IMPORTANT POINT
In this case Trial Court rightly declined to grant a decree for specific performance in favour of plaintiff u/s. 20(2)(b) of Specific Relief Act, 1963 despite breach by dependant. The appellate Court should not have reversed the decision in law. The respondent is not entitled to a decree of specific performance of the contract.

Headnote:(i) Specific Relief Act, 1963-Section 20(2)-Breach of agreement but when Court will not exercise its discretion to grant specific relief ?-Case law discussed.
       Held : The jurisdiction to decree specific relief is discretionary and the court can consider various circumstances to decide whether such relief is to be granted. Merely because it is lawful to grant specific relief, the court need not grant the order for specific relief; but this discretion shall not be exercised in an arbitrary or unreasonable manner. Certain circumstances have been mentioned in Section 20(2) of the Specific Relief Act, 1963 as to under what circumstances the court shall exercise such discretion. If under the terms of the contract the plaintiff gets an unfair advantage over the defendant, the court may not exercise its discretion in favour of the plaintiff. So also, specific relief may not be granted if the defendant would be put to undue hardship which he did not foresee at the time of agreement. If it is inequitable to grant specific relief, then also the court would desist from granting a decree to the plaintiff. (Para 7)
       (ii) Specific Relief Act, 1963-Section 20(2)(b)-Appellant agreeing to sell two mortgaged properties to respondent-Default by appellant Trial Court still dismissed the suit on ground that appellant would be put to great hardship if it was decreed-High Court reversed it on ground that Section 20(2)(b) was not attracted-Whether Trial Court was right or High Court? (The former)-Directions given-Appeal allowed accordingly.
       After discussing facts and procedural facts held : Granting of specific performance is an equitable relief, though the same is now governed by the statutory provisions of the Specific Relief Act, 1963. These equitable principles are nicely incorporated in Section 20 of the Act. While granting a decree for specific performance, these salutary guidelines shall be in the forefront of the mind of the court. The trial Court, which had the added advantage of recording the evidence and seeing the demeanour of the witnesses considered the relevant facts and reached a conclusion. The appellate court should not have reversed that decision disregarding these facts and, in our view, the appellate court seriously flawed in its decision. Therefore, we hold that the respondent is not entitled to a decree of specific performance of the contract. (Para 15)
       Held further : The respondent-plaintiff had advanced a sum of Rs. 42,000/- as early as on 1.5.1977. She had also parted with Rs. 4,000/- subsequently. We hold that she is entitled to refund of these amounts with reasonable interest. We direct that the respondent-plaintiff will be entitled to get the total amount of Rs. 46,000/- (Rs.42,000/- + Rs.4,000/-) with 14 percent interest from the date of payment of the amount till the date of realisation. There shall be a charge for this amount on the plaint schedule property. The respondent would be at liberty to enforce the decree against the appellant and his property, in case the appellant fails to re-pay the said sum of Rs. 46,000/- with 14 per cent interest. (Para 16)
       Held finally : The appeals stand disposed of with the aforesaid directions. Parties on either side to bear their respective costs. (Para 17)

JUDGMENT

K.G. Balakrishnan, J.-Leave granted.

2. Defendant in a suit for specific performance is the appellant before us. The appellant and the respondent plaintiff entered into an agreement on 1.5.1977 whereby the appellant agreed to sell his RCC building with appurtenant land for a consideration of Rs. 85,000/-. The respondent paid a sum of Rs. 42,000/- as advance. The plaint schedule property was outstanding on two mortgages - one in favour of the Karnataka Government and another in favour of Pragathi Co-operative Bank Ltd. The appellant was also liable to pay a sum of Rs. 8,000/- to one Lakshmamma. In the agreement, it was stated that the appellant intended to sell the property to clear the loans outstanding in respect thereof. No time limit was stipulated for execution of sale deed. The plaint schedule house was in occupation of a tenant. According to the respondent, the appellant again executed another agreement on 10.12.1977 wherein some more terms and conditions were incorporated. As per that agreement, the appellant was to execute the sale deed on or before 16.1.1978. The respondent alleged that she had all along been ready and willing to perform her part of the contract but the appellant failed to execute the sale deed on 16.1.1978 though she was present in the Sub-Registrar s Office for execution of sale deed. The respondent filed a suit within a week thereafter and sought for specific performance of the contract.

3. The appellant contended that the respondent was not entitled to seek specific performance. He admitted the agreement entered into by him on 1.5.1977, but alleged that the consideration agreed to by him was Rs. 98.000/- and not Rs. 85.000/-. The appellant also alleged that the City Improvement Trust Board had not granted permission to sell the property and that he could not get the income tax clearance certificate from the competent authority for the sale of the property. He also alleged that the respondent resiled from the contract and requested for refund of the advance amount and that in that behalf she wrote two letters on 27.9.1977 and 1.11.1977. The appellant further alleged that the respondent wanted to revoke the agreement dated 1.5.1977 and for that purpose the respondent and her husband took the appellant to their tax consultant where the appellant was forced to sign certain papers. The appellant alleged that the agreement dated 10.12.1977 was vitiated by coercion and threat.

4. The trial Court declined to grant the decree for specific performance and dismissed the suit though the court held that there was no evidence to prove that the agreement dated 10.12.1977 was vitiated by coercion. The trial court noticed that the appellant was to retire from service and that he was not having funds to purchase another house and that he had not obtained the requisite permission under the Urban Land Ceiling Act and also had not obtained the income tax clearance certificate. The trial court held that the agreement dated 1.5.1977 was executed with a view to discharge some debts of the appellant and he wanted to move to a small house elsewhere. It was also noticed that the appellant was not keeping good health and voluntarily retired from service. Considering the overall circumstances of the case, it was noted by the trial court that the appellant would be put to great hardship in case the relief of specific performance was granted to the plaintiff.

5. The respondent filed an appeal before the High Court and the appellate court decreed the suit as prayed for. According to the appellate court, mere inadequacy of consideration, or the mere fact that the contract is onerous to the defendant or improvident in its nature, would not be deemed to constitute an unfair advantage and the ingredients of clause (b) of Section 20(2) of the Specific Relief Act (1963) are not attracted. On this premise, the appeal filed by the respondent was allowed.

6. We heard the learned counsel for the appellant as also lear

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2001 Supreme(SC) 1077

Cases Referred (4)