A contractual provision for liquidated damages does not automatically bar a decree for specific performance; courts may exercise discretion to grant specific performance based on equitable principles, part performance, and the defendant's notice of the prior agreement, notwithstanding minor evidentiary or procedural irregularities.

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MANDEEP PANNU, J (ORAL)

1. This Regular Second Appeal has been preferred by the appellant–defendant No.2 against the judgment and decree dated 21.02.2000 passed by the learned District Judge, Amritsar, whereby the judgment and decree passed by the learned Civil Judge (Senior Division), Tarn Taran, dated 02.02.1998, were set aside and the suit of the plaintiff–respondent for possession by way of specific performance of the agreement to sell dated 10.05.1992 was decreed.

Brief facts

2. The brief facts giving rise to the present appeal are that the plaintiff Raghbir Singh filed a suit for specific performance of an agreement to sell dated 10.05.1992, allegedly executed by defendant No.1 Gurmej Singh in his favour, in respect of land measuring 7 kanals 12 marlas comprised in Khasra No. 10/20, Khata No. 11/31, as per Jamabandi for the year 1991–92, situated in village Nathoke, Tehsil Tarn Taran. The total sale consideration was ₹80,750/–, out of which ₹15,000/– was paid as earnest money at the time of execution of the agreement. It was agreed that the sale deed would be executed on or before 15 Katak 2049 and 30 Katak 2050, upon payment of the balance sale price. The plaintiff alleged that he was always ready and willing to perform his part of the contract and had even filed a suit for permanent injunction on 27.09.1993 when defendant No.1 threatened to alienate the suit property to another person. Despite the pendency of the said proceedings and knowledge of the agreement, defendant No.1 executed a sale deed dated 30.09.1993 in favour of defendant No.2, Swinder Singh, which according to the plaintiff was without consideration and collusive. Hence, the present suit was filed for specific performance, or in the alternative, for recovery of ₹30,000/– being double the amount of earnest money as stipulated in the agreement.

3. Defendant No.1 Gurmej Singh, in his written statement, admitted execution of certain sale deeds in favour of defendant No.2 and pleaded that he had never executed any agreement to sell the suit land in favour of the plaintiff. He further averred that he had executed an agreement to sell dated 16.02.1992 in favour of defendant No.2 for a consideration of ₹49,000/–, out of which ₹6,000/– was received in cash, ₹23,000/– was adjusted towards a prior mortgage, and the balance along with the cost of stamp papers was paid later.

4. Defendant No.2, in his separate written statement, supported this version, pleaded that the suit was bad for misjoinder of parties, and asserted that he was a bona fide purchaser for valuable consideration without notice of any prior agreement, being protected under Section 41 of the Transfer of Property Act, 1882.

5. The plaintiff filed replication denying all the preliminary objections and reiterating the averments made in the plaint.

6. Upon completion of pleadings, the learned trial court framed the following issues:

(i). Whether the defendants had executed an agreement to sell dated 10.05.1992 in favour of the plaintiff as alleged in the plaint? OPP

(ii). If issue No.1 is proved, whether the plaintiff was ready and willing and still ready and willing to perform his part of the contract? OPP

(iii). Whether the plaintiff is entitled to a decree for specific performance of the contract dated 10.05.1992 and in the alternative, a decree for recovery of ₹30,000/–? OPP

(iv). Whether the suit is bad for misjoin