IMPORTANT POINT
For balancing the equities in a given case, compensation can be awarded in lieu of grant of decree of specific performance of contract.

Headnote:(i) Specific Relief Act, 1963—Section 20—Limitation Act, 1963—Article 54—Suit for specific performance—Period of limitation for filing of—Respondent and Defendant entered into an agreement of sale on 11-4-1983 wherein no time limit was fixed for performance—Defendant also executed a registered deed of sale in favour of appellant on 4-9-1985 where transaction by way of execution of sale deed was to be completed within a period of three months—According to respondent, he had paid Rs. 7,700/- by way of part payment of the entire amount of consideration which was fixed at Rs. 17,000/—Refusal on part of defendant to execute sale deed within a period of 20 days from the date of the agreement for sale dated 11-4-1983—However, notice served on defendant for the first time on 15-9-1986 and not soon thereafter—Appellant has been in possession of suit land—He has dug a well and altered the foundations—Suit for specific performance of contract filed was dismissed by the trial Court—However, on appeal, First Appellate Court decreed the suit—Whether considering facts of the case, exercise of discretionary jurisdiction u/s 20 of the Act was justified—(No)—Judgment passed in favour of respondent may be substituted by a decree directing defendant to refund sum of Rs. 7,700/- with 12% interest thereon from the date of payment till date of realization.
       Held : The Court, in applying the period of limitation, would first inquire as to whether any time was fixed for performance of agreement of sale. If it is so fixed, the suit must be filed within the period of three years, failing which the same would be barred by limitation. Here, however, no time for performance was fixed. It was for the Courts to find out the date on which the plaintiff had notice that the performance was refused and on arriving at a finding in that behalf, to see whether the suit was filed within three years thereafter. (Para 12)
       The 1st Defendant was a friend of the 2nd Defendant. Admittedly, the usual stipulations were knowingly not made in the agreement of sale dated 11.4.1983. The 1st Defendant may or may not be aware about the agreement entered by and between the respondent herein. But he cannot raise a plea of absence of notice of the deed of sale dated 4.9.1985, which was a registered document. Possession of the suit land by the appellant also stands admitted. Registration of a document as well as possession would constitute notice, as is evident from Section 3 of the Transfer of Property Act, 1882.(Para 14)
       Admittedly, father-in-law and wife of the Respondent No.1 had been looking after his affairs. They were, therefore, acting as his agents. They would be deemed to have notice of the registration of the document as also the possession of the appellant herein. If they had the requisite notice, in our opinion, the Respondent No.1., having regard thereto, should have filed a suit for specific performance of contract within the prescribed period. In fact they should have done so expeditiously having regard to the discretionary nature of relief he may obtain in the suit. They did not do so. They waited for more than two years from the date of execution of deed of sale. Even if the suit was not barred by limitation on that account, it was a fit case, where the Court should have refused to exercise its discretionary jurisdiction under Section 20 of the Specific Relief Act, 1963.(Para 15)
       But before we advert to the said question, we may consider the effect of refusal on the part of the 2nd Defendant to execute the deed of sale within 20 days from the date of entering into the said agreement for sale. We have noticed hereinbefore that father-in-law of the Respondent No.1 categorically stated that he, at all material times, he was aware that the 2nd Defendant was refusing to execute the agreement of sale. They had, therefore, the notice, that the defendant no.1 had refused to perform his part of contract. The suit should have, in the aforementioned situation, been filed within three years from the said date. We are not oblivious of the fact that performance of a contract may be dependent upon several factors. The conduct of the parties in this behalf is also relevant. The parties by their conduct or otherwise may also extend the time for performance of contract from time to time, as was noticed by this Court.(Para 16)
       In that view of the matter, the suit ought to have been filed by 1st May, 1986. The suit was filed on 22.9.1987 and therefore, it was barred by limitation.(Para 17)
       Furthermore, the appellant is in possession of the said land. He had dug a well. He had made improvement on the suit land. Digging of well as also making improvements was within the notice of the respondent. The witnesses examined on his behalf had categorically admitted the same. In that view of the matter too, in our opinion, it was a fit case where the discretionary jurisdiction of the Court under Section 20 of the Specific Relief Act should not have been exercised and, instead, monetary compensation could be granted.(Para 18)
       (ii) Limitation Act, 1963—Article 54—Suit for specific performance—Period of limitation—Where any time was fixed for performance of agreement of sale—Suit must be filed within the period of three years, failing which the same would be barred by limitation—Where no time for performance was fixed—It was for the Courts to find out the date on which the plaintiff had notice that the performance was refused and on arriving at a finding in that behalf, to see whether the suit was filed within three years thereafter.(Para 12)
       (iii) Transfer of Property Act, 1882 —Section 3—Notice—Transaction relating to immovable property—Registration of a document as well as possession would constitute notice.(Para 14)
       (iv) Specific Relief Act, 1963—Section 20—Specific performance of contract—Time period for performance of contract—Conduct of parties in this behalf is relevant—Parties by their conduct or otherwise may also extend the time for performance of contract from time to time.(Para 16)
       (v) Specific Relief Act, 1963—Section 20—Specific performance of contract—Award of compensation in lieu of grant of decree of specific performance of contract for balancing equities in a given case.(Para 19)

JUDGMENT

S.B. Sinha, J.—Appellant herein and one M. Manoharan (1st Defendant) entered into an agreement for sale in respect of a property in suit. 1st Defendant and respondent No. 1 herein entered into another agreement for sale on 11.4.1983. In the former agreement the transaction by way of execution of the deed of sale was to be completed within a period of three months, whereas in the later case, no time limit was fixed. The 1st Defendant executed a registered deed of sale in favour of the appellant herein on 4.9.1985.

2. The 1st Defendant contended that he had asked the 2nd Defendant to execute a deed of sale in his favour and he had gone to the registration office, but 2nd Defendant did not turn up. As Respondent was working in Saudi Arabia, his affairs were being looked after by his father-in-law, Shri C.M. Raman Chettiar, and his wife, Smt. Vijaya. According to the 1st Defendant, he had paid Rs.7,700/- by way of part payment of the entire amount of consideration which was fixed at Rs.17,000/-. When he came back from Saudi Arabia in August, 1983, May, 1984, 1985 and 1986, he asked the Respondent No.2 to execute the deed of sale on receipt of the balance amount, but he had been avoiding to do the same.

3. The suit for specific performance of contract was thereafter filed. The said suit was dismissed. However, the First Appellate Court, on an appeal preferred thereagainst by the Respondent No.1, allowed the appeal and decreed the suit. By reason of the impugned judgment, the High Court has dismissed the second appeal.

4. Respondent had served a notice upon said M. Manoharan to perform his part of contract on 15.9.1986. The Respondent did not examine himself in the suit. His father-in-law and his wife had been examined on his behalf. In his deposition before the Court it is accepted that defendant Nos.1 and 2 were friends and, therefore, the stipulations, which are ordinarily made in an agreement for sale, were not made.

5. P.W.1, the father-in-law of respondent, in his evidence, stated :

“...He has assured to come but not come. He has avoided. We have waited in the Registrar’s office. 20 days after Ex.A2. He has not come as assured. We came to know that he was cheating. He was not willing to execute the sale deed. I have not given notice immediately...”

6. Thus, within a period of 20 days from the date of the agreement for sale dated 11.4.1983, the father-in-law of the Respondent No.1, was aware that the defendant No.2 was not ready and willing to perform his part of contract and in fact, “cheating” him. We, therefore, fail to understand as to why a notice was served for the first time on 15.9.1986 and not soon thereafter.

7. The High Court in the second appeal formulated the following purported substantial questions of law :

“a)Whether the judgment and decree of the lower appellate Court are not erroneous in not considering the well known principle of consensus as idem as lacking in Ex.A-1, the agreement of sale?

b)Whether the judgment and decree of the lower appellate Court are not erroneous in not rejecting the agreement of sale which is not signed by the plaintiff or his agent in not holding that the suit is barred by limitation?

c)Whether the judgment and decree of the lower appellate Court are not palpably wrong in upholding an incomplete agreement of sale,Ex.A-1, produced by the plaintiff in preference to the agreement of sale, Ex.B-1, a complete sale agreement prior to the agreement of sale Ex.A-1?

d)Whether the findings of the lower appellate Court are not correct in drawing adverse inference against the 1st defendant on the ground of non-reply to the plaintiff’s belated notice?

e)Whether the judgment and decree of the lower appellate Court are not palpably wrong in not considering and applying the provisions of Contract Act and Specific Relief Act?

f)Whether the lower appellate Court has not erred in not considering the lack of consensus ad idem in the agreement of sale?

g)Whether the lower appellate Court has n

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2007 Supreme(SC) 122

IMPORTANT POINTFor balancing the equities in a given case, compensation can be awarded in lieu of grant of decree of specific performance of contract.

Cases Referred (6)

IMPORTANT POINT
For balancing the equities in a given case, compensation can be awarded in lieu of grant of decree of specific performance of contract.