2019 Supreme(Del) 1711

IN THE HIGH COURT OF DELHI AT NEW DELHI
VALMIKI J. MEHTA, J.
Rajender Kumar - Appellant
Versus
Rama Bala Gupta - Respondent
RFA No. 322 of 2017
Decided on : 14-01-2019

A proposed buyer who has paid only a small amount of the total sale consideration as advance payment under the agreement to sell, is not entitled to the discretionary relief of specific performance.

Headnote:

SPECIFIC PERFORMANCE - AGREEMENT TO SELL - FINANCIAL CAPACITY - READINESS AND WILLINGNESS - DISCRETIONARY RELIEF - SPECIFIC PERFORMANCE SUIT - LOSS CAUSED TO PLAINTIFF - INCREASE IN PROPERTY PRICES - SECTION 16(C) OF THE SPECIFIC RELIEF ACT, 1963 - SECTION 20 OF THE SPECIFIC RELIEF ACT, 1963 - SECTION 73 OF THE INDIAN CONTRACT ACT, 1872.

Fact of the Case:

The appellant/plaintiff entered into two agreements with the respondent/defendant, one being an Agreement to Sell and another being an Memorandum of Understanding (MOU). The respondent/defendant denied that the parties had entered into any agreement to sell. The respondent/defendant contended that parties had actually only entered into a loan transaction whereby the respondent/defendant had taken a sum of Rs. 4 lakhs from the appellant/plaintiff as loan and was to return a sum of Rs. 4.50 lakhs by 18.08.2008, with the amount of Rs. 50,000/- comprised in a sum of Rs. 4.50 lakhs being towards the interest payable. The suit was therefore prayed to be dismissed.

Finding of the Court:

The trial court held that there was indeed an Agreement to Sell between the parties and simultaneously the respondent/defendant agreed under the second agreement being the MOU that in case the Agreement to Sell does not go through, then in such a situation the respondent/defendant will refund the sum of Rs. 4.50 lakhs, received by the respondent/defendant, to the appellant/plaintiff, as received under the Agreement to Sell. The trial court has rightly held that the appellant/plaintiff has miserably failed to prove his financial capacity because self-serving ipse dixit averment of the appellant/plaintiff having the balance sale consideration in cash would not discharge the onus of proof upon the appellant/plaintiff. The trial court has exhaustively and very correctly considered these aspects by referring to Section 16(c) of the Specific Relief Act and the judgments passed by this Court. The appellant/plaintiff is not entitled to the relief of specific performance as the appellant/plaintiff has not only has failed to prove his financial capacity and which is a sine qua non under Section 16(c) of the Specific Relief Act, but also the appellant/plaintiff cannot be granted the relief of specific performance which is a discretionary relief as the appellant/plaintiff has admittedly paid only about 17% of the total sale consideration as advance.

Issues: 1. Whether the transaction between the parties was that of a loan and not of agreement to sell? OPD. 2. Whether the agreement to sell was contingent upon the plaintiff getting a housing loan sanctioned and if so, to what effect? OPD. 3. What is the effect, if any, of issuance of the cheque for Rs.4.50 lac by the defendant in favour of the plaintiff? OPP. 4. Whether the plaintiff has been ready and willing to perform his part of the agreement to sell? OPP. 5. Whether the discretion in the grant of the relief of specific performance is to be exercised in favour of the plaintiff? OPP.

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. A plaintiff in a suit for specific performance must also lead evidence with respect to the rise in the prices of the property, so that when a breach of contract is proved by the respondent/defendant, then in such a case, the court can grant monetary damages on the principles of Section 73 of the Indian Contract Act, 1872.

Final Decision: Appeal dismissed.