Punjab & Haryana High Court Upholds Specific Performance, Emphasizing Vendor's Duty to Clear Encumbrances
Chandigarh –
In a recent judgment, the High Court of Punjab and Haryana has reaffirmed the principle that a vendor is primarily responsible for clearing any encumbrances on a property before seeking specific performance of a sale agreement. Justice
NidhiGupta
presided over the case of
Tej Singh
v.
Trilok Chand
, dismissing the second appeal filed by the vendor,
Tej Singh
, and upholding the decree for specific performance in favor of the purchaser,
Trilok Chand
.
Case Background: Agreement to Sell and Mortgage
The dispute arose from an Agreement to Sell dated November 23, 2005, where
Tej Singh
(Defendant/Appellant) agreed to sell agricultural land to
Trilok Chand
(Plaintiff/Respondent) for ₹28,32,875.
Trilok Chand
paid ₹8 lakhs as earnest money. A crucial clause in the agreement stipulated that the land, which was mortgaged with Syndicate Bank, was to be cleared of all encumbrances by
Tej Singh
. The deadline for the sale deed execution was May 30, 2006.
When
Trilok Chand
discovered on May 29, 2006, that the mortgage remained uncleared, he served a legal notice to
Tej Singh
requesting him to clear the bank loan.
Tej Singh
, in his reply, asked
Trilok Chand
to redeem the mortgage himself and offered to execute the sale deed on June 22, 2006, after deducting the mortgage amount from the balance consideration.
Trilok Chand
did not appear on June 22 and instead filed a suit for specific performance in 2009.
Conflicting Judgments and Second Appeal
The trial court initially granted a decree for the return of earnest money, finding in favor of
Trilok Chand
only for this alternative relief. However, the first appellate court reversed this decision, decreeing the suit for specific performance and directing
Tej Singh
to clear the mortgage and execute the sale deed.
Tej Singh
then filed a second appeal in the High Court challenging the first appellate court’s judgment.
Arguments Presented
Appellant (
Tej Singh
)’s Arguments:
Represented by Senior Advocate Akshay Bhan,
Tej Singh
argued that
Trilok Chand
was not ready and willing to perform his part of the contract. He contended that
Trilok Chand
's immediate legal notice on May 30, 2006, demonstrated a lack of funds and willingness. Further,
Tej Singh
claimed he offered an extended date of June 22, 2006, for execution, but
Trilok Chand
failed to appear. He pointed to inconsistencies in
Trilok Chand
’s testimony regarding the source of funds, suggesting he could not afford the balance payment. Reliance was placed on
R. Shama Naik vs. G. Srinivasiah
(2024) to emphasize the need for demonstrating both readiness and willingness, including proof of funds.
Respondent (
Trilok Chand
)’s Arguments:
Represented by Advocate
Adarsh Jain
,
Trilok Chand
countered that the agreement unequivocally placed the responsibility of clearing the mortgage on
Tej Singh
. He argued that under Section 13(c) of the Specific Relief Act, 1963, it was the vendor's duty to redeem the mortgage. He maintained that he was always ready and willing to perform his part after
Tej Singh
fulfilled his obligation. He cited Section 13C of the Specific Relief Act and argued that the vendor could not unilaterally shift the burden of clearing the mortgage to the purchaser.
Court's Reasoning and Decision
Justice
NidhiGupta
firmly rejected
Tej Singh
's arguments. The court emphasized Clause 10 of the Agreement to Sell, which explicitly stated the defendant's obligation to clear the mortgage. Justice
Gupta
noted, "The defendant cannot unilaterally alter the terms and conditions of the Agreement. Both parties are bound by the Agreement."
The court highlighted Section 13(c) of the Specific Relief Act, 1963, stating, "Where the vendor professes to sell unencumbered property, but the property is mortgaged… the purchaser may compel him to redeem the mortgage…" The court agreed with
Trilok Chand
's counsel that the onus to redeem the mortgage was on
Tej Singh
, not the other way around.
Dismissing the argument about
Trilok Chand
's readiness and willingness, Justice
Gupta
stated, “...the question of ascertaining the readiness and willingness of the plaintiff to perform the contract would arise only after redemption of the mortgage by the defendant.” The court found sufficient evidence of
Trilok Chand
’s presence at the Sub-Registrar's office with the balance consideration, as evidenced by his affidavit. The court found no merit in the defendant’s reliance on the plaintiff's cross-examination regarding funds.
The court also addressed the delay in filing the suit, citing
R. Lakshmikantham vs. Devaraji
and
Laxman Tatyaba Kankata vs. Smt. Taramati Harishchandra Dhatrak
, clarifying that as long as the suit is filed within the limitation period, delay itself is not a bar to specific performance in India.
Final Verdict
Ultimately, the High Court dismissed
Tej Singh
's second appeal, upholding the first appellate court's decree for specific performance.
Tej Singh
was directed to clear the mortgage within 15 days and execute the sale deed within 30 days thereafter upon payment of the balance consideration by
Trilok Chand
. The judgment reinforces the contractual obligations of vendors to ensure clear titles and fulfill their agreed-upon responsibilities before demanding specific performance from purchasers. This ruling serves as a significant reminder of the importance of adhering to contractual terms and the provisions of the Specific Relief Act in property sale agreements.
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