Equitable considerations may lead to the refusal of specific performance, but the plaintiffs may be entitled to compensation for breach of contract.

Headnote:
AGREEMENT - Specific Performance - Agreement dated 17-5-1979 - Section 19 of the Specific Relief Act - Tripartite Agreement dated 5-4-1980 - Clause 21 of the Specific Relief Act
Fact of the Case:

The plaintiffs filed a suit seeking specific performance of an agreement dated 17th May, 1979, for the purchase of a flat and car parking space. The defendants failed to respond to the plaintiffs' letters and subsequently sold the property to the 2nd defendant. The plaintiffs sought interim relief and the suit was decreed in favor of the plaintiffs against defendant No. 1.
Finding of the Court:

The court found that the agreement was valid and subsisting, but refused specific performance due to equitable considerations. The plaintiffs were awarded compensation of Rs. 30,98,425/- with interest at 10% p.a. from the date of filing the suit till payment.
Issues: The court framed and answered several issues, including the validity and enforceability of the agreement, the plaintiffs' readiness to pay the balance amount, the defendants' acquisition of the property, and the plaintiffs' entitlement to compensation.
Ratio Decidendi: The court held that the agreement was valid and subsisting, but refused specific performance due to equitable considerations. The plaintiffs were awarded compensation as they had paid the entire purchase price and the defendants had failed to cancel the agreement or settle with the plaintiffs.
Final Decision: The suit was decreed in favor of the plaintiffs, and defendant No. 2 was directed to pay compensation of Rs. 30,98,425/- with interest at 10% p.a. from the date of filing the suit till payment.

JUDGMENT - AGUIAR A.S., J.: - The plaintiffs have filed the present suit praying that the defendants be ordered and decreed to specifically perform the agreement dated 17th May, 1979 and hand over vacant and peaceful of Flat No. 903, in the building known as "Mahendra Towers", together with a covered car parking space to the plaintiffs. Alternatively, the first defendant be ordered and decreed to pay to the plaintiffs a sum of Rs. 30,98,425/- with further interest, as more particularly set out in particulars of claim at Exhibit M to the plaint. The plaintiffs have also prayed for interim relief by way of injunction restaining the defendants from dealing with or disposing of, transferring, encumbering, using or parting with possession of the said Flat No. 903 or car parking space or any part thereof or inducting any one therein.

2. Briefly stated the facts of the case are that defendant No. 1, a Private Limited Company, engaged in the construction of buildings, is the builder of the building known as Mahendra Towers, on plot of land admeasuring about 3000 sq. fts., situate at 72, Bomanji Petit Road, Cumballa Hill, Bombay 400 026, defendant No. 2 is a statutory body under the Industrial Development Bank of India Act, 1964.

3. By an agreement dated 17th May, 1979 entered into between defendant No. 1 and the plaintiffs, the plaintiffs agreed to purchase and acquire from defendant No. 1, flat No. 903, on the 9th floor of the building known as Mahendra Towers at and for a price of Rs. 2,90,000/-. It is the case of the plaintiffs that the plaintiffs have paid to the 1st defendant, from time to time, the agreed price of the premiss to the tune of Rs. 2,75,500/-, leaving a balance of Rs. 14,500/- to be paid to the defendant No. 1, on the plaintiffs being put in possession of the said flat. The 1st defendant also issued receipts for the amounts paid by the plaintiffs, totalling Rs. 2,46,500/-. Subsequently the plaintiffs by their letter dated 20th February, 1980 forwarded to the 1st defendant a cheque for Rs. 14,500/-, which was duly received by the defendant No. 1. Thereafter, there was further correspondence between the plaintiffs and the defendant No. 1. By letter dated 2nd July, 1980 the plaintiffs brought to the attention of defendant No. 1 that they had paid an amount of Rs. 2,46,500/-. However, no reply was received to the said letter from defendant No. 1. Subsequently the plaintiffs realised that the cheque which was forwarded to defendant No. 1 had not been encashed. The plaintiffs, therefore, send another letter dated 9th August, 1980 bringing the aforesaid facts to the attention of defendant No. 1, who did not care to reply. Thereafter the plaintiffs addressed another letter dated 14th August, 1980 recording the earlier correspondence and asking for confirmation of the statement of the account. To this letter also there was no reply. Subsequently the plaintiffs again by letter dated 1st October, 1980 forwarded to the defendant No. 1 a cheque for Rs. 14,500/- and requested the 1st defendant to send a receipt for the same. There was no reply to this also to this letter. On making enquiries the plaintiffs came to know that both the cheques had not been presented for payment by the 1st defendant.

4. On or about February 1981 the plaintiffs found that the Board of Industrial Development Bank of India- Staff Quarters had been put up on the suit property, whereupon the plaintiffs addressed a letter dated 28th February, 1981 enquiring with the 1st defendant as to when possession would be handed over to the plaintiffs. No reply was sent even to this letter. Thereupon, the plaintiffs by their Advocates letter dated 28th February, 1981 addressed to the 2nd defendants, referred to the aforesaid facts and also to the notice put up on the said premises and called upon defendant No. 2 not to enter into or have any dealings with the 1st defendant in respect of the premises allotted to him.

5. The 2nd defendants by their letter dated 14th May, 1

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