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2024 Supreme(Bom) 841

IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD
R. G. Avachat, Neeraj P. Dhote, JJ.
Gulam Ali S/o Ismail Khan and ors. – Petitioners
Versus
Shaikh Kalimulla S/o Sk. Barkatulla and ors. – Respondents
First Appeal No.1180 of 2014, Civil Application No.1244 Of 2024 In First Appeal No.1180 Of 2014 With Civil Application No.5366 Of 2014 In First Appeal No.1180 Of 2014
Decided On : 26-08-2024

Advocates:
Advocate Appeared:
For the Appellant :Mr. A. D. Soman, Advocate
For the Respondent:Mr. P. R. Katneshwarkar, Advocate, Mr. Rajendra S. Deshmukh, Senior Advocate a/w. Mr. Shriram Deshmukh, Advocate i/by. Mr. Devang R. Deshmukh, Advocate, Mr. S. V. Adwant, Advocate

Specific performance requires continuous proof of readiness and willingness, which was found lacking in this case, leading to a dismissal of the claim.

Headnote:(A) Code of Civil Procedure, 1908 - Section 96; Specific Relief Act, 1963 - Section 16 - First Appeal against dismissal of suit for Specific Performance of Contract - Trial Court found that the plaintiff failed to prove readiness and willingness to perform contract - The nature of the Agreement to Sell required performance within six months, making time the essence of the contract - Plaintiff not able to demonstrate financial capacity to fulfill obligations required under contract (Paras 20, 40, 52).

(B) Specific Performance - Equitable remedy - Must be proven by continuous readiness and willingness on the part of the plaintiff - ‘Willingness’ must be inferred from conduct, not mere assertions (Para 23).

(C) Earnest Money - Non-automatic forfeiture - Defendants failed to exercise right of forfeiture which necessitated refund of earnest money to plaintiff along with interest (Paras 49-50).

Facts of the case:
The appeal arises from dismissal of a suit for specific performance where the plaintiff claimed he was ready to purchase property under an Agreement to Sell but was found lacking in demonstrating financial readiness (Para 2).

Findings of Court:
The court found that the plaintiff was neither ready nor willing to perform the contract and the conditions for granting specific performance were not met (Paras 50, 52).

Issues: Whether the plaintiff proved his readiness and willingness to perform under the negotiated contract?

Ratio Decidendi: The court held that specific performance requires clear proof of continuous readiness and willingness, which the plaintiff failed to demonstrate, and reasonable principles of equity dictate the outcome (Para 23).

Result: First Appeal partly allowed; refund of earnest money of Rs.50,00,000/- with interest at 7.5%.

Table of Content
1. factual background of contract dispute (Para 2)
2. emphasizes the nature of the agreement and financial dealings involved. (Para 4 , 12)
3. arguments regarding readiness to perform contract (Para 20 , 21 , 22)
4. legal standards for specific performance contracts (Para 23 , 41)
5. examines plaintiff's conduct and implications of contractual readiness. (Para 37 , 40)
6. outcome and refund order (Para 52 , 54)

JUDGMENT :

NEERAJ P. DHOTE, J.

This is the First Appeal under Section 96 of the Code of Civil Procedure, 1908 (for short, ‘C.P.C.’) against the Judgment and Order dated 21.11.2013 passed by the learned 2nd Jt. Civil Judge, (S.D.), Aurangabad dismissing the Spl. Civil Suit No.390/2011 instituted for Specific Performance of Contract. The operative Order of the impugned Judgment reads as under :

    “. The suit of the plaintiff is hereby dismissed.

    1. The prayer for specific performance of the contract is hereby rejected.

    2. The prayer to refund earnest amount is hereby rejected.

    3. The prayer for compensation is also hereby rejected.

    4. Decree be drawn up accordingly.”

2. The facts, in brief, giving rise to the present Appeal are as follows:

2.1. The Appellants are the Legal Representatives of the original Plaintiff who died during the pendency of the Appeal. The original Plaintiff went before the learned Civil Court with the Plaint that he entered into an Agreement to Sell (Exh.65) with the Defendants on 20.02.2008 in respect of landed property admeasuring 70,000 Sq. Feet, bearing CTS No.20719, out of Survey No.2, situated at Kokanwadi, Aurangabad (hereinafter referred to as the ‘Suit Property’) for the total consideration of Rs.21,52,50,000/- (Twenty One Crore Fifty Two Lakh Fifty Thousand Only) at the rate of Rs.3,075/- (Rs.Three Thousand Seventy Five Only) per Sq. Feet. It was decided to execute the sale-deed within a period of 6 (six) months from the date of agreement. Time was essence of the contract. An amount of Rs.50,00,000/- was paid as the earnest money by the Plaintiff to the Defendants.

2.2. On 18.03.2008, the Plaintiff came across the notice published in the daily newspaper that, Defendant No.2 had already executed an Agreement to Sell with the third party in respect of the Suit Property. The Plaintiff contacted the Defendant Nos.2 and 3, who assured that the issue would be settled and they will execute the sale-deed with the Plaintiff. Though, the Plaintiff repeatedly contacted the Defendants for execution of the sale-deed by accepting balance consideration, the Defendants assured that they will execute the saledeed. By communication dated 26.06.2008 the Plaintiff requested the Defendants to execute the sale-deed in his favour as early as possible and the Defendants requested him to wait for some time. The Defendant No.3 by a reply dated 26.06.2008 showed his readiness to perform his part of contract. Even after the repeated requests by the Plaintiff, the Defendants did not execute the sale-deed. On 20.08.2008 the Plaintiff contacted the Defendants and requested them to complete the transaction before expiry of the stipulated period and the Defendants assured the Plaintiff to complete the transaction on 20.08.2008, however when the Plaintiff went to the office of Sub-Registrar to complete the necessary formalities, the Defendants did not turn up. Therefore, the Plaintiff went to the house of the Defendant No.2. The Plaintiff handed over one communication titled as ‘Samaj Patra’ intimating that he was ready and willing to complete the transaction and he was present for the same on 20.08.2008.

2.3. On 23.10.2008 the Plaintiff came across a notice published in the newspaper issued by Defendant No.2 stating that the Plaintiff failed to perform his part of contract within the stipulated period, to which the Plaintiff replied by a paper publication on 29.11.2008 stating that he was ready and willing to execute the sale-deed. The Defendant Nos.2 and 3 sought some time from the Plaintiff to execute the saledeed. On 3

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