Supreme Court Upholds Dismissal of Specific Performance Suit Due to Delay: Atma Ram vs. Charanjit Singh (2020)

Introduction

Date of the Judgment: February 10, 2020
Citation: 2020 INSC 138
Judges: N.V. Ramana, J. and V. Ramasubramanian, J.

Can a party circumvent the limitation period for filing a suit for specific performance by initially filing for a mandatory injunction and later converting it by paying the deficit court fee? The Supreme Court of India addressed this question in a recent case, clarifying the importance of timely action and the nature of reliefs sought in specific performance cases. The Court examined whether a suit initially filed for mandatory injunction could be treated as a suit for specific performance by paying the deficit court fee and the effect of delay in filing the suit. The judgment was delivered by a two-judge bench comprising Justice N.V. Ramana and Justice V. Ramasubramanian, with the opinion authored by Justice V. Ramasubramanian.

Case Background

On October 12, 1994, Atma Ram (the petitioner) and Charanjit Singh (the respondent) entered into an agreement for the sale of land and factory premises in Bhiwani for a total consideration of Rs. 4,38,000. Atma Ram paid an earnest money of Rs. 1,00,000 at the time of the agreement, with the contract’s performance date set for October 7, 1996. When the performance date arrived, Atma Ram claimed that Charanjit Singh disclosed the existence of a pending civil litigation as an impediment to the sale. Subsequently, on November 12, 1996, Atma Ram issued a legal notice requesting details of the litigation and asking Charanjit Singh to execute the sale deed within 21 days if no litigation was pending. As there was no response, Atma Ram filed a civil suit on October 13, 1999, seeking a mandatory injunction to direct Charanjit Singh to execute the transfer documents after receiving the balance payment. The suit was initially valued at Rs. 250 with a court fee of Rs. 25.

Timeline

Course of Proceedings

The Trial Court initially framed eight issues, including whether the plaintiff was entitled to a mandatory injunction and whether the suit was maintainable in its current form. The respondent applied for the dismissal of the suit, arguing that a suit for mandatory injunction could not enforce specific performance. The Trial Court, in a curious order on August 9, 2003, held that the suit was indeed for specific performance and allowed the petitioner to pay the deficit court fee. The respondent did not challenge this order, and the Trial Court subsequently decreed the suit in favor of Atma Ram on February 3, 2006. The First Appellate Court reversed the Trial Court’s decision on January 2, 2013, dismissing the suit. The High Court of Punjab & Haryana at Chandigarh upheld the First Appellate Court’s decision on May 20, 2016, leading to the current special leave petition before the Supreme Court.

Legal Framework

The Supreme Court considered the following legal provisions:

• Section 149 of the Code of Civil Procedure (CPC): This section allows the court to permit a party to pay the deficit court fee at any stage, and upon such payment, the document has the same effect as if the fee had been paid initially. The court noted that Section 149 of the CPC confers a discretion upon the Court to allow a person, at any stage, to pay the whole or part of the court fee actually payable on the document, but which has not been paid. Once the Court exercises such a discretion and payment of court fee is made in accordance with the said decision, the document, under Section 149, shall have the same force and effect as if such fee had been paid in the first instance.
• Section 16(c) of the Specific Relief Act, 1963: This provision requires the plaintiff to prove their readiness and willingness to perform the contract. The Court noted that the effect of Section 16(c) of the Specific Relief Act, 1963 was not considered in the proper prospective by the High Court with particular reference to the facts of the case.
• Section 20 of the Specific Relief Act, 1963: This section states that the relief of specific performance is discretionary. The Court noted that the relief of specific performance is discretionary under Section 20 of the Specific Relief Act, 1963.

Arguments

Petitioner’s Arguments:

• The petitioner argued that the Trial Court’s order dated August 9, 2003, allowed the suit for mandatory injunction to be treated as one for specific performance upon payment of the deficit court fee.
• Relying on Section 149 of the Code of Civil Procedure, the petitioner contended that the payment of the deficit court fee should have the same effect as if the fee had been paid initially.
• The petitioner argued that the High Court did not properly consider the effect of Section 16(c) of the Specific Relief Act, 1963, regarding readiness and willingness, especially given the facts of the case.

Respondent’s Arguments:

• The respondent argued that the suit was filed beyond the limitation period for specific performance.
• The respondent contended that the suit was not maintainable in the form it was originally filed, as it sought a mandatory injunction instead of specific performance.
• The respondent argued that the petitioner’s conduct, including the delay in filing the suit and the initial prayer for mandatory injunction, demonstrated a lack of readiness and willingness to perform the contract.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a separate section. However, the core issues addressed by the court were:

1. Whether a suit initially filed for a mandatory injunction can be treated as a suit for specific performance by paying the deficit court fee.
2. Whether the delay in filing the suit for specific performance affects the plaintiff’s claim, particularly regarding the requirement of readiness and willingness under Section 16(c) of the Specific Relief Act, 1963.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Judgment

How each authority was viewed by the Court?

• The court cited K. Raheja Constructions Ltd. vs. Alliance Ministries [1995 Suppl. (3) SCC 17] to emphasize that amendments to pleadings can be dismissed on the ground of limitation.
• The court cited Tarlok Singh vs. Vijay Kumar [1996 (8) SCC 367] and Van Vibhag Karamchari Griha Nirman Sahkari Sanstha Maryadit vs. Ramesh Chander [2010 (14) SCC 596] to support that amendments do not automatically relate back to the date of the original plaint.

What weighed in the mind of the Court?

The Supreme Court’s decision was heavily influenced by the petitioner’s conduct and the procedural irregularities in the case. The court emphasized the importance of adhering to the legal framework and the discretionary nature of specific performance. The court noted that the petitioner’s attempt to circumvent the limitation period by initially filing for a mandatory injunction and later converting it to specific performance was not permissible. The court also highlighted the significance of continuous readiness and willingness in a suit for specific performance, which was lacking in the petitioner’s case due to the three-year delay in filing the suit. The Court was also influenced by the fact that the suit was filed as a mandatory injunction with a fixed court fee, and the attempt to convert it to a suit for specific performance was a clever ploy to circumvent limitation.

The Court considered alternative interpretations, such as the applicability of Section 149 of the CPC. However, the Court rejected these interpretations, stating that the petitioner’s attempt to circumvent the limitation period by initially filing for a mandatory injunction and later converting it to specific performance was not permissible. The Court emphasized that the discretionary nature of specific performance requires the plaintiff to demonstrate continuous readiness and willingness. The Court also noted that the petitioner’s conduct, including the delay in filing the suit and the initial prayer for mandatory injunction, demonstrated a lack of readiness and willingness to perform the contract.

The Supreme Court upheld the decisions of the First Appellate Court and the High Court, dismissing the special leave petition. The court reasoned that:

• The suit was originally filed for a mandatory injunction, and the attempt to convert it to a suit for specific performance was a clever ploy to circumvent the limitation period.
• The delay of three years in filing the suit after issuing the legal notice indicated a lack of readiness and willingness on the part of the petitioner.
• The relief of specific performance is discretionary, and the petitioner’s conduct did not warrant the grant of such relief.

The court quoted the following from the judgment:

• “But in this case, the question was not merely one of limitation.”
• “Clever ploys cannot always pay dividends.”
• “The conduct of a plaintiff is very crucial in a suit for specific performance.”

Key Takeaways

• A suit initially filed for a mandatory injunction cannot be automatically converted to a suit for specific performance by merely paying the deficit court fee, especially if it is an attempt to circumvent the limitation period.
• Delay in filing a suit for specific performance can be detrimental to the plaintiff’s claim, as it can indicate a lack of readiness and willingness, which is a crucial requirement under Section 16(c) of the Specific Relief Act, 1963.
• The relief of specific performance is discretionary, and the court will consider the conduct of the parties in deciding whether to grant such relief.

Directions

The Supreme Court did not issue any specific directions in this case.

Development of Law

The ratio decidendi of this case is that a suit initially filed for a mandatory injunction cannot be automatically converted to a suit for specific performance by merely paying the deficit court fee, especially if it is an attempt to circumvent the limitation period. Further, delay in filing a suit for specific performance can be detrimental to the plaintiff’s claim, as it can indicate a lack of readiness and willingness. This judgment reinforces the principle that specific performance is a discretionary remedy and should not be granted to parties who are not diligent in pursuing their claims. This case clarifies the limitations of Section 149 of the CPC and emphasizes the importance of adhering to the legal framework when seeking specific performance.

Conclusion

The Supreme Court dismissed the special leave petition, upholding the decisions of the lower courts. The Court emphasized that the petitioner’s attempt to convert a suit for mandatory injunction into one for specific performance by paying the deficit court fee was an attempt to circumvent the limitation period. The Court also highlighted the importance of continuous readiness and willingness in a suit for specific performance, which was lacking in the petitioner’s case due to the three-year delay in filing the suit.