MR. JUSTICE S.RAVINDRA BHAT, J (OPEN COURT)

1. Through this application, the defendant seeks rejection of the suit.

2. The plaintiff sues for a decree for specific performance. The brief facts necessary to decide the case are that the parties entered into an agreement to sell dated 06.11.2006 in respect of the first floor of property being A-39, East of Kailash, New Delhi. The total consideration indicated in the pleadings is Rs. 25 lakhs. The plaintiff claims to have paid sum of Rs. 3 crores in fulfillment of the agreement and alleges having approached the defendant for execution of the sale deed but faced resistance. Alleging these facts, the plaintiff approached this Court.

3. Initially, the plaintiff had sought damages as an additional and alternative relief. By an amendment, that relief was given-up; the Court recorded the plaintiff’s position that such reliefs were given-up with prejudice on 10.05.2010.

4. The defendant contends, on the basis of the decision of the Supreme Court in Dadarao and Anr. v. Ramrao and Ors. 1999 (8) SCC 416 that wherever such an agreement postulates a consequence in monetary terms, the suit seeking specific performance of the agreement is not maintainable. The defendant particularly relies upon the following observations in Dadarao and Anr.:

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6. The relationship between the parties has to be regulated by the terms of the agreement between them. Whereas the defendants in the suit had taken up the stand that the agreement dated 24th April, 1969 was really in the nature of a loan transaction, it is the plaintiff who contended that it was an agreement to sell. As we read the agreement, it contemplates that on or before 15th April, 1972 the sale deed would be executed. But what is important is that the agreement itself provides as to what is to happen if either the seller refuses to sell or the purchaser refuses to buy. In that event the agreement provides that in addition to the earnest money of Rs. 1,000 a sum of Rs. 500 was to be given back to Tukaram Devsarkar and that "no sale deed will be executed". The agreement is very categorical in envisaging that a sale deed is to be executed only if both the parties agree to do so and in the event of anyone of them resiling from the same there was to be no question of the other party being compelled to go ahead with the execution of the sale deed. In the event of the sale deed not being executed, Rs. 500, in addition to the return of Rs. 1,000, was the only sum payable. This sum of Rs. 500 perhaps represented the amount of quantified damages or, as the defendants would have it, interest payable on Rs. 1,000.

7. If the agreement had not stipulated as to what is to happen in the event of the sale not going though, then perhaps the plaintiff could have asked the court for a decree of specific performance but here the parties to the agreement had agreed that even if the seller did not want to execute the sale deed he would only be required to refund the amount of Rs. 1,000 plus pay Rs. 500 in addition thereto. There was thus no obligation on Balwantrao to complete the sale transaction.

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It is argued that the above ruling has been subsequently followed by this Court in Ashok Aggarwal v. Bhagwan Das Arora 2001 (57) DRJ 241.

5. The plaintiff resists the application and relies upon Section 23 of the Specific Relief Act. He relies upon three rulings of the Supreme Court. In M.L. Devender Singh and Others v. Syed Khaja 1973 (2) SCC 515, the Court, after discussing the said provision (which states that contract may be enforced despite the sum named by the parties as the amount to be paid in case of its prejudice), if it is satisfied why such an amount was named only for the purpose of securing performance of the contract, held that in every case of specific performance involving such agreement, the Court has to inquire and satisfy itself as to the true intention of the parties, having regard to that provision, i.e. Sectio

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