IMPORTANT POINT
Agreement to sell--Agreement was to be executed after permission from competent authority--Permission rejected--Bonafide cause to refuse execution--Rise in price--Damages of 20 lacs to respondent to balance the equities.

Rajive Bhalla, J.:- By way of this Regular Second Appeal, the appellants impugn the judgment and decree, dated 8.11.1994, passed by the Additional District Judge, Ludhiana, decreeing the suit, filed by the respondent, and setting aside the judgment and decree, dated 21.1.1991, passed by the Sub Judge Ist Class, Ludhiana, whereby the suit was dismissed.

2. The plaintiff-respondent filed a suit seeking possession of the property in dispute by way of specific performance of an agreement to sell, dated 12.12.1980. In the alternative, he prayed for the grant of a decree for recovery of Rs.80,000/-, Rs.40,000/- being the earnest money and Rs.40,000/- as damages. The defendants/appellants entered into an agreement to sell, dated 12.12.1980 with the respondent/plaintiff, agreeing to sell land measuring 26 kanals 10 marIas, situated in Ludhiana @ Rs.18/- per square yard. The total sale consideration was fixed at Rs.2,88,540/-. A sum of Rs.40,000/- was received by the appellants as earnest money. As per clause II of the agreement, the appellants were required to execute the sale deed, within a period of 15 days from the date of receipt of permission to sell land from the competent authority under the Urban Land (Ceiling and Regulation) Act, 1976 (for short herein after referred to as “the Urban Land Ceiling Act”). It is averred in the plaint that as the appellants delayed the execution of the sale deed, a registered notice, dated 25.2.1981 was served upon the appellants to complete necessary formalities under the Urban Land Ceiling Act and to intimate the date and time as well as the place for execution of the sale deed. It is also averred that the appellants, instead of replying to the aforementioned notice, sent a notice, dated 4.6.1981 informing the respondent that permission to sell the aforementioned property had been declined by the Urban Land Ceiling Officer, Ludhiana, vide his letter No.1352, dated 27.5.1981 and as they could not execute the sale deed, the appellants, vide letter, dated 31.10.1981, returned the earnest money of Rs.40,000/- by way of demand draft No. 41/10851, dated 29.10.1981.

3. In response to the averments in the plaint, the appellants/defendants filed their written statement pleading that both parties had specifically agreed that the sale deed would be executed within 15 days from the receipt of permission, under the Urban Land Ceiling Act. As permission to execute the sale deed was declined, vide letter, dated 27.5.1981, the appellants were not in a position to execute the sale deed and, therefore, within their rights in refusing to execute the sale deed. It was further asserted that as the appellants were not at fault, the suit be dismissed, as the sale deed had been rendered inexecutable.

4. The respondent/plaintiff filed a replication to the written statement, whereafter the trial Court framed the following issues:-

“1. Whether the plaintiff has been ready and willing to perform his part of the contract? OPP

2. Whether the plaintiff is estopped by his act and conduct from filing the present suit? OPP

3. Whether the plaintiff is entitled to the specific performance of the agreement, dated 12.12.1980? OPP

4. Whether the suit for specific performance is not maintainable as alleged in the preliminary objection No.1?OPD

4A. Whether the plaintiff is entitled to the recovery of Rs.80,000/- as an alternative remedy? OPP"

5. After the parties led their evidence, the trial Court, vide judgment and decree, dated 21.1.1991, declined the prayer for specific performance but accepted the prayer with respect to damages and decreed the suit for recovery of a sum of Rs.48,800/- in favour of the respondent. The trial Court held that parties to the suit were bound by clause II of the agreement, which required the defendants/appellants to obtain permission under the Urban Land Ceiling Act, before executing the sale deed. It was also held that the disputed land was covered by the provisions of the Urban Land Ceiling Ac