Sushil Kumar Agarwal vs Meenakshi Sadhu - Supreme Court Important Judgment

 Sushil Kumar Agarwal vs Meenakshi Sadhu - Supreme Court Important Judgment 2018 - 


On 9th October, 2018, in the case of Sushil Kumar Agarwal vs Meenakshi Sadhu and Ors. [Civil Appeal No.1129 of 2012], the issue raised was whether Section 14(3)(c) of the Specific Relief Act, 1963 is a bar to a suit by a developer for specific performance of a development agreement between itself and the owner of the property. While dealing with this issue, the crux of the matter which came up for consideration was whether the word “defendant” in Section 14(3)(c)(iii) of the Specific Relief Act, 1963 has the effect of confining the scope of the suit for specific performance only to a particular class (consisting of owners) or whether a purposive interpretation to the legislation would be required, so as to provide a broader set of remedies to both owners and developers.


 It was held that “if the rule of literal interpretation is adopted to interpret Section 14(3)(c)(iii), it would lead to a situation where a suit for specific performance can only be instituted at the behest of the owner against a developer, denying the benefit of the provision to the developer despite an interest in the property having been created.”


The Supreme Court observed that “this anomaly is created by the use of the words “the defendant has, by virtue of the agreement, obtained possession of the whole or any part of the land” in Section 14(3)(c)(iii). Under a development agreement, an interest in the property may have been created in favour of the developer. If the developer is the plaintiff and the suit is against the owner, strictly applied, clause (iii) would require that the defendant should have obtained possession under the agreement. In such a case if the developer files a suit for specific performance against the owner, and the owner is in possession of the land by virtue of a lawful title, the defendant (i.e. the owner) cannot be said to have obtained possession of the land by way of the agreement. This would lead to an anomalous situation where the condition in Section 14(3)(c)(iii) would not be fulfilled in the case of a suit by a developer. Application of the literal rule of interpretation to Section 14(3)(c)(iii), would lead to an absurdity and would be inconsistent with the intent of the Act.”


“By giving a purposive interpretation to Section 14(3)(c)(iii)”, it was held that “the anomaly and absurdity created by the third condition [in sub clause (iii) of Section 14(3)(c)] “will have no applicability in a situation where the developer who has an interest in the property, brings a suit for specific performance against the owner.”” The Supreme Court held that “the developer will have to satisfy the two conditions laid out in sub clause (i) and (ii) of Section 14(3)(c), for the suit for specific performance to be maintainable against the owner. This will ensure that both owners and developers can avail of the remedy of specific performance under the Act. A suit for specific performance filed by the developer would then be maintainable.” However, it was also held “whether specific performance should in the facts of a case be granted is a separate matter, bearing on the discretion of the court.” 

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