IMPORTANT POINTS
(1) Agreement to Sell – Suit for Specific Performance cannot be based upon an agreement which is legally unenforceable.
(2) Doctrine of Severability – Court cannot remove essential part of an agreement or very object for which it was executed.

JUDGMENT :

ARAVIND KUMAR, J.

1. The Appellant before this Court is the unsuccessful Plaintiff in a suit¹ [Suit No. 1669 of 1989, hereinafter referred to as the Suit] for Specific Performance and the Respondent is the Defendant in the suit. (The parties hereinafter are referred to by their respective ranks in the suit.) The Single Judge² [Hereinafter referred to as the Trial Court] of the Delhi High Court³ [Hereinafter referred to as the High Court] had decreed the suit filed by the Plaintiff against the Defendant, directing the Defendant to execute a Registered Sale Deed in favor of the Plaintiff, based on the Agreement to Sell⁴ [Hereinafter referred to as the Agreement] dated 27.12.1984. This judgment and decree of the Trial Court was challenged in RFA (OS) No. 47 of 2009 by the Defendant before the Division Bench of the High Court which came to be allowed by the impugned order dated 08.05.2012 and dismissed the Plaintiff’s suit with respect to specific performance. However, directed the refund of the consideration already paid by the Plaintiff. This order of the Division Bench of the High Court is now assailed before this Court in the present appeal by the plaintiff.

BRIEF FACTS:

2. The plaintiff and defendant entered into an agreement to sell dated: 27.12.1984, wherein the defendant agreed that he would sell the property bearing Plot No. 9, Block B, East of Kailash⁵ [Hereinafter referred to as the Schedule Property] for a sum of Rs. 32,07,500. According to the Agreement the Defendant was responsible for construction of 8 (eight) flats on the schedule property in following terms:

SCHELDULE - I:

(A) 2(Two) Flats of approximately 1000 sq. ft. in Ground floor.

1 (one) flat of approximately 1000 sq. ft. in Mezzanine floor.

2 (Two) Flats of approximately 1000 sq. ft. in first floor.

2 (Two) Flats of approximately 1000 sq. ft. in Second floor.

1 (One) Flat of approximately 1000 sq. ft. in Third/Barsati floor.

(B) Basement of approximately 1950 sq. ft. The actual covered area will be determined after the construction is completed in all respects and the flats are ready for occupation legally.

3. Disputes arose between the parties regarding the Registration of the agreement and therefore the Plaintiff filed a Suit for Specific Performance, contending the following:

3.1. In December 1984, the plaintiff entered into an agreement with the defendant for purchase of residential flats to be constructed on a plot in East of Kailash, Delhi, at a total consideration of Rs. 32,07,500/- of which about 90% (Rs. 28,86,750/-) was paid by the plaintiff. The defendant was obligated to complete construction within 18 months, with an additional six-month grace period, obtain all necessary statutory approvals, and hand over possession of the flats. The agreement also provided for payment of damages at Rs. 1,000/- per day for delays and allowed the plaintiff to complete unfinished work at the defendant’s cost if necessary.

3.2. The defendant failed to complete the construction or hand over possession despite repeated requests, allegedly abandoning the project. The plaintiff contends that the defendant’s claimed difficulties with their contractor are irrelevant, as construction and delivery were solely the defendant’s responsibility. The Plaintiff contends that the mere monetary compensation is inadequate given the purpose of the flats for officers and public interest.

4. On service of summons, the Defendant appeared before the Court and filed his Written Statement contending the following:

4.1. The Agreement to Sell (27.12.1984) was not a genuine sale but a cover for a loan transaction executed under the assurance of the plaintiff bank’s officers, with an understanding that advances would be repaid with 18% interest. The defendant contended the agreement was obtained under undue influence and coercion, as he was in urgent need of funds, indebted to the bank, and had no real freedom to negotiate terms.

4.2. The agreement imposed unfair conditions such as low conside