Dismissed

Gurdev Kaur v. Inderjit Singh

Punjab & Haryana HC13 Jan 2009RSA/2136/2007

Case brief

AI extract

What is this about?

In this regular second appeal, the appellant challenged a decree for specific performance of an agreement to sell. The High Court held that the existence of a liquidated damages clause did not preclude specific performance and that no substantial question of law arose. The appeal was dismissed as it lacked merit.

What did the court decide?

Appeal dismissed; judgments and decree of courts below stand upheld.

Gurdev Kaur Vs Inderjit Singh — Specific Performance | Punjab & Haryana HC (2009)

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RSA No.2136 of 2007

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IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

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RSA No.2136 of 2007 (O&M)

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Date of Decision: 13.01.2009

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Gurdev Kaur ..Appellant

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Vs.

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Inderjit Singh ..Respondent

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Coram: Hon'ble Mr. Justice Vinod K.Sharma

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Present: Mr.V.K.Jindal, Advocate, for the appellant.

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Mr.Puneet Bali, Advocate, for the respondent.

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Whether Reporters of Local Newspapers may be allowed to see the judgment?

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To be referred to the Reporters or not?

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Whether the judgment should be reported in Digest?

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Vinod K.Sharma,J. (Oral)

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By way of this regular second appeal challenge is to the

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RSA No.2136 of 2007

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judgments and decree dated 13.9.2005 and 17.1.2007 passed by the learned courts below decreeing the suit for possession by way of specific performance of an agreement to sell dated 1.4.1999.

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The plaintiff/respondent brought a suit for specific performance for the agreement to sell dated 1.4.1999 executed by Gurdev Kaur regarding the land measuring 9 kanals 7 marlas for a total consideration of Rs.3.5 lacs as detailed in the head-note of the plaint or in the alternative for recovery of Rs.5 lacs.

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The appellant/defendant being owner in possession of the land in dispute entered into an agreement to sell dated 1.4.1999 regarding the suit land. At the time of agreement the appellant was paid a sum of Rs.2.50 lacs as part sale consideration. It was agreed that the sale deed would be executed on or before 31.3.2000 on the receipt of balance sale consideration from the plaintiff. One of the stipulations in the agreement was that in case the defendant failed to perform her part of the agreement she would be liable to pay double the amount of earnest money i.e. Rs.5 lacs.

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The plaintiff/respondent claimed that he was always ready and willing to perform his part of agreement. However, the defendant resiled from the agreement in question by refusing to perform her part of the contract without any rhyme or reason. It was also the case of the plaintiff that notice dated 16.3.2000 was issued by the defendant-appellant taking a plea that the agreement was forged. Notice was replied. The plaintiff appeared in the office of Sub Registrar, Anandpur Sahib on 31.3.2000 i.e. the date stipulated for execution of the sale deed. He claimed to have gone

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there along with balance sale consideration and other expenses to perform his part of the contract. However, defendant never turned up to perform her part of the contract. The plaintiff/respondent got himself marked present before the Sub Registrar, Anandpur Sahib. The case of the plaintiff was that, as the defendant failed to execute the sale deed in his favour the suit for specific performance was filed.

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The suit was contested by the defendant wherein a preliminary objection was taken that the suit was not maintainable. Defendant-appellant claimed that she never executed any agreement to sell in favour of the plaintiff. She also denied the receipt of Rs.2.5 lacs as earnest money. A plea was taken that the agreement of sale was false and fabricated document and was prepared by the plaintiff/respondent in connivance with the scribe and got signed by the defendant under misrepresentation.

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It was claimed that husband of the appellant namely Kuldip Singh is owner of 3 trucks and has landed property of about 12 acres and also a house in Shahpur Bela. Sons of the appellant-defendant are drivers who ply their trucks. It was claimed that one of the trucks belonging to the husband of the defendant-appellant was involved in a case registered at Police Station, Biwara on 27.3.1999. Kuldip Singh was said to have been told about the involvement of truck by the driver. It was claimed that police of Police Station, Biwara demanded a sum of Rs.25,000/- to get the truck released. Satinder Singh was contacted who helped in the matter by arranging a sum of Rs.25,000/-who was running a shop at Anandpur Sahib. He was also a friend of the plaintiff. It was claimed that the plaintiff agreed

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to arrange Rs.25,000/- on the condition that interest at the rate of 20 per cent per annum would be paid on the said amount. It was claimed that the land in dispute was given as a security and thus, it was claimed that the defendant/appellant was made to sign the papers in the Tehsil Office. Writing was not done in the presence of the defendant-appellant nor the same was read out to her nor any payment was made. Thus, it was claimed that in fact no agreement to sell was executed between the parties.

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On the defence raised above it was claimed that whole transaction was suspicious, therefore suit deserves to be dismissed.

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In the replication pleas raised in the plaint were reiterated and that of the written statement were denied.

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On the pleading of the parties the learned trial court was pleased to frame the following issues:-

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Whether the defendant has agreed to sell the suit property vide agreement dated 1.4.1999 and received Rs.2,50,000/-? OPP

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1-A Whether the agreement to sell dated 1.4.1999 is false, forged and fabricated document and is a result of misrepresentation? OPD

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Whether the plaintiff is still ready and willing to perform his part of agreement? OPP

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Whether the plaintiff is entitled to the relief of possession by way of specific performance? If issue No.1 and 2 are proved? OPP

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RSA No.2136 of 2007

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Whether the plaintiff is entitled to alternative relief of recovery of Rs.5 lacs along with interest? OPP

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Whether the suit is not maintainable? OPD

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Relief.

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Learned courts below on appreciation of evidence did not believe the case set up by the appellant/defendant and decided issue No.1 in favour of the plaintiff/respondent. Issues No.1-A and 2 were also decided in favour of the plaintiff/respondent and against the defendant/appellant.

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On issue No.3, it was held that the plaintiff/respondent was entitled to the relief of possession by way of specific performance. In view of the findings on issue No.3, it was held that the plaintiff was not entitled to the alternative relief. Thus, issue No.4 was also decided against the appellant/defendant and in view of the findings referred to above the suit was decreed.

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Appeal filed against the judgment and decree of the learned trial court also failed.

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Mr.V.K.Jindal, learned counsel appearing on behalf of the appellant while challenging the judgment and decree passed by the learned courts below referred to the following stipulation in the agreement:-

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“ If I failed to execute the sale deed registered within the period fixed above, in favour of above mentioned Inderjit Singh, then I, apart from the amount of earnest money, will pay Rs.2,50,000/- on account of compensation i.e. in total I will return Rs.5,00,000/- to Inderjit Singh. For the payment of

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aforesaid amount, I and my entire moveable and immovable property stands guarantee.”

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to contend that once the parties have stipulated that in the event of failure to execute the agreement the plaintiff/respondent shall be entitled to a sum of Rs.5 lacs, the learned courts were not justified in decreeing the suit for specific performance. Reference was made to Sections 10 and 14 of the Specific Relief Act which provide that a specific performance of the contract cannot be ordered when the party can be compensated in terms of money.

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However, this plea of the learned counsel for the appellant cannot be accepted as explanation I to Section 10 provides that breach of contract to transfer immovable property cannot be adequately relieved by compensation in money.

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Similarly, section 14 of the Specific Relief Act can be of no help to the appellant/defendant as the compensation in money cannot be said to be adequate in view of explanation I to Section 10 of the Act.

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Learned counsel for the appellant thereafter contended that as the plaintiff/respondent had himself claimed alternative relief of damages, the decree of specific performance would be inequitable and unjust.

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In support of this contention learned counsel for the appellant placed reliance on the judgment of Hon'ble Supreme Court in the case of Kansi Ram Vs. Om Parkash Jawal and others AIR 1996 SC 2150 , wherein Hon'ble Supreme Court was pleased to lay down as under:-

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“5. ..... But it is equally settled law that granting decree for

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specific performance of a contract of immovable property is not automatic. It is one of the discretion to be exercised on sound principles. When the Court gets into equity jurisdiction,it would be guided by justice, equity, good conscience and fairness to both the parties. Considered from this perspective, in view of the fact that the respondent himself had claimed alternative relief for damages, we think that the Courts would have been well justified in granting alternative decree for damages, instead of ordering specific performance which would be unrealistic and unfair. Under these circumstances,we hold that the decree for specific performance is inequitable and unjust to the appellant.”

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However, Mr. Puneet Bali, learned counsel appearing on behalf of the respondent controverted the contention raised by the learned counsel for the appellant by placing reliance on the judgment of this court in the case of Mohini Kapoor Vs. Deepak Uppal 2006 (1) RCR (Civil) 807 , wherein this court had upheld the order passed by the learned courts below ordering specific performance of the contract wherein alternative relief of compensation was also claimed, by observing as under:-

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“ The argument based on the aforementioned Clause 2 has also been rejected by the learned lower Appellate Court by observing that merely because prayer for the alternative relief of refunding double the amount of earnest money has been made as per the terms of the agreement would not necessarily

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mean that the suit of the plaintiff-respondent for specific performance of agreement was to be dismissed by granting him alternative relief of damages to pay double the amount of earnest money. The learned lower Appellate Court has placed reliance on various judgments and has rejected the argument of the defendant-appellant by observing as under:

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“In the present case the respondent-plaintiff has been ready and willing to perform their part of the contract. The appellant-defendants had been avoiding performance thereof. Untenable grounds have been taken by them.

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Incorporation of clause of payment of damages, as has rightly been argued by learned counsel for the respondent/plaintiffs, even otherwise cannot be interpreted to refuse specific performance of the agreement. In case Kapoor Singh Vs. Surinder Singh, 1993 (1) RRR 567: 1993 (1) PLR 499, it was held that mere mention in the agreement of a sum to be paid as damages in case of default is no ground to deny the specific performance of the agreement. It was further observed that such mention was only made for the purpose of securing performance. In Sadiz Hussain V. Anup Singh, AIR 1924 Lahore 151 it was held that general rule of equity is that if a thing is agreed upon to be done though there is a penalty annexed to secure its

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performance. Yet the very thing itself must be done. Reference may be made to authority report Hukam Chand and another V. Nikka Singh and another, 15, Punjab Record, 1908 wherein it was ruled that party should not be allowed to evade merely because the agreement provided a penal clause.

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Still in another recent authority reported as Gurmail Singh and others V. Amrit Singh and others, 2000 (1) RCR (Civil) 70: 1993 (3) PLR 68 (P&H) it was held that merely because agreement indicated that the plaintiff would claim double the amount in case of breach, would not exclude the right of the plaintiff to enforce the agreement. Support has also been sought from the authorities reported as Smt.Shakuntla Devi V. M/s Mohanlal Amrit Raj Jain Market, Pali AIR 1994 (Rajasthan) 259; Ramani Ammnal V.Susilammal, AIR 1991 Madras 163; Narayan Nagarao V. Amrit Haribhau, AIR 1957 Bombay 241; Sadiq Hussain V. Anup Singh, AIR 1924 Lahore 151, Hukam Chand and another V. Nikka Singh and another, 15 Punjab Record 1908; V.K.Kandasami Chettiar Vs. Shanmugha Thevara and another, AIR (36) 1949 Madras 3021; Kirpal Singh Vs. Mst. Kartaro and others, AIR 1980 Rajasthan 212 and Vairvan

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RSA No.2136 of 2007

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V,K.S.Vidyanandam and others, 1996 (4) LLR 163.

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Looking from another angle, relief of specific performance is to be ordinarily granted and is to be refused only in exceptional circumstances. In case of immovable property monetary compensation is not adequate. Mere mentioning of liquidated damages does not curtail jurisdiction of the Court to grant relief of specific performance. Reference may be made to authority reported as Janga Singh v. Harbans Singh, 1992(1) RRR 566 : 1992 PLJ 7 (P&H) ; Gurdial Singh v. Darshan Singh, 1995(3) RRR 508 : 1996(1) PLR 102 (P&H) ; Anokh Devi v. Trilok Singh, 1996(1) RRR 288 : 1996(1) PLR 372 (P&H) ; M.L. Devender Singh v. Syed Khaja, AIR 1973 SC 2452 ; and Afsar Gujjar v. Barkha Ram, 1989 PLJ 23 (P&H).

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Still further it may be mentioned that in case of immovable property time is never the essence of the contract unless so is recited in the contract. Reference may be made to the authorities reported as Mohammad Nadir v. Chaudhari Jahangiri Mal and others, AIR (36) 1949 Lahore 72 ; Bhagwan Singh v. Teja Singh alias Teja Ram, 1996(3) LLR 487 (P&H) ; and, Gur Akbar Akal Kaur v. Tehal Singh, 1994(1) RRR 225 (P&H) : 1994(1) LLR 581 (P&H).

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Thus, plea of learned counsel for the appellants that sufficient time having elapsed, the specific performance should be refused, cannot be accepted. The default lies with the appellants and refusing specific performance would be amounting to undue enrichment of wrongdoers."

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Mr. J.K. Sibal, learned Senior counsel has placed reliance on Clause 2 of the agreement to sell and has argued that once there is a contract between the parties entered with their free will giving option to one party to terminate the contract at any time and without assigning any reason then such a contract has to be considered as determinable within the meaning of Section 14(1)(c) of the Specific Relief Act, 1963 (for brevity the 'Act'). According to the learned counsel, in such like cases no specific performance of a contract of sale would be permissible and proper relief of refunding double the amount of earnest money would alone be sustainable in law. In support of his submission, learned counsel has placed reliance on the observation in para Nos. 56 and 57 of the judgment of the Supreme Court in the case of Her Highness Maharani Shanti Devi P. Gaikwad v. Savjibhai Haribhai Patel and others, 2001(1) RCR(Rent) 481 (SC) : 2001(2) RCR(Civil) 536 (SC) : (2001)5 SCC 101. Learned counsel has also relied upon another judgment

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of the Supreme Court in Dadarao v. Ramrao, (1999)8 SCC 416 and argued that where the agreement itself provided for contingencies if sellers are refusing to sell and purchases are refusing to buy by stipulating the refund of earnest money then there was no obligation to complete the sale transaction by passing a decree for specific performance. Learned counsel has then argued that when there is continuous steep rise in prices of the property in respect of a house located in an urban area then relief of specific performance of agreement could be refused by passing a decree for alternative relief of damages.

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Mr. Ashok Aggarwal, learned Senior counsel appearing for the plaintiff- respondent has argued that the law is well settled and merely because an alternative plea of refund of earnest amount and damages has been raised it cannot constitute a bar to claim a decree for specific performance of contract. In support of his submission, learned counsel has placed reliance on the judgment of the Supreme Court in the case of P.C. Varghese v. Devaki Amma Balambika Devi and others, 2005(4) RCR(Civil) 469 : (2005)8 SCC 486 and P.D. Souza v. Shondrilo Naidu, 2004(3) RCR(Civil) 668 : (2004)6 SCC 649. Learned counsel has then argued that the agreement of sale by virtue of Clause 2 or any other Clause would not become a contingent contract which could alone

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be performed on the happening of a particular event. According to the learned counsel, Clause 2 firstly lacks mutuality and then the relief by filing the suit has been claimed without any delay. Learned counsel has drawn my attention to the date of filing the suit which is 18.05.1991 and the date of agreement to sell executed between the parties on 18.08.1990. There is a stipulation in the agreement to sell that the balance sale consideration was to be paid by the plaintiff-respondent to defendant-appellant Nos. 1 and 2 within 30 days from the date of issuance of transfer permission by defendant- respondent No. 3 and after obtaining of Income Tax Clearance Certificate from the concerned Department. There was no communication sent by the defendant- appellants to the plaintiff-respondent so as to permit the commencement of period of 30 days. Replying to the argument of the learned counsel for the defendantappellant, Mr. Aggarwal has submitted that continuous steep rise in prices of property during the pendency of the suit cannot constitute the sole basis for refusing to grant a decree for specific performance and grant of the alternative relief of refund of earnest amount along with damages. Learned counsel has also submitted that in any case Clause 2 cannot be interpreted to mean that the defendant-appellant has arbitrary discretion to refuse performance of the agreement

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to sell but the same has been incorporated in order to secure the performance of agreement to sell. Learned counsel has also made a reference to the explanation appended to Section 10 and Section 22 of the Act. The last submission made by the learned counsel is that there are concurrent findings of fact which do not deserve to be interfered in exercise of jurisdiction under Section 100 of the Code and that the plea of determination of contract based on Section 14(1)(c) has nowhere been raised by the defendant-appellant in the Courts below. According to the learned counsel, an issue of the aforementioned plea could have been framed, evidence could have been led and then finding could have been recorded and, therefore, such a plea cannot be permitted to be raised before the High Court in an appeal under Section 100 of the Code.

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After hearing the learned counsel for the parties and perusing the judgments of both the courts below, I am of the considered view that this appeal does not merit admission because no substantive question of law requiring determination by this court is involved. Both the courts below have concurrently found that the defendant-appellants have failed to perform their part of the contract whereas the plaintiff-respondents have always been ready and willing to perform their part. It has rightly been held that merely

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because a clause for payment of damages has been incorporated in the agreement to sell dated 18.8.1990 would not constitute a ground to refuse specific performance of the agreement. It is elementary to point out that a breach of contract cannot be adequately relieved by compensation in money. The aforementioned legal position emerges from the plain language of Explanation (1) of Section 10 and Section 23 of the Act. For the aforementioned purpose, reliance can be placed on the judgment of the Supreme Court in P.C. Varghese case (supra). It is also evident that Clause 2 merely contained sanction for securing the performance of the agreement to sell as contemplated by Section 23 of the Act. The aforementioned view is supported by the judgment of the Supreme Court in the case of Manzoor Ahmed Magray v. Gulam Hassan Aram and others, 1999(4) RCR(Civil) 597 : AIR 2000 SC 191. It is equally well settled that under Section 230-A of the Income Tax Act, 1961, clearance certificate for registration of transfer of property has to be obtained by the defendant- appellants and an application was required to be submitted by them. In this regard, reference may be made to the judgment of Karnataka High Court in the case of Smt. Fouzia Shahi Nazeer v. B.K. Lingappa and others, 1990 ITR 342. It has been categorically found by the courts below that the defendant-appellants did not come

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forward to complete the formalities for obtaining transfer permission letter from HUDA or from the Income Tax Department. Moreover, both the courts below have exercised discretion in favour of the plaintiff- respondents by keeping in view the facts and circumstances of the case and the aforementioned discretion cannot be interfered with in exercise of jurisdiction under Section 100 of the Code because nothing has been shown from the record that there is any legal infirmity in the application of law or in respect of finding of fact. It has been repeatedly emphasized by the Supreme Court that this court in exercise of jurisdiction under Section 100 of the Code should be extremely slow in setting aside the findings of fact as the first appellate court is the final court of fact as well as law. In this regard, reference may be made to the judgment of the Supreme Court in the case of Santosh Hazari v. Purushottam Tiwari, 2001(3) RCR(Civil) 243 : (2001)3 SCC 179. In concluding portion of para 15 of the judgment their Lordships of have observed as under :

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"We need only remand (remind ?) the first appellate courts of the additional obligation cast on them by the scheme of the present Section 100 substituted in the Code. The first appellate court continues, as before, to be a final court of facts; pure findings of fact remain

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immune from challenge before the High Court in second appeal. Now the first appellate court is also a final court of law in the sense that its decision on a question of law even if erroneous may not be vulnerable before the High Court in second appeal because the jurisdiction of the High Court has now ceased to be available to correct the errors of law or the erroneous findings of the first appellate court even on questions of law unless such question of law be a substantial one."

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Therefore, the appeal does not deserve admission as no substantial question of law requiring determination by this court has been raised.

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The argument of the learned counsel for the defendantappellants placing reliance on Clause 2 would not require any detailed consideration because such an argument has not been raised in terms before the courts below. The absence of such an argument before the courts below would be significant because it would have required pleadings, framing of issues and adducing of evidence by the parties. It is no doubt true that such a course can be adopted even at the stage of second appeal under Section 100 of the Code, but I do not wish to prefer to adopt the aforementioned course because there is nothing on the record to show that there was any intimation refusing to

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perform the contract. Therefore, it has as to be concluded that the contract in terms of Clause 2 in any case had never been determined. No notice expressing the intention to determine the contract in terms of Clause 2 has ever been given and therefore, Section 14(1)(c) of the Act cannot be invoked. It is further appropriate to mention that the use of expression 'a contract' which is in its nature determinable in Clause (C) of sub-section (1) of Section 14 of the Act would not include in its sweep the ordinary agreement to sell containing penalty clause which are aimed at securing the performance of the contract as envisaged by Section 23 of the Act. Moreover, sub-section (3) of Section 14, has incorporated a non-obstante clause which provides that notwithstanding anything contained inter alia any clause (C) of sub-section (1) the court may still enforce specific performance where the suit is for enforcement of a contract. It appears to me that the situation contemplated by Section 14(1)(c) is the one which was available in the case of Indian Oil Corporation Limited v. Amritsar Gas Service, 1991(1) SCC 533 , because in that case the finding recorded in the award was that the distributorship agreement was revocable and the same was admittedly for rendering personal service and in such a situation Section 14(1)(c) would automatically get attracted. It has further been made clear that sub-section (1) of Section 14 of the Act specifies the contracts which cannot be specifically

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enforced and one of the type of contract mentioned is which is in its nature determinable. It is thus evident that Section 14(1) is attracted to those contracts which cannot be specifically enforced and it includes a contract which in its nature is determinable. The aforementioned provision when read with Explanation (1) of Section 10 then it becomes evident that breach of a contract to transfer immovable property cannot be adequately relieved by compensation in money. In other words, a presumption is available under Explanation (1) of Section 10 that the court must presume that the breach of a contract to transfer immovable property must be specifically enforced and the alternative relief of securing compensation in money would not be adequate. Therefore, on principle as well as on precedent the legal position is against the defendant-appellants.”

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Though the relief of specific performance is a discretionary relief but it is well settled that normally suit for specific performance is required to be decreed unless on the facts and circumstances of the case courts come to the conclusion that it would not be, just, fair and equitable to grant decree for specific performance by taking into consideration the facts brought on record, rise in price of the property or any other equitable consideration.

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In the present case, the appellant/defendant neither pleaded nor proved that the decree of specific performance would be harsh or

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inequitable so as to grant a relief against the well settled law that normally a suit for specific performance is required to be decreed. It is also well settled that inadequate price fixed in an agreement to sell cannot be a ground to deny the decree of specific performance unless the price is shown to be so inadequate to prick the conscience of the court to hold that the specific performance would be unfair and inequitable.

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As already observed above no such plea was raised or proved, thus, no fault can be found with the judgments and decree passed by the learned courts below.

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The appeal raises no substantial question of law for consideration by this court as the plea raised by the learned counsel for the appellant already stands decided by this court in the case of Mohini Kapoor Vs. Deepak Uppal (supra) .

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No merit.

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Dismissed.

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13.01.2009 (Vinod K.Sharma) rp Judge

Gurdev Kaur v. Inderjit Singh

Case brief

What is this about?

What did the court decide?

Gurdev Kaur v. Inderjit Singh

Case brief

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What did the court decide?

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