2022 Supreme(SC) 852

SUPREME COURT OF INDIA
N. V. Ramana, CJI., Krishna Murari, Hima Kohli, JJ.
Smt. Katta Sujatha Reddy & Anr. – Appellants
Versus
Siddamsetty Infra Projects Pvt. Ltd.& Ors. – Respondents
Civil Appeal No. 5822 of 2022 (arising out of SLP (C) No. 13565 of 2021
With
Siddamsetty Infra Projects Pvt. Ltd. – Appellants
Versus
Debbad Visweswara Rao (Dead, Through Lrs) & Ors – Respondents
Civil Appeal No. 5823 of 2022 (arising out of SLP (C) No. 19920 of 2021
With
Debbad Srinandhan Rao & Ors. – Appellants
Versus
State of Telangana & Ors. – Respondents
Civil Appeal No. 5824 of 2022 (arising out of SLP (C) No. 19286 of 2021
Decided On : 25-08-2022

IMPORTANT POINTS
(1) Agreement to sell – When a condition of a contract is breached and consequences ensue for that breach, a party cannot claim equity to escape such consequences.
(2) It is nature of amendments which determine whether substituted provisions are in realm of procedural or substantive law.

Headnote:

(A) Specific Relief Act, 1963 – Sections 10 and 16 – Contract Act, 1872 – Section 55 – Limitation Act, 1963 – Article 54 – Agreement to sell – Specific Performance of Contract – Contract was strictly conditioned on a time frame – Vendors were entitled to rescind contract as there was a breach of condition (Time was essence) – When a condition of a contract is breached and consequences ensue for that breach, a party cannot claim equity to escape such consequences – Suit filed by purchaser was clearly barred by limitation and no amount of payment of advance could have remedied such a breach of condition – Even on merits, purchaser’s case cannot be countenanced in law – 2018 Amendment Act is prospective and cannot be applied to present set of facts – Purchaser ought to have been vigilant in case at hand to enforce his right and could not have been lackadaisical in his approach – In order to prove readiness and willingness, burden is on purchaser to prove that they were always ready and it is only vendor who refused to perform contract for extraneous considerations – In order to bypass condition of time being the essence, purchaser invoked standard of good faith which prescribes a higher duty of care for parties entering into a contract – Unless such duty is expressly stipulated, good faith standard cannot be implicitly read into any contract – Purchaser was not ready or willing to perform his part of contract within time stipulated and accordingly, specific performance cannot be granted for entire contract. (Paras 34, 35, 36, 38, 39, 57, 58, 59, 63, 65 and 69)

(B) Specific Relief Act, 1963 – Section 12 – Agreement to sell – Part Performance of Contract – There was no inability on part of parties to perform rest of the contract or remaining part was waived – In this case, purchaser breached essential condition of contract which altogether disentitles him to claim specific performance – Claim of purchaser is hit by delay and laches on their part as they did not take appropriate measures within stipulated time and filing of suit was delayed by almost five years – It is an appropriate case for granting relief to purchaser in terms of Section 12 of Specific Relief Act, 1963 as claim of the purchaser is barred by delay, laches and limitation – Contract was breached due to conduct of plaintiff/purchaser who were not willing to perform contract after entering into a time sensitive agreement – Plaintiff had paid only part consideration – Though there is a forfeiture clause in agreement, Court with a view of rendering complete justice between parties, deems it appropriate to direct vendors/appellants to repay the amount with 7.5% interest. (Paras 77, 78 and 79)

(C) Statute Law – Procedural or Substantive – For determination of whether a substituted law is procedural or substantive, reference to nature of parent enactment may not be material – Instead, it is nature of amendments which determine whether they are in realm of procedural or substantive law. (Paras 45, 53 and 54)

(D) Statute Law – Effect of Amendment – Ordinarily, effect of amendment by substitution would be that earlier provisions would be repealed and amended provisions would be enacted in place of earlier provisions from date of inception of that enactment – However, if substituted provisions contain any substantive provisions which create new rights, obligations, or take away any vested rights, then such substitution cannot automatically be assumed to have come into force retrospectively – In such cases, legislature has to expressly provide as to whether such substitution is to be construed retrospectively or not. (Paras 53 and 54)

Facts of the case:

Points in issue are: –

1. Whether trial court is right in holding that time is not the essence of contract and whether same can be attacked by defendants without filing cross objections?

2. Whether trial court is right in not exercising its discretion for granting relief of specific performance?

3. Whether Section 10 of Act as substituted by Act 18 of 2018 is prospective or retrospective in nature?

Findings of Court:

Though there is a forfeiture clause in agreement, this Court with a view of rendering complete justice between the parties, deems it appropriate to direct vendors/appellants to repay said amount with interest @ 7.5% p.a. from the date such payment was made by purchaser to the vendors, till the entire amount is paid back. We further direct the vendors to pay the entire amount to the credit of suit account within six months from date of receipt of a copy of order.

Result : Appeal allowed.