1999 Supreme(SC) 684

1999(6) Supreme 8
Supreme Court of India
(From Delhi High Court)
Mrs. Sujata V. Manohar and R.C. Lahoti, JJ.
K. Narendra -Appellant
versus
Riviera Apartments (P) Ltd. -Respondent
Civil Appeal Nos. 1928-1929 of 1993
Decided on 24-5-1999
Counsel for the Parties :
For the Appellant : Manoj Wad, (Ashish Wad), Yashank Adhyaru, Ms. Sushma Chawla, Advocate for Mrs. J.S. Wad, Advocates.
For the Respondent : Shanti Bhushan, Sr. Advocate, Jayant Bhushan, Advocate.

Important point
Mere inadequacy of consideration or the mere fact that the contract is onerous to the defendant or improvident in its nature, shall not constitute an unfair advantage to the plaintiff over the defendant or unforseeable hardship on the defendant so as to deny decree for specific performance.

Headnote:(i) Specific Relief Act, 1963-Section 20-Specific performance-Grant of relief is discretion of Court -Discretion should be reasonably exer­cised guided by judicial principles-Performance of contract involving some hardship on defendant not foreseen, while non-performance involv­ing no hardship on plaintiff is a circumstance in which Court may properly exercise discretion not to decree specific performance-Mere inadequacy of consideration or onerousness of contract cannot be ground to constitute hardship on defendant.

       Held : Section 20 of the Specific Relief Act, 1963 provides that the jurisdiction to decree specific performance is discretionary and the court is not bound to grant such relief merely because it is lawful to do so; the discretion of the court is not arbitrary but sound and reasonable guided by judicial principles and capable of correction by a court of appeal. Performance of the contract involving some hardship on the defendant which he did not foresee while non-performance in­volving no such hardship on the plaintiff, is one of the circumstances in which the court may properly exercise discretion not to decree specific performance. The docrine of comparative hardship has been thus statutorily recognized in India. However, mere inadequacy of consideration or the mere fact that the contract is onerous to the defendant or improvident in its nature, shall not constitute an unfair advantage to the plaintiff over the defendant or unforseeable hardship on the defendant. (Para 29)

       (ii) Specific Relief Act, 1963-Sections 20 and 21-Specific performance-Sale agreement-Agree­ment did not specifically provide for time limit-Plaintiff-builder was to secure sanctions/clearances from Municipal authorities, authorities under ULCRA and Lessor of defendant-seller-Intrinsic evidence avail­able in agreement itself showing intention was to have agreement performed within a period of 2-1/2 to 3-1/2 years-Though more than 7 years lapsed plaintiff’s ef­forts did not materialise-Period lost could not be termed as a rea­sonable period for which defendant could have waited awaiting perform­ance by plaintiff his part of obligations-Plaintiffs neither pleaded nor brought on record material to show that they acted in such a way as to render inequitable denial of specific performance - Fit case not to exer­cise discretionary jurisdiction to decree specific performance-Plain­tiffs awarded compensation equi­valent to money paid by them to defendant.

       Held : There has been a default on the part of the re­spondents in performing their obligations under the contract. The period lost between 25.7.1972 (the date of the agreement) and the years 1979 and 1980 when the litigation commenced, cannot be termed a reasonable period for which the appellant could have waited awaiting performance by the respondents though there was not a defined time limit for performance laid down by the agreement. The agreement con­templated several sanctions and clearances which were certainly not within the power of the parties and both the parties knew it well that they were the respondents who were being depended on for securing such sanctions/clearances. Part of the land forming subject matter of the agreement was an excess land within the meaning of ULCRA and hence could not have been sold. Part of the land has been acquired by the State and to that extent the agreement has been rendered incapable of performance. The feasibility of a multi-storeyed complex as is pro­posed and planned by the respondents appears to be an impracticality. If the respondents would not be able to construct and deliver to the appellant some of the flats as contemplated by the novated agreement how and in what manner the remaining part of consideration shall be offered/paid by the respondents to the appellant is a question that defies answer on the material available on record. Added to all this is the factum of astronomical rise in the value of the land which none of the parties would have forecontemplated at the time of entering into the agreement. We are not in the least holding that the consider­ation agreed upon between the parties was inadequate on the date of the agreement. We are only noticing the subsequent event. Possession over a meagre part of the property was delivered by the appellant to the respondents, not simultaneously with the agreement but subsequent­ly at some point of time. To that extent, the recital in the agreement and the averments made in the plaint filed by the respondents are false. On a major part of the property, the appellant has continued to remain in possession. As opposed to this, the respondents have neither pleaded nor brought material on record to hold that they have acted in such a way as to render inequitable the denial of specific performance and to hold that theirs would be a case of greater hard­ship over the hardship of the appellant. Upon evaluation of the totality of the circumstances, we are of the opinion that the perform­ance of the contract would involve such hardship on the appellant as he did not foresee while the non-perfor­mance would not involve such hardship on the respondents. The contract though valid at the time when it was entered, is engrossed into such circumstances that the performance thereof cannot be secured with precision. The present one is a case where the discretionary jurisdiction to decree the specific performance ought not to be exercised in favour of the res­pondents. At one point of time the contract had stood frustrated by reference to Section 56 of the Contract Act. We do not think that the subsequent events can be pressed into service for so reviving the contract as to decree its specific performance. (Paras 32 & 33)

       The present one is a fit case where the respondents should be awarded some compensation in spite of its spe­cific performance being refused. Section 21 of the Specific Relief Act provides for award of compensation either in addition to or in substi­tution of such performance. The explanation appended to the Section expressly enacts that the Court is not precluded from exercising jurisdiction to award compensation even in a case where the contract has been rendered incapable of specific performance. Compensation to some extent is a matter of guess work. An amount of Rs. 3,25,000/-, equivalent to the amount which was paid by the respondents to the appellant would be a reasonable amount of compensation in the facts and circumstances of the case which in our opinion deserves to be paid by the appellant to the respondents in substitution of the decree for specific performance. (Para 35)

       (iii) Specific Relief Act, 1963-Section 18 - Non-enforcement except with variation-When permissible.

       Held : When the defendant sets up a variation then the plaintiff may have the contract specifically performed subject to the variation so set up only in cases of fraud, mistake of fact or misrepresentation or where the contract has failed to produce a cer­tain legal result which the contract was intended to do or where the parties have subsequent to the execution of the contract varied its terms. (Para 34)

       In the instant case, the plaintiff submitted that in spite of a part area of the property agreed to be transferred having been rendered inalienable by the owner on account of its having been ac­quired by the State and part of the property having been found to be inalienable on account of being in excess of the ceiling limit provid­ed by ULCRA, the res­pondents were prepared to have a sale deed execut­ed of such remaining part of the property as is available to be trans­ferred without insisting on a corresponding reduction in the price agreed to be paid. The learned counsel for the respondents also sub­mitted that the ULCRA having been repealed by the Urban Land Ceiling and Regulation (Repeal) Act, 1999, the hurdle of the land being in excess of the ceiling has been removed and this aspect of the matter has lost its relevance. The Court held that though the plaintiffs may on their part, in the changed circumstances, be agreeable to have even lesser property being transferred to them, but in our opinion that is not permissible. Obviously, the case at hand is not covered by any of the situ­tations contemplated by Section 18 abovesaid. (Para 34)