SUPREME COURT DENIES RELIEF OF SPECIFIC PERFORMANCE IN FAVOR OF PLAINTIFFS DUE TO ITS MISREPRESENTATION OF FACTS

INTRODUCTION

A two-Judge Bench of the Supreme Court comprising of Justice Sanjay Karol and Justice Abhay S. Oka passed an Order dated 01.03.2024 in Civil Appeal No. 9360 Of 2013 in Major Gen. Darshan Singh (D) By Lrs. & Anr Vs. Brij Bhushan Chaudhary (D) by Lrs and upheld the lower Courts and High Court’s decision of denial to grant discretionary relief of specific performance in favor of the Plaintiffs on the ground that the Plaintiffs misrepresented facts in the Plaint and did not come clean before the Court.

FACTS

i) That the Defendant, Brij Bhushan Chaudhary executed an Agreement for Sale dated 16.01.1980 (‘Sale Agreement’) in favour of Plaintiff No.1 (Major General (retd) Darshan Singh) in respect of a plot of land admeasuring approximately 2438 sq. yards with structure thereon being residential House No.33, R.P. No. 2829, Sector 2-A, Chandigarh (‘Suit Property’). The agreed consideration was Rs.3,50,000/-. A sum of Rs.30,000/- was paid by the Plaintiff No. 1 to the Defendant by way of earnest money.

ii) The sale deed was to be executed on or before 30.04.1980. Clause No. 3 in the Sale Agreement provided that in the event the Defendant-Seller failed to honour the Agreement, his liability will be to refund the sum of Rs. 30,000/- along with damages of Rs.10,000/- without any interest to the Plaintiff No. 1. The Clause further provided that Plaintiff No.1 will have no right to claim any other damages or to file a suit for specific performance.

iii) Further, it was the case of the Plaintiff No. 1 that, there were further negotiations after the execution of the Sale Agreement, and it was agreed to reduce the price to Rs.2,90,000/-. Consequently, a Sale Deed was executed between Plaintiff No.1 and the Defendant on 18.03.1980. That, along with the Plaintiff No.1, his Daughters- Raman, Pawan and Narveen, who were the co-Plaintiffs, were signatories to the Sale Deed. According to the Plaintiffs’ case, necessary sale permission under the Urban Land (Ceiling and Regulation) Act, 1976 was granted on 11.08.1980. The Plaintiffs claimed that on the date of execution of the Sale Deed, they were put in possession of the Suit Property. The Plaintiffs purchased Stamp Papers worth Rs.23,200/- on 19.07.1980, as desired by the Defendant. According to the Plaintiffs’ case, the Defendant changed his mind as there was a price rise in respect of the properties in the vicinity of the Suit Property. Therefore, a telegraphic notice was issued by the Plaintiffs to the Defendant on 26.08.1980, calling upon him to remain present in the office of the Sub-Registrar at Chandigarh on 29.08.1980 between 10 am and 4 pm for registration of the Sale Deed. The case of the Plaintiffs was that notwithstanding the service of the said Notice, the Defendant neither replied nor remained present before the Sub-Registrar for registration of the Sale Deed. Therefore, a Suit for Specific Performance was filed by the Plaintiffs. In the alternative, the Plaintiffs claimed relief of damages of Rs.40,000/-.

iv) The Defendant contested the Suit by filing a Written Statement in which he contended that the Suit Property belonged to his Hindu Undivided Family and the members of the family were in joint possession of the Suit Property. The Defendant denied that the possession of the Property was handed over to the Plaintiffs. A Replication (further pleading) was filed by the Plaintiffs dealing with the averments made in the Written Statement.

v) The Ld. Trial Court declined to grant relief of specific performance and passed a decree of damages in the sum of Rs.40,000/- in favor of the Plaintiff No.1. The Suit as regards Plaintiff Nos. 2 to 4 was dismissed. The Ld. Trial Court framed eleven issues. The Trial Court held that though there was a clause to the contrary in the Sale Agreement, it would not bar the Plaintiff’s remedy to seek a specific performance. The Trial Court held that the Suit Property was the property of Hindu Undivided Family (‘HUF Property’) of the Defendant’s family. The Ld. Trial Court held that the theory of the Plaintiffs that there was a fresh agreement under which the price was reduced to Rs.2,90,000/- was not established. The Ld. Trial Court also held that the possession of the Suit Property was not handed over to Plaintiff No.1. The Trial Court further held that Plaintiffs nos.2 to 4 were not parties to the Sale Agreement and hence, they are not entitled to maintain the Suit for Specific Performance. The Ld. Trial Court on the issue of readiness and willingness held that as the Plaintiffs had kept the Demand Draft in the sum of Rs. 2,60,000/- ready, it cannot be held that they were not ready and willing to perform their part of the Agreement.

vi) Thereafter, an Appeal was filed by the Appellants/Plaintiffs before the District Court, which was dismissed. The District Court held that though, even according to the case of Plaintiff No.1, the Suit Property was HUF Property, there was no pleading that there was a legal necessity for the sale of the HUF Property. Moreover, the co-sharers of the Defendant were not made parties, and the Plaintiffs had not given up their claim against the co-sharers of the Defendant. While dismissing the Appeal, the District Court held that the Ld. Trial Court’s finding on the issue of readiness and willingness was correct.

vii) The High Court of Madhya Pradesh, in the Second Appeal, held that the Suit Property was HUF Property. Relying upon the decision of the Supreme Court in the case of Balmukand v. Kamla Wati AIR 1964 SC 1385, the High Court held that the Suit Property was impartible under the provisions of the Capital of Punjab (Development and Regulation) Act, 1952. Therefore, the High Court, vide Order dated 31.08.2010, confirmed the Decrees passed by the Ld. Trial Court and the Ld. First Appellate Court.

viii) Aggrieved by the Order dated 31.08.2010 of the High Court, the Appellant filed Civil Appeal No. 9360 Of 2013 before the Supreme Court.

SUPREME COURT ANALYSIS

The Apex Court vide Order dated 01.03.2024, made the following observations:

1) The Bench observed that under Section 20 of the Specific Relief Act, 1963 (Discretion as to decreeing specific performance), the grant of a decree for specific performance is always discretionary. The exercise of discretion depends on several factors. One of the factors is the conduct of the Plaintiff. The reason was that relief of a decree of specific performance is an equitable relief. A person who seeks equity must do equity.

2) Further, the Sale Agreement did not refer to the Defendant’s status as the Karta of the family. However, in the Sale Deed dated 18.03.1980 relied upon by the Plaintiffs, the Defendant was described as a vendor representing HUF as its Karta. Apart from Plaintiff No.1, the other three Plaintiffs also signed the Sale Deed. Clause (2) of the Sale Deed records that the Defendant has delivered the vacant possession of the Suit Property to the Plaintiffs. In the Plaint, the Plaintiffs have relied upon the Sale Deed of 18.03.1980, which specifically records that the Defendant, in his capacity as the Karta of HUF, had agreed to sell the Property of HUF. However, in the Plaint, the Plaintiffs did not disclose that the Defendant executed the Sale Agreement in his capacity as the Karta of HUF and that the Suit Property was HUF Property. This was very relevant as in the Sale Deed relied upon by the Plaintiffs themselves, the Defendant had been described as the Karta of HUF. In the Written Statement filed by the Defendant, specific reliance was placed on the fact that the Suit Property was HUF Property. It was specifically pleaded that as partition was not permissible, three members of HUF were in joint possession thereof. The Plaintiffs pleaded in Paragraph No. 3 of the Replication that the Suit Property was an individual property of the Defendant, and he was under obligation to sell the same to the Plaintiffs. Thus, in the pleadings, the Plaintiffs maintained that the Suit Property was the individual property of the Defendant. However, in his cross examination, the Plaintiff No. 1 accepted that the Suit Property belonged to HUF, and it was accordingly mentioned in the Sale Deed. Though the Plaintiff No. 1 knew that the Suit Property was HUF Property, this fact was suppressed in the Plaint.

3) The Apex Court further observed that the Plaintiffs had pleaded that after the Sale Agreement was executed, there were further negotiations, and the price was agreed to be reduced to Rs.2,90,000/- from Rs.3,50,000/-. In the Written Statement, there was a specific denial of the case of novation. In the Replication, the Plaintiffs reiterated that on 18.03.1980, when the Sale Deed was executed, the Parties agreed to reduce the price of the Suit Property to Rs.2,90,000/-. However, in his examination-in-chief, the Plaintiff No. 1 asserted that the terms and conditions of the Sale Agreement were never varied after its execution. Therefore, he did not come out with the case in his evidence that there was a further agreement under which the price of the Property was reduced to Rs.2,90,000/-. Thus, to the knowledge of the Plaintiff No. 1, the case pleaded in the Plaint regarding the price reduction was factually incorrect.

4) That the conduct of the Plaintiff No. 1 does not stop here. In paragraph 4 of the Plaint, there was a specific assertion that after the Sale Deed dated 18.03.1980 was executed, the possession of the Suit Property was delivered to the Plaintiffs. This assertion had been specifically denied in the Written Statement. In paragraph 2 of Replication, the Plaintiffs reiterated that the Sale Agreement was superseded and the novated contract of 18.03.1980 exists between the Parties. In Paragraph 3, the Plaintiffs reiterated that they were put in possession. However, in the cross-examination, the Plaintiff No. 1 specifically admitted that he never took possession of the Suit Property on 18.03.1980. He was confronted with his Affidavit dated 18.10.1980. He explained the statements in the Affidavit to mean he could get possession whenever he liked. He admitted that though he had not received possession, he stated in the Affidavit that he had received possession of the Suit Property. He also accepted that an Application for Temporary Injunction filed by him in the Suit was dismissed on the ground that the Plaintiffs were not in possession.

5) Though the Plaintiff No. 1 gave up his case of novation and reduction of the price of the Suit Property, he pleaded that he had kept a balance consideration of Rs.2,60,000/- ready in the form of a Demand Draft. Admittedly, the Plaintiffs had paid only a sum of Rs.30,000/- by way of earnest money. Therefore, the balance consideration was Rs.3,20,000/-.

6) As observed earlier by the Apex Court, the relief of specific performance is discretionary and equitable. Considering the Plaintiffs’ conduct of making false and/or incorrect statements in the Plaint, which were very material, the Bench held that the Plaintiffs were disentitled to relief of specific performance. It is important to note that Plaintiff No. 1 admitted in the examination-in-chief that the Suit Property was HUF Property. Despite such admission, the Plaintiffs continued to prosecute the Suit by seeking a decree in respect of the entire Suit Property. The Plaintiffs did not give up their case concerning the shares of other co-sharers who were not parties to the Suit. Therefore, the Ld. Trial Court, Ld. Appellate Court and High Court were justified in denying discretionary relief of specific performance to the Plaintiffs.

ORDER

Thus, the Apex Court upheld the Ld. Trial Court, Ld. Appellate Court and High Court that denied to grant discretionary relief of specific performance in favor of the Plaintiffs. Further, regarding the damages, the Ld. Trial Court had not granted interest post the Decree, therefore, the Supreme Court modified the Decree of the Ld. Trial Court and directed that the sum of Rs.40,000/- would carry interest @ 6% per annum from the date of the Decree of the Ld. Trial Court till its payment or realization. The Appeal filed by the Plaintiffs was partly allowed by the Apex Court.

 

Kartik Khandekar

Associate

The Indian Lawyer & Allied Services