The Hon’ble Madras High Court overturned the relief of specific performance granted by the Trial Court holding that courts cannot direct a party to execute a sale deed if consideration is inequitable or the nature or the circumstances are over mitigating. The court held that these are the factors to be considered for the grant of relief of specific performance.

Facts:-

1. The original Plaintiff had filed a suit for specific performance of an agreement to sell entered into on 31st August, 2006 between the Plaintiff and the Defendant in respect of an immovable property for a total consideration of Rs.13,00,000/-.
2. After execution of the agreement to sell, certain changes took place whereby, the defended made the proposal to the Plaintiff that a tenant was occupying the first floor of the suit property and that the tenant had to be paid a sum of Rs.50,000/- for vacating the first floor of the suit property. Similarly, in respect of another tenant who was also occupying the suit property, the Defendant requested the Plaintiff to make payment of a sum of Rs.75,000/- to such tenant for him to vacate a part of the suit property.
3. It was the case of the Plaintiff that taking into account the sums paid to the tenants and additional sums paid to the Defendant, the Plaintiff had paid a total sum of Rs.6,30,000/- towards the sale consideration and a balance Rs.6,40,000/- was to be paid. It was the case of the Plaintiff that when the Plaintiff approached the Defendant with the balance consideration for execution of a sale deed, the Defendant evaded the execution. The Plaintiff accordingly filed a suit for specific performance of the agreement to sell in the year 2010. The suit was contested by the Defendant on the only contention was that that the agreement was entered into by fraud, coercion and undue influence.
4. In the year 2014 the Trial Court after considering the evidence before it held the suit contract as proved and came to the conclusion that the Plaintiff had shown readiness and willingness to perform the contract. The learned Trial Court therefore passed a judgment holding that the Plaintiff was entitled for a decree of specific performance on making payment of the balance sale consideration. The Trial Court also held that the Defendant failed to prove that the suit contract was entered by fraud, coercion and undue influence.

Against the judgment and decree of the Trial Court, the Defendant filed an appeal before the Madras High Court. During the course of the appeal, it was brought to the notice of the Hon'ble Court that the suit property may fetch more than Rs. 50,00,000 which is far higher than the sale consideration fixed between the parties in the year 2006.

The Hon’ble Madras High Court reversed the judgment of the Trial Court for specific performance and allowed the original Plaintiff to seek refund of the consideration advanced to the Defendant with a reasonable interest. While doing so, the Hon'ble Court held as under:-
“15. This Court is of the considered opinion that it is not sufficient that the Plaintiff could be able to establish that the suit sale agreement is genuine and true. It is insufficient that the Plaintiff has established his readiness and willingness beyond all these factors. The court has to find out whether any inequality arose on account of the change in circumstances or otherwise, so as to avoid any unjust encroachment to the suit for specific performance. In other words, the contract must be voidable. The contract is established by the Plaintiff and he performed his portion of the contract, still the relief of specific performance being a discretionary one, the court has considered the overall circumstances of the facts and has taken a decision, whether any inequality would arise in the event of granting the relief of specific performance. The court cannot direct a party to execute a sale deed, if the sale consideration is in equitable or the nature of contract or the circumstances are over mitigating factors. These factors are to be considered for the grant of specific performance.”

The Hon'ble Madras High Court placed reliance upon the judgment of the Hon'ble Supreme Court in Surinder Kaur V/s Bahadur Singh reported at (2019) 8 SCC 575 wherein, the Supreme Court had held that:-
“A perusal of section 20 of the Specific Relief Act clearly indicates that the relief of specific performance is discretionary. Merely because the Plaintiff is legally right, the court is not bound to grant him the relief. True it is, the court while exercising its discretionary power is bound to exercise the same on established judicial principles and in a reasonable manner. Obviously, the discretion cannot be exercised in an arbitrary or whimsical manner. Sub- clause (c) of sub-section (2) of section 20 provides that even if the contract is otherwise not voidable but the circumstances make it in equitable to enforce specific performance the court can refuse to grant such discretionary relief. Explanation (2) of the section provides that the hardship has to be considered at the time of the contract, unless the hardship is brought in by the action of the Plaintiff.”

Placing reliance upon the above judgment, the Hon’ble Madras High Court was pleased to hold that even though the contract in question was not voidable the circumstances and the efflux of time made in equitable to grant the relief of specific performance and accordingly set aside the judgment of the Trial Court. In order to balance equities, the Hon’ble Court also directed a refund of the amounts paid by the Plaintiff to the Defendant with interest even though the said relief was not prayed for in the plaint.

By - Chaitanyaa Bhandarkar