Supreme Court Reverses High Court Decision on Specific Performance of Contract: Jaichand vs. Sahnulal (2024)

Introduction

Date of the Judgment: 10 December 2024
Citation: 2024 INSC 996
Judges: J.B. Pardiwala, J., R. Mahadevan, J.

Can a High Court overturn a well-reasoned judgment of a first appellate court in a second appeal, especially when the first appellate court has raised doubts about the plaintiff’s readiness and willingness to perform their part of a contract? The Supreme Court of India recently addressed this question in a case concerning the specific performance of a sale agreement. The court emphasized that High Courts should not re-evaluate evidence in second appeals, particularly when the first appellate court has already made findings of fact. The bench comprised Justice J.B. Pardiwala and Justice R. Mahadevan.

Case Background

The case involves a dispute over an agreement of sale for a piece of land in village Parsahi, Tehsil District Bilaspur. The original owner of the land, Juglal, entered into an agreement to sell the property to Sahnulal on April 28, 1996. The agreed sale consideration was Rs. 50,000 per acre, with an advance payment (earnest money) of Rs. 6,000. Juglal passed away during the pendency of the suit. The legal heirs of Juglal are the appellants in this case, and Sahnulal is the respondent.

Sahnulal, the plaintiff, filed a suit seeking specific performance of the contract in 2001, after realizing that Juglal was not willing to complete the sale. The trial court ruled in favor of Sahnulal, directing the defendants to execute the sale deed. However, the first appellate court reversed this decision, stating that Sahnulal had not shown sufficient readiness and willingness to perform his part of the contract. The High Court then overturned the first appellate court’s decision, leading to the current appeal before the Supreme Court.

Timeline:

Course of Proceedings

The trial court ruled in favor of the plaintiff, Sahnulal, ordering the defendants to execute the sale deed after receiving the balance amount. The first appellate court, however, partly allowed the appeal filed by the defendants, setting aside the trial court’s order for specific performance. The first appellate court noted that the plaintiff had not taken timely action and had not demonstrated readiness and willingness to perform the contract. The High Court, in a second appeal, reversed the first appellate court’s decision, stating that the first appellate court had erred in considering the issue of hardship to the defendant without proper pleadings and evidence.

Legal Framework

The case primarily revolves around the interpretation and application of Section 100 of the Civil Procedure Code, 1908 (CPC), which governs second appeals in the High Court. This section allows the High Court to interfere with the findings of the lower courts only if a substantial question of law is involved. The court also discussed Section 20(2)(b) of the Specific Relief Act, 1963, which allows the court to refuse specific performance of a contract if it would cause hardship to the defendant, which he did not foresee, and where not granting the same would not cause any hardship to the plaintiff.

Relevant provisions mentioned in the judgment:

• Section 100 of the Civil Procedure Code, 1908: “Second appeal. – (1) Save as otherwise expressly provided in the body of this Code or by any other law for the time being in force, an appeal shall lie to the High Court from every decree passed in appeal by any Court subordinate to the High Court, if the High Court is satisfied that the case involves a substantial question of law.”
• Section 20(2)(b) of the Specific Relief Act, 1963: “The court may properly exercise discretion not to decree specific performance- (b) where the performance of the contract would involve some hardship on the defendant which he did not foresee, whereas its non-performance would involve no such hardship on the plaintiff.”

Arguments

Appellants’ (Original Defendants) Arguments:

• The first appellate court had rightly concluded that the plaintiff was not ready and willing to perform his part of the contract. The plaintiff had delayed the suit for years after the agreement and after the refusal to register the sale deed.
• The High Court incorrectly focused solely on the issue of hardship under Section 20(2)(b) of the Specific Relief Act, 1963, ignoring the first appellate court’s findings on the plaintiff’s readiness and willingness.
• The High Court should not have re-evaluated the evidence in a second appeal, as the first appellate court is the final court of facts.

Respondents’ (Original Plaintiffs) Arguments:

• The plaintiff had always been ready and willing to perform his part of the contract.
• The first appellate court had erred in considering the issue of hardship without proper pleadings and evidence.
• The High Court was correct in restoring the trial court’s decree for specific performance.

The innovativeness of the argument by the appellants was that they highlighted the delay on the part of the plaintiff in filing the suit and that the first appellate court had correctly considered the lack of readiness and willingness to perform the contract, which was a crucial aspect that the High Court had overlooked. The respondents’ arguments were more focused on the procedural aspect of the first appellate court’s decision, stating that it had erred in considering the issue of hardship without proper pleadings and evidence.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in the judgment. However, the core issue that the court addressed was:

1. Whether the High Court was justified in interfering with the findings of the first appellate court in a second appeal, particularly concerning the readiness and willingness of the plaintiff to perform the contract.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Supreme Court relied on several precedents to explain the scope of a second appeal under Section 100 of the CPC. The court emphasized that the High Court should not re-appreciate evidence or substitute its opinion for that of the first appellate court unless the findings are erroneous or contrary to law.

Cases Relied Upon by the Court:

• Navaneethammal v. Arjuna Chetty, AIR 1996 SC 3521: The Supreme Court held that the High Court should not re-appreciate the evidence to reach another possible view in order to set aside the findings of fact arrived at by the first appellate Court.
• Kshitisn Chandra Purkait v. Santhosh Kumar Purkait, (1997) 5 SCC 438: The Supreme Court held that in a second appeal, the High Court should be satisfied that the case involves a substantial question of law and not a mere question of law.
• Dnyanoba Bhaurao Shemade v. Maroti Bhaurao Marnor, 1999 (2) SCC 471: The Supreme Court held that the High Court can exercise its jurisdiction under Section 100 of CPC only on the basis of substantial questions of law, which are to be framed at the time of admission of the second appeal.
• Kondira Dagadu Kadam v. Savitribai Sopan Gujar, AIR 1999 SC 2213: The Supreme Court held that the High Court cannot substitute its opinion for the opinion of the first appellate Court unless it is found that the conclusions drawn by the lower appellate Court were erroneous.
• Bhagwan Sharma v. Bani Ghosh, AIR 1993 SC 398: The Supreme Court held that the High Court was entitled to examine if the findings of fact recorded by the first appellate court were vitiated due to non-consideration of admissible evidence.
• Hero Vinoth v. Seshammal, (2006) 5 SCC 545: The Supreme Court explained the concept of a substantial question of law, stating that it must be a question of general public importance or one that directly and substantially affects the rights of the parties.

Legal Provisions Considered by the Court:

• Section 100 of the Civil Procedure Code, 1908: Governs the scope of second appeals in the High Court, emphasizing that the High Court can only interfere when a substantial question of law is involved.
• Section 103 of the Civil Procedure Code, 1908: Empowers the High Court to determine issues of fact in a second appeal under certain conditions.
• Section 20(2)(b) of the Specific Relief Act, 1963: Allows the court to refuse specific performance if it would cause unforeseen hardship to the defendant.

Judgment

The Supreme Court allowed the appeals, setting aside the High Court’s judgment and restoring the first appellate court’s decision. The court held that the High Court had erred in re-evaluating the evidence and had not addressed the first appellate court’s findings regarding the plaintiff’s readiness and willingness to perform the contract. The court also criticized the High Court for framing a vague and unsubstantial question of law for consideration in the second appeal.

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• The Supreme Court relied on Navaneethammal v. Arjuna Chetty, AIR 1996 SC 3521* to emphasize that the High Court should not re-appreciate evidence to reach a different conclusion than the first appellate court.
• The Supreme Court cited Kshitisn Chandra Purkait v. Santhosh Kumar Purkait, (1997) 5 SCC 438* to highlight that a second appeal should involve a substantial question of law, not just any question of law.
• The Supreme Court referred to Dnyanoba Bhaurao Shemade v. Maroti Bhaurao Marnor, 1999 (2) SCC 471* to reiterate that the High Court’s jurisdiction under Section 100 of the CPC is limited to substantial questions of law framed at the time of admission of the second appeal.
• The Supreme Court used Kondira Dagadu Kadam v. Savitribai Sopan Gujar, AIR 1999 SC 2213* to stress that the High Court cannot substitute its opinion for the first appellate court unless the conclusions were erroneous.
• The Supreme Court cited Bhagwan Sharma v. Bani Ghosh, AIR 1993 SC 398* to explain that the High Court can examine if the findings of fact were vitiated due to non-consideration of admissible evidence.
• The Supreme Court referred to Hero Vinoth v. Seshammal, (2006) 5 SCC 545* to clarify the concept of a substantial question of law, stating that it must be a question of general public importance or one that directly and substantially affects the rights of the parties.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the procedural errors committed by the High Court in the second appeal. The court emphasized the importance of adhering to the principles governing second appeals under Section 100 of the CPC. The court was also critical of the High Court’s failure to address the first appellate court’s findings on the plaintiff’s readiness and willingness, and its focus on the issue of hardship without proper pleadings or evidence. The court’s reasoning was heavily based on the established legal principles regarding the scope of second appeals and the limitations on the High Court’s power to re-evaluate evidence.

Fact:Law

Logical Reasoning:

The Supreme Court considered the alternative interpretation that the High Court was correct in restoring the trial court’s decree for specific performance. However, the court rejected this interpretation, emphasizing that the High Court had exceeded its jurisdiction under Section 100 of the CPC by re-evaluating factual findings and not addressing the first appellate court’s findings on the plaintiff’s readiness and willingness. The Supreme Court’s final decision was based on the principle that High Courts should not interfere with the findings of fact of the first appellate court unless the findings are erroneous or contrary to law.

The court’s reasoning was based on the following points:

• The High Court should not have re-evaluated the evidence in a second appeal.
• The High Court should have addressed the first appellate court’s findings on the plaintiff’s readiness and willingness.
• The High Court’s focus on hardship under Section 20(2)(b) of the Specific Relief Act, 1963, was misplaced.
• The High Court had framed a vague and unsubstantial question of law.

“The High Court seems to have proceeded under a misconception of fact that the first appellate court reversed the judgment and decree passed by the trial court only on the issue of hardship, relying on the provisions of Section 20(2)(b) of the specific relief act, 1963. Whereas in fact the first appellate court also expressed its doubt as regards the plaintiffs readiness and willingness to perform his part of the contract.”

“The High Court has not said a word in so far as the findings recorded by the first appellate court in regard to the readiness and willingness on the part of the plaintiff to perform his part of the contract is concerned.”

“By any stretch of imagination, it cannot be termed even a question of law far from being a substantial question of law. How many times the Apex Court should keep explaining the scope of a second appeal under Section 100 of the CPC and how a substantial question of law should be framed?”

There were no minority opinions in this case. The decision was unanimous.

Key Takeaways

• High Courts should not re-evaluate evidence in second appeals under Section 100 of the CPC.
• High Courts must respect the findings of fact made by the first appellate court unless they are erroneous or contrary to law.
• When considering a second appeal, High Courts must address all the findings of the lower appellate court and not selectively focus on certain issues.
• The readiness and willingness of a plaintiff to perform their part of a contract is a crucial factor in suits for specific performance.
• The issue of hardship under Section 20(2)(b) of the Specific Relief Act, 1963, should be considered only if it is properly pleaded and supported by evidence.

Potential Future Impact: This judgment reinforces the limitations on the High Court’s power in second appeals and emphasizes the importance of adhering to the established principles governing such appeals. It is likely to serve as a reminder to High Courts to exercise caution when interfering with the findings of fact of the first appellate court. The judgment also clarifies the importance of the readiness and willingness of the plaintiff in suits for specific performance.

Directions

The Supreme Court directed the appellants (original defendants) to refund an amount of Rs. 3,50,000 to the respondents (original plaintiffs) within eight weeks. If the appellants fail to deposit this amount, the decree passed by the trial court will stand restored.

Specific Amendments Analysis

Not applicable as the judgment does not discuss any specific amendments.

Development of Law

The ratio decidendi of this case is that the High Court should not interfere with the findings of fact of the first appellate court in a second appeal under Section 100 of the CPC, unless such findings are erroneous or contrary to law. The judgment reinforces the established principles regarding the scope of second appeals and emphasizes the importance of the plaintiff’s readiness and willingness in suits for specific performance. There is no change in the previous position of law, but the judgment reiterates the existing principles and clarifies their application.

Conclusion

The Supreme Court’s judgment in Jaichand (Dead) Through Lrs & Ors. vs. Sahnulal & Anr. reinforces the limitations on the High Court’s power in second appeals under Section 100 of the CPC. The court emphasized that High Courts should not re-evaluate evidence or substitute their opinions for the findings of fact made by the first appellate court. The judgment also highlights the importance of the plaintiff’s readiness and willingness in suits for specific performance and directs the appellants to refund Rs. 3,50,000 to the respondents, failing which the trial court’s decree for specific performance would be restored.