Back
IN THE HIGH COURT OF DELHI AT NEW DELHI
VALMIKI J.MEHTA, J.
M/S Hotz Industries Pvt. Ltd. – Plaintiff
Versus
Dr. Ravi Singh (Since Deceased Through Lrs) & Ors. – Defendants
CS(OS) No. 1261 of 1995
Decided On : 28-02-2018
SPECIFIC PERFORMANCE - AGREEMENT TO SELL - BREACH OF CONTRACT - READINESS AND WILLINGNESS - FINANCIAL CAPACITY - DISCRETIONARY RELIEF - LOSS/DAMAGES - INTEREST - SUIT FOR SPECIFIC PERFORMANCE DISMISSED - MONEY DECREE PASSED.
Fact of the Case:
Plaintiff filed a suit for specific performance of an agreement to sell dated 10.2.1995 with respect to the property bearing no. G-6 (previous no. C-63) Maharani Bagh, New Delhi. Defendant nos. 1 to 3 contested the suit. Defendant no. 4 compromised the matter with the plaintiff. Plaintiff claimed rights under Section 53A of the Transfer of Property Act, 1882 etc with respect to 1/6th share of the defendant no.4 in the suit property, and through the suit the plaintiff claimed decree of specific performance with respect to the balance 5/6th share in the suit property remaining in the defendant nos. 1, 2 and 3.
Finding of the Court:
The court held that there was a valid agreement to sell dated 10.2.1995 entered into between the parties. The court further held that it was the defendants who were guilty of breach of contract and not the plaintiff. However, the court held that the plaintiff was not entitled to the discretionary relief of specific performance as he had failed to show that he had always been and continued to be ready and willing to perform his part of the agreement to sell by having the necessary financial capacity to pay the balance sale consideration. The court also held that the plaintiff was not entitled to any interest on the amount decreed in his favor as he had made the suit property into a disputed property by filing the suit and the defendants were also injuncted by an interim order granted during the pendency of the suit to maintain status quo of the suit property.
Issues: 1. Whether the suit has been signed, verified and instituted by duly authorized person? 2. Whether agreement to sell dated 10.2.1995 was entered into between the parties? 3. Whether W.S. is liable to be rejected for want of verification? 4. Whether draft agreement dated 17.12.1994 can be construed as agreement to sell executed between the parties? If so, its effect? 5. Whether the agreement to sell dated 10.2.1995, Form No. 37-I and receipt of Rs.18 lac is an outcome of fraud, cheating or misrepresentatin as alleged in written statement? 6. Whether the plaintiff has been ready and willing to perform its part of agreement to sell dated 10.2.1995? 7. Whether the plaintiff is entitled to decree for specific performace of agreement to sell dated 10.2.1995? 8. If issue No. 7 is decided against the plaintiff, whether the plaintiff is entitled to refund of the amounts paid to the defendants? 9. Whether the plaintiff is entitled to damages? If so, to what extent? 10. Whether the defendants 2 and 3 are entitled to recover any amount from the plaintiffs as claimed by way of counter claim? If so, to what extent? 11. Whether the plaintiff is entitled to interest? If so, on what amount, at what rate and for what period? 12. Relief.
Ratio Decidendi: 1. A proposed buyer as a plaintiff when only has paid a very limited amount of consideration, then such a plaintiff may not ordinarily be entitled to the discretionary relief of specific performance when the grant of specific performance is being decided after a long period of time having elapsed after entering into the agreement to sell and the suit for specific performance coming up for final disposal. 2. In a suit for specific performance, the plaintiff must always be and continues to be ready and willing to perform his part of the contract for making payment of balance sale consideration. Financial capacity which is to be proved under the term readiness and willingness is not that plaintiff has to show that it had with it liquid moneys, but however it is equally necessary for the plaintiff to show its financial capacity, and having much assets, for being able to pay the balance sale consideration. 3. In a suit for specific performance, merely because there is an agreement to sell, and that the proposed seller is found to be guilty of breach of agreement to sell, yet it does not automatically follow that a proposed buyer is only for that reason entitled to the specific performance of the agreement to sell. In fact, besides the defendants/proposed sellers being guilty of breach of contract, and that even if the proposed buyer/plaintiff proves that there was financial capacity in the plaintiff to pay the balance sale consideration, yet the plaintiff is not necessarily and automatically entitled to specific performance, and this is because the grant of relief of specific performance is a discretion vested in the Court as per Section 20 of the Specific Relief Act.
Final Decision: The suit for specific performance was dismissed. A money decree was passed in favor of the plaintiff for a sum of Rs.18.50 lacs against the defendant no. 1, and against each of the defendant nos. 2 and 3 for a sum of Rs.6.17 lacs. Parties were left to bear their own costs.
VALMIKI J. MEHTA, J.
(DICTATED IN OPEN COURT IN THE PRESENCE OF PARTIES)
1. This is a suit for specific performance of the agreement to sell dated 10.2.1995 with respect to the property bearing no. G-6 (previous no. C-63) Maharani Bagh, New Delhi (herein after referred to as the ‘suit property’) situated on a plot of 800 sq. yards. Plaintiff is the proposed buyer and the four defendants in the suit are the proposed sellers. Defendant no. 1 is the owner of 50% share in the suit property and defendant nos. 2 to 4 are the joint owners of the other 50% share in the suit property.
2. The case pleaded by the plaintiff is that the parties entered into the subject agreement to sell dated 10.2.1995 with respect to the suit property for a total sale consideration of Rs.2.55 crores. At the time of entering into of the agreement to sell in terms of the agreement to sell a total sum of Rs.45 lacs was paid by the plaintiff to the defendants, though it is now the admitted position on record that defendants did not receive a sum of Rs.45 lacs but received only a sum of Rs.37 lacs before the entering into of the agreement to sell. Plaintiff has pleaded that it is the defendants who are guilty of breach of contract and therefore plaintiff should be held entitled to the relief of specific performance as the plaintiff has always been and continues to be ready and willing to perform its part of the contract/agreement to sell including paying the balance sale consideration. Out of the balance sale consideration, as per the agreement to sell a sum of Rs.1 crore was payable by the plaintiff to the defendants when the defendants obtained the necessary clearance from the Income Tax authorities with respect to validity of the subject agreement to sell under the then prevailing provision of Section 269 UC of the Income Tax Act, 1961. Thereafter further sum of Rs.10 lacs was to be deemed to be paid on the tenant M/s. S.M.S. Udyog Limited attorning to the plaintiff as the tenant of the plaintiff in the suit property and plaintiff taking over of the liability of the defendants to pay Rs.10 lacs to the tenant towards the tenant’s security deposit. The balance sale consideration of Rs. 1crore was payable at the time of execution of the sale deed of the suit property in favour of the plaintiff by the defendants. I may note that since only Rs.37 lacs were paid out of the sum of Rs.45 lacs mentioned in the agreement to sell, the balance sale consideration at the time of obtaining of Income Tax clearance or earlier/later would be a sum of Rs.2.18 crores instead of Rs.2.10 crores in terms of the agreement to sell. Plaintiff has pleaded that the suit for specific performance be decreed and the defendants be directed to execute the sale deed of the suit property in favour of the plaintiff and handover possession of the suit property to the plaintiff.
3. Defendant nos. 1, 2 and 3 have contested the suit. It is relevant to at this stage to state that defendant no. 4 in the suit has compromised the matter with the plaintiff thereby defendant no.4 has executed a registered agreement to sell, power of attorney, Will, etc in favour of the plaintiff and this aspect of compromise entered into between the plaintiff and defendant no. 4 is recorded by the Court under Order XXIII Rule 3 CPC in terms of I.A. No. 1014/2005 vide order dated 9.2.2005. I may note that defendant no. 4 was the 1/6th owner of the suit property and by virtue of the compromise entered into by the plaintiff with the defendant no. 4, plaintiff is claiming rights under Section 53A of the Transfer of Property Act, 1882 etc with respect to 1/6th share of the defendant no.4 in the suit property, and through the suit the plaintiff is claiming decree of specific performance with respect to the balance 5/6th share in the suit property remaining in the defendant nos. 1, 2 and 3.
4. Defendant nos. 1 to 3 as per their joint written statement plead that there was no valid agreement to sell entered into between t
AI
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
