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2018 Supreme(Del) 3166
IN THE HIGH COURT OF DELHI AT NEW DELHI
VALMIKI J. MEHTA, J.
Jitender Kumar - Appellant
Versus
Vijender Kumar - Respondent
RFA No. 275 of 2014
Decided On : 12-11-2018
For the Appellant :Mr. B.S. Mathur, Mr. Rajat Mathur and Mr. Divyank Tyagi, Advocates.
For the Respondents:Mr. Tarun Diwan, Advocate.
The discretionary relief of specific performance may be denied if the proposed purchaser fails to prove financial capacity and readiness to perform the contract, especially when only a nominal amount is paid out of the total sale consideration.
Headnote:
Specific Performance - Agreement to Sell - Code of Civil Procedure, 1908 - Section 96 - Suit for specific performance filed by the respondent/plaintiff - Appellant/defendant directed to execute the sale deed after taking necessary permissions - Financial capacity of proposed purchaser to pay balance sale consideration - Supreme Court's interpretation of Section 16(c) of the Specific Relief Act, 1963 - Financial capacity must exist from the time of entering into the agreement to sell till disposal of the suit - Self-serving statements cannot prove financial capacity - Grant of specific performance is a discretionary relief - Payment of nominal consideration does not entitle grant of specific performance - Court's discretion to grant specific performance - Plaintiff's readiness and willingness to perform - Discretionary relief of specific performance not granted due to lack of financial capacity and nominal payment of consideration
Fact of the Case:
The suit involved an agreement to sell a property, with the respondent/plaintiff claiming specific performance and damages for breach of contract. The appellant/defendant contested the suit, denying execution of the agreement and alleging breach of contract by the respondent/plaintiff.
Finding of the Court:
The court found that the respondent/plaintiff failed to prove financial capacity to pay the balance sale consideration and was guilty of breach of contract. The court rejected the argument for damages due to lack of evidence on the market price of the property. The appellant/defendant's offer to pay an additional amount to the respondent/plaintiff was not accepted.
Issues: The issues included valuation of the suit, enforceability of the agreement to sell, entitlement to specific performance, entitlement to permanent injunction, and relief.
Ratio Decidendi: The court held that the respondent/plaintiff's lack of financial capacity and nominal payment of consideration did not entitle grant of specific performance. The court exercised discretion to deny specific performance due to the plaintiff's failure to prove readiness and willingness to perform the contract.
Final Decision: The appeal was allowed, the impugned judgment was set aside, and the suit of the respondent/plaintiff was dismissed. Each party was left to bear their own costs.
VALMIKI J. MEHTA, J.
1. This Regular First Appeal under Section 96 of the Code of Civil Procedure, 1908 (CPC) is filed by the defendant in the suit impugning the Judgment of the trial court dated 28.05.2014 by which the trial court has decreed the suit for specific performance filed by the respondent/plaintiff and has ordered the appellant/defendant to specifically perform the Agreement dated 19.02.2004 and execute the sale deed in favour of the respondent/plaintiff with respect to one fourth share out of land bearing no. Lal Dora Hakdar No.1031 to 1086 out of Khasra Nos. 108/451(0-06), 323 (0-06), 106/94 (1-06), 95 (1-08), 93 (2-02), land situated in extended Lal Dora and agricultural land out of Khasra No. 86/9 min (2-10), situated in the Revenue Estate of Village Khera Kalan, Delhi.
2. The appellant/defendant has been directed to execute the sale deed after taking the necessary permissions from the requisite competent authorities on the respondent/plaintiff paying the balance sale consideration of Rs. 10,50,000/-.
3. The facts of the case are that the parties entered into an Agreement to Sell dated 19.02.2004 whereby the appellant/defendant agreed to sell his one fourth share out of various Khasra numbers situated in the Revenue Estate, Village Khera Kalan, Delhi to the respondent/plaintiff. The total area in question was 7 bighas 18 biswas i.e. approximately 7900 sq. yds of land. The total sale consideration of the suit property was fixed at Rs. 11,00,000/- of which the respondent/plaintiff paid a sum of Rs. 50,000/- as earnest money and for this, a Receipt dated 19.02.2004 was executed by the appellant/defendant. It was pleaded that appellant/defendant had failed to perform the contract within the stipulated period up to 18.05.2004, thus, the subject suit for specific performance was filed. It was also pleaded in the suit plaint that the respondent/plaintiff sent a Legal Notice dated 07.05.2004 stating that the respondent/plaintiff would be present before the Sub-Registrar at Pitampura on 14.05.2004 at 11:00 am along with the balance sale consideration of Rs. 10,50,000/-, but the appellant/defendant failed to turn up at the office of the Sub-Registrar for executing the sale deed. The suit for specific performance was hence prayed to be decreed. In the alternative, the respondent/plaintiff claimed a decree for damages for a sum of Rs. 11,00,000/- along with interest at 18% per annum.
4. The appellant/defendant contested the suit by filing a written statement. It was pleaded that it was the respondent/plaintiff who was guilty of breach of contract. It was also pleaded that a co-sharer cannot sell his undivided share. The appellant/defendant also denied execution of the agreement to sell. It was pleaded that there was no reason why a property worth crores of rupees could be sold by the appellant/defendant for a sum of Rs. 11,00,000/- only. The appellant/defendant even denied receipt of the sum of Rs. 50,000/- towards earnest money which was paid by the respondent/plaintiff to the appellant/defendant under the subject Agreement to Sell.
5. After pleadings were complete, the trial court framed issues:-
“(1) Whether the suit has been properly valued for the purpose of court fee and jurisdiction? (OPP).
(2) Whether the agreement to sell dated 19.02.2004 of the suit property is unlawful an unenforceable? (OPD)
(3) Whether the plaintiff is entitled to decree of specific performance of agreement to sell against defendant? (OPP)
(4) Whether the plaintiff is entitled to decree of permanent injunction as has been claimed in his suit? (OPP)
(5) Relief.”
6. In a suit for specific performance, a proposed purchaser must necessarily prove his financial capacity, and which is a sine qua non as per Section 16(c) of the Specific Relief Act, 1963. Section 16(c) of the Specific Relief Act requires that a proposed purchaser must always be and continue to be ready and willing to perform his part of the contract. Readiness has been interpreted to m
