Supreme Court Overturns High Court in Specific Performance Case: C. Haridasan vs. Anappath Parakkattu Vasudeva Kurup (2023)

Date of the Judgment: 13 January 2023

Citation: Civil Appeal No. 4072 of 2022

Judges: M.R. Shah, J. (Majority Opinion), B.V. Nagarathna, J. (Dissenting Opinion)

Can a buyer who has not paid the full sale consideration and has not taken steps to fulfill his obligations under a contract for sale of land, still get a decree of specific performance? The Supreme Court of India recently addressed this question in a case concerning a land sale agreement. The court had to decide whether the buyer had shown that he was ready and willing to complete the purchase. The majority opinion was authored by Justice M.R. Shah, and a dissenting opinion was given by Justice B.V. Nagarathna.

Case Background

The case revolves around an agreement to sell land between C. Haridasan (the plaintiff/appellant) and Anappath Parakkattu Vasudeva Kurup & Others (the defendants/respondents). On 7th August 2005, they agreed that the defendants would sell their land to the plaintiff for Rs. 8,750 per cent. The plaintiff paid Rs. 10,000 as an advance. The agreement stipulated that the remaining amount would be paid within six months after the land was measured and the necessary title documents were provided by the defendants, including a purchase certificate under the Kerala Land Reforms Act.

The plaintiff sent a legal notice on 2nd November 2006, asking the defendants to complete the sale. The defendants refused, stating that they had canceled the agreement. The plaintiff then filed a suit in the trial court for specific performance of the agreement, or alternatively, for the return of his advance with interest.

Timeline:

Course of Proceedings

The trial court initially ruled in favor of the plaintiff, decreeing specific performance of the agreement. However, to ensure fairness, the court directed the plaintiff to pay 25% more than the agreed amount (Rs. 11,000 per cent) and deposit the balance of Rs. 3,97,000 within two months. The defendants appealed to the High Court of Kerala, which set aside the trial court’s decision. The High Court held that the trial court was wrong to increase the sale price and should not have exercised discretion in favor of the plaintiff. The High Court instead directed the defendants to pay Rs. 3,10,000 to the plaintiff.

The plaintiff then appealed to the Supreme Court of India against the High Court’s decision.

Legal Framework

The case primarily involves the interpretation of Section 20 of the Specific Relief Act, 1963. This section deals with the court’s discretion in granting specific performance of a contract. The High Court had relied on this section to deny specific performance, stating that the trial court should not have exercised its discretion in favor of the plaintiff. The Supreme Court also considered the concept of “readiness and willingness” to perform the contract, as required under Section 16(c) of the Specific Relief Act, 1963, which states that specific performance of a contract cannot be enforced in favor of a person who fails to prove that he has performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him.

Section 16(c) of the Specific Relief Act, 1963:

“16. Personal bars to relief. —Specific performance of a contract cannot be enforced in favour of a person—
(c) who fails to prove that he has performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him, other than terms of the performance of which has been prevented or waived by the defendant.”

Arguments

Appellant (Plaintiff)’s Submissions:

• The plaintiff argued that the execution of the agreement to sell and receipt of part sale consideration were not disputed by the defendants.
• The plaintiff was always ready and willing to perform his part of the contract. The balance payment was to be made after the land was measured and the defendants provided the necessary documents, which they did not do in time.
• The trial court was justified in decreeing specific performance and enhancing the sale consideration to do complete justice. The High Court should not have interfered with this decision.
• The plaintiff relied on Pratap Lakshman Muchandi v. Shamlal Uddavadas Wadhwa, (2008) 12 SCC 67, to argue that the trial court was justified in enhancing the sale consideration to do complete justice.

Respondent (Defendants)’s Submissions:

• The defendants claimed the agreement was a forced one as defendant no. 1 was a heart patient and needed money urgently.
• The plaintiff paid only a small advance of Rs. 10,000 and did not pay the balance within six months. The defendants had to sell gold ornaments to clear their liabilities.
• The High Court was right in setting aside the decree for specific performance, considering Section 20 of the Specific Relief Act, and exercising discretion in favor of the defendants.
• The defendants argued that the price of the property had increased significantly, and therefore, the decree should not be enforced.

Issues Framed by the Supreme Court

The Supreme Court framed the primary issue as follows:

1. Whether the High Court was justified in reversing the decree of specific performance granted by the trial court.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Cases:

• Pratap Lakshman Muchandi v. Shamlal Uddavadas Wadhwa, (2008) 12 SCC 67: The Supreme Court referred to this case to support the trial court’s decision to enhance the sale consideration while decreeing specific performance.

  Ratio: In cases of specific performance, the court can enhance the sale consideration to do complete justice between the parties, especially when the market value of the property has increased.

Legal Provisions:

• Section 20 of the Specific Relief Act, 1963: The court considered the High Court’s reliance on this section, which deals with the court’s discretion in granting specific performance.

  Brief: This section gives the court discretion to grant or refuse specific performance, but this discretion must be exercised judiciously.

• Section 16(c) of the Specific Relief Act, 1963: The court considered this section which deals with the concept of “readiness and willingness” to perform the contract.

  Brief: This section states that specific performance cannot be enforced in favor of a person who fails to prove that he has performed or has always been ready and willing to perform the essential terms of the contract.

Judgment

The Supreme Court allowed the appeal, setting aside the High Court’s judgment and restoring the trial court’s decree for specific performance. The Court held that the trial court was justified in decreeing specific performance after finding that the plaintiff was ready and willing to perform his part of the contract. The Supreme Court also upheld the trial court’s decision to enhance the sale consideration to ensure complete justice.

However, the Supreme Court, in exercise of its powers under Article 142 of the Constitution of India, directed the plaintiff to pay an additional sum of Rs. 10,00,000 to the defendants within six weeks, over and above the sale consideration mentioned in the agreement and the amount already deposited. The Court also ordered the return of Rs. 3,10,000 to the defendants, which they had deposited pursuant to the High Court’s order.

How each authority was viewed by the Court?

• Pratap Lakshman Muchandi v. Shamlal Uddavadas Wadhwa, (2008) 12 SCC 67: The court followed this authority to justify the trial court’s decision to enhance the sale consideration.
• Section 20 of the Specific Relief Act, 1963: The court held that the High Court had incorrectly applied this section to deny specific performance.
• Section 16(c) of the Specific Relief Act, 1963: The court found that the plaintiff had complied with this section by demonstrating his readiness and willingness to perform his part of the contract.

What weighed in the mind of the Court?

The Supreme Court was primarily influenced by the following factors:

• The trial court’s findings on the execution of the agreement, the receipt of part sale consideration, and the plaintiff’s readiness and willingness to perform his part of the contract.
• The need to ensure complete justice between the parties, which justified the trial court’s decision to enhance the sale consideration.
• The court’s equitable powers under Article 142 of the Constitution of India, which allowed it to direct the plaintiff to pay an additional sum to the defendants.

The Court emphasized the importance of the trial court’s findings and the need to ensure that both parties are treated fairly. The court also used its constitutional powers to ensure that the defendants were adequately compensated, given the increase in property value.

The court considered the trial court’s findings, the High Court’s decision, and the legal principles involved before arriving at its final judgment.

“When to do the complete justice and relying upon and/or considering the decision of this Court in the case of Pratap Lakshman Muchandi v. Shamlal Uddavadas Wadhwa, (2008) 12 SCC 67, the learned trial Court directed the plaintiff to pay some more amount than the amount mentioned in the agreement to sell, at the most, the plaintiff can be said to be aggrieved.”

“Therefore, in the facts and circumstances of the case and more particularly when the learned trial Court exercised the discretion in favour of the plaintiff after having observed and recorded the findings on the execution of the agreement to sell by the defendants and that the part sale consideration was paid by the plaintiff which was accepted by the defendants and thereafter the finding that the plaintiff was always ready and willing to perform his part of the contract, the learned trial Court was absolutely justified in passing the decree for specific performance.”

“However, to do complete justice and in exercise of powers under Article 142 of the Constitution of India, I direct that over and above the sale consideration mentioned in the agreement to sell and the amount already deposited by the plaintiff, the plaintiff to pay a further sum of Rs. 10,00,000/- (Rupees Ten Lakhs only) to the original defendants, to be paid within a period of six weeks from today.”

Key Takeaways

• In cases of specific performance, the plaintiff must demonstrate that they were always ready and willing to perform their part of the contract.
• Trial courts have the power to enhance the sale consideration to ensure complete justice between the parties, especially when the market value of the property has increased.
• The Supreme Court can exercise its powers under Article 142 of the Constitution to ensure that justice is done, including directing additional payments to the parties.

Directions

The Supreme Court directed the plaintiff to pay an additional sum of Rs. 10,00,000 to the defendants within six weeks. The court also directed that the amount of Rs. 3,10,000, which was deposited by the defendants pursuant to the High Court’s order, be returned to them.

Development of Law

The ratio decidendi of this case is that a trial court can decree specific performance of a contract for sale of land, even if the buyer has not paid the full consideration, provided that the buyer demonstrates readiness and willingness to perform their part of the contract and the court enhances the sale consideration to ensure complete justice. This case reinforces the principle that courts have the power to ensure equitable outcomes in specific performance cases, and the trial court’s discretion to enhance sale consideration is upheld.

Conclusion

The Supreme Court’s judgment in C. Haridasan vs. Anappath Parakkattu Vasudeva Kurup & Others reaffirms the principle that specific performance of a contract can be granted if the plaintiff demonstrates readiness and willingness to fulfill their obligations. The court also emphasized the importance of ensuring complete justice between the parties and upheld the trial court’s decision to enhance the sale consideration. The Supreme Court’s intervention highlights the importance of equitable remedies in contract law and the court’s power to ensure fair outcomes.