SMT. KATTA SUJATHA REDDY & ANR. versus SIDDAMSETTY INFRA PROJECTS PVT. LTD.& ORS. on 25 August 2022

1. The vendors were entitled to rescind the contract asthere was a breach of condition, i.e, ‘time was the essence’.Coming back to the point of limitation, it is clear that Article 54of the Limitation Act mandates that in this case at hand, the datefixed for payment of consideration was three months from thedate of the agreements (i.e. 26.03.1997 and 27.03.1997). In anycase, the time period for filing the suit had commenced from 26/27.6.1997 and would have expired after three years, i.e., in theend of June 2000. [Para 35][434-B-C]

2. The purchaser has contended that the legal notice issuedby them on 31.03.2000, would be sufficient to get past the bar oflimitation, as the purchaser has paid the advance amount to a ABC

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Alarge extent. Although this argument seems to be very attractiveat first blush, the same cannot be sustained in the eyes of the lawfor the reason that when a condition of a contract is breached andthe consequences ensue for that breach, a party cannot claimequity to escape such consequences. In this context, this Courtnotes that Article 54 of the Limitation Act provides for twoBconsequences based on the presence of fixed time period ofperformance. It is only in a case where the time period forperformance is not fixed that the purchaser can take recourse tothe notices issued and the vendors’ reply thereto. In the case athand, the aforesaid circumstances do not come into play as a fixedCtime period was clearly mandated by Clause 3 read with Clause23 of the agreements to sell, as explained above. [Paras 36 and37] [434-D-F]

3. In light of the above, this Court notes that the suit filedby the purchaser was clearly barred by limitation in view of theDfirst part of Article 54 of the Limitation Act and no amount ofpayment of advance could have remedied such a breach ofcondition. [Para 38][434-F-G]

4. This Court does not subscribe to the aforesaid reasoningprovided by the High Court for the simple reason that after theE2018 amendment, specific performance, which stood as adiscretionary remedy, is not codified as an enforceable right whichis not dependent anymore on equitable principles expounded byjudges, rather it is founded on satisfaction of the requisiteingredients as provided under the Specific Relief Act. Fordetermination of whether a substituted law is procedural orFsubstantive, reference to the nature of the parent enactment maynot be material. Instead, it is the nature of the amendments whichdetermine whether they are in the realm of procedural orsubstantive law. [Para 45][436-D-E]

5. Having come to the conclusion that the 2018 amendmentGwas not a mere procedural enactment, rather it had substantiveprinciples built into its working, this Court cannot hold that suchamendments would apply retrospectively. [Para 51][438-G]

6. It is clear that when a substantive law is brought aboutby amendment, there is no assumption that the same ought to begiven retrospective effect. Rather, there is a requirement for thelegislature to expressly clarify whether the aforesaid amendmentsought to be retrospective or not. [Para 53][440-C]

7. In the case at hand, the amendment act contemplatesthat the said substituted provisions would come into force onsuch date as the Central Government may appoint, by notificationin the Official Gazette, or different dates may be appointed fordifferent provisions of the Act. It may be noted that 01.10.2018was the appointed date on which the amended provisions wouldcome into effect. [Para 55][440-F]

8. This Court does not have any hesitation in holding thatthe 2018 amendment to the Specific Relief Act is prospectiveand cannot apply to those transactions that took place prior to itscoming into force. [Para 56][440-G]

9. It was necessary that the purchaser should have takenimmediate steps to complete the transaction and if such stepswere immediately completed then the purchaser would have aclear right for seeking enforcement for 3 years reckoned fromthe last date decided for completion of the contract. [Para 59][442-D-E]

10. It is clear that the purchaser did not voluntarily adhereto the time stipulation under the contract. In order to by-passthe condition of time being the essence, the purchaser invokedthe standard of good faith. Aforesaid standard prescribes a higherduty of care for parties entering into a contract. Unless such dutyis expressly stipulated, good faith standard cannot be implicitlyread into any contract. [Para 65][444-D]

11. This Court does not subscribe to acceptance of a generalstandard of good faith to imply broader good faith obligations onlyto give a go-by to the explicit conditions for maintaining thesanctity of contract. Such broad standards will have potentiallyfar reaching consequences. This Court agrees that such animplicit reading would come into play post the 2018 Amendment A

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Ato the Specific Relief Act which enables specific performance ofcontracts to uphold their sanctity. However, from the facts andcircumstances of this case, we cannot accept that such higherstandards of good faith was relevant. [Para 66][444-E-F]

12. It is clear that Section 16(c) of the Specific Relief ActBwould only come into force if the purchaser was ready and willingto perform the contract within the three month period prescribedunder Clause 3 of the agreements. The aforesaid conclusion isalso bolstered by the fact that specific performance can only begranted when essential terms of contract are not violated in termsCof Section 16(b). [Para 68][444-G-H]

13. This Court does not think that it is an appropriate casefor granting relief to the purchaser in terms of Section 12 of theSpecific Relief Act, 1963 as the claim of the purchaser is barredby delay, laches and limitation. [Para 78][449-E]

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14. This Court is of the firm opinion that the contract wasbreached due to the conduct of the plaintiff/purchaser, who werenot willing to perform the contract after entering into a timesensitive agreement. In any case, it is an admitted fact that plaintiffhad paid only part consideration. Though there is a forfeitureEclause in the agreement, this Court with a view of renderingcomplete justice between the parties, deems it appropriate todirect the vendors/appellants to repay the said amount withinterest @ 7.5% p.a. from the date such payment was made bythe purchaser to the vendors, till the entire amount is paid back.We further direct the vendors to pay the entire amount to theFcredit of the suit account within six months from the date of receiptof a copy of the order. [Para 79][449-E-G]

Chand Rani (dead) by Lrs. v. Kamal Rani (dead) by Lrs.(1993) 1 SCC 519 : [1992] 3 Suppl. SCR 798;Whiteley Limited v. Hilt(1918) 2 K.B. 808;GShyam Sunder and Others (2001) 8 SCC 24: [2001] 1Suppl. SCR 115;Saradamani Kandappan v.

SMT. KATTA SUJATHA REDDY v. SIDDAMSETTYINFRA PROJECTS PVT. LTD.

S. Rajalakshmi and Other, (2011) 12 SCC 18 : [2011]8 SCR 874; Jaswinder Kaur v. Gurmeet Singh (2017)12 SCC 810 : [2017] 5 SCR 430; RachakondaNarayana v. Ponthala Parvathamma (2001) 8 SCC 173;[2001] 2 Suppl. SCR 71; Radheshyam Kamila v. KiranBala Dasi AIR 1971 Cal 341; Adhunik Steels Limited v.Orissa Manganese and Minerals (P) Ltd. (2007) 7 SCC125 : [2007] 8 SCR 213 - referred to.

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CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5822of 2022.

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From the Judgment and Order dated 23.04.2021 of the High Courtfor the State of Telangana at Hyderabad in Appeal Suit No. 998 of 2010.

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Civil Appeal Nos. 5823 and 5824 of 2022.

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H.N. Salve, Mukul Rohatgi, Dushyant A. Dave, Harin P. Raval,Manan Kumar Mishra, Sr.Advs, Mahesh Agarwal, Ankur Saigal, RishabhParikh, Sundeep Reddy, Rajesh Kumar, E. C. Agrawala, Ms. BinaMadhavan, Krishna Kumar Singh, Ms. Rao Vishwaja, Durga Dutt,Ms. Anjul Dwivedi, Rohit Priyadarshi, U.N. Mishra, Vaibhav Shukla,GAdvs. for the appearing parties.

AThe Judgment of the Court was delivered byKRISHNA MURARI, J.

1. Leave granted in all the matters.

C.A.NO.5822OF2022(ARISINGOUTOFSLP(C)NO.13565OF2021)B

2. The present civil appeal arises out of the impugned judgmentdated 23.04.2021 in A.S. No. 998 of 2010, passed by the High Courtfor the State of Telangana at Hyderabad.

3. Siddamsetty Infra Projects Pvt. Ltd., who is the respondentCherein, had filed a suit for specific performance against the appellants,Smt. Katta Sujatha Reddy and Smt. Kamireddy Geetha Reddy, whowere respondents 6 & 8 respectively, among others in the suit.

4. A conspectus of the facts necessary for the disposal of theappeals is as follows: One late D Narayana, predecessor-in-interest ofthe respondent no. 2 and 3, was the owner of an agricultural land bearingDSy. No. 300-309, admeasuring 141.05 acres, situated in Budvel Village,Rajendra Nagar Mandal, Ranga Reddy District, Hyderabad. Theappellants herein acquired certain extent of the land from the aforesaidpredecessor-in-interest through an agreement dated 19.03.1994. Inpursuance to this agreement, two registered Joint GPA’S datedE28.03.1994 were executed in the name of the defendant Nos. 5 and 6from the above-mentioned owners, for an extent of Acs. 127.27 gts. ofland.

5. The agreement dated 19.03.1994 and the registered GPA, infavour of the respondent no. 1/purchaser (Siddamsetty Infra ProjectsFPvt. Ltd.) could not materialize. Parties entered into two freshagreements dated 26.03.1997 and 27.03.1997 inter alia appellant(hereinafter referred to as ‘vendors’) herein to purchase an extent ofAcs. 40.08 gts. The agreement dated 26.03.1997 pertained to Acs. 35.15gts. land for a consideration of Rs.38,37,500/- while the agreement dated27.03.1997 pertained to Acs 1.33 gts of land for a consideration ofGRs.1,82,500/-.

6. The total suit scheduled property thus consists of Acs. 40.08gts of land situated in Sy No. 301 (part), 302, 303, 304 (part) of BudvelVillage, Rajendranagar Mandal, R.R. District for which a totalconsideration of Rs.40,20,000/- was agreed upon between the parties.HOut of the total agreed consideration, Rs.34,80,850/- was paid by the purchaser to the vendors by way of cash and cheques, which fact is notdisputed.

7. The remaining amount of Rs.5,39,150/- was to be paid within 3months, as per clause 3 of the agreements. This amount had admittedlynot been paid within the stipulated time. On 31.03.2000, the purchaserallegedly sent the first notice dated 08.02.2000 to the vendors seekingspecific performance of the agreement. Thereafter, a second notice wassent by the plaintiff on 06.07.2002. The purchaser, having no otheralternative, filed the present suit, being OS No. 88 of 2002, before theAdditional District Judge, Ranga Reddy District, LB Nagar, Hyderabad,seeking specific performance. The trial Court framed 5 issues forconsideration which are as under:

1. Whether the purchaser is entitled for Specific Performance ofagreement dt. 27.3.1997 and 26.3.1997 directing the vendorsto execute a registered sale deed in favour of purchaser inrespect of suit land?

2. Whether the time is essence of the contract as pleaded by thevendors, if so whether the purchaser is not entitled for SpecificPerformance of agreement of sale as pleaded by him?

3. Whether the suit filed by the purchaser is barred by limitation?

4. Whether the purchaser is entitled for alternative reliefs ofdelivery of possession and for refund of Rs. 34,80,850/- withinterest @36% per annum as pleaded in the plaint?

5. To what relief?

8. In response to issues (1) and (2), taking into consideration theevidence available on record, the trial Court held that the purchaser wasnever put in possession of the property. On the issue of payment, it washeld that the purchaser never made the total payment of Rs.34,70,000/-under the agreement of sale. It was discovered during the course ofcross and chief examination, that the purchaser had issued a cheque forRs. 5,00,000/- which was dishonoured. This information was not sharedby the purchaser and hence the purchaser had suppressed materialevidence.

9. The trial Court further held that the burden of proof lies on theperson who pleads that time is the essence of the contract. It was furtherobserved that in respect of an immovable property, time is not the essence A

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Aof the contract unless the same is explicitly mentioned in the agreementof sale and the parties through their conduct have treated time as theessence of the contract. The lower Court observed that Clause 3 in thecontract stipulates a time bar of 3 months for the payment of the saleconsideration and furnishing of necessary certificates by the purchaserand the vendor respectively. The vendor through their conduct had neverBintended to treat time as the essence of the contract. On delay of paymentsmade by the purchaser, the vendor never issued any notice to them. Thisshowed that the vendor never intended to treat time as the essence ofthe contract. The vendor also painted a picture that it did procure thenecessary documents as required under clause 3 of the contract, but itCnever did the same. The vendor made a false plea about the duty to beperformed by it under clause 3 of the contract.

10. The trial Court further held that while there exists a falseplea on the part of the vendor, the same however does not benefit thecase of the purchaser because there are grave laches on his part too.DThe purchaser himself having approached the Court with unclean hands,he cannot get the benefit of the false plea made by the vendor.

11. The trial court also came to the conclusion that the purchaserwas never ready to pay the balance sale consideration, if so, he wouldhave either issued a notice to the vendor making out his willingness toEpay. Hence, on the basis of all the above mentioned observations, it washeld that the purchaser is not entitled for specific performance of theagreements of sale and that the parties never intended to treat time asan essence of the contract.

12. With regard to issue (3), the trial Court held that part one ofFArticle 54 of the Limitation Act,1963 will come into operation, as perwhich the three-year period has to be computed from the date so stipulated,which comes to on or before 27.06.2000, in the present case. The currentsuit however was presented on 09.08.2002, after a lapse of two years.Even for the recovery of the advance amount, the suit was barred bytime as provided under Article 47 of the Limitation Act. When the mainGsuit itself is barred, then alternative relief also cannot be granted. Hence,the trial Court held that the suit is barred by limitation. In the light ofthe above findings, the trial Court dismissed the suit holding that theplaintiff is not entitled for the relief of specific performance.

13. Aggrieved by the aforesaid order of the trial Court, the plaintiff/Hpurchaser approached the High Court by way of a first appeal, being

A.S. No. 998/2010. The High Court framed 7 issues for adjudication ofthe matter which are as under;-

1. Whether the suit is barred by limitation?

2. Whether the purchaser proved it’s possession over the suitschedule property?

3. Whether the plaintiff was ready and willing to perform hispart of the contract and paid balance sale consideration withinthe stipulated time in the suit agreements?

4. Whether the trial court is right in holding that the time is notthe essence of the contract and whether the same can beattacked by the defendants without filing cross objections?

5. Whether the trial court is right in not exercising its discretionfor granting relief of specific performance?

6. Whether Section 10 of the Act as substituted by Act 18 of 2018 is prospective or retrospective in nature?

7. To what relief?

14. In response to point (1), the High Court has held that Clause 3of the agreements did not stipulate time as the essence of the contract.Moreover, the vendor has not exercised the option of forfeiting theadvance amount as per Clause 3 of the agreements. The High Courtfurther held that the trial Court has erred in making the distinction betweentime fixed for payment of sale consideration and time for performanceof contract.

15. On point (2), the High Court held that the vendors surrenderedalmost all their rights over the suit schedule property and allowed thepurchaser to exercise his rights over the suit property as per the contract.It was wrongly held by the trial Court that since the name of thepurchaser was deleted in Exs. B10 & B11, the purchaser was not inpossession of the property. On the basis of this, the trial Court also heldthat the purchaser did not approach the court with clean hands. Onemore point that came in favour of the purchaser was that one of theparties to the sale agreement had categorically admitted that the purchaserwas put in possession of the property. This fact was never contested byany party. The High Court held that just because the possession aspectis not mentioned in Exs. A2, A3, A4, A5, A29 & A30 or in the first notice, A

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Ait cannot be said that the purchaser was not in possession of the suitschedule property.

16. On point (3), the High Court observed that the vendors wereat fault for not obtaining the necessary certificates as per Clause 3 ofthe contract for completing the sale transaction. Further, to show hisBbonafides, the purchaser filed an application for permission to deposit thebalance sale consideration of Rs. 5,39,150/- and the same was orderedand became final. The High Court further held that no person woulddrag on the matter for this long for a payment of 10% of total saleconsideration. The purchaser was ready and willing to perform hiscontract, had already paid 90% of the sale consideration within theCstipulated period and had deposited the balance amount in Court. Hence,the purchaser was ready and willing to perform his contract, and throughhis acts, proved his bonafides.

17. On point (4), the High Court held that the trial Court had correctlyassessed the judgments and the fact situation and held that time is notDthe essence of the contract in the present case.

18. On point (5), the High Court held that the trial Court shouldhave exercised its discretion and should have granted specific performancein favour of the purchaser. It was held that the vendors took a false pleain their written statements as well as in their chief examinations statingEthat they did not receive the sale consideration. The vendors furthertook the false plea that the necessary documents and certificates as perclause 3 of the contract were obtained from the concerned departments,and hence the said point was answered in favour of the purchaser.

19. On point (6), the High Court held that when a provision isFreplaced by way of substitution, the substituted legislation operatesretrospectively and not prospectively. It further held that specific reliefin essence is a part of the law of procedure, and hence it is aretrospective law. The High Court then went on to state that an appealis a continuation of the suit, and hence any change in law between theGdate of passing of the decree and the decision of the appeal must betaken into consideration. Based on the above analysis, the High Courtheld that Section 3 of the Amended Act is retrospective in nature andapplies to pending proceedings.

20. On point (7), the High Court held that since the purchasersucceeded on all points, it partly allowed the appeal and directed theH

vendors to register the suit property in favour of the purchaser, to theextent of the amount paid by the purchaser, i.e., 90% of the total saleconsideration, within a period of 3 months. Further, it was ordered thatthe sum of Rs.5,39,150/- deposited by the purchaser, by virtue of the trialCourt order dated 11.07.2005 in IA No. 925/2005, was to be refunded tothe purchaser with interest, if any accrued thereon.

21. Aggrieved by the impugned judgment, both the vendors andthe purchaser are in appeal before this Court.

22. Mr. Dushyant Dave and Mr. Harin P. Raval, learned SeniorCounsel appearing on behalf of the purchaser, submitted as follows:

i.The High Court was correct in exercising its jurisdictionand the impugned judgment is based on both, oral anddocumentary evidence. The reasons given for granting therelief of specific performance are in accordance with thesettled principles of law.

ii.Both the trial Court and the High Court have concurrentlyfound that time is not the essence of the contract. No timewas fixed for the performance of the contract itself. Theperiod of 3 months stipulated under Clause 3 of theagreements to sell, is only for payment of the saleconsideration. As a result, when no date is fixed for theperformance of the contract, the limitation periodcommences from the date of specific refusal. In the caseat hand, specific refusal of the vendors to perform theirobligations had occurred on 14.04.2000 and 22.07.2002 andtherefore, the suit was filed well within the limitation period.

iii.The purchaser has clearly established that they were alwaysready and willing to perform their part of the contract. Theyhave admittedly paid 90% of the sale consideration within 3months of the agreements to sell. The purchaser also issuedtwo legal notices dated 08.02.2000 and 06.07.2002 to thevendors indicating their readiness to pay the balance amount.The vendors avoided receiving the sale consideration despitethe purchaser’s repeated requests. Additionally, the vendorsdid not procure the requisite permissions.

iv.Defendant No.5 has admitted in her pleadings that thepurchaser was put in possession of the suit property. Such A

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statement was neither challenged by the vendors in therejoinder and nor was it mentioned in the evidence led bythe DWs that her statement is incorrect. Moreover,Defendant No.5 is a proper party to the suit.

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v.The stand of the parties on possession cannot be a groundBon which the Court can refuse grant of specificperformance. Delivery of possession is ancillary to the reliefsought and such an issue would be inconsequential.

vi.In the light of the amendment to Section 10 of the SpecificRelief Act, the jurisdiction to grant specific performance ofCa contract is no longer discretionary and it is mandatoryfor Courts to grant such relief, unless the case at handfalls within the statutorily carved out exceptions.

23. Mr. Mukul Rohatgi and Mr. Harish Salve, learned SeniorCounsel appearing on behalf of the vendors, submitted as follows:

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i.The purchaser did not approach the Court with clean hands.The balance amount was not paid within the stipulated timeperiod and the trial Court found the purchaser’s statementregarding possession to be false inter alia, for the followingreasons:

E(a)In the suit, there was an alternate prayer seekingpossession. If the purchaser was already in possession,such a prayer would not have been made.

(b) The purchaser has not mentioned any specific date as towhen they were put in possession of the property.

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(c) As per the draft sale deed prepared by the purchaser,there is no mention of the fact that they had alreadybeen granted possession of the property. In fact, the draftsale deed indicates that the purchaser would be put inpossession on execution of the sale deed.

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(d) PW2 (neighbour) deposed that the purchaser had laidroads, constructed two rooms, put up fencing, etc. on theproperty. However, the same is falsified by the documentson record. The photographs of the property show thatthere are no road or rooms on the property. Additionally,Hno such pleading is made in the suit.

ii.The suit filed by the purchaser is barred by limitation and theAtrial Court held so correctly. The parties executed theagreements to sell on 26.03.1997 and 27.03.1997 and thepurchaser was to pay the balance amount within 3 months,i.e., by 27.06.1997. It is the purchaser’s case that the vendorsevaded execution of the sale deed as early as in June 1997.BTherefore, the limitation would start running in June 1997 andexpire in June 2000. The suit, however, was filed only on09.08.2002 and is, therefore, clearly barred by limitation. Thepurchaser’s oral evidence also shows that the right to sueaccrued in the year 1997 itself.

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iii. Additionally, the notice purportedly dated 08.02.2000, wasactually despatched on 31.03.2000 and was purposelybackdated.

iv. The purchaser was not ready and willing to perform thecontract. The evidence on record indicates that the purchasernot only failed to pay the balance consideration within thestipulated 3 months, but also failed to pay the same within aperiod of 3 years of the agreement.

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v.A suit for specific performance cannot be decreed in apiecemeal manner. The High Court ought to have acceptedthe trial Court’s decision and rejected the purchaser’s appeal.Moreover, grant of specific relief only to the extent of 90%itself indicates that the purchaser was not ready and willing toperform the contract and consequently, is not entitled to thedecree.

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vi. The High Court, while overturning the trial Court’s judgement,stated that the discretion to grant specific performance wastaken away by the 2018 amendment to Section 10 of theSpecific Relief Act. However, both the Delhi High Court andKarnataka High Court have rightly taken the view that theamendment, being substantive, would be applicableprospectively. The impugned judgement erroneously states thatthe amendment is merely procedural and would applyretrospectively.

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vii. The High Court has misconstrued Section 12 of the SpecificRelief Act. The section would not be applicable to the present H

Acase as the question of ‘inability to perform a contract’ doesnot arise.

viii. Reliance on Defendant No.5’s pleadings in support of theplaintiff is misplaced. She has nothing to do with the agreementsin question and had filed a collusive written statement.BMoreover, knowing such a statement is collusive, she neverentered the witness box.

24. We have heard the learned Senior counsel appearing on eitherside and perused the entire material available on record. In the light ofthe arguments advanced, the following issues fall for consideration.

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A. Whether the suit for specific performance is barred bylimitation?

B. Whether the amended Section 10 of the Specific Relief Actis prospective or retrospective in operation?

C. Whether the purchaser is entitled to the relief of specificperformance?

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D. In any case, whether the purchaser is entitled to take benefitof Section 12 of the Specific Relief Act in view of the partpayment made in respect of the contract?

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25. Before dealing with issue “A”, we would like to highlight certainfacts which may be relevant. On 26.03.1997 and 27.03.1997 twoagreements to sell were executed between the vendors and purchaserfor two separate parcels of land in survey no. 301(part), 302, 303, 304F(part). The sale considerations for the aforesaid land wereRs.38,37,500/- and Rs. 1,82,500/- respectively. Out of the above saleconsiderations, the vendors received an advance of Rs.34,70,000/- andRs.10,850/- in furtherance of the performance of the aforesaid agreement.

26. A notice dated 08.02.2000 was despatched by the purchaserGon 31.03.2000, calling upon the appellants herein to execute the saledeed at a convenient date, suitable to the vendors herein.

27. The vendor replied to the aforesaid notice by letter dated14.04.2000 by stating that the purchaser never offered to pay the balancesale consideration and issuance of the notice dated 08.02.2000, was nothingHbut a subterfuge to get over the limitation.

28. Thereafter, a suit was filed by the purchaser only on 09.08.2002.In the suit, the averments made by the purchaser as to the limitation areas under:

“LIMITATION:The suit is within limitation in continuationof efforts. Some defendants are agreeing to execute the saledeed and some defendants are continuing and evading theexecution of the sale deed. Time is not the essence of thecontract. The suit is within limitation in view of reply notice.”

29. The Defendant No.6-vendors herein filed a written statementdated 25.10.2002, wherein they replied to the question of limitation asunder:

“8 (Pg NO. 175) .It is submitted that, in reply to Para no. 10of the plaint that, the plaintiff has got issued legal notice dated8.02.2000 to the defendant & the defendant no. 8 and postedthe said notice on 31.3.2000 under the registered post, thesaid fact is revealed that, the Plaintiff purposefully made thenotice dated as 8.2.2000 which was posted on 31.03.2000with ulterior motive. The Plaintiff to cover up the limitationperiod of 3 years creates the date 8.02.2000. It is not truethat, the defendant and the defendant no. 8 Smt. KamreddyGeetha Reddy are not the joint GPA holder of the vendors. Itis false that, there was no response from defendant no. 6 anddefendant no. 8 to the said notice, in fact the defendant gotissued a reply legal notice dated 14.04.2000 to the said allegedlegal notice dated 8.2.2000. After receipt of the reply legalnotice the Plaintiff kept quiet for nearly 2 ½ years and gotissued another legal notice dated 6.7.2002. The defendanthad got issued reply legal notice on 22.7.2002 to the noticedated 6.7.2002 by stating that the agreements are barred bylimitation and the plaintiff never in possession of the suitproperty and moreover he has not performed his partperformance in paying the balance sale consideration withinthe stipulated period and the notice dated 8.02.2000 wasposted on 31.02.2000 with malafide intention.”

30. In the above light, the first question that this Court needs toconsider pertains to the aspect of limitation. The First Schedule to theLimitation Act, 1963 provides for the period of limitation in the followingmanner:

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The High Court, while dealing with the aspect of limitation, hasCgiven a reasoning that Clause 3 of the agreements to sell did not have aspecific calendar date for performance of the contract, but rather, providedonly for payment of the entire sale consideration within 3 months fromthe date of the agreements. Further, the High Court construed the obligationof the vendors to produce requisite certificates and permission as acondition for the purchaser to complete the sale transaction. In view ofDthe same, the High Court concluded that the first part of Article 54 wasincorrectly applied by the trial Court and accordingly held that the suitwas not barred by limitation.

31. At the outset, this Court has perused Clause 3 of the agreements,which is in two parts. The first part provides for the purchaser’s obligation,Ewhile the second part details the obligation of the vendors to provide therequisite certificates. Although both the obligations were required to becompleted within the stipulated period of three months, there is asubstantive difference between these two sets of obligations. Theobligation upon the vendors concerned was production of certaincertificates, such as income tax exemption certificate and agricultureFcertificate. No consequences were spelt out for non- performance ofsuch obligations. Whereas the obligation on the purchaser, was to makethe complete payment of the sale consideration within three months.The clause further mandates forfeiture of the advance amount if thepayment obligation is not met within the time period stipulated therein.GIn this context, this Court in Chand Rani (dead) by Lrs. v. KamalRani (dead) by Lrs[1]., held as under:

“25. From an analysis of the above case law it is clear that inthe case of sale of immovable property there is no presumption H1 (1993) 1 SCC 519

as to time being the essence of the contract. Even if it is not ofthe essence of the contract the Court may infer that it is to beperformed in a reasonable time if the conditions are:

1. from the express terms of the contract;

2. from the nature of the property; and

3. from the surrounding circumstances,for example: theobject of making the contract.”

32. Coming to the aforesaid indicators, the language of theagreements makes it clear that severe consequences of forfeiture wouldensue if the payment is not made within three months of the date of theagreements. It may be noted that as per Clause 21, the parties hadentered into an earlier agreement to sell dated 19.03.1994, which didnot materialize and accordingly the agreed price therein was no longerapplicable. It is in this context that the fresh agreements were enteredinto between the parties, so as to provide a last opportunity for them tosuccessfully enter into a sale-purchase agreement. The aforesaid intentionof the parties is also made clear through Clause 23 of the agreement tosell, which reads as under:

“23. The parties of the second part herein undertake on anypretext they will not make any claim for enhancing the agreedsale consideration.”

33. The aforesaid clause clearly freezes any enhancement of theagreed sale consideration, which cannot be independent of a fixed timeperiod. A contrary interpretation would render the contract commerciallyunreasonable and unworkable. The moratorium on the enhancement ofrates prescribed under Clause 23 should be interpreted to be predicatedon a fixed time and be executable within a reasonable period. The sameshould not be utilized to render the commercial wisdom between theparties otiose, which is inherent in drafting such clauses.

34. From the above analysis, it is clear that the contract wasstrictly conditioned on a time frame. At this stage, it may be relevant toquote Section 55 of the Contract Act, which reads as under:

“55. Effect of failure to perform at fixed time, in contract inwhich time is essential When a party to a contract promisesto do a certain thing at or before a specified time, or certainthings at or before specified times, and fails to do any such A

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Athing at or before the specified time, the contract, or so muchof it as has not been performed, becomes voidable at the optionof the promisee, if the intention of the parties was that timeshould be of the essence of the contract.”

35. In view of the aforesaid provisions, the vendors were entitledBto rescind the contract as there was a breach of condition, i.e, ‘timewas the essence’. Coming back to the point of limitation, it is clear thatArticle 54 of the Limitation Act mandates that in this case at hand, thedate fixed for payment of consideration was three months from the dateof the agreements (i.e. 26.03.1997 and 27.03.1997). In any case, thetime period for filing the suit had commenced from 26/27.6.1997 andCwould have expired after three years, i.e., in the end of June 2000.

36. The purchaser has contended that the legal notice issued bythem on 31.03.2000, would be sufficient to get past the bar of limitation,as the purchaser has paid the advance amount to a large extent. Althoughthis argument seems to be very attractive at first blush, the same cannotDbe sustained in the eyes of the law for the reason that when a conditionof a contract is breached and the consequences ensue for that breach, aparty cannot claim equity to escape such consequences.

37. In this context, we may note that Article 54 of the LimitationAct provides for two consequences based on the presence of fixed timeEperiod of performance. It is only in a case where the time period forperformance is not fixed that the purchaser can take recourse to thenotices issued and the vendors’ reply thereto. In the case at hand, theaforesaid circumstances do not come into play as a fixed time periodwas clearly mandated by Clause 3 read with Clause 23 of the agreementsFto sell, as explained above.

38. In light of the above, we may note that the suit filed by thepurchaser was clearly barred by limitation in view of the first part ofArticle 54 of the Limitation Act and no amount of payment of advancecould have remedied such a breach of condition.

G39.Having come to the aforesaid conclusion, there would not havebeen any reason for this Court to continue the analysis on merits. However,we feel that even on merits, the purchaser’s case cannot becountenanced in law and we accordingly adumbrate on the followingaspects.

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40. At the outset, we may notice that this question assumes greatsignificance as application of the 2018 Amendment Act to the presentset of circumstances would determine whether specific performanceought to be applied mandatorily or the aforesaid decision is a discretionof the Court to examine whether equity demands such application insteadof granting damages if any.

41. We may note that the Specific Relief Act, 1963 is the secondlegislation, replacing the earlier 1877 enactment of the Specific ReliefAct. The 1963 Act was enacted after consideration of the LawCommission in its Ninth Report. The 1963 Act more or less followed theEnglish position on equitable remedy of specific performance. In CommonLaw, the remedy of specific performance was unknown in the initialdays and courts only granted damages for the value of goods if therewas any breach of contract. Accordingly English Courts, in the earlyyears, granted monetary relief. In order to rectify the harsh stance oflaw, Courts of Equity in England started granting relief of specificperformance if the Court of Equity found that granting damages wouldbe inadequate or some special equitable rights of the plaintiff under atrust have been breached.

42. In any case, grant of such relief, which emanated from equitableprinciples, remained discretionary. This principle is clearly explained bySwinfen Eady M.R., in Whiteley Limited v. Hilt[2], in the followingmanner:

“The power vested in the Court to order the delivery up of aparticular chattel is discretionary, and ought not to beexercised when the chattel is an ordinary article of commerceand of no special value or interest, and not alleged to be ofany special value to the plaintiff and where the damages wouldfully compensate.”

43. However, this was not the position under the Civil Law. Underthe Civil Law of contracts, adherence to the sanctity of contract isenforced with greater rigour by inversing the situation. The reason forchoice of damages and specific performance range from legal toeconomic. It is in this context that the Courts cannot engage on the A

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Amerits of having damages or specific performance or a hybrid. It is bestleft to the legislature to choose the course best-suited to the economywithout sheepishly following the typecast approach in England or CivilLaw systems.

44. The High Court, in the impugned order, has taken a differentBapproach in categorising the Specific Relief Act, 1963 as procedural andholding that the 2018 amendment is also a procedural provision whichrequires to be given retrospective effect. The High Court places relianceon an old case of Radheshyam Kamila v. Kiran Bala Dasi[3], whereinthe High Court, while relying upon the commentary of Pollock & Mullaon Indian Contract Act and Specific Relief Act (4[th] edition) specificallyCobserved that “specific relief, as a form of judicial process, belongs tothe law of procedure”. In this context, the Court came to a conclusionthat such procedural amendment ought to be given retrospective effect.

45. We do not subscribe to the aforesaid reasoning provided bythe High Court for the simple reason that after the 2018 amendment,Dspecific performance, which stood as a discretionary remedy, is notcodified as an enforceable right which is not dependent anymore onequitable principles expounded by judges, rather it is founded onsatisfaction of the requisite ingredients as provided under the SpecificRelief Act. For determination of whether a substituted law is proceduralEor substantive, reference to the nature of the parent enactment may notbe material. Instead, it is the nature of the amendments which determinewhether they are in the realm of procedural or substantive law.

46. The High Court’s reliance on Adhunik Steels Limited v. OrissaManganese and Minerals (P) ltd.[4], was also misplaced. In that case,Fthe Court was concerned with the interpretation of Section 9 of theArbitration Act, that deals with granting of injunctions. The specificquestion before the Court was whether the provisions of the CPC or theprovisions of the Specific Relief Act have a bearing on Section 9 of theArbitration and Conciliation Act, 1996.

G47. While discussing the nature of the Specific Relief Act, in theaforesaid case, this Court had observed as under:- “16. Injunction is a form of specific relief. It is an order of acourt requiring a party either to do a specific act or acts or to 3 AIR 1971 Cal 341H4 (2007) 7 SCC 125

refrain from doing a specific act or acts either for a limitedperiod or without limit of time. In relation to a breach ofcontract, the proper remedy against a defendant who acts inbreach of his obligations under a contract, is either damagesor specific relief. The two principal varieties of specific reliefare, decree of specific performance and the injunction (SeeDavid Bean on Injunctions). The Specific Relief Act, 1963was intended to be “an Act to define and amend the lawrelating to certain kinds of specific reliefs”. Specific relief isrelief in specie. It is a remedy which aims at the exact fulfilmentof an obligation. According to Dr. Banerjee in his TagoreLaw Lectures on Specific Relief, the remedy for thenon-performance of a duty are (1) compensatory, (2) specific.In the former, the court awards damages for breach of theobligation. In the latter, it directs the party in default to do orforbear from doing the very thing, which he is bound to do orforbear from doing. The law of specific relief is said to be, inits essence, a part of the law of procedure, for, specific reliefis a form of judicial redress. Thus, the Specific Relief Act,1963 purports to define and amend the law relating to certainkinds of specific reliefs obtainable in civil courts. It does notdeal with the remedies connected with compensatory reliefsexcept as incidental and to a limited extent. The right to reliefof injunctions is contained in Part III of the Specific ReliefAct. Section 36 provides that preventive relief may be grantedat the discretion of the court by injunction, temporary orperpetual. Section 38 indicates when perpetual injunctionsare granted and Section 39 indicates when mandatoryinjunctions are granted. Section 40 provides that damagesmay be awarded either in lieu of or in addition to injunctions.Section 41 provides for contingencies when an injunctioncannot be granted. Section 42 enables, notwithstandinganything contained in Section 41, particularly Clause (e)providing that no injunction can be granted to prevent thebreach of a contract the performance of which would not bespecifically enforced, the granting of an injunction to performa negative covenant. Thus, the power to grant injunctions byway of specific relief is covered by the Specific Relief Act,1963.”

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AHowever, the conclusion in the above paragraph, taken in isolation,would not support the final outcome in the aforesaid case, wherein itwas held that an injunction order granted under Section 9 of theArbitration and Conciliation Act would involve consideration of settledprinciples under the Code of Civil Procedure or the Specific Relief Act.It was nowhere stated in the aforesaid case that the Specific Relief ActBof 1963 stricto sensu provided for only procedural mechanism. Wefind it difficult to read the aforesaid case in the manner alluded to bythe High Court.

48. In any case, the amendment carried out in 2018 was enactedto further bolster adherence to the sanctity of contracts. This approachCwas radical and created new rights and obligations which did not existprior to such an amendment. Section 10, after amendment, reads asunder:

10. Specific performance in respect of contracts.—The specificperformance of a contract shall be enforced by the courtDsubject to the provisions contained in sub-section (2) ofsection 11, section 14 and section 16.

49. This provision, which remained in the realm of the Courts’discretion, was converted into a mandatory provision, prescribing a powerthe Courts had to exercise when the ingredients were fulfilled. This wasEa significant step in the growth of commercial law as the sanctity ofcontracts was reinforced with parties having to comply with contractsand thereby reducing efficient breaches.

50. Under the pre-amended Specific Relief Act, one of the majorconsiderations for grant of specific performance was the adequacy ofFdamages under Section 14(1)(a). However, this consideration has nowbeen completely done away with, in order to provide better compensationto the aggrieved party in the form of specific performance.

51. Having come to the conclusion that the 2018 amendment wasnot a mere procedural enactment, rather it had substantive principlesGbuilt into its working, this Court cannot hold that such amendments wouldapply retrospectively.

52. In Shyam Sunder and others V. Ram Kumar and Another[5],this Court held as under:

H5 (2001) 8 SCC 24

“28. From the aforesaid decisions the legal position thatemerges is that when a repeal of an enactment is followed bya fresh legislation, such legislation does not affect thesubstantive rights of the parties on the date of the suit oradjudication of the suit unless such a legislation isretrospective and a court of appeal cannot take intoconsideration a new law brought into existence after thejudgment appealed from has been rendered because the rightsof the parties in an appeal are determined under the law inforce on the date of the suit. However, the position in lawwould be different in the matters which relate to procedurallaw but so far as substantive rights of parties are concerned,they remain unaffected by the amendment in the enactment.We are, therefore, of the view that where a repeal of provisionsof an enactment is followed by fresh legislation by anamending Act, such legislation is prospective in operation anddoes not affect substantive or vested rights of the parties unlessmade retrospective either expressly or by necessaryintendment. We are further of the view that there is apresumption against the retrospective operation of a statuteand further a statute is not to be construed to have a greaterretrospective operation than its language renders necessary,but an amending Act which affects the procedure is presumedto be retrospective, unless the amending Act provides otherwise.We have carefully looked into the new substituted Section 15brought in the parent Act by the Amendment Act, 1995 but donot find it either expressly or by necessary implicationretrospective in operation which may affect the rights of theparties on the date of adjudication of the suit and the same isrequired to be taken into consideration by the appellate court.In Shanti Devi v. Hukum Chand [(1996) 5 SCC 768] this Courthad occasion to interpret the substituted Section 15 with whichwe are concerned and held that on a plain reading of Section15, it is clear that it has been introduced prospectively andthere is no question of such section affecting in any mannerthe judgment and decree passed in the suit for pre-emptionaffirmed by the High Court in the second appeal. We arerespectfully in agreement with the view expressed in the saiddecision and hold that the substituted Section 15 in the ABC

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Aabsence of anything in it to show that it is retrospective, doesnot affect the right of the parties which accrued to them onthe date of the suit or on the date of passing of the decree bythe court of first instance. We are also of the view that thepresent appeals are unaffected by change in law insofar itrelated to determination of the substantive rights of the partiesBand the same are required to be decided in the light of the lawof pre-emption as it existed on the date of passing of thedecree.”

53. From the aforesaid decision, it is clear that when a substantivelaw is brought about by amendment, there is no assumption that theCsame ought to be given retrospective effect. Rather, there is a requirementfor the legislature to expressly clarify whether the aforesaid amendmentsought to be retrospective or not.

54. In the light of the aforesaid discussion, it is clear that ordinarily,the effect of amendment by substitution would be that the earlierDprovisions would be repealed, and amended provisions would be enactedin place of the earlier provisions from the date of inception of thatenactment. However, if the substituted provisions contain any substantiveprovisions which create new rights, obligations, or take away any vestedrights, then such substitution cannot automatically be assumed to haveEcome into force retrospectively. In such cases, the legislature has toexpressly provide as to whether such substitution is to be construedretrospectively or not.

55. In the case at hand, the amendment act contemplates that thesaid substituted provisions would come into force on such date as theFCentral Government may appoint, by notification in the Official Gazette,or different dates may be appointed for different provisions of the Act. Itmay be noted that 01.10.2018 was the appointed date on which theamended provisions would come into effect.

56. In view of the above discussion, we do not have any hesitationGin holding that the 2018 amendment to the Specific Relief Act isprospective and cannot apply to those transactions that took place priorto its coming into force.

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57. From the above, it is clear that the 2018 Amendment Act isHprospective and cannot be applied to the present set of facts. Under the earlier law, grant of specific performance was discretionary. However, itwas mandated that such discretion ought to be used in a principledmanner without leaving scope for any arbitrary application. InSaradamani Kandappan v. S. Rajalakshmi and other[6], this courtheld a under:-

42. Therefore there is an urgent need to revisit the principlethat time is not of the essence in contracts relating to immovableproperties and also explain the current position of law withregard to contracts relating to immovable property made after1975, in view of the changed circumstances arising frominflation and steep increase in prices. We do not propose toundertake that exercise in this case, nor referring the matterto a larger Bench as we have held on facts in this case thattime is the essence of the contract, even with reference to theprinciples in Chand Rani [(1993) 1 SCC 519] and other cases.Be that as it may.

43. Till the issue is considered in an appropriate case, we canonly reiterate what has been suggested in K.S. Vidyanadam[(1997) 3 SCC 1]:

(i) The courts, while exercising discretion in suits for specificperformance, should bear in mind that when the partiesprescribe a time/period, for taking certain steps or forcompletion of the transaction, that must have somesignificance and therefore time/period prescribed cannot beignored.

(ii) The courts will apply greater scrutiny and strictness whenconsidering whether the purchaser was “ready and willing”to perform his part of the contract.

(iii) Every suit for specific performance need not be decreedmerely because it is filed within the period of limitation byignoring the time-limits stipulated in the agreement. The courtswill also “frown” upon suits which are not filed immediatelyafter the breach/refusal. The fact that limitation is three yearsdoes not mean that a purchaser can wait for 1 or 2 years tofile a suit and obtain specific performance. The three-year A

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Aperiod is intended to assist the purchasers in special cases,as for example, where the major part of the considerationhas been paid to the vendor and possession has been deliveredin part-performance, where equity shifts in favour of thepurchaser.”

B58. From the aforesaid, it is clear that the purchaser ought to havebeen vigilant in the case at hand to enforce his right and could not havebeen lackadaisical in his approach. From the facts, it is clear that thepurchaser had entered into an agreement way back on 26/27.03.1997,which had a clause mandating completion of the contract by payment ofthe remaining consideration within three months. The aforesaid clauseCwas drafted, as alluded to earlier, for providing one last opportunity forthe purchaser to make good their lapse which had happened on theearlier occasion. In this context, the time for performance of the contractincluding the payment lasted till the month of June 1997.

59. It was necessary that the purchaser should have takenDimmediate steps to complete the transaction and if such steps wereimmediately completed then the purchaser would have a clear right forseeking enforcement for 3 years reckoned from the last date decidedfor completion of the contract.

60. The notice dated 08.02.2000, issued on behalf of the purchaserEimplicitly acknowledges the fact that time was considered as the essenceeven by the purchaser themselves and due to breach of the same, theysought novation of the agreement to sell in the following manner:

“However the due efforts by my client’s proved little light hopewhen you have strongly urged my clients to come up with theFbalance of sale consideration in view of the fact that otherinterested parties are not available at that moment and youasked my clients to renew theireffortsbyendofJan’2000and thereafter you have promised to complete thetransactionbyexecutingthesaledeedin favourofmyclient.”

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61. Aforesaid notice, at best reflects an intention by the vendor torenegotiate the terms, which was not accepted in toto by the vendor.

62. The next aspect which this Court needs to consider is whetherthe parties had requisite willingness and readiness to perform the contract.H

The aforesaid requirement is one of the essential ingredients under Section16 of the Specific Relief Act, 1963 which reads as under:

16. Personal Bars to relief.- Specific Performance of a contractcannot be enforced in favour of a person- …

(c) who fails to aver and prove that he has performed or alwaysbeen ready and willing to perform the essential terms of thecontract which are to be performed by him, other than termsthe performance of which has been prevented or waived bythe defendant.

63. It is clear that in order to prove readiness and willingness, theburden is on the purchaser to prove that they were always ready and itis only the vendor who refused to perform the contract for extraneousconsiderations. In order to support their averments, the purchaser (SunilSiddam Setty) entered into the witness box and deposed as PW1.

64. In his cross examination, PW1 deposed as below:

“We have paid a sum Rs. 10,850/- towards advance of saleconsideration on 27.03.1997, when one of the agreement ofsale was executed. It is true one cheque which was issued byus for a sum of Rs. 5,00,000/- was bounced. When the saidfact was brought to our notice, we issued a demand draft forthe sum of Rs. 5,00,000/- within 10 of [sic.] 15 days andobtained a separate receipt for that amount from Deft. No. 6by name Katta Sujatha Reddy. It is mentioned in the agreementfor sale dt. 26.03.1997 the transaction has to be completedwithin three months. Witness volunteers and says; the threemonth time was stipulated with some conditions.

It is mentioned in another agreement of sale dated 27.03.1997that the sale transaction has to be completed within threemonths with some conditions.

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Q. How many times you met the Defendant and demandedfor execution in the year 1997?

Ans.- … We did not issue any notice to the defendants in theyear 1997 by demanding them to receive the balance of saleconsideration and execute sale deed in our favour.

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AIt is not true to suggest that I was not ready and willing toperform my part of contract and that I never had balance ofsale consideration and that I did not demand the defendantswithin stipulated period to receive the balance of saleconsideration and to execute the sale deed and that due toit, I am not entitled to get the relief of specific performance ofBagreement of sale as prayed in my suit. …

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I did not get issued any written notice to D5 prior to06.07.2002. Witness volunteers and says: that the entiretransaction had taken place in good faith and they neveranticipated court proceedings at that time.

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65. From the above it is clear that the purchaser did not voluntarilyadhere to the time stipulation under the contract. In order to by-pass thecondition of time being the essence, the purchaser invoked the standardDof good faith. Aforesaid standard prescribes a higher duty of care forparties entering into a contract. Unless such duty is expressly stipulated,good faith standard cannot be implicitly read into any contract.

66. This Court does not subscribe to acceptance of a generalstandard of good faith to imply broader good faith obligations only toEgive a go-by to the explicit conditions for maintaining the sanctity ofcontract. Such broad standards will have potentially far reachingconsequences. This Court agrees that such an implicit reading wouldcome into play post the 2018 Amendment to the Specific Relief Actwhich enables specific performance of contracts to uphold their sanctity.However, from the facts and circumstances of this case, we cannotFaccept that such higher standards of good faith was relevant.

67. On the aspect of the vendor’s obligation to provide requisiteand necessary documents, DW1 (Smt. Katta Sujatha Reddy), has averredthat all the documents were available. It is only after the purchaser wassatisfied about the sound title that he entered into the agreement to sell.

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68. In the light of the above, it is clear that Section 16(c) of theSpecific Relief Act would only come into force if the purchaser wasready and willing to perform the contract within the three month periodprescribed under Clause 3 of the agreements. The aforesaid conclusion H

is also bolstered by the fact that specific performance can only be grantedwhen essential terms of contract are not violated in terms of Section16(b).

69. From the above, we can safely conclude that the purchaserwas not ready or willing to perform his part of the contract within thetime stipulated and accordingly, specific performance cannot be grantedfor the entire contract.

70. The last aspect which we need to consider in this matter iswhether possession was with the purchaser after entering intoagreements to sell in 1997. On this aspect, the High Court has decided infavour of the purchaser by relying upon the evidence of PW1 and theproceedings before the Revenue Authorities. However, we are of theopinion that the High Court has not duly considered the statement ofPW1 in its proper perspective. PW1 during the course ofcross-examination, has not specifically pointed out as to when was thepurchaser put into possession of the property. PW1 has not further provedthat there was any development cost incurred by him for developing theaforesaid land.

71. The claim of PW2 that the disputed land was developed bythe purchaser, is clearly unacceptable in the light of exhibits A22 to A26which are the photographs of the property that show that no developmenthad taken place, as averred by the purchaser. Reliance on the revenuerecords concerning mutation may not be of any significance when thequestion of possession is to be decided solely on the facts as available onthe records.

72. In this context, we do not propose to burden this judgmentwith a detailed discussion of the testimonies of DW2 and DW3 whichclearly go to show that the purchaser was never in possession of theaforesaid land.

73. If the agreement of sale is coupled with possession, it requiresstamp duty and stamp duty has to be paid as per Schedule 1A of Article47A of the Stamp Act. Further, asking for the relief of recovery ofpossession also shows that the plaintiff was not in possession of theproperty. The trial Court has rightly answered this point against the plaintiffand the Appellate Court, on an erroneous appreciation of the facts andlaw, reversed the said findings.

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74. The last aspect which has been argued before us concernsapplication of Section 12 of the Specific Relief Act, 1963. This issuearises from the fact that the purchaser is said to have paid 90 percent ofthe sale consideration and in lieu thereof, the High Court has held thatBthe purchaser is entitled to ninety percent of the scheduled land.

75. Although this argument appears to be attractive in the firstgloss, however a deeper examination of the same would paint a contrarypicture. Section 12 of the Specific Relief Act, 1963 reads as under:

12. Specific performance of part of contract.—C

(1) Except as otherwise hereinafter provided in this section,the court shall not direct the specific performance of a part ofa contract.

(2) Where a party to a contract is unable to perform the wholeof his part of it, but the part which must be left unperformedby only a small proportion to the whole in value and admitsof compensation in money, the court may, at the suit of eitherparty, direct the specific performance of so much of thecontract as can be performed, and award compensation inmoney for the deficiency.

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(3) Where a party to a contract is unable to perform the wholeof his part of it, and the part which must be left unperformedeither—

(a) forms a considerable part of the whole, though admittingof compensation in money; or F

(b) does not admit of compensation in money, he is not entitledto obtain a decree for specific performance; but the courtmay, at the suit of other party, direct the party in default toperform specifically so much of his part of the contract as hecan perform, if the other party—

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(i) in a case falling under clause (a), pays or has paid theagreed consideration for the whole of the contract reducedby the consideration for the part which must be leftunperformed and a case falling under clause (b), 1[pays orhad paid] the consideration for the whole of the contractHwithout any abatement; and

(ii) in either case, relinquishes all claims to the performanceof the remaining part of the contract and all right tocompensation, either for the deficiency or for the loss ordamage sustained by him through the default of the defendant.

(4) When a part of a contract which, taken by itself, can andought to be specifically performed, stands on a separate andindependent footing from another part of the same contractwhich cannot or ought not to be specifically performed, thecourt may direct specific performance of the former part.

Explanation.—For the purposes of this section, a party to acontract shall be deemed to be unable to perform the wholeof his part of it if a portion of its subject matter existing atthe date of the contract has ceased to exist at the time of itsperformance.

76. The aforesaid provision has been interpreted by this Court onseveral occasions. In the case of Jaswinder Kaur v. Gurmeet Singh[7],this Court held as under:- “20. Section 12(1) provides that specific performance can begranted on part of a contract only in the circumstancesmentioned in the section. Section 12(2) deals with breach thecontract if a party is unable to perform the whole of its partand such part bears a small proportion to the whole in valueand admits compensation in money. The expression “unableto perform” in Section 12(2) for instance would mean that apart of the property destroyed after contract or act of God oran act by which it would cease to exist. In such a case partyto a contract shall be deemed to be unable to perform thewhole or its part of the contract. Such a person would comewithin the words “party in default”. Theinabilityto performmay arise by deficiency in quantity of subject-matter ordeficiencies or some legal prohibition or such other causes.None of such causes is present in the instant case.

21. Section12oftheActdoesnotapply where the inability toperform specific performance on part of contract arises becauseof the plaintiff’s own conductas held in Abdul Rahim v.Maidhar Gazi [Abdul Rahim v. Maidhar Gazi, 1928 SCC

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SUPREME COURT REPORTS

AOnLine Cal 20 : AIR 1928 Cal 584] . In Graham v. KrishnaChunder Dey [Graham v. Krishna Chunder Dey, 1924 SCCOnLine PC 63 : (1924-25) 52 IA 90 : AIR 1925 PC 45] ithas been laid down that the Explanation in the section exhaustall the circumstances in which part-performance can begranted. Section 12(2) deals with the situation where a partyBis unable to perform and such part is only a small proportionin value and capable of compensation in form of money. Itwas not a case covered in Section 12(2) at all. Under Section12(3) partyin default is entitled to specific performance onpayment of whole consideration or for the part left unperformedCbut here in the instant case the plaintiff being in default could”not be said to be entitled to invoke Section 12(3) also.

77. From the above, it is clear that there was no inability on partof the parties to perform the rest of the contract or the remaining partwas waived. In this case, the purchaser breached the essential conditionDof the contract, which altogether disentitles him to claim specificperformance. There is no doubt that the claim of purchaser is hit bydelay and laches on their part as they did not take appropriate measureswithin the stipulated time and filing of the suit was delayed by almostfive years. In this context, in Rachakonda Narayana v. PonthalaParvathamma[8], this Court held as under:E

“8. A perusal of sub-section (3) of Section 12 shows that thefirst part of the said provisions mandates refusal of specificperformance of a contract on certain conditions. However,the latter part of the provisions permits a court to direct theparty in default to perform specifically so much of his part ofFthe contract as he can perform if the other party pays or haspaid the agreed consideration for the whole of the contractand relinquishes all claims to the performance of the remainingpart of the contract and all the rights to compensation for theloss sustained by him. If a suit is laid by the other party, theGcourt may direct the defaulting party to perform that part ofthe contract which is performable on satisfying twopreconditions i.e. (i) the plaintiff pays or has already paidthe whole of the consideration amount under the agreement, and that (ii) the plaintiff relinquishes all claims to theperformance of the other part of the contract which thedefaulting party is incapable to perform and all rights tocompensation for loss sustained by him.Thus, the ingredientswhich would attract specific performance of the part of thecontract, are: (i) if a party to an agreement is unable to performa part of the contract, he is to be treated as defaulting partyto that extent, and (ii) the other party to an agreement must,in a suit for such specific performance, either pay or haspaid the whole of the agreed amount, for that part of thecontract which is capable of being performed by thedefaulting party and also relinquish his claim in respect ofthe other part of the contract which the defaulting party isnot capable to perform and relinquishes the claim ofcompensation in respect of loss sustained by him. If suchingredients are satisfied, the discretionary relief of specificperformance is ordinarily granted unless there is delay orlaches or any other disability on the part of theotherparty.

78. Therefore, we do not think that it is an appropriate case forgranting relief to the purchaser in terms of Section 12 of the SpecificRelief Act, 1963 as the claim of the purchaser is barred by delay, lachesand limitation.

79. We are of the firm opinion that the contract was breached dueto the conduct of the plaintiff/purchaser, who were not willing to performthe contract after entering into a time sensitive agreement. In any case,it is an admitted fact that plaintiff had paid only part consideration. Thoughthere is a forfeiture clause in the agreement, this Court with a view ofrendering complete justice between the parties, deems it appropriate todirect the vendors/appellants to repay the said amount with interest @7.5% p.a. from the date such payment was made by the purchaser tothe vendors, till the entire amount is paid back. We further direct thevendors to pay the entire amount to the credit of the suit account withinsix months from the date of receipt of a copy of the order.

80. The appeal is allowed on the above terms and the parties areleft to bear their own costs.

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[2022] 17 S.C.R.

AC.A.NO.5823/2022(ARISINGOUTOFSLP(C)NO.19920/2021) AND C.A. NO. 5824/2022 (ARISING OUT OFSLP(C) NO.19286/2021)

81. In light of the above judgment, the present appeals are disposedof accordingly.

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Ankit Gyan and Anurag Bhaskar(Assisted by : Ajay, LCRA)

Appeals disposed of.

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