                                                                   G
        The Judgment of the Court was delivered by

      V.N. KHARE, J. This is a plaintiffs appeal. On 12th of December,
1975 defendant No. I executed an agreement to sell two plots of land - plot
A comprising 2 acres patta land and plot B comprising Ac. 1.30 Cents
Sivaijama land for a sum of Rs. 17,900 in favour of the plaintiff. Under the       H
    74                         SUPREME COURT REPORTS [2001) SUPP. 2 S.C.R.

A agreement to sell, a sum of Rs. 2,900 was paid to defendant No. 1 as earnest
  money. Subsequently, one Bhima Naik issued a registered notice to the
  appellant stating therein that he is the owner of the land comprising in plot
  B measuring Ac. 1.30 Cents and that the defendant No. 1 has no right to sell
  the same to the appellant herein. The appellant sent notice to defendant
B No. I for executing the sale deed. However, the defendant evaded to perform
  his part of the contract. It is under such circumstances, on 15.3.76, the appellant
  herein brought a suit for specific performance being OS 19/76 in the court
  of Subordinate Judge, Madanapalle. The plaintiffs case was that the appellant
  always was and is ready and willing to perform his part of the contract. Since
  the title of defendant No. 1 was found to be defective as one Bhima Naik set
C up title on Sivaijama land, hence the plaintiff prayed for specific perfonnance
  of agreement to sell of two acres of patta land only after proportionate
  deduction of the price for the land or in the alternative, substitute the patta
  land for the price agreed upon between the parties. Defendant No. 1 contested
  the suit by filing a written statement. The defendant took the plea that the
  plaintiff cannot seek to enforce a new contract and that the plaintiff under the
D pretext of notice having received by him from Bhima Naik, did not come
  forward to perform his part of the contract and his plea for proportionate
  deduction of the price or in the alternative, substitute the property is untenable
  and the suit is liable to be dismissed. The trial court held that the plaintiff is
  not entitled to seek enforcement of new contract either by way of substitution
E of the patta land or for proportionate deduction of the agreed price of the
  land. The trial court further found that the title set up by Bhima Naik in
  respect of one item of the land did not entitle the plaintiff to vary the contract.
  With the aforesaid finding, the plaintiffs suit was dismissed.

           The plaintiff thereafter filed an appeal before the first appellate court.
F Before the first appellate court for the first time it was stated by defendant
    No. 1 that he has no title in respect of plot B land and the same belonged to
    his wife and she has refused to assign the said land in his favour.

        Under such circumstances, the plaintiff moved an application for
  amendment of the plaint to the effect that the plaintiff is ready and willing
G to purchase Ac. 2 acres of land in plot A by paying the entire sale consideration
  of Rs. 17,900 and further he is relinquishing his claim in respect of the land
  contained in plot B and that he would not claim any compensation. The said
  amendment was allowed by the appellate court. The first appellate court
  having found that defendant No. 1 has no title in respect of land comprising
H in plot B, and the plaintiff is ready and willing to pay up the whole of the
     RACHAKONDA NARAYANA v. PONTHALA PARVATHAMMA [V.N. KHARE, J.]             75
agreed consideration amount, after relinquishing his claim in respect of plot       A
B land and the compensation, the plaintiff is entitled to decree for specific
performance. In that view of the matter, the appeal was allowed and the suit
was decreed in respect of land comprised in plot ·A' measuring two acn~s of
patta land.

       Aggrieved, the defendant preferred a second appeal before the High           B
Court. The High Court was of the view that since the plaintiff did not come
with the suit claiming the benefit of sub-section (3) of Section 12 of the
Specific Relief Act, 1963 (hereinafter referred to as the Act), and claimed
performance of only part of the whole agreement, and therefore he was not
ready and willing to perform his part of the whole contract and thus not            C
entitled for decree for specific performance of the agreement to sell.
Consequently, the second appeal was allowed and the suit stood dismissed.
It is against the said judgment of the High Court, the plaintiff has preferred
this appeal by way of special leave petition.

      Learned counsel for the appellant urged that the relief under sub-section     D
(3) of Section 12 of the Act can be claimed even at the appellate stage and
the High Court committed serious mistake of law in holding that such relief
ought to have been claimed when the suit was filed. Learned counsel appearing
for the respondents contended that in view of Section 16 (c) of the Act, the
plaintiff is to aver and establish that he has perfonned or has been ready and
willing to perform the essential tenns of the contract. The averment has to         E
come in the plaint itself. An amendment to the pleading at a later point of
time to bring in the statement is to be refused after the parties have gone into
evidence.

      On the arguments of the parties, the question that arises for consideration   F
is whether the relief under sub-section (3) of Section 12 of the Act can be
claimed at the appellate stage by amendment in the plaint. We would first
examine whether the plaintiff was entitled to relinquish a portion of his claim
under the agreement at the appellate stage and seek performance of remaining
part of the contract in conformity with Section 12 (3) of the Act when the
plaintiff for the first time came to know that defendant no. 1 has no title in      G
respect of Sivaijama land.

      Pomercy on Specific Performance stated thus :

         "When the vendor's title proves to be defective in some particulars,
        or his estate is different from that which he agreed to convey, or is       H
    76                         SUPREME COURT REPORTS [2001) SUPP. 2 S.C.R.

A           subject to encumbrances or outstanding rights to third persons, or the
            subject-matter generally the land is deficient in quantity, quality or
            value, it is plain that the contract cannot be specifically performed,
            according to its exact terms, at the suit of either party. In such a case
            there are only three possible alternatives for a court of equity to
            pursue, either to refuse this remedy entirely; or to enforce the contract
B           without any regard to the partial failure, compelling the purchaser to
            take what there is to give and to pay the full price as agreed; or to
            decree the conveyance of the vendor's actual interest and allow to the
            vendee pecuniary compensation or abatement from the price,
            proportional to the amount and value of the defect in title or deficiency
c           in the subject matter."

          Sub-section (3) of Section 12 of the Specific Relief Act, 1963 runs as
    under:

            "12(3) Where a party to a contract is unable to perform the whole of
D           his part of it, and the part which must be left unperformed either -

            (a) forms a considerable part of the whole, though admitting of
                compensation in money; or
            (b) does not admit of compensation in money;

E he is not entitled to obtain a decree for specific performance; but the court
    may, at the suit of other party, direct the party in default to perform specifically
    so much of his part of the contract as he can perform, if the other party -

            (i) in a case falling under clause (a), pays or has paid the agreed
            consideration for the whole of the contract reduced by the consideration
F           for the part which must be left unperformed and a case falling under
            clause (b ), [pays or had paid] the consideration for the whole of the
            contract without any abatement; and

            (ii) in either case, relinquishes all claims to the performance of the
            remaining part of the contract and all right to compensation, either
G           for the deficiency or for the loss or damage sustained by him through
            the default of the defendant."

          A perusal of sub-section (3) of Section 12 shows that the first part of
    the said provisions mandates refusal of specific performance of a contract on
    certain conditions. However, latter part of the provisions permits a Court to
H   direct the party in default to perform specifically so much of his part of the




                                                                                           '
    RACHAKONDA NARAYANA v. PONTHALA PARVATHAMMA [V.N. KHARE, J.]              77
contract as he can perform if the other party pays or has paid the agreed A
consideration for the whole of the contract and relinquishes all claims to the
performance of the remaining part of the contract and all the rights to
compensation for the loss sustained by him. If a suit is laid by the other party,
the court may direct the defaulting party to perform that part of the contract
which is performable on satisfying two preconditions, i.e., (i) the plaintiff B
pays or has already paid the whole of the consideration amount under the
agreement and that (ii) plaintiff relinquishes all claims to the performance of
other part of the contract which defaulting party is incapable to perform and
all rights to compensation for loss sustained by him. Thus, the ingredients
which would attract specific performance of the part of the contract, are : (i)
if a party to an agreement is unable to perform a part of the contract, he is C
to be treated as defaulting party to that extent and (ii) the other party to an
agreement must, in a suit for such specific performance, either pays or has
paid the whole of the agreed amount, for that part of the contract which is
capable of being performed by the defaulting party and also relinquish his
claim in respect of other part of contract which defaulting party is not capable
to perform and relinquishes the claim of compensation in respect of loss D
sustained by him. If such ingredients are satisfied, the discretionary relief of
specific performance is ordinarily granted unless there is delay or latches or
any other disability on the part of other party.

       Now, the question is whether relief under Section 12(3) of the Act is E
required to be pleaded in the plaint when the suit is laid or it can also be
taken at the appellate stage. The view taken by the High Court is the readiness
and willingness to perform the terms of the contract by the plaintiff based on
latter part of sub-section (3) of Section 12 must be pleaded in the plaint itself
when the suit is laid and in its absence the relief being discretionary cannot
be granted by amendment of the plaint at the appellate stage. In Kalyanpur F
Lime Works ltd. v. State of Bihar and Anr., [1954] SCR 958, identical
question came up for consideration before the Supreme Court. In the said
case, the apex court held that relief based on Sections 13, 14, 15 and 17 of
the Specific Relief Act, 1877 can be granted at any stage of the litigation. In
A.L. Parthasarathi Mudaliar v. Vertkata Kondiah Chettiar, AIR (1965) Madras G
188, it is held that it is open to plaintiff to relinquish the part of the performance
of the contract after paying the entire consideration of the contracted amount
at the appellate stage of the proceedings if the defaulting party is not capable
to perform the whole of the contract.

      We are in agreement with the statement of law expressed in the aforesaid     H
    78                        SUPREME COURT REPORTS [2001] SUPP. 2 S.C.R.

A decisions. In the present case what we find is that it was for the first time at
  the appellate stage, the defendant no. I stated that he had no title in respect
  of Plot 'B' Sivaijama land which belonged to his first wife and his wife has
  refused to assign the said plot of land in his favour. It is on account of the
  said statement the plaintiff filed an application for amendment of the plaint
B relinquishing his claim in respect of' B' plot of land as well as compensation
  for the loss he sustained for non-performance of part of the contract while
  agreeing to pay the entire contracted amount An appeal is a continuation of
  the suit. When an appellate Court hears an appeal, the whole matter is at
  large. The appellate Court can go into any question relating to rights of the
  parties which a trial Court was entitled to dispose of provided the plaintiff
C possesses that right on the date of filing of the suit. Defendant no. I prior
  to filing of appeal by the plaintiff never informed the plaintiff that his wife
  has refused to assign 'B' plot of land in his favour and he having no title over
  the said plot of land is incapable to perform the whole part of the contract.
  Under such circumstances it was open to the plaintiff to move for amendment
  of the plaint pleading therein the ingredients for part performance of the
D contract as provided under sub-section (3) of Section 12 of the Act. It is not
  disputed that the plaintiff had deposited the entire contracted amount in the
  trial Court. He further relinquished his claim in respect of· B' plot of land as
  well as claim for compensation. Under such circumstances the first appellate
  Court was justified in allowing the amendment of the plaint and thereafter
E decreeing the suit of the plaintiff. We, therefore, find that view taken by the
  High Court in holding that the plea taken by the plaintiff at the appellate
  stage having been not taken at the time of filing of suit, the suit would fail,
   is erroneous. For the aforesaid reasons appeal deserves to be allowed.

          We, accordingly, set aside the judgment under appeal. The appeal is
F   allowed. There shall be no order as to costs.

    S.V.K.                                                       Appeal allowed.