Back
1999 Supreme(Online)(SC) 57
SUPREME COURT
Sujata V. Manohar, *R. C. Lahoti, JJ.
K. Narendra v. Riviera Apartments (P) Ltd.
Civil Appeals Nos. 1928 and 1929 of 1993
Specific performance of a contract can be denied when regulatory constraints render the contract impossible, justifying compensation instead.
Headnote:(A) Specific Relief Act, 1963 - Section 20 - Urban Land Ceiling & Regulation Act, 1976 - The lease terms prohibited unauthorized assignment and construction changes on the property in question. The agreement to sell aimed at constructing multi-storeyed buildings was incapable of execution due to regulatory constraints and time delays in obtaining permissions. The court found that the parties had anticipated timely execution, and the respondents' failure to secure necessary sanctions rendered the agreement void. The rise in land value post-agreement weighed heavily against the feasibility of performance. The court dismissed the suit for specific performance while awarding compensation due to the impossibility of fulfilling the contract. (Paras 23, 36, 39)
Facts of the case:
The appellant leased property to construct a building but later agreed to sell it to the respondents for construction. The respondents failed to obtain the necessary approvals leading to disputes and litigation.
Findings of Court:
The court concluded the agreement was unfeasible due to regulatory restrictions, resulting in a justified refusal of specific performance.
Issues: Whether the agreement to sell is enforceable considering the inability to complete construction due to regulatory hurdles and contractual breaches.
Ratio Decidendi: The court held the impossibility of fulfilling the contract due to external circumstances could negate the right to specific performance, necessitating a compensation award instead.
Result: Appeals allowed; specific performance denied.
1 This common judgment shall govern the disposal of Civil Appeals Nos. 1928 and 1929 of 1993 between the same parties and touching the same property.
2 The property in suit consists of a plot of nazul land known as 6, Tolstoy Marg, New Delhi wherein leasehold rights were vested by the President of India in favour of M/s Shiv Ram, Mahashaya Krishna and K. Narendra (the appellant herein) in terms of a perpetual lease commencing from 29-5-1956. The relevant and material terms of the lease are extracted and reproduced hereunder:
"II. (5) The lessee will not without the previous consent in writing of the lessor or of such officer or body as the lessor may authorise in this behalf make any alternations in or additions to the buildings erected on the said demised premises so as to affect any of the architectural or structural features thereof or erect or suffer to be erected on any part of the said demised premises any buildings other than and except the buildings erected thereon at the date of these presents.
(6) The lessee shall not without the written consent of the lessor or such officer or body as he may authorise in this behalf construct any well of any description, or instal any private system of supplying water whether for irrigation or for drinking.
(7) The lessee will not without such consent as aforesaid carry on or permit to be carried on the said premises any trade or business whatsoever or use the same or permit the same to be used for any purpose other than that of a single storeyed residential building for a private dwelling house for one or two families in all or do or suffer to be done thereon any act or thing whatsoever which in the opinion of the lessor or such officer as he may authorise in this behalf may be an annoyance or disturbance to the President of India or his tenants in the New Capital of Delhi.
(13) The lessee shall before any assignment or transfer of the said premises hereby demised or any part thereof obtain from the lessor or such officer or body as the lessor may authorise in this behalf approval in writing of the said assignment or transfer and all such assignees and transferees and the heirs of the lessee shall be bound by all covenants and conditions herein contained and be answerable in all respects therefor.
* * *
IV. If there shall at any time have been in the option (sic opinion) of the lessor or such officer as may be authorised by him in this behalf whose decision shall be final, any breach by the lessee or by any person claiming through or under him of any of the covenants or conditions contained in sub clauses (5), (9) and (10) of Clause.3 and if the said lessee shall neglect or fail to remedy any such breach to the satisfaction of the lessor or such officer as may be authorised by him in this behalf within seven days from the receipt of a notice signed by the lessor or such officer as may be authorised by him in this behalf requiring him to remedy such breach it shall be lawful for the officers and workmen acting under the authority and direction of the lessor to enter upon the premises hereby demised, and
(a) to remove or demolish any alterations in or additions to the buildings erected on the said premises,
(b) to remove or demolish any buildings erected on the said premises without the previous consent in writing of the lessor or duly authorised officer,
(c) to fill any excavation or carry out any repairs that may be necessary and all such moneys and expenses as may be laid out and incurred by the lessor or by his order shall be paid by the said lessee;
and it is hereby expressly declared that the liberty hereinbefore given is not to prejudice in any way the power given to the President of India by Clause.5 and Clause.6 hereof.
* * *
3 On 25-7-1972, the appellant entered into an agreement to sell, transfer and assign all his rights, title and interest in the said property along with all structures, outho
