2024 Supreme(SC) 933

SUPREME COURT OF INDIA
VIKRAM NATH, PANKAJ MITHAL, PRASANNA B. VARALE, JJ.
Janardan Das & Ors. - Appellants
Versus
Durga Prasad Agarwalla & Ors. – Respondents
Civil Appeal No. 613 of 2017
Decided On : 26-09-2024

IMPORTANT POINTS
(1) Agreement to Sell – Suit for Specific Performance – Specific performance is a discretionary relief and plaintiff must come to court with clean hands.
(2) In contracts involving multiple parties with distinct interests, especially when some parties are absent or not signatories, onus is on plaintiff to ensure that all necessary consents and participations are secured.
(3) An agent's authority must be explicit and any limitations or revocations thereof must be given due consideration.

Headnote:

(A) Specific Relief Act, 1963 – Section 16(c) – Agreement to Sell – Suit for Specific Performance – Plaintiff seeking specific performance of contract must aver and prove that they have performed or have always been ready and willing to perform essential terms of contract which are to be performed by them – This requirement is a condition precedent and must be established by plaintiff throughout the proceedings – Readiness and willingness of plaintiff are to be determined from their conduct prior to and subsequent to filing of suit as well as from terms of agreement and surrounding circumstances – Specific performance is a discretionary relief and plaintiff must come to court with clean hands, demonstrating sincerity and earnestness in fulfilling their contractual obligations – Any laxity, indifference, or failure to perform their part of contract can be a ground to deny such relief. (Para 8)

(B) Specific Relief Act, 1963 – Section 16(c) – Agreement to Sell – Suit for Specific Performance – Suit decreed by High Court reversing order of dismissal passed by Trial Court – Plaintiffs did not take any concrete steps to secure consent or presence of sisters within stipulated period – Plaintiffs continued to operate their petrol pump on suit land without taking proactive steps to complete purchase, suggesting complacency and a lack of urgency – Plaintiffs also did not furnish any evidence to show that they had arranged balance consideration amount or were prepared to pay it upon execution of sale deed – In contracts involving multiple parties with distinct interests, especially when some parties are absent or not signatories, onus is on plaintiff to ensure that all necessary consents and participations are secured – Plaintiffs' passive approach and failure to act proactively undermine their claim of readiness and willingness – Plaintiffs failed to prove their continuous readiness and willingness to perform their part of contract – Plaintiffs' failure to comply with essential terms of agreement and to take necessary steps within stipulated time demonstrates a lack of readiness and willingness, which is fatal to their claim for specific performance – Trial Court rightly concluded that plaintiffs failed to demonstrate continuous readiness and willingness to perform their part of contract. (Paras 9, 12 and 13)

(C) Specific Relief Act, 1963 – Sections 16(c) and 20 – Agreement to Sell – Suit for Specific Performance – In contracts involving multiple owners of property, it is imperative that all co-owners either personally execute agreement to sell or duly authorize an agent to act on their behalf through a valid and subsisting power of attorney – An agent's authority must be clear and unambiguous and any limitations or revocations of such authority must be duly considered – Without proper authority, an agent cannot bind the principals to a contract of sale – High Court disagreed with Trial Court, holding that GPA was valid and in force at the time of agreement – While it is legally permissible for an agent to bind a principal even if agency relationship is not disclosed, this principle applies when agent has valid and subsisting authority – An agent's authority must be explicit and any limitations or revocations thereof must be given due consideration – Plaintiffs' knowledge of necessity of obtaining sisters' consent, coupled with their failure to secure such consent, renders agreement ineffective against Defendants – Plaintiffs failed to demonstrate readiness and willingness to perform their obligations and did not take necessary steps to secure consent of all co-owners – Granting specific performance in this case would be neither just nor equitable – Judgment passed by Trial Court dismissing suit for specific performance restored. (Paras 14, 15, 16, 17, 18, 19, 20, 23, 24 and 25)

Facts of the case:

High Court decreed suit for specific performance filed by plaintiffs (Respondent Nos. 1 & 2 herein), directing defendants, including the present appellants (Defendant Nos. 9 to 11), to execute a sale deed in favour of the plaintiffs. Aggrieved by this decision, defendant nos. 9 to 11 have approached this Court by way of the present appeal.

Findings of Court:

Appellants are directed to refund to plaintiffs (Respondents) a sum of ?10,00,000/- within a period of two months from date of this order. This amount includes earnest money paid by the plaintiffs and accounts for any interest and expenses incurred.

Result : Appeal allowed. Judgment of High Court set aside.