Smt. Katta Sujatha Reddy & Anr. VERSUS Siddamsetty Infra Projects Pvt. Ltd.& Ors. Case

Smt. Katta Sujatha Reddy & Anr. VERSUS Siddamsetty Infra Projects Pvt. Ltd.& Ors. Case

Landmark Cases of India / सुप्रीम कोर्ट के ऐतिहासिक फैसले


REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPEALLATE JURISDICTION
CIVIL APPEAL NO. 5822 OF 2022
(arising out of SLP (C) No. 13565 of 2021)
Smt. Katta Sujatha Reddy & Anr.                                 …APPELLANT(S)
VERSUS
Siddamsetty Infra Projects Pvt. Ltd.& Ors.       …RESPONDENT(S)
WITH
CIVIL APPEAL NO. 5823 Of 2022
(arising out of SLP (C) No. 19920 of 2021)
Siddamsetty Infra Projects Pvt. Ltd.                          …APPELLANT(S)
VERSUS
Debbad Visweswara Rao (Dead, Through Lrs) & Ors    …RESPONDENT(S)
WITH
CIVIL APPEAL NO. 5824 Of 2022
(arising out of SLP (C) No. 19286 of 2021)
Debbad Srinandhan Rao & Ors.                                    …APPELLANT(S)
VERSUS
State of Telangana & Ors.        …RESPONDENTS
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J U D G M E N T
    KRISHNA MURARI, J.
1. Leave granted in all the matters.
    C.A. NO. 5822  OF  2022  (ARISING OUT OF  SLP  (C)  NO. 13565  OF
    2021)
2. The present civil appeal arises out of the impugned judgment dated
23.04.2021 in A.S. No. 998 of 2010, passed by the High Court for
the State of Telangana at Hyderabad.
3. Siddamsetty Infra Projects Pvt. Ltd., who is the respondent herein,
had filed a suit for specific performance against the appellants, Smt.
Katta Sujatha Reddy and Smt. Kamireddy Geetha Reddy, who were
respondents 6 & 8 respectively, among others in the suit. 
4. A conspectus of the facts necessary for the disposal of the appeals is
as   follows:   One   late   D   Narayana,   predecessor­in­interest   of   the
respondent no. 2 and 3, was the owner of an agricultural land
bearing Sy. No. 300­309, admeasuring 141.05 acres, situated in
Budvel   Village,   Rajendra   Nagar   Mandal,   Ranga   Reddy   District,
Hyderabad. The appellants herein acquired certain extent of the
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land   from   the   aforesaid   predecessor­in­interest   through   an
agreement dated 19.03.1994. In pursuance to this agreement, two
registered Joint GPA’S dated 28.03.1994 were executed in the name
of the defendant Nos. 5 and 6 from the above­mentioned owners, for
an extent of Acs. 127.27 gts. of land.
5. The agreement dated 19.03.1994 and the registered GPA, in favour
of the respondent no. 1/purchaser (Siddamsetty Infra Projects Pvt.
Ltd.)   could   not   materialize.   Parties   entered   into   two   fresh
agreements dated 26.03.1997 and 27.03.1997  inter alia  appellant
(hereinafter referred to as ‘vendors’) herein to purchase an extent of
Acs. 40.08 gts. The agreement dated 26.03.1997 pertained to Acs.
35.15 gts. land for a  consideration of Rs.38,37,500/­ while  the
agreement dated 27.03.1997 pertained to Acs 1.33 gts of land for a
consideration of Rs.1,82,500/­.
6. The total suit scheduled property thus consists of Acs. 40.08 gts of
land situated in Sy No. 301 (part), 302, 303, 304 (part) of Budvel
Village,   Rajendranagar   Mandal,   R.R.   District   for   which   a   total
consideration   of   Rs.40,20,000/­   was   agreed   upon   between   the
parties. Out of the total agreed consideration, Rs.34,80,850/­ was
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paid by the purchaser to the vendors by way of cash and cheques,
which fact is not disputed.
7. The remaining amount of Rs.5,39,150/­ was to be paid within 3
months,   as  per  clause   3   of   the   agreements.   This   amount   had
admittedly not been paid within the stipulated time. On 31.03.2000,
the purchaser allegedly sent the first notice dated 08.02.2000 to the
vendors seeking specific performance of the agreement. Thereafter,
a   second   notice   was   sent   by   the   plaintiff   on   06.07.2002.  The
purchaser, having no other alternative, filed the present suit, being
OS No. 88 of 2002, before the Additional District Judge, Ranga
Reddy District, LB Nagar, Hyderabad, seeking specific performance.
The trial Court framed 5 issues for consideration which are as
under:
1. Whether the purchaser is entitled for Specific
Performance of agreement dt. 27.3.1997 and
26.3.1997 directing the vendors to execute a
registered sale deed in favour of purchaser in
respect of suit land?
2. Whether the time is essence of the contract as
pleaded   by   the   vendors,   if   so   whether   the
purchaser   is   not   entitled   for   Specific
Performance of agreement of sale as pleaded
by him?
3. Whether   the   suit   filed   by   the   purchaser   is
barred by limitation?
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4. Whether   the   purchaser   is   entitled   for
alternative reliefs of delivery of possession and
for   refund   of   Rs.   34,80,850/­   with   interest
@36% per annum as pleaded in the plaint?
5. To what relief?
8. In  response  to issues (1) and (2), taking  into  consideration  the
evidence available on record, the trial Court held that the purchaser
was   never   put   in   possession   of   the   property.   On   the   issue   of
payment,   it   was   held   that   the   purchaser   never   made   the   total
payment of Rs. 34,70,000/­ under the agreement of sale. It was
discovered during the course of cross and chief examination, that
the purchaser had issued a cheque for Rs. 5,00,000/­ which was
dishonoured. This information was not shared by the purchaser
and hence the purchaser had suppressed material evidence.
9. The trial Court further held that the burden of proof lies on the
person who pleads that time is the essence of the contract. It was
further observed that in respect of an immovable property, time is
not   the   essence   of   the   contract   unless   the   same   is   explicitly
mentioned in the agreement of sale and the parties through their
conduct have treated time as the essence of the contract. The lower
Court observed that Clause 3 in the contract stipulates a time bar
of   3   months   for   the   payment   of   the   sale   consideration   and
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furnishing of necessary certificates by the purchaser and the vendor
respectively. The vendor through their conduct had never intended
to treat time as the essence of the contract. On delay of payments
made by the purchaser, the vendor never issued any notice to them.
This showed that the vendor never intended to treat time as the
essence of the contract. The vendor also painted a picture that it did
procure the necessary documents as required under clause 3 of the
contract, but it never did the same. The vendor made a false plea
about the duty to be performed by it under clause 3 of the contract.
10. The trial Court further held that while there exists a false plea on
the part of the vendor, the same however does not benefit the case
of the purchaser because there are grave laches on his part too. The
purchaser   himself   having   approached   the   Court   with   unclean
hands, he cannot get the benefit of the false plea made by the
vendor.
11. The trial court also came to the conclusion that the purchaser was
never ready to pay the balance sale consideration, if so, he would
have either issued a notice to the vendor making out his willingness
to pay. Hence, on the basis of all the above mentioned observations,
it   was   held   that   the   purchaser   is   not   entitled   for   specific
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performance of the agreements of sale and that the parties never
intended to treat time as an essence of the contract.
12. With regard to issue (3), the trial Court held that part one of Article
54 of the Limitation Act,1963 will come into operation, as per which
the   three­year   period   has   to   be   computed   from   the   date   so
stipulated, which comes to on or before 27.06.2000, in the present
case. The current suit however was presented on 09.08.2002, after
a lapse of two years. Even for the recovery of the advance amount,
the suit was barred by time as provided under Article 47 of the
Limitation Act. When the main suit itself is barred, then alternative
relief also cannot be granted. Hence, the trial Court held that the
suit is barred by limitation. In the light of the above findings, the
trial   Court   dismissed   the   suit   holding   that   the   plaintiff   is   not
entitled for the relief of specific performance.
13. Aggrieved   by   the   aforesaid   order   of   the   trial   Court,   the
plaintiff/purchaser approached the High Court by way of a first
appeal, being A.S. No. 998/2010. The High Court framed 7 issues
for adjudication of the matter which are as under;­
1. Whether the suit is barred by limitation?
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2. Whether the purchaser proved it’s possession over the
suit schedule property?
3. Whether the plaintiff was ready and willing to perform
his   part   of   the   contract   and   paid   balance   sale
consideration within the stipulated time in the suit
agreements?
4. Whether the trial court is right in holding that the time
is not the essence of the contract and whether the
same can be attacked by the defendants without filing
cross objections?
5. Whether the trial court is right in not exercising its
discretion for granting relief of specific performance?
6. Whether Section 10 of the Act as substituted by Act 18
of 2018 is prospective or retrospective in nature?
7. To what relief?
14. In response to point (1), the High Court has held that Clause 3 of
the agreements did not stipulate time as the essence of the contract.
Moreover, the vendor has not exercised the option of forfeiting the
advance amount as per Clause 3 of the agreements. The High Court
further held that the trial Court has erred in making the distinction
between time fixed for payment of sale consideration and time for
performance of contract.
15. On point (2), the High Court held that the vendors surrendered
almost all their rights over the suit schedule property and allowed
the purchaser to exercise his rights over the suit property as per the
contract. It was wrongly held by the trial Court that since the name
of the purchaser was deleted in Exs. B10 & B11, the purchaser was
8
not in possession of the property. On the basis of this, the trial
Court also held that the purchaser did not approach the court with
clean hands. One more point that came in favour of the purchaser
was that one of the parties to the sale agreement had categorically
admitted that the purchaser was put in possession of the property.
This fact was never contested by any party. The High Court held
that just because the possession aspect is not mentioned in Exs.
A2, A3, A4, A5, A29 & A30 or in the first notice, it cannot be said
that   the   purchaser   was   not   in   possession   of   the   suit   schedule
property. 
16. On point (3), the High Court observed that the vendors were at fault
for not obtaining the necessary certificates as per Clause 3 of the
contract for completing the sale transaction. Further, to show his
bonafides,   the   purchaser   filed   an   application   for   permission   to
deposit the balance sale consideration of Rs. 5,39,150/­ and the
same was ordered and became final. The High Court further held
that no person would drag on the matter for this long for a payment
of 10% of total sale consideration. The purchaser was ready and
willing to perform his contract, had already paid 90% of the sale
consideration within the stipulated period and had deposited the
9
balance amount in Court. Hence, the purchaser was ready and
willing to perform his contract, and through his acts, proved his
bonafides.
17. On point (4), the High Court held that the trial Court had correctly
assessed the judgments and the fact situation and held that time is
not the essence of the contract in the present case.
18. On point (5), the High Court held that the trial Court should have
exercised   its   discretion   and   should   have   granted   specific
performance   in   favour   of   the   purchaser.   It   was   held   that   the
vendors took a false plea in their written statements as well as in
their chief examinations stating that they did not receive the sale
consideration.   The   vendors   further   took   the   false   plea   that   the
necessary documents and certificates as per clause 3 of the contract
were obtained from the concerned departments, and hence the said
point was answered in favour of the purchaser.
19. On point (6), the High Court held that when a provision is replaced
by   way   of   substitution,   the   substituted   legislation   operates
retrospectively and not prospectively. It further held that specific
relief in essence is a part of the law of procedure, and hence it is a
10
retrospective law. The High Court then went on to state that an
appeal is a continuation of the suit, and hence any change in law
between the date of passing of the decree and the decision of the
appeal   must   be   taken   into   consideration.   Based   on   the   above
analysis, the High Court held that Section 3 of the Amended Act is
retrospective in nature and applies to pending proceedings.
20. On   point   (7),   the   High   Court   held   that   since   the   purchaser
succeeded on all points, it partly allowed the appeal and directed
the vendors to register the suit property in favour of the purchaser,
to the extent of the amount paid by the purchaser, i.e., 90% of the
total sale consideration, within a period of 3 months. Further, it was
ordered that the sum of Rs.5,39,150/­ deposited by the purchaser,
by   virtue   of   the   trial   Court   order   dated   11.07.2005   in   IA   No.
925/2005, was to be refunded to the purchaser with interest, if any
accrued thereon.
21. Aggrieved by the impugned judgment, both the vendors and the
purchaser are in appeal before this Court. 
22. Mr. Dushyant Dave and Mr. Harin P. Raval, learned Senior Counsel
appearing on behalf of the purchaser, submitted as follows:
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i. The High Court was correct in exercising its jurisdiction
and the impugned judgment is based on both, oral and
documentary evidence. The reasons given for granting the
relief of specific performance are in accordance with the
settled principles of law.
ii. Both   the   trial   Court   and   the   High   Court   have
concurrently found that time is not the essence of the
contract. No time was fixed for the performance of the
contract itself. The period of 3 months stipulated under
Clause 3 of the agreements to sell, is only for payment of
the sale consideration. As a result, when no date is fixed
for the performance of the contract, the limitation period
commences from the date of specific refusal. In the case
at hand, specific refusal of the vendors to perform their
obligations had occurred on 14.04.2000 and 22.07.2002
and therefore, the suit was filed well within the limitation
period.
iii. The   purchaser   has   clearly   established   that   they   were
always  ready  and  willing  to   perform  their  part  of   the
contract.   They   have   admittedly   paid   90%   of   the   sale
consideration within 3 months of the agreements to sell.
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The   purchaser   also   issued   two   legal   notices   dated
08.02.2000   and   06.07.2002   to   the   vendors   indicating
their readiness to pay the balance amount. The vendors
avoided   receiving   the   sale   consideration   despite   the
purchaser’s repeated requests. Additionally, the vendors
did not procure the requisite permissions.
iv. Defendant No.5 has admitted in her pleadings that the
purchaser was put in possession of the suit property.
Such statement was neither challenged by the vendors in
the rejoinder and nor was it mentioned in the evidence
led by the DWs that her statement is incorrect. Moreover,
Defendant No.5 is a proper party to the suit. 
v. The   stand   of   the   parties   on   possession   cannot   be   a
ground on which the Court can refuse grant of specific
performance. Delivery of possession is ancillary to the
relief   sought   and   such   an   issue   would   be
inconsequential. 
vi. In   the   light   of   the   amendment   to   Section   10   of   the
Specific   Relief   Act,   the   jurisdiction   to   grant   specific
performance of a contract is no longer discretionary and
it is mandatory for Courts to grant such relief, unless the
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case   at   hand   falls   within   the   statutorily   carved   out
exceptions.
23. Mr. Mukul Rohatgi and Mr. Harish Salve, learned Senior Counsel
appearing on behalf of the vendors, submitted as follows:
i. The purchaser did not approach the Court with clean
hands.   The   balance   amount   was   not   paid   within   the
stipulated   time   period   and   the   trial   Court   found   the
purchaser’s statement regarding possession to be false
inter alia, for the following reasons:
(a)In   the   suit,   there   was   an   alternate   prayer   seeking
possession.   If   the   purchaser   was   already   in
possession, such a prayer would not have been made.
(b)The purchaser has not mentioned any specific date as
to when they were put in possession of the property.
(c)As per the draft sale deed prepared by the purchaser,
there is no mention of the fact that they had already
been granted possession of the property. In fact, the
draft sale deed indicates that the purchaser would be
put in possession on execution of the sale deed.
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(d)PW2 (neighbour) deposed that the purchaser had laid
roads, constructed two rooms, put up fencing, etc. on
the   property.   However,  the   same   is   falsified   by   the
documents on record. The photographs of the property
show that there are no road or rooms on the property.
Additionally, no such pleading is made in the suit. 
ii. The suit filed by the purchaser is barred by limitation
and the trial Court held so correctly. The parties executed
the agreements to sell on 26.03.1997 and 27.03.1997
and the purchaser was to pay the balance amount within
3 months, i.e., by 27.06.1997. It is the purchaser’s case
that the vendors evaded execution of the sale deed as
early as in June 1997. Therefore, the limitation would
start running in June 1997 and expire in June 2000. The
suit,   however,   was   filed   only   on   09.08.2002   and   is,
therefore, clearly barred by limitation. The purchaser’s
oral evidence also shows that the right to sue accrued in
the year 1997 itself. 
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iii. Additionally,   the   notice   purportedly   dated   08.02.2000,
was   actually   despatched   on   31.03.2000   and   was
purposely backdated.
iv. The purchaser was not ready and willing to perform the
contract.   The   evidence   on   record   indicates   that   the
purchaser   not   only   failed   to   pay   the   balance
consideration within the stipulated 3 months, but also
failed to pay the same within a period of 3 years of the
agreement.  
v. A suit for specific performance cannot be decreed in a
piecemeal   manner.   The   High   Court   ought   to   have
accepted   the   trial   Court’s   decision   and   rejected   the
purchaser’s appeal. Moreover, grant of specific relief only
to the extent of 90% itself indicates that the purchaser
was not ready and willing to perform the contract and
consequently, is not entitled to the decree.
vi. The   High   Court,   while   overturning   the   trial   Court’s
judgement, stated that the discretion to grant specific
performance was taken away by the 2018 amendment to
Section 10 of the Specific Relief Act. However, both the
Delhi High Court and Karnataka High Court have rightly
16
taken the view that the amendment, being substantive,
would   be   applicable   prospectively.   The   impugned
judgement   erroneously   states   that   the   amendment   is
merely procedural and would apply retrospectively.
vii. The   High   Court   has   misconstrued   Section   12   of   the
Specific Relief Act. The section would not be applicable to
the present case as the question of ‘inability to perform a
contract’ does not arise.
viii. Reliance on Defendant No.5’s pleadings in support of the
plaintiff is misplaced. She has nothing to do with the
agreements in question and had filed a collusive written
statement.   Moreover,   knowing   such   a   statement   is
collusive, she never entered the witness box. 
24. We have heard the learned Senior counsel appearing on either
side and perused the entire material available on record. In the
light of the arguments advanced, the following issues fall for
consideration.
A. Whether the suit for specific performance is barred by
limitation?
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B. Whether the amended Section 10 of the Specific Relief Act
is prospective or retrospective in operation?
C. Whether the purchaser is entitled to the relief of specific
performance?
D. In any case, whether the purchaser is entitled to take
benefit of Section 12 of the Specific Relief Act in view of
the part payment made in respect of the contract?
Issue A
25. Before dealing with issue “A”, we would like to highlight certain
facts which may be relevant. On 26.03.1997 and 27.03.1997
two agreements to sell were executed between the vendors and
purchaser   for   two   separate   parcels   of   land   in   survey   no.
301(part) , 302, 303, 304(part). The sale considerations for the
aforesaid   land   were   Rs.38,37,500/­   and   Rs.   1,82,500/­
respectively. Out of the above sale considerations, the vendors
received   an   advance   of   Rs.34,70,000/­   and   Rs.10,850/­   in
furtherance of the performance of the aforesaid agreement. 
26. A notice dated 08.02.2000 was despatched by the purchaser on
31.03.2000, calling upon the appellants herein to execute the
sale deed at a convenient date, suitable to the vendors herein. 
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27. The   vendor   replied   to   the   aforesaid   notice   by   letter   dated
14.04.2000 by stating that the purchaser never offered to pay
the balance sale consideration and issuance of the notice dated
08.02.2000,   was   nothing   but   a   subterfuge   to   get   over   the
limitation.
28. Thereafter,   a   suit   was   filed   by   the   purchaser   only   on
09.08.2002. In the suit, the averments made by the purchaser
as to the limitation are as under:
“LIMITATION:  The   suit   is   within   limitation   in
continuation of efforts. Some defendants are agreeing
to execute the sale deed and some defendants are
continuing   and   evading   the   execution   of   the   sale
deed. Time is not the essence of the contract. The suit
is within limitation in view of reply notice.”
29. The Defendant No.6­vendors herein filed a written statement
dated   25.10.2002,   wherein   they   replied   to   the   question   of
limitation as under: 
“8 (Pg NO. 175) .It is submitted that, in reply to
Para no. 10 of the plaint that, the plaintiff has got
issued   legal   notice   dated   8.02.2000   to   the
defendant & the defendant no. 8 and posted the
said   notice   on   31.3.2000   under   the   registered
post, the said fact is revealed that, the Plaintiff
purposefully made the notice dated as 8.2.2000
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which   was   posted   on   31.03.2000   with   ulterior
motive.   The   Plaintiff   to   cover   up   the   limitation
period of 3 years creates the date 8.02.2000. It is
not true that, the defendant and the defendant no.
8 Smt. Kamreddy Geetha Reddy are not the joint
GPA holder of the vendors. It is false that, there
was   no   response   from   defendant   no.   6   and
defendant  no.  8   to   the   said   notice,  in   fact   the
defendant got issued a reply legal notice dated
14.04.2000 to the said alleged legal notice dated
8.2.2000. After receipt of the reply legal notice the
Plaintiff kept quiet for nearly 2 ½ years and got
issued another legal notice dated 6.7.2002. The
defendant  had got  issued  reply legal notice  on
22.7.2002 to the notice dated 6.7.2002 by stating
that the agreements are barred by limitation and
the   plaintiff   never   in   possession   of   the   suit
property and moreover he has not performed his
part   performance   in   paying   the   balance   sale
consideration within the stipulated period and the
notice   dated   8.02.2000   was   posted   on
31.02.2000 with malafide intention.” 
30. In the above light, the first question that this Court needs to
consider pertains to the aspect of limitation. The First Schedule
to the Limitation Act, 1963 provides for the period of limitation in
the following manner: 
DESCRIPTION OF SUIT PERIOD OF
LIMITATION
TIME FROM WHICH PERIOD
BEGINS TO RUN
54.   For   specific
performance   of   a
contract
Three years The   Date   fixed   for   the
performance,   or,   if   no
such   date   is   fixed,   when
the   plaintiff   has   notice
that   performance   is
refused.
20
The High Court, while dealing with the aspect of limitation, has
given a reasoning that Clause 3 of the agreements to sell did not
have a specific calendar date for performance of the contract,
but   rather,   provided   only   for   payment   of   the   entire   sale
consideration within 3 months from the date of the agreements.
Further, the High Court construed the obligation of the vendors
to produce requisite certificates and permission as a condition
for the purchaser to complete the sale transaction. In view of the
same, the High Court concluded that the first part of Article 54
was incorrectly applied by the trial Court and accordingly held
that the suit was not barred by limitation. 
31. At   the   outset,   this   Court   has   perused   Clause   3   of   the
agreements, which is in two parts. The first part provides for the
purchaser’s   obligation,   while   the   second   part   details   the
obligation  of the  vendors to  provide  the requisite certificates.
Although  both  the  obligations  were  required  to   be  completed
within   the   stipulated   period   of   three   months,   there   is   a
substantive difference between these two sets of obligations. The
obligation upon the vendors concerned was production of certain
certificates,   such   as   income   tax   exemption   certificate   and
21
agriculture certificate. No consequences were spelt out for nonperformance of such obligations. Whereas the obligation on the
purchaser,   was   to   make   the   complete   payment   of   the   sale
consideration within three months. The clause further mandates
forfeiture of the advance amount if the payment obligation is not
met within the time period stipulated therein. In this context,
this Court in Chand Rani (dead) by Lrs. v. Kamal Rani (dead)
by Lrs1
., held as under:
 “25. From an analysis of the above case law it is
clear   that   in   the   case   of   sale   of   immovable
property there is no presumption as to time being
the essence of the contract. Even if it is not of the
essence of the contract the Court may infer that it
is   to   be   performed   in   a   reasonable   time   if   the
conditions are:
1. from the express terms of the contract;
2. from the nature of the property; and
3.   from   the   surrounding   circumstances,   for
example: the object of making the contract.”
32. Coming   to   the   aforesaid   indicators,   the   language   of   the
agreements makes it clear that severe consequences of forfeiture
would ensue if the payment is not made within three months of
the date of the agreements. It may be noted that as per Clause 21,
the parties had entered into an earlier agreement to sell dated
1 (1993) 1 SCC 519
22
19.03.1994, which did not materialize and accordingly the agreed
price therein was no longer applicable. It is in this context that the
fresh agreements were entered into between the parties, so as to
provide a last opportunity for them to successfully enter into a
sale­purchase agreement. The aforesaid intention of the parties is
also made clear through Clause 23 of the agreement to sell, which
reads as under:
“23.  The   parties   of   the   second   part   herein
undertake on any pretext they will not make any
claim   for   enhancing   the   agreed   sale
consideration.”
33. The aforesaid clause clearly freezes any enhancement of the
agreed sale consideration, which cannot be independent of a fixed
time period. A contrary interpretation would render the contract
commercially unreasonable and unworkable. The moratorium on
the enhancement of rates prescribed under Clause 23 should be
interpreted to be predicated on a fixed time and be executable
within a reasonable period. The same should not be utilized to
render the commercial wisdom between the parties otiose, which
is inherent in drafting such clauses.
23
34. From   the   above   analysis,   it   is   clear   that   the   contract   was
strictly conditioned on a time frame. At this stage, it may be
relevant to quote Section 55 of the Contract Act, which reads as
under: 
“55.   Effect   of   failure   to   perform   at   fixed
time, in contract in which time is essential
When a party to a contract promises to do a
certain thing at or before a specified time, or
certain things at or before specified times, and
fails   to   do   any   such   thing   at   or   before   the
specified time, the contract, or so much of it as
has not been performed, becomes voidable at
the option of the promisee, if the intention of the
parties was that time should be of the essence
of the contract.”
35. In view of the aforesaid provisions, the vendors were entitled
to rescind the contract as there was a breach of condition, i.e,
‘time was the essence’. Coming back to the point of limitation,
it is clear that Article 54 of the Limitation Act mandates that in
this case at hand, the date fixed for payment of consideration
was   three   months   from   the   date   of   the   agreements   (i.e.
26.03.1997 and 27.03.1997). In any case, the time period for
filing the suit had commenced from 26/27.6.1997 and would
have expired after three years, i.e., in the end of June 2000.
24
36. The purchaser has contended that the legal notice issued by
them on 31.03.2000, would be sufficient to get past the bar of
limitation, as the purchaser has paid the advance amount to a
large   extent.   Although   this   argument   seems   to   be   very
attractive at first blush, the same cannot be sustained in the
eyes of the law for the reason that when a condition of a
contract   is   breached   and   the   consequences   ensue   for   that
breach,   a   party   cannot   claim   equity   to   escape   such
consequences.
37. In this context, we may note that Article 54 of the Limitation
Act provides for two consequences based on the presence of
fixed time period of performance. It is only in a case where the
time period for performance is not fixed that the purchaser can
take  recourse  to  the  notices  issued and   the  vendors’  reply
thereto. In the case at hand, the aforesaid circumstances do
not come into play as a fixed time period was clearly mandated
by Clause 3 read with Clause 23 of the agreements to sell, as
explained above.
38. In light of the above, we may note that the suit filed by the
purchaser was clearly barred by limitation in view of the first
25
part   of   Article   54   of   the   Limitation   Act   and   no   amount   of
payment   of   advance   could   have   remedied   such   a   breach   of
condition.
39. Having come to the aforesaid conclusion, there would not have
been any reason for this Court to continue the analysis on
merits. However, we feel that even on merits, the purchaser’s
case   cannot   be   countenanced   in   law   and   we   accordingly
adumbrate on the following aspects.
Issue B
40. At the outset, we may notice that this question assumes great
significance as application of the 2018 Amendment Act to the
present set of circumstances would determine whether specific
performance ought to be applied mandatorily or the aforesaid
decision is a discretion of the Court to examine whether equity
demands such application instead of granting damages if any.
41. We may note that the Specific Relief Act, 1963 is the second
legislation, replacing the earlier 1877 enactment of the Specific
Relief Act. The 1963 Act was enacted after consideration of the
26
Law Commission in its Ninth Report. The 1963 Act more or less
followed the English position on equitable remedy of specific
performance.   In   Common   Law,   the   remedy   of   specific
performance was unknown in the initial days and courts only
granted damages for the value of goods if there was any breach
of   contract.   Accordingly   English   Courts,   in   the   early   years,
granted monetary relief. In order to rectify the harsh stance of
law,   Courts   of   Equity   in   England   started   granting   relief   of
specific performance if the Court of Equity found that granting
damages would be inadequate or some special equitable rights
of the plaintiff under a trust have been breached.
42. In any case, grant of such relief, which emanated from equitable
principles,   remained   discretionary.   This   principle   is   clearly
explained by Swinfen Eady M.R., in Whiteley Limited v. Hilt2
,
in the following manner:
“The power vested in the Court to order the delivery
up of a particular chattel is discretionary, and ought
not to be exercised when the chattel is an ordinary
article   of   commerce   and   of   no   special   value   or
interest, and not alleged to be of any special value
to the plaintiff and where the damages would fully
compensate.” 
2 (1918) 2 K.B. 808
27
43. However, this was not the position under the Civil Law. Under
the Civil Law of contracts, adherence to the sanctity of contract
is enforced with greater rigour by inversing the situation. The
reason for choice of damages and specific performance range
from legal to economic. It is in this context that the Courts
cannot   engage   on   the   merits   of   having   damages   or   specific
performance or a hybrid. It is best left to the legislature to
choose   the   course   best­suited   to   the   economy   without
sheepishly following the typecast approach in England or Civil
Law systems.
44. The High Court, in the impugned order, has taken a different
approach   in   categorising   the   Specific   Relief   Act,   1963   as
procedural and holding that the 2018 amendment is also a
procedural provision which requires to be given retrospective
effect.   The   High   Court   places   reliance   on   an   old   case   of
Radheshyam Kamila v. Kiran Bala Dasi3
, wherein the High
Court, while relying upon the commentary of Pollock & Mulla on
Indian   Contract   Act   and   Specific   Relief   Act   (4th  edition)
specifically observed that “specific relief, as a form of judicial
3 AIR 1971 Cal 341
28
process, belongs to the law of procedure”. In this context, the
Court came to a conclusion that such procedural amendment
ought to be given retrospective effect.
45. We do not subscribe to the aforesaid reasoning provided by the
High   Court   for   the   simple   reason   that   after   the   2018
amendment,   specific   performance,   which   stood   as   a
discretionary remedy, is not codified as an enforceable right
which   is   not   dependent   anymore   on   equitable   principles
expounded by judges, rather it is founded on satisfaction of the
requisite ingredients as provided under the Specific Relief Act.
For determination of whether a substituted law is procedural or
substantive, reference to the nature of the parent enactment
may   not   be   material.   Instead,   it   is   the   nature   of   the
amendments which determine whether they are in the realm of
procedural or substantive law.
46. The   High   Court’s   reliance   on  Adhunik   Steels   Limited   v.
Orissa Manganese and Minerals (P) ltd.4
, was also misplaced.
In that case, the Court was concerned with the interpretation of
Section 9 of the Arbitration Act, that deals with granting of
4 (2007) 7 SCC 125
29
injunctions. The specific question before the Court was whether
the provisions of the CPC or the provisions of the Specific Relief
Act   have   a   bearing   on   Section   9   of   the   Arbitration   and
Conciliation Act, 1996.
47. While discussing the nature of the Specific Relief Act, in the
aforesaid case, this Court had observed as under:­ 
“16. Injunction is a form of specific relief. It is an
order of a  court requiring a party either to do a
specific act or acts or to refrain from doing a specific
act or acts either for a limited period or without limit
of time. In relation to a breach of contract, the proper
remedy against a defendant who acts in breach of
his obligations under a contract, is either damages
or   specific   relief.   The   two   principal   varieties   of
specific   relief   are,   decree   of   specific   performance
and the injunction (See David Bean on Injunctions).
The Specific Relief Act, 1963 was intended to be “an
Act to define and amend the law relating to certain
kinds of specific reliefs”. Specific relief is relief in
specie.   It   is   a   remedy   which   aims   at   the   exact
fulfilment of an obligation. According to Dr. Banerjee
in his Tagore Law Lectures on Specific Relief, the
remedy for the non­performance of a duty are (1)
compensatory, (2) specific. In the former, the court
awards damages for breach of the obligation. In the
latter, it directs the party in default to do or forbear
from doing the very thing, which he is bound to do
or forbear from doing. The law of specific relief is
said   to   be,   in   its   essence,   a   part   of   the   law   of
procedure, for, specific relief is a form of judicial
redress. Thus, the Specific Relief Act, 1963 purports
to   define   and   amend   the   law   relating   to   certain
kinds of specific reliefs obtainable in civil courts. It
30
does   not   deal   with   the   remedies   connected   with
compensatory reliefs except as incidental and to a
limited extent. The right to relief of injunctions is
contained in Part III of the Specific Relief Act. Section
36 provides that preventive relief may be granted at
the discretion of the court by injunction, temporary
or perpetual. Section 38 indicates when perpetual
injunctions   are   granted   and   Section   39   indicates
when mandatory injunctions are granted. Section 40
provides that damages may be awarded either in
lieu   of   or   in   addition   to   injunctions.   Section   41
provides   for   contingencies   when   an   injunction
cannot   be   granted.   Section   42   enables,
notwithstanding anything contained in Section 41,
particularly Clause (e) providing that no injunction
can be granted to prevent the breach of a contract
the performance of which would not be specifically
enforced, the granting of an injunction to perform a
negative   covenant.   Thus,   the   power   to   grant
injunctions by way of specific relief is covered by
the Specific Relief Act, 1963.”
However,   the   conclusion   in   the   above   paragraph,   taken   in
isolation, would not support the final outcome in the aforesaid
case,   wherein   it   was   held   that   an   injunction   order   granted
under Section 9 of the Arbitration and Conciliation Act would
involve consideration of settled principles under the Code of
Civil Procedure or the Specific Relief Act. It was nowhere stated
in the aforesaid case that the Specific Relief Act of 1963 stricto
sensu  provided   for   only   procedural   mechanism.   We   find   it
31
difficult to read the aforesaid case in the manner alluded to by
the High Court.
48. In any case, the amendment carried out in 2018 was enacted to
further   bolster   adherence   to   the   sanctity   of   contracts.   This
approach was radical and created new rights and obligations
which did not exist prior to such an amendment. Section 10,
after amendment, reads as under:
10.   Specific   performance   in   respect   of
contracts.—The specific performance of a contract
shall   be   enforced   by   the   court   subject   to   the
provisions contained in sub­section (2) of section 11,
section 14 and section 16.
49. This   provision,   which   remained   in   the   realm   of   the   Courts’
discretion,   was   converted   into   a   mandatory   provision,
prescribing   a   power   the   Courts   had   to   exercise   when   the
ingredients  were fulfilled. This was a significant step in the
growth   of   commercial   law   as   the   sanctity   of   contracts   was
reinforced with parties having to comply with contracts and
thereby reducing efficient breaches.
50. Under the pre­amended Specific Relief Act, one of the major
considerations   for   grant   of   specific   performance   was   the
32
adequacy   of   damages   under   Section   14(1)(a).   However,   this
consideration has now been completely done away with, in order
to provide better compensation to the aggrieved party in the
form of specific performance.
51. Having come to the conclusion that the 2018 amendment was
not a mere procedural enactment, rather it had substantive
principles built into its working, this Court cannot hold that
such amendments would apply retrospectively.  
52. In Shyam Sunder and others V. Ram Kumar and Another5
,
this Court held as under:
“28.  From   the   aforesaid   decisions   the   legal
position that emerges is that when a repeal of an
enactment is followed by a fresh legislation, such
legislation does not affect the substantive rights of
the parties on the date of the suit or adjudication of
the suit unless such a legislation is retrospective
and   a   court   of   appeal   cannot   take   into
consideration   a   new   law   brought   into   existence
after   the   judgment   appealed   from   has   been
rendered because the rights of the parties in an
appeal are determined under the law in force on
the date of the suit. However, the position in law
would be different in the matters which relate to
procedural law but so far as substantive rights of
parties are concerned, they remain unaffected by
the   amendment   in   the   enactment.   We   are,
therefore,   of   the   view   that   where   a   repeal   of
5 (2001) 8 SCC 24
33
provisions   of   an   enactment  is   followed   by fresh
legislation by an amending Act, such legislation is
prospective   in   operation   and   does   not   affect
substantive or vested rights of the parties unless
made   retrospective   either   expressly   or   by
necessary intendment. We are further of the view
that   there   is   a   presumption   against   the
retrospective operation of a statute and further a
statute is not to be construed to have a greater
retrospective operation than its language renders
necessary, but an amending Act which affects the
procedure is presumed to be retrospective, unless
the   amending   Act   provides   otherwise.   We   have
carefully looked into the new substituted Section
15 brought in the parent Act by the Amendment
Act, 1995 but do not find it either expressly or by
necessary   implication   retrospective   in   operation
which may affect the rights of the parties on the
date of adjudication of the suit and the same is
required   to   be   taken   into   consideration   by   the
appellate court. In Shanti Devi v. Hukum Chand
[(1996)   5   SCC   768]   this   Court   had   occasion   to
interpret the substituted Section 15 with which we
are concerned and held that on a plain reading of
Section 15, it is clear that it has been introduced
prospectively   and   there   is   no   question   of   such
section affecting in any manner the judgment and
decree passed in the suit for pre­emption affirmed
by the High Court in the second appeal. We are
respectfully in agreement with the view expressed
in the said decision and hold that the substituted
Section 15 in the absence of anything in it to show
that it is retrospective, does not affect the right of
the parties which accrued to them on the date of
the suit or on the date of passing of the decree by
the court of first instance. We are also of the view
that the present appeals are unaffected by change
in  law insofar it  related  to determination  of  the
substantive rights of the parties and the same are
required to be decided in the light of the law of pre34
emption as it existed on the date of passing of the
decree.”
53. From the aforesaid decision, it is clear that when a substantive
law is brought about by amendment, there is no assumption
that the same ought to be given retrospective effect. Rather,
there is a requirement for the legislature to expressly clarify
whether the aforesaid amendments ought to be retrospective or
not.
54. In the light of the aforesaid discussion, it is clear that ordinarily,
the   effect   of   amendment   by   substitution   would   be   that   the
earlier provisions would be repealed, and amended provisions
would be enacted in place of the earlier provisions from the date
of   inception   of   that   enactment.   However,   if   the   substituted
provisions contain any substantive provisions which create new
rights, obligations, or take away any vested rights, then such
substitution cannot automatically be assumed to have come
into force retrospectively. In such cases, the legislature has to
expressly   provide   as   to   whether   such   substitution   is   to   be
construed retrospectively or not.
35
55. In the case at hand, the amendment act contemplates that the
said substituted provisions would come into force on such date
as the Central Government may appoint, by notification in the
Official Gazette, or different dates may be appointed for different
provisions of the Act. It may be noted that 01.10.2018 was the
appointed date on which the amended provisions would come
into effect. 
56. In view of the above discussion, we do not have any hesitation
in holding that the 2018 amendment to the Specific Relief Act is
prospective and cannot apply to those transactions that took
place prior to its coming into force.
    ISSUE C
57. From the above, it is clear that the 2018 Amendment Act is
prospective and cannot be applied to the present set of facts.
Under   the   earlier   law,   grant   of   specific   performance   was
discretionary. However, it was mandated that such discretion
ought to be used in a principled manner without leaving scope
for any arbitrary application. In Saradamani Kandappan v. S.
Rajalakshmi and other6
, this court held a under:­ 
6 (2011) 12 SCC 18
36
42. Therefore there is an urgent need to revisit the
principle that time is not of the essence in contracts
relating to immovable properties and also explain
the current position of law with regard to contracts
relating to immovable property made after 1975, in
view   of   the   changed   circumstances   arising   from
inflation and steep increase in prices. We do not
propose to undertake that exercise in this case, nor
referring the matter to a larger Bench as we have
held on facts in this case that time is the essence of
the contract, even with reference to the principles in
Chand Rani [(1993) 1 SCC 519] and other cases.
Be that as it may.
43.  Till the issue is considered in an appropriate
case,   we   can   only   reiterate   what   has   been
suggested in K.S. Vidyanadam [(1997) 3 SCC 1]:
(i) The courts, while exercising discretion in suits
for specific performance, should bear in mind that
when   the   parties   prescribe   a   time/period,   for
taking   certain   steps   or   for   completion   of   the
transaction, that must have some significance and
therefore time/period prescribed cannot be ignored.
(ii)   The   courts   will   apply   greater   scrutiny   and
strictness when considering whether the purchaser
was “ready and willing” to perform his part of the
contract.
(iii) Every suit for specific performance need not be
decreed merely because it is filed within the period
of limitation by ignoring the time­limits stipulated in
the agreement. The courts will also “frown” upon
suits   which   are   not   filed   immediately   after   the
breach/refusal.   The   fact   that   limitation   is   three
years does not mean that a purchaser can wait for
1   or   2   years   to   file   a   suit   and   obtain   specific
performance. The three­year period is intended to
assist   the   purchasers   in   special   cases,   as   for
37
example, where the major part of the consideration
has been paid to the vendor and possession has
been delivered in part­performance, where equity
shifts in favour of the purchaser.”
58. From the aforesaid, it is clear that the purchaser ought to
have been vigilant in the case at hand to enforce his right and
could not have been lackadaisical in his approach. From the
facts,   it   is   clear   that   the   purchaser   had   entered   into   an
agreement   way   back   on   26/27.03.1997,   which   had   a   clause
mandating   completion   of   the   contract   by   payment   of   the
remaining   consideration   within   three   months.   The   aforesaid
clause was drafted, as alluded to earlier, for providing one last
opportunity for the purchaser to make good their lapse which
had happened on the earlier occasion. In this context, the time
for performance of the contract including the payment lasted till
the month of June 1997.
59. It   was   necessary   that   the   purchaser   should   have   taken
immediate steps to complete the transaction and if such steps
were immediately completed then the purchaser would have a
clear right for seeking enforcement for 3 years reckoned from the
last date decided for completion of the contract.
38
60. The   notice   dated   08.02.2000,   issued   on   behalf   of   the
purchaser   implicitly   acknowledges   the   fact   that   time   was
considered as the essence even by the purchaser themselves and
due   to   breach   of   the   same,   they   sought   novation   of   the
agreement to sell in the following manner:
“However the due efforts by my client’s proved
little light hope when you have strongly urged my
clients   to   come   up   with   the   balance   of   sale
consideration   in   view   of   the   fact   that   other
interested   parties   are   not   available   at   that
moment  and  you  asked  my   clients   to   renew
their   efforts   by   end   of   Jan’   2000   and
thereafter you have promised to complete the
transaction   by   executing   the   sale   deed   in
favour of my client.”
    (emphasis supplied)
61. Aforesaid notice, at best reflects an intention by the vendor to
renegotiate the terms, which was not accepted  in toto  by the
vendor. 
62. The next aspect which this Court needs to consider is whether
the parties had requisite willingness and readiness to perform
the contract. The aforesaid requirement is one of the essential
ingredients under Section 16 of the Specific Relief Act, 1963
which reads as under:
39
16.   Personal   Bars   to   relief.­   Specific
Performance of a contract cannot be enforced in
favour of a person­
(c)   who   fails   to   aver   and   prove   that   he   has
performed or always been ready and willing to
perform the essential terms of the contract which
are to be performed by him, other than terms the
performance   of   which   has   been   prevented   or
waived by the defendant.
63. It is clear that in order to prove readiness and willingness, the
burden is on the purchaser to prove that they were always ready
and it is only the vendor who refused to perform the contract for
extraneous considerations. In order to support their averments,
the purchaser (Sunil Siddam Setty) entered into the witness box
and deposed as PW1.
64. In his cross examination, PW1 deposed as below:
“We   have   paid   a   sum   Rs.   10,850/­   towards
advance   of   sale   consideration   on   27.03.1997,
when one of the agreement of sale was executed.
It is true one cheque which was issued by us for a
sum of Rs. 5,00,000/­ was bounced. When the
said fact was brought to our notice, we issued a
demand draft for the sum of Rs. 5,00,000/­ within
10   of   [sic.]   15   days   and   obtained   a   separate
receipt for that amount from Deft. No. 6 by name
Katta   Sujatha   Reddy.   It   is   mentioned   in   the
agreement for sale dt. 26.03.1997 the transaction
has to be completed within three months. Witness
40
volunteers and says; the three month time was
stipulated with some conditions. 
It is mentioned in another agreement of sale
dated  27.03.1997  that  the  sale  transaction
has   to   be   completed   within   three   months
with some conditions.
Q. How many times you met the Defendant and
demanded for execution in the year 1997?
Ans.­  …  We  did  not   issue  any  notice  to  the
defendants   in  the  year  1997  by  demanding
them   to   receive   the   balance   of   sale
consideration  and   execute   sale  deed   in  our
favour.
It is not true to suggest that I was not ready and
willing to perform my part of contract and that I
never had balance of sale consideration and that I
did not demand the defendants within stipulated
period to receive the balance of sale consideration
and to execute the sale deed and that due to it, I
am   not   entitled   to   get   the   relief   of   specific
performance of agreement of sale as prayed in my
suit. …
I did not get issued any written notice to D5
prior to 06.07.2002. Witness volunteers and
says:  that  the  entire  transaction  had  taken
place   in   good   faith   and   they   never
anticipated court proceedings at that time.
(emphasis supplied)
65. From   the   above   it   is   clear   that   the   purchaser   did   not
voluntarily adhere to the time stipulation under the contract. In
order to by­pass the condition of time being the essence, the
41
purchaser invoked the standard of good faith. Aforesaid standard
prescribes   a   higher   duty   of   care   for   parties   entering   into   a
contract. Unless such duty is expressly stipulated, good faith
standard cannot be implicitly read into any contract.
66. This   Court   does   not   subscribe   to   acceptance   of   a   general
standard of good faith to imply broader good faith obligations
only to give a go­by to the explicit conditions for maintaining the
sanctity of contract. Such broad standards will have potentially
far   reaching   consequences.   This   Court   agrees   that   such   an
implicit reading would come into play post the 2018 Amendment
to the Specific Relief Act which enables specific performance of
contracts to uphold their sanctity. However, from the facts and
circumstances of this case, we cannot accept that such higher
standards of good faith was relevant.
67. On the aspect of the vendor’s obligation to provide requisite
and necessary documents, DW1 (Smt. Katta Sujatha Reddy), has
averred that all the documents were available. It is only after the
purchaser was satisfied about the sound title that he entered
into the agreement to sell.
42
68. In the light of the above, it is clear that Section 16(c) of the
Specific Relief Act would only come into force if the purchaser
was ready and willing to perform the contract within the three
month period prescribed under Clause 3 of the agreements. The
aforesaid conclusion is also bolstered by the fact that specific
performance   can   only   be   granted   when   essential   terms   of
contract are not violated in terms of Section 16(b).
69. From the above, we can safely conclude that the purchaser
was not ready or willing to perform his part of the contract within
the time stipulated and accordingly, specific performance cannot
be granted for the entire contract.
70. The last aspect which we need to consider in this matter is
whether possession was with the purchaser after entering into
agreements to sell in 1997. On this aspect, the High Court has
decided in favour of the purchaser by relying upon the evidence
of   PW1   and   the   proceedings   before   the   Revenue   Authorities.
However, we are of the opinion that the High Court has not duly
considered the statement of PW1 in its proper perspective. PW1
during   the   course   of   cross­examination,   has   not   specifically
43
pointed out as to when was the purchaser put into possession of
the property. PW1 has not further proved that there was any
development cost incurred by him for developing the aforesaid
land.
71. The claim of PW2 that the disputed land was developed by the
purchaser, is clearly unacceptable in the light of exhibits A22 to
A26 which are the photographs of the property that show that no
development   had   taken   place,   as   averred   by   the   purchaser.
Reliance on the revenue records concerning mutation may not be
of any significance when the question of possession is to be
decided solely on the facts as available on the records.
72. In this context, we do not propose to burden this judgment
with a detailed discussion of the testimonies of DW2 and DW3
which   clearly   go   to   show   that   the   purchaser   was   never   in
possession of the aforesaid land.
73. If the agreement of sale is coupled with possession, it requires
stamp duty and stamp duty has to be paid as per Schedule 1A of
Article 47A of the Stamp Act. Further, asking for the relief of
recovery of possession also shows that the plaintiff was not in
44
possession of the property. The trial Court has rightly answered
this point against the plaintiff and the Appellate Court, on an
erroneous appreciation of the facts and law, reversed the said
findings.   
    ISSUE D­ 
74. The last aspect which has been argued before us concerns
application of Section 12 of the Specific Relief Act, 1963. This
issue arises from the fact that the purchaser is said to have paid
90 percent of the sale consideration and in lieu thereof, the High
Court has held that the purchaser is entitled to ninety percent of
the scheduled land. 
75. Although this argument appears to be attractive in the first
gloss, however a deeper examination of the same would paint a
contrary picture. Section 12 of the Specific Relief Act, 1963 reads
as under:
12. Specific performance of part of contract.
(1) Except   as   otherwise   hereinafter   provided   in
this section, the court shall not direct the specific
performance of a part of a contract.
(2) Where   a   party   to   a   contract   is   unable   to
perform the whole of his part of it, but the part
which must be left unperformed by only a small
45
proportion to the whole in value and admits of
compensation in money, the court may, at the suit
of either party, direct the specific performance of
so much of the contract as can be performed, and
award compensation in money for the deficiency.
(3) Where   a   party   to   a   contract   is   unable   to
perform the whole of his part of it, and the part
which must be left unperformed either—
(a) forms a considerable part of the whole, though
admitting of compensation in money; or
(b) does not admit of compensation in money, he
is   not   entitled   to   obtain   a   decree   for   specific
performance;   but   the   court   may,   at   the   suit   of
other party, direct the party in default to perform
specifically so much of his part of the contract as
he can perform, if the other party—
(i) in a case falling under clause (a), pays or has
paid the agreed consideration for the whole of the
contract reduced by the consideration for the part
which must be left unperformed and a case falling
under   clause   (b),   1[pays   or   had   paid]   the
consideration for the whole of the contract without
any abatement; and
(ii) in  either  case, relinquishes  all  claims   to  the
performance of the remaining part of the contract
and   all   right   to   compensation,   either   for   the
deficiency or for the loss or damage sustained by
him through the default of the defendant.
(4) When   a   part   of   a   contract   which,   taken   by
itself, can and ought to be specifically performed,
stands   on   a   separate   and   independent   footing
from   another   part   of   the   same   contract  which
cannot or ought not to be specifically performed,
the court may direct specific performance of the
former part. 
Explanation.—For the purposes of this section, a
party to a contract shall be deemed to be unable
to perform the whole of his part of it if a portion of
its   subject   matter   existing   at   the   date   of   the
46
contract   has   ceased   to   exist   at   the   time   of   its
performance.
76. The aforesaid provision has been interpreted by this Court on
several occasions. In the case of  Jaswinder  Kaur  v.  Gurmeet
Singh7
, this Court held as under:­
“20.  Section   12(1)   provides   that   specific
performance can be granted on part of a contract
only   in   the   circumstances   mentioned   in   the
section.   Section   12(2)   deals   with   breach   the
contract if a party is unable to perform the whole
of its part and such part bears a small proportion
to the whole in value and admits compensation in
money.   The   expression   “unable   to   perform”   in
Section 12(2) for instance would mean that a part
of the property destroyed after contract or act of
God or an act by which it would cease to exist. In
such a case party to a contract shall be deemed to
be unable to perform the whole or its part of the
contract. Such a person would come within the
words   “party   in   default”.  The   inability   to
perform may arise by deficiency in quantity
of   subject­matter   or   deficiencies   or   some
legal prohibition or such  other causes.  None
of such causes is present in the instant case.
21.  Section   12   of   the   Act   does   not   apply
where   the   inability   to   perform   specific
performance   on   part   of   contract   arises
because of the plaintiff's own conduct as held
in Abdul Rahim v. Maidhar Gazi [Abdul Rahim v.
Maidhar Gazi,  1928  SCC   OnLine  Cal  20   : AIR
1928 Cal 584] . In Graham v. Krishna Chunder
Dey [Graham v. Krishna Chunder Dey, 1924 SCC
OnLine PC 63 : (1924­25) 52 IA 90 : AIR 1925 PC
45] it has been laid down that the Explanation in
the section exhaust all the circumstances in which
7 (2017) 12 SCC 810
47
part­performance   can   be   granted.   Section   12(2)
deals with the situation where a party is unable
to   perform   and   such   part   is   only   a   small
proportion in value and capable of compensation
in form of money. It was not a case covered in
Section 12(2) at all.  Under  Section 12(3) party
in default is entitled to specific performance
on payment of whole consideration or for the
part left unperformed but here in the instant
case the plaintiff being in default could not
be said to be entitled to invoke Section 12(3)
    also.”
77. From the above, it is clear that there was no inability on part
of the parties to perform the rest of the contract or the remaining
part   was   waived.   In   this   case,   the   purchaser   breached   the
essential condition of the contract, which altogether disentitles
him to claim specific performance. There is no doubt that the
claim of purchaser is hit by delay and laches on their part as
they did not take appropriate measures within the stipulated
time and filing of the suit was delayed by almost five years. In
this   context,   in  Rachakonda   Narayana   v.   Ponthala
Parvathamma8
, this Court held as under:
“8.   A   perusal   of   sub­section   (3)   of   Section   12
shows that the first part of the said provisions
mandates   refusal   of   specific   performance   of   a
contract on certain conditions. However, the latter
part of the provisions permits a court to direct the
8 (2001) 8 SCC 173
48
party in default to perform specifically so much of
his part of the contract as he can perform if the
other   party   pays   or   has   paid   the   agreed
consideration for the whole of the contract and
relinquishes all claims to the performance of the
remaining part of the contract and all the rights to
compensation for the loss sustained by him. If a
suit is laid by the other party, the court may
direct   the  defaulting  party   to  perform   that
part of the contract which is performable on
satisfying   two   preconditions   i.e.   (i)   the
plaintiff pays or has already paid the whole
of   the   consideration   amount   under   the
agreement,   and   that   (ii)   the   plaintiff
relinquishes all claims to the performance of
the   other   part   of   the   contract   which   the
defaulting party is incapable to perform and
all rights to compensation for loss sustained
by   him.  Thus,   the   ingredients   which   would
attract   specific   performance   of   the   part   of   the
contract,   are:   (i)   if   a   party   to   an   agreement   is
unable to perform a part of the contract, he is to
be treated as defaulting party to that extent, and
(ii) the other party to an agreement must, in a suit
for such specific performance, either pay or has
paid the whole of the agreed amount, for that part
of   the   contract   which   is   capable   of   being
performed   by   the   defaulting   party   and   also
relinquish his claim in respect of the other part of
the   contract   which   the   defaulting   party   is   not
capable to perform and relinquishes the claim of
compensation in respect of loss sustained by him.
If   such   ingredients   are   satisfied,   the
discretionary   relief   of   specific   performance
is ordinarily granted unless there is delay or
laches or any other disability on the part of
the other party.
                                            (emphasis supplied)
49
78. Therefore, we do not think that it is an appropriate case for
granting relief to the purchaser in terms of Section 12 of the
Specific Relief Act, 1963 as the claim of the purchaser is barred
by delay, laches and limitation.
79. We are of the firm opinion that the contract was breached due
to the conduct of the plaintiff/purchaser, who were not willing to
perform   the   contract   after   entering   into   a   time   sensitive
agreement. In any case, it is an admitted fact that plaintiff had
paid only part consideration. Though there is a forfeiture clause
in the agreement, this Court with a view of rendering complete
justice between the parties, deems it appropriate to direct the
vendors/appellants to repay the said amount with interest @
7.5%   p.a.   from   the   date   such   payment   was   made   by   the
purchaser to the vendors, till the entire amount is paid back. We
further direct the vendors to pay the entire amount to the credit
of the suit account within six months from the date of receipt of a
copy of the order. 
80. The appeal is allowed on the above terms and the parties are
left to bear their own costs.
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    C.A. NO.5823/2022 (ARISING OUT OF SLP (C) NO. 19920/2021)
    AND  C.A.   NO.5824/2022   (ARISING OUT OF  SLP(C)
    NO.19286/2021)
81. In   light   of   the   above   judgment,   the   present   appeals   are
disposed of accordingly. 
.............................CJI.
(N. V. RAMANA)
...…..........................J.
(KRISHNA MURARI)
..........…………….......J.
    (HIMA KOHLI)
NEW DELHI;
AUGUST 25, 2022.
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