KAPILABEN & ORS. versus ASHOK KUMAR JAYANTILAL SHETH THROUGH POA GOPALBHAI MADHUSUDAN PATEL & ORS. on 25 November 2019

[2019] 17 S.C.R. 247

KAPILABEN & ORS.

v.

ASHOK KUMAR JAYANTILAL SHETH THROUGHPOA GOPALBHAI MADHUSUDAN PATEL & ORS.

(Civil Appeal Nos. 10683-86 of 2014)

NOVEMBER 25, 2019

[MOHAN M. SHANTANAGOUDAR ANDANIRUDDHA BOSE, JJ.]

Specific Performance:

Specific performance of contract – Agreement to selldisputed property in the year 1986 between original vendor andoriginal vendees – Sale was to be executed upon receipt ofremaining consideration from the original vendees within stipulatedtime – The original vendees thereafter in the year 1987 executedfour agreements to sell the four different portions of the propertyin dispute to the vendees in the present case (i.e. respondent Nos.1)– The vendees under 1987 agreement were required to start ahousing project on the land in question – Suit for specificperformance of 1986 agreement was filed by the original vendeeagainst the original vendor – The vendees under 1987 agreementsalso filed suit for specific performance of the 1987 agreements –Original vendees withdrew their suit for specific performance of1986 agreement and the vendees in respect of 1987 agreementssought impleadment as co-plaintiffs in that suit – Trial court rejectedthe withdrawal application and allowed the impleadmentapplication – High Court reversing the order of trial court allowedthe withdrawal application and rejected impleadment applications– The order of High Court was affirmed by Supreme Court –Vendees of 1987 agreement amended their suit for specificperformance of 1987 agreement seeking execution of 1986agreement on the basis of assignment made in their favour – Trialcourt dismissed the suits – Appellate Court affirmed the finding oftrial court – High Court allowed the case of vendees of 1987agreement – Appeal to Supreme Court by the original vendors –Held: There was no privity of contract between the appellants(original vendors) and respondent No.1 (vendees in 1987

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Aagreement) as neither appellants were party to 1987 agreements,nor respondent Nos.1 were party to the 1986 agreement – Hencerespondent Nos.1 cannot seek specific performance of 1986 or1987 agreements against the appellants except by suing asrepresentative-in-interest or the original vendees u/s. 15(b) of theSpecific Relief Act – The term ‘representative-in-interest’ includesBthe assignee of a contractual interest – Whether or not an assigneecan seek specific performance would depend upon the constructionof the contract – In the facts of the present case, 1987 agreementswere not a case of assignment, but were independent agreementsfor sale which were contingent upon the execution of 1986Cagreement – Therefore, the only way respondent Nos.1 could seekspecific performance of the 1986 agreement was by proving theappellants’ knowledge of and consent to transfer of the originalvendees’ rights and liabilities to respondent Nos.1 – In the presentcase, appellants have neither by words nor by conduct, consentedto the assignment of the 1986 agreement in favour of respondentDNos.1 – 1987 agreements were contingent contracts – Once 1986agreement was cancelled, the original vendees’ rights thereunderceased to exist – Due to subsequent withdrawal of the suit forspecific performance of 1986 agreement abandoning their rights,enforcement of 1987 agreements has become impossible – Thus,E1987 agreements are void and unenforceable as provided u/ss. 32and 35 of the Contract Act – However, it prima facie seems thatthe original vendees relinquished their rights in the 1986agreements to frustrate the performance of 1987 agreements,original vendees are directed to reimburse earnest money and 9%interest per annum and pay compensation of Rs.1,80,000/- withFinterest @ 9% per annum – Specific Performance Act, 1963 –s.15(b) – Contract Act, 1872 – ss.32, 35 and 40 – Transfer ofProperty Act, 1882 – s.40.

Contract:

GAssignability of Contract – Held: Promisor cannot assigncontract to the third party without consent of the promisee.

Words and Phrases:

Conclusion

‘Representative-in-interest’ – Meaning of in the context ofcontract.H

Partly allowing the appeals, the Court

HELD: 1.1 Upon considering the facts and circumstancesof the present case, it is evident that there is no privity ofcontract between the appellants and respondent Nos. 1.Respondent Nos. 1 were not the party to the 1986 agreement.Vice versa, the appellants were not party to the 1987 agreements,though whether or not they had knowledge of the same isdisputed. Hence, respondent Nos. 1 cannot seek specificperformance of the 1986 agreement, or for that matter, the 1987agreements, against the appellants, except by suing as‘representatives-in-interest’ of the original vendees underSection 15(b) of the Specific Relief Act. [Para 7] [236-B-D]

The Indian Contract and Specific Relief Acts byPollock and Mulla by (R. Yashod Vardhan, and ChitraNarayan eds., 15[th] edn., Vol. I) 730 – referred to.

1.2 The term ‘representative-in-interest’ includes theassignee of a contractual interest. Though the provisions of theContract Act do not particularly deal with the assignability ofcontracts, this Court has opined time and again that a party to acontract cannot assign their obligations/liabilities without theconsent of the other party. Even in a case of assignment ofrights simplicitor, such assignment would necessarily require theconsent of the other party to the contract if it is of a ‘personalnature’. [Paras 7, 8] [263-F-H; 265-A-B]

1.3 The rule stated in Section 15(b) of the Specific ReliefAct is that any interest in a contract can be specifically enforcedby the assignee thereof, except where the ‘personal quality’ ofthe party is a material ingredient in the contract; or where thecontract, expressly or by necessary implication, prohibits thebeneficiary from transferring their contractual interest to thirdparties. Hence Section 15(b) does not contradict the general lawon assignability of contracts as laid down by this Court, butrather clarifies that the same conditions will have to be satisfiedif an assignee seeks to secure specific performance of theassigned contract. [Para 9] [265-D-G]

1.4 In the modern context where parties frequently enterinto complex commercial transactions, it is perhaps not so A

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Aconvenient to pigeonhole contracts as being either ‘general’ orof ‘personal nature’ or as involving the assignment of purely‘rights’ or ‘obligations’. It is possible that a contract may involvea bundle of mutual rights and obligations which are intertwinedwith each other. Where the conferment of a right or benefit iscontingent upon, or coupled with, the discharge of a burden orBliability, such right or benefit cannot be transferred without theconsent of the person to whom the co-extensive burden orliability is owed. [Para 10] [266-A-D]

1.5 It would be inequitable for a promisor to contract outhis responsibility to a stranger if it is apparent that the promiseeCwould not have accepted performance of the contract had it beenoffered by a third party. This is especially important in businessrelationships where the pre-existing goodwill between partiesis often a significant factor influencing their decision to contractwith each other. This principle is already enshrined in SectionD40 of the Contract Act. The promisor ‘may employ a competentperson’, or assign the contract to a third party as the case maybe, to perform the promise only if the parties did not intend thatthe promisor himself must perform it. Hence in a case wherethe contract is of personal nature, the promisor must necessarilyshow that the promisee was agreeable to performance of theEcontract by a third person/assignee, so as to claim exemptionfrom the condition specified in Section 40 of the Contract Act.If the promisee’s consent is not obtained, the assignee cannotseek specific performance of the contract. [Para 10] [266-D-H;267-A-B]F

1.6 Hence, whether or not an assignee can seek specificperformance would depend upon the construction of the contractin each case. The Court would have to determine the nature ofinterest sought to be transferred, whether such interest wasmeant to be enforceable only between the parties to the contractGand whether the contract expressly or by necessary implicationbars assignment of such interest. [Para 11] [267-A-C]

1.7 In the present case, the 1986 agreement provided thatthe Appellants shall execute sale deed in favour of the originalvendees or ‘name proposed by the vendee’ subject to theHassurance that the latter would pay the remaining consideration and betterment tax within the stipulated time, and that the formerwould obtain the necessary permissions for construction on thesuit property. The term ‘name proposed by the vendee’ in the1986 agreement refers to a nominee to be proposed at the timeof execution of the sale deed and not a subsequent assignee.At the same time, it is true the 1986 agreement does not containany express bar against assignability. [Para 11] [267-C-E]

1.8 It cannot be said that in every case where there is noexpress bar against assignability stipulated in the contract,assignment of the interest therein should be upheld withoutlooking at the context in which the parties contracted with eachother. It has to be seen whether the terms of the contract, andthe circumstances in which the contract was entered into, leadto an inference that the parties did not intend to make theirinterest therein assignable. [Para 11] [267-F-H]

1.9 Section 40 of the Transfer of Property Act states thata contract for sale of immovable property is a contract that “asale shall take place on terms settled between the parties”. It is asettled position that such a contract does not by itself create anyinterest in or charge on the property. The buyer only obtains aright to get the sale deed executed, upon fulfilment of theapplicable terms and conditions as consented to by all theparties. Hence the 1986 agreement, being an agreement to sellthe suit property, is a clear case of a contract combining mutualrights and obligations. The original vendees were to obtain theright to get the sale deed executed in respect of the suit propertyupon fulfilment of the conditions specified in the 1986 agreement.[Para 12] [268-E-H]

1.10 Upon comparison of the 1986 agreement and the 1987agreements, it is found that the 1987 agreements amount tonothing but a substitution of liabilities wherein Respondent Nos.1 have assumed the same obligations which the original vendeeswere supposed to have performed under the 1986 agreements.This includes not only the obligation to pay betterment tax butalso the obligation to reimburse the cost of acquiring planningpermissions and to get the suit property levelled for the purposeof construction. Additionally, the 1987 agreements also providethat the plaintiffs can prepare the scheme for construction of AB

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Ahousing society on the suit property, get the members of thesociety registered and execute agreements with them, andpublish advertisement boards regarding the scheme. Hence thisis not a case of assignment of agreement for sale simplicitor, butassignment of what is akin to a development agreement for ahousing scheme on the suit property. A contract of this natureBis ordinarily based upon certain personal understanding betweenthe parties regarding the course of business to be undertakenon the suit property. [Para 12] [269-A-D]

1.11 It is not disputed that the original vendees had notfulfilled their obligations under the 1986 agreement prior to theCpurported ‘assignment’ under the 1987 agreements. Hence theyhad not ‘performed their part of the contract’ as required underSection 15(b) of the Specific Relief Act. Applying the law, theassignment of such a contract cannot be enforced without provingthat it was with the knowledge and consent of the originalDowners/Appellants. [Para 12] [269-D-F]

1.12 Under the 1987 agreements, payment of theremaining consideration amount is to be made to the originalvendees, not the appellants, and possession of the suit propertyis to be handed over by the original vendees. Even theEconsideration to be paid was twice the rate as specified in the1986 agreement. The 1987 agreements nowhere provide fordischarge of the original vendees’ pending obligations towardsthe appellants by respondent Nos. 1. Hence, the 1987agreements were not a case of assignment but appear to beindependent agreements for sale which were contingent on theFexecution of the 1986 agreement. Therefore, the only wayrespondent Nos. 1 can seek specific performance of the 1986agreement against the appellants is by proving the appellants’knowledge of and consent to transfer of the original vendees’rights and liabilities to respondent Nos. 1. [Para 13] [269-E-H]G

1.13 It is true that Section 15(b) does not stipulate in whatform the promisee’s ‘acceptance’ of performance by arepresentative-in-interest of the promisor should becommunicated. It may be either through express written consent,or implied from the actions of the promisee; though as a matterHof caution, the former mode of acceptance would inevitably have higher evidentiary value. However in the present case, as thetrial court and the District Judge have rightly appreciated onfacts, the appellants have not either by words or by conduct,consented to the assignment of the 1986 agreement in favourof respondent Nos. 1. [Para 14] [270-A-C]

1.14 Respondent Nos. 1 had conceded before the trial courtthat the appellants had given their signatures on the layout planfor the housing scheme on the suit property to the originalvendees, not to respondent Nos. 1. Even the advertisementregarding the housing scheme nowhere indicates that theappellants/original owners were developing the project on thesuit property in partnership with respondent Nos. 1. Thus, therewas no valid assignment of rights flowing from the 1986agreement to respondent Nos. 1, and they cannot seek specificperformance against the appellants. [Para 14] [270-E-G]

1.15 The 1987 agreements are clearly contingent contractsinasmuch as they could only be enforced had the originalvendees obtained the right to get the sale deed executed, andtaken possession of the suit property as per the terms of the1986 agreement. Once the 1986 agreement was cancelled by theappellants, the original vendees’ rights thereunder ceased toexist. [Para 16] [271-D-F]

Khardah Company Ltd v. Raymon & Co (India) PrivateLtd., AIR 1962 SC 1810 : [1963] SCR 183 – followed.

Indu Kakkar v. Haryana State Industrial DevelopmentCorporation Ltd. and Another (1999) 2 SCC 37 :[1998] 3 Suppl. SCR 277 – relied on.

Shyam Singh v. Daryao Singh (Dead) By LRs. andOthers (2003) 12 SCC 160 : [2003] 5 Suppl. SCR784 ; Ram Baran Prasad v. Ram Mohit Hazra andOthers AIR 1967 SC 744 : [1967] SCR 293 –distinguished.

2.1 Respondent Nos. 1 have admitted in their plaints thatthe Town Planning Scheme was finalized prior to the 1986agreement. Hence the deadline stipulated under the 1986agreement for payment of remaining consideration by the originalvendees, i.e., within three months of finalization of the Scheme, A

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[2019] 17 S.C.R.

Ahas long since lapsed. Since the original vendees never paid theremaining consideration within the time specified in the 1986agreement, their rights thereunder never fructified. [Para 17][272-A-C]

2.2 Even assuming that the original vendees acquired someBinterest in the suit property, the subsequent withdrawal of thesuit SCS No. 194/1988 shows that the original vendees do notintend to enforce the 1986 agreement. The trial court has foundthat though the suit property de jure vested with the concernedGovernment Authority under the Town Planning Scheme, the defacto possession of the property remains with the Appellants andCthe original vendees have not taken possession thereof.Furthermore, both the trial court and the District Judge haveon facts found that the original vendees have not shown anyreadiness or willingness to pay the remaining consideration tothe appellants. Hence since the original vendees have abandonedDtheir rights under the 1986 agreement, enforcement of the 1987agreements has become virtually impossible and respondentNos. 1 cannot seek specific performance of the latter.Consequently the 1987 agreements are void and unenforceableas provided under Sections 32 and 35 of the Contract Act. [Para17] [272-B-F]E

2.3 Given that the withdrawal of the suit for specificperformance of 1986 agreement has attained finality before thisCourt, and the trial court and the High Court have concurrentlyfound in the separate application made by the plaintiffs in thepresent suit, by orders dated 24.1.2008 and 25.3.2008Frespectively, that the original vendees cannot be compelled tocontinue their suit against their desire, interference with thesame is not warranted. [Para 18] [273-B-C]

3.1 Though on facts and law, respondent Nos.1 are notentitled to specific performance of the 1986 and 1987agreements, prima facie it does appear that the appellants andGthe original vendees have colluded to frustrate performance ofthe 1987 agreements. The trial court has rightly directed theoriginal vendees to reimburse earnest money of Rs. 5000 paidby respondent Nos. 1 towards each of the 1987 agreements withan interest of 9% p.a. from 14.9.1987 till the date of realization.H[Para 19] [273-C-E]

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3.2 Since the original vendees seem to have relinquishedtheir rights in the 1986 agreement so as to frustrate performanceof the 1987 agreements, it would be just, in these circumstances,to award compensation to the Plaintiffs for the loss of opportunityand inconvenience suffered by them. Though no remedy isavailable as against the Appellants on account of absence ofprivity of contract, it is apposite to direct the original vendees,that is, respondent Nos. 3-11 in the four appeals, to payRs. 1,80,000/-, with interest at the rate of 9% per annum fromthe date of the suits, as damages to the Plaintiffs/respondent Nos.1 in these appeals. High Court is also directed to expeditiouslyrelease and remit back the consideration amount deposited byrespondent Nos. 1 in lieu of specific performance. [Para 19] [273-G-H; 274-A-B]

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Habiba Khatoon v. Ubaidul Huq and Others (1997) 7SCC 452 : [1997] 3 Suppl. SCR 251 – referred to.

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Case Law Reference

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 10683-10686 of 2014.

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From the Judgment and Order dated 31.07.2014 of the HighCourt of Gujarat at Ahmedabad in S.A. Nos. 100, 101, 102 & 103 of2013.

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Ranjit Kumar, Sr. Adv., Gaurav Agrawal, Santosh Krishnan,Anurag Gharote, Advs. for the Appellants.

C.U. Singh, Sr. Adv., Amar Dave, Mahesh Agarwal, RishiAgrawala, Ankur Saigal, Arshit Anand, Divyang Gobind Chandiramani,E.C. Agrawala, Advs. for the Respondents.

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AThe Judgment of the Court was delivered byMOHAN M. SHANTANAGOUDAR, J.

1. These appeals arises out of judgement of the High Court ofGujarat at Ahmedabad dated 31.7.2014, allowing the appeals of therespective Respondent Nos. 1 in the four Civil Appeal Nos. 10683-86Bof 2014 before us (hereinafter ‘Respondent Nos. 1’), against judgementand order of the Additional District Judge, Vadodara dated 2.4.2013 andorder dated 30.12.2011 of the Additional Senior Civil Judge, Vadodara;and decreeing the suits SCS Nos. 657-660/1988 filed by RespondentNos. 1 for specific performance against the Appellants herein.

CI. Background Facts

2. This case concerns four suits for specific performance filedby the Respondent Nos. 1/Plaintiffs against the Appellants/DefendantsNos. 1-5. One Naranbhai Ramdas Patel (Defendant No. 1, nowdeceased) was the original owner of property bearing Survey No. 354/D1, admeasuring 1 acre and 31 gunthas in Village Manjalpur of Vadodaradistrict (hereinafter ‘suit property’). He, along with Defendants Nos.2-5 (relatives of Defendant No. 1) executed agreement to sell dated11.3.1986 (‘1986 agreement’) in respect of the suit property in favourof Respondent Nos. 3-11/Defendants Nos. 6-9 (hereinafter ‘originalvendees’), for which the original vendees paid earnest money of Rs.E1,54,251. The suit property was included in Town Planning Scheme No.19 of the Vadodara Municipal Corporation and possession of the suitproperty was to be given to the original vendees once the aforesaidScheme was finalized. A registered sale deed in respect of the suitproperty was to be executed upon receipt of the remaining considerationfrom the original vendees, the deadline for which was within threeFmonths of finalization of the Town Planning Scheme.

The case of Respondent Nos. 1 is that the original vendeesthereafter executed four agreements to sell dated 14.9.1987 (‘1987agreements’) in respect of four different portions of the suit property,assigning the former’s rights under the 1986 agreement in the latter’sGfavour, and that earnest money of Rs. 5000/- was paid under eachagreement. Notably, the Appellants were not parties to the 1987agreements.

Under the 1987 agreements, it was purportedly open toRespondent Nos. 1 to make preparations for construction of a housingHscheme over the suit property and issue advertisement for the same.

Hence they claim that consequently, possession of the suit property wasgiven to them, that a Bhoomi Pujan was conducted for layingfoundation stone on the land and the members of the housing schemewere also registered. Further, that they also obtained the layout planand construction permission for the housing scheme from VadodaraMunicipal Corporation at their own cost, and the deceased originalowner Mr. Naranbhai Patel had put his signature on the layout plan.

Subsequently, dispute arose between the parties, and the originalvendees filed suit SCS No. 194/1988 on 4.4.1988 before the LearnedCivil Judge (Senior Division) at Vadodara (hereinafter ‘trial court’),seeking specific performance of the 1986 agreement against theAppellants. They claimed that they had served notice to the Appellantson 11.3.1988 seeking execution of sale deed in their favour, but the latterhad given evasive reply to the same; that they were deliberately avoidingexecution of sale deed so as to take advantage of increase in real estateprices. Per contra, the Appellants claimed that they had on 25.3.1988,by way of reply to the original vendees’ legal notice, cancelled the 1986agreement as the original vendees had not paid the remainingconsideration as required.

Respondent Nos. 1 were not party to SCS No. 194/1988; andno averment was made in the said suit regarding the 1987 agreements.Instead, on 21.11.88, Respondent Nos. 1 filed four separate suits SCSNos. 657-660/1988 against the Appellants and the original vendeesseeking specific performance of the 1987 agreements. RespondentNos. 1 alleged that the Appellants and the original vendees wereconniving with each other to deny their rights under the 1987agreements, so as to sell the land to a third party in view of theincreasing price of real estate in Vadodara.

The Appellants in their written statements to SCS Nos. 657-660/1988 denied having any dealings with Respondent Nos. 1 and also statedthat the original vendees had never informed them about the 1987agreements. They averred that since the original vendees had neverbecome the legal owners of the suit property, they did not have anyright or authority to enter into any kind of transaction qua the land withRespondent Nos. 1; and that the plaints were concocted to usurp theland.

Both sets of suits, SCS No. 194/1988 and SCS Nos. 657-660/1988, remained pending for a number of years. During that period, A

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Anotably, the Appellants and the original vendees acting together executeda Power-of-Attorney dated 11.11.2001 in favour of one DhananjayVallabhbhai Patel. It was stated in the Power-of-Attorney that theAppellants and the original vendees are relinquishing their rights in thesuit property to Mr. Dhananjay Patel for the purpose of executing saledeed in favour of one Kantilal Ambalal Patel, who is the uncle of theBsaid Dhananjay Patel.

A. Proceedings in SCS No. 194/1988 (Original vendees’ suit)

3. The original vendees filed withdrawal pursis on 26.7.2002seeking to unconditionally withdraw SCS No. 194/1988 on the groundCthat the 1986 agreement was fraudulently registered; that they werenot aware of the identity of the true owners of the suit property at thetime of the 1986 agreement as it was executed through a broker, thatthe original owners of the suit property had not signed the agreement,nor had they received any consideration; and the 1986 agreement wasfraudulently registered, hence no dispute could be raised regarding theDsuit property. On the same day, Respondent Nos. 1 sought impleadmentas co-plaintiffs in SCS No. 194/1988.

The trial court by way of common order dated 22.9.2002 rejectedthe original vendees’ withdrawal application and allowed theimpleadment applications of Respondent Nos. 1. The High Court inErevision reversed the trial court’s order, though without going into themerits of the claim made by Respondent Nos. 1. The Court held thatthe original vendees had an absolute right to withdraw their suitunconditionally irrespective of their motivations for the same. Further,that it was open to Respondent Nos. 1 to raise all available contentionsin their separate suits, including admissions, if any, made by the originalFvendees in their suit SCS No. 194/1988. It was noted that RespondentNos. 1 cannot be permitted to substitute the original vendees as plaintiffs,as otherwise substantial amendment would be required to the originalvendees’ plaint. The special leave petitions filed by Respondent Nos. 1against the High Court judgement were dismissed by this Court byorder dated 16.11.2004 in SLP (Civil) Nos. 22664-65/2004.G

Respondent Nos. 1 subsequently made application in SCS No.658 of 2008, for revival of SCS No. 194/1988, contending that theoriginal vendees had been misled into withdrawing the latter suit;however the application was dismissed by the trial court and the HighCourt by orders dated 24.1.2008 and 25.3.2008 respectively. Hence theHwithdrawal of the original vendees’ suit has attained finality.

-B. Proceedings in SCS Nos. 657660/1988 (Present suit)

4. It is relevant to note that though the original plaints in SCSNos. 657-660/1988 were seeking specific performance only of the 1987agreements, Respondent Nos. 1 amended their plaints in 2005 to seeka declaration that the 1986 agreement is still in force and that theAppellants were bound to execute the 1986 agreement on the basis ofthe assignment made in their favour.

The trial court by common order dated 30.12.2011 dismissed allfour suits. It rejected Respondent Nos.1/Plaintiffs’ contention that theoriginal vendees had withdrawn their suit SCS No. 194/1988 in collusionwith the Appellants herein. This was based on the reasoning that theHigh Court and this Court had, in the earlier proceedings, sanctionedthe unconditional withdrawal of SCS No. 194/1988 and not made anyfinding of judicial impropriety or fraud.

The trial court further found that in light of revocation of the 1986agreement by the Appellants and withdrawal of SCS No. 194/1988 bythe original vendees, it was not open to the Plaintiffs to re-agitate forspecific performance of the said agreement. That in any case, even ifthe 1986 agreement was assumed to be in force, the original vendeescould not have assigned their outstanding obligation to pay the remainingconsideration without the written consent of the original owner i.e.,Defendant No. 1 Naranbhai. Since the 1987 agreements and the 1986agreement were not ad idem, and new conditions were laid down inthe 1987 agreements, such consent was indispensable.

That neither of the Appellants had given any such consent, eitherverbally or by conduct; nor was there any evidence that the originalvendees had paid the remaining consideration to the Appellants, suchthat the former’s rights under the 1986 agreement had fortified andconsequently passed on to the Plaintiffs under the 1987 agreements.Therefore the 1987 agreements were void, illegal and unenforceable.Further, that the 1987 agreements were also vague and unenforceableinasmuch as the suit property was not specifically defined therein.

The trial court additionally held that the Plaintiffs had not takenany steps, such as depositing the remaining consideration owed by theoriginal vendees, or paying betterment tax as per the terms of the 1987agreements, to show that they themselves were ready and willing toperform the contracts. Hence this was not a fit case to grant either A

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Aspecific performance or damages, though Respondent Nos. 1 were heldentitled to return of the earnest money paid by them with interest.

The Learned Additional District Judge, Vadodara by judgementdated 2.04.2013 affirmed the trial court’s findings. It was re-emphasizedthat a party to a contract cannot assign their obligations thereunderBwithout the other party’s consent. There was nothing on record to showthat the Appellants had given such consent. In any case, since theoriginal vendees had never shown their readiness and willingness to paythe balance consideration due by them, no right of specific performancehad accrued in their favour. Further, that the original vendees hadanyway waived their rights by withdrawing their suit in SCS No. 194/C1988. Hence the question of assignment of such a right to RespondentNos. 1, such that they could claim specific performance of the 1986agreement as representatives-in-interest of the original vendees underSection 15(b) of the Specific Relief Act, 1963 (‘Specific Relief Act’)did not arise.D

However, the High Court in the impugned judgement found thatthere was a definite linkage between the 1986 agreement and the 1987agreements such that there was a valid assignment of rights in favourof Respondent Nos.1, which made them ‘representatives-in-interest’ ofthe original vendees for the purpose of Section 15(b) of the SpecificERelief Act. The High Court reasoned that since all the material rightsunder the 1986 agreement were assigned under the 1987 agreements,supplementary conditions specified in the latter did not change the natureof the basic contract.

Further, that reading Sections 40 and 54 of the Transfer ofFProperty Act, 1882 (‘Transfer of Property Act’) and Section 15(b) ofthe Specific Relief Act together, the ‘interest’ assignable under Section15(b) need not be an interest in the property or a charge created in theproperty. A contractual interest in the form of an obligation annexed toownership of the property may also be assignable. It was discerniblefrom the facts and evidence on record that the Appellants had givenGimplied consent for such assignment. Mr. Naranbhai Patel’s signatureon planning permissions and his presence at the Bhoomi Pujanceremony were taken as proof that the original owners had consentedto the involvement of Respondent Nos. 1 in developing a housingscheme on the suit property. Therefore, it was found that the 1986Hagreement remained alive, and the rights derived therefrom in favour of the original vendees were validly assigned under the 1987agreements.

Additionally, since the High Court and this Court had clarifiedwhile sanctioning withdrawal of SCS No. 194/1988 that such withdrawalwould not preclude Respondent Nos. 1 from pursuing their independentremedies, the withdrawal of the original vendees’ suit could not prejudicethe rights of Respondent Nos. 1 to specific performance. That actualtendering of money was not necessary to evince readiness andwillingness to perform the contract as required under Section 16(c) ofthe Specific Relief Act, and the specific averments made in the pleadingsby Respondent Nos. 1 would suffice.

It may be relevant to note at this juncture that the High Courtby interim order dated 27.6.2013 had directed Respondent Nos. 1 todeposit an amount equal to five times the amount of originalconsideration under the 1987 agreements, and Respondent Nos. 1 havesubmitted that they are ready and willing to forfeit the entire amountdeposited in respect of the relief of specific performance, so as tobalance equities between the parties.

We further note from the order sheets maintained by this Courtthat the parties have been directed to maintain status quo during thependency of the appeal and no steps have been taken for the executionof the impugned judgement.

II. Issues and Submissions made by the Parties

5. Therefore, upon a perusal of the entire record, the followingissues arise for our consideration:

Firstly, whether there was a valid assignment of rights by theoriginal vendees in favour of Respondent Nos. 1 under the 1987agreements?

Secondly, whether the right of Respondent Nos. 1 to seek specificperformance survives subsequent to the cancellation of the 1986agreement by the Appellants and withdrawal of suit in SCS No. 194/1988 by the original vendees?

Thirdly, whether relief may be granted to Respondent Nos. 1,and if so, of what nature?

6. Learned senior counsel for the Appellants, Mr. Ranjit Kumarargued that there was no privity of contract between the Appellants A

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Aand Respondents Nos. 1 in the respective appeals. That the 1987agreements were contingent contracts under Section 31 of the IndianContract Act, 1872 (‘Contract Act’), as the rights therein could onlybe enforced upon the completion of the 1986 agreement, and the interestcreated under the 1987 agreements was also a ‘contingent interest’under Section 21 of the Transfer of Property Act. Since the 1986Bagreement was cancelled, Respondent Nos. 1 could not seek specificperformance of the 1987 agreements.

Further, that the purported ‘assignment’ under the 1987agreements practically amounted to a novation of the 1986 agreement,and the Appellants had not accorded any consent for such anCassignment. Even if such an assignment had taken place, there was noevidence to show that Respondent Nos. 1 were ready and willing toperform their contractual obligations. Respondent Nos. 1 had nevercommunicated their willingness to complete their contractual obligationsunder the 1986 agreement to the Appellants.D

Per contra, learned senior counsel for Respondent No. 1, Mr.C.U. Singh argued that the Appellants i.e. the landowners werecolluding with the original vendees to avoid sale of the suit property, asevidenced by the fact that the original vendees had not contested thesuit at any point of time. He brought to this Court’s notice that thereEcould not have been a termination of the 1986 agreement in 1988 giventhat in the Power-of-Attorney dated 11.11.2001 (supra) executed byDefendant Nos. 1-9 (the Appellants and the original vendees) in favourof Mr. Dhananjay Patel, it is stated that the original vendees haveacquired rights in the suit property under the 1986 agreement. It is notopen to the Appellants to accept the existence of the 1986 agreementFin the Power-of-Attorney and reject it for the purpose of these suits.

He further relied upon this Court’s decisions in Shyam Singh v.Daryao Singh (Dead) By LRs. and Others, (2003) 12 SCC 160, RamBaran Prasad v. Ram Mohit Hazra and Others, AIR 1967 SC 744and Habiba Khatoon v. Ubaidul Huq and others, (1997) 7 SCC 452Gto argue that no implied prohibition can be read into the 1986 agreementagainst assignability of the interest therein. The requirement of consentof the other party for assignment under Section 15(b) of the SpecificRelief Act is only applicable in cases where the obligation is of apersonal nature or where there is an express bar in the contractHprohibiting such assignment of interest. Further, that in any case, the original owner Naranbhai Patel’s conduct in arranging for developmentpermissions and consenting to publication of advertisement regardingdevelopment of housing scheme in the suit property shows that therewas implied consent for assignment of rights under the 1986 agreementin favour of Respondent Nos. 1.

III. Validity of Assignment of Rights under 1987Agreements.

A. General principles governing assignability of contracts

7. Upon considering the facts and circumstances of the presentcase, it is evident that there is no privity of contract between theAppellants and Respondent Nos. 1. Respondent Nos. 1 were not partyto the 1986 agreement. Vice versa, the Appellants were not party tothe 1987 agreements, though whether or not they had knowledge ofthe same is disputed. Hence Respondent Nos. 1 cannot seek specificperformance of the 1986 agreement, or for that matter, the 1987agreements, against the Appellants, except by suing as ‘representatives-in-interest’ of the original vendees under Section 15(b) of the SpecificRelief Act. Section 15(b) provides that:

“15. Who may obtain specific performance.—Except asotherwise provided by this Chapter, the specific performance ofa contract may be obtained by—

…(b) the representative in interest or the principal, of any partythereto: Provided that where the learning, skill, solvency or anypersonal quality of such party is a material ingredient in thecontract, or where the contract provides that his interest shallnot be assigned, his representative in interest or his principal shallnot be entitled to specific performance of the contract, unlesssuch party has already performed his part of the contract, or theperformance thereof by his representative in interest, or hisprincipal, has been accepted by the other party…”

It is well-settled that the term ‘representative-in-interest’ includesthe assignee of a contractual interest. Though the provisions of theContract Act do not particularly deal with the assignability of contracts,this Court has opined time and again that a party to a contract cannotassign their obligations/liabilities without the consent of the other party.A Constitution Bench of this Court in Khardah Company Ltd v.Raymon & Co (India) Private Ltd., AIR 1962 SC 1810 has laid outthis principle as follows:

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A“…An assignment of a contract might result by transfer eitherof the rights or of the obligations thereunder. But there is a well-recognised distinction between these two classes of assignments.As a rule obligations under a contract cannot be assigned exceptwith the consent of the promisee, and when such consent is given,Bit is really a novation resulting in substitution of liabilities. On theother hand, rights under a contract are assignable unless thecontract is personal in its nature or the rights are incapable ofassignment either under the law or under an agreement betweenthe parties.”

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In Khardah Company, the Appellant jute manufacturers wereentitled to receive price for the jute from the buyer/dealer of jute onlyupon delivery of certain shipping documents. Question arose as towhether such an obligation coupled with a benefit was assignable. ThisDCourt held, based on the above-mentioned principle, that the terms ofthe contract strongly implied that the rights thereunder are non-transferable.

Similarly, in Indu Kakkar v. Haryana State IndustrialDevelopment Corporation Ltd. and Another, (1999) 2 SCC 37, theERespondent Corporation allotted certain land subject to the conditionthat the allottee shall complete construction of a building unit on theplot within a period of two years. Upon the allottee’s failure to complywith the said condition, the Respondent resumed the land. The allotteefiled a civil suit challenging the resumption order, during the pendencyFof which he assigned his rights in the plot to the Appellant. The issuewas whether such an assignee could challenge the resumption order.A two-judge Bench of this Court held, in reliance upon KhardahCompany (supra), that:

“19.…Answer of the said question depends upon the terms ofGallotment. Assignment by act of parties may cause assignmentof rights or of liabilities under a contract. As a rule a party to acontract cannot transfer his liabilities under the contract withoutconsent of the other party. This rule applies both at the CommonLaw and in Equity (vide para 337 of Halsbury’s Laws ofHEngland, Fourth Edition, Part 9). Where a contract involves mutual rights and obligations an assignee of a right cannotenforce that right without fulfilling the co-relative obligations.”

(emphasis supplied)

8. Even in a case of assignment of rights simplicitor, suchassignment would necessarily require the consent of the other party tothe contract if it is of a ‘personal nature’. This is elucidated by learnedauthors Pollock and Mulla in their commentary on The IndianContract and Specific Relief Acts (R. Yashod Vardhan, and ChitraNarayan eds., 15[th] edn., Vol. I) at page 730:

“A contract which is such that the promisor must perform it inperson, viz. involving personal considerations or personal skill orqualifications (such as his credit), are by their nature notassignable. The benefit of contract is assignable in ‘cases whereit can make no difference to the person on whom the obligationlies to which of two persons he is to discharge it.’ The contractualrights for the payment of money or to building work, for e.g., donot involve personal considerations.” (emphasis supplied)

9. It is true that Section 15(b) of the Specific Relief Act doesnot specifically state that ‘obligations’ may not be assigned except withthe consent of the other party. However a reading of Section 15(b)shows that it is nothing but a statutory formulation of the ratio laid downin the above-mentioned precedents. The rule stated in Section 15(b) isthat any interest in a contract can be specifically enforced by theassignee thereof, except where the ‘personal quality’ of the party is amaterial ingredient in the contract; or where the contract, expressly orby necessary implication, prohibits the beneficiary from transferring theircontractual interest to third parties. Hence Section 15(b) does notcontradict the general law on assignability of contracts as laid downby this Court, but rather clarifies that the same conditions will have tobe satisfied if an assignee seeks to secure specific performance of theassigned contract.

Therefore, for example, a contract for a singing performance ora painting may not be assignable as it involves a personal skill and evenif it is assigned, the assignee cannot seek specific performance inrespect of such a contract. Whereas it may be said that generalcontracts for payment of money or building work do not involve anypersonal considerations, as it makes no difference as to who discharges A

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Athe obligation to pay or perform a certain act under the contract. Hencethe assignees of parties to such contracts may seek specificperformance.

10. It is important to note that in the modern context whereparties frequently enter into complex commercial transactions, it isBperhaps not so convenient to pigeonhole contracts as being either‘general’ or of ‘personal nature’ or as involving the assignment of purely‘rights’ or ‘obligations’. It is possible that a contract may involve a bundleof mutual rights and obligations which are intertwined with each other.However, as this Court has held in Indu Kakkar (supra), the samerule as laid down in Khardah Company (supra) and as stated inCSection 15(b) of the Specific Relief Act, may be applied to suchcontracts as well. Where the conferment of a right or benefit iscontingent upon, or coupled with, the discharge of a burden or liability,such right or benefit cannot be transferred without the consent of theperson to whom the co-extensive burden or liability is owed.DIt further has to be seen whether conferment of benefits undera contract is based upon the specific assurance that the co-extensiveobligations will be performed only by the parties to the contract and noother persons. It would be inequitable for a promisor to contract outhis responsibility to a stranger if it is apparent that the promisee wouldEnot have accepted performance of the contract had it been offered bya third party. This is especially important in business relationships wherethe pre-existing goodwill between parties is often a significant factorinfluencing their decision to contract with each other. This principle isalready enshrined in Section 40 of the Contract Act:F“40. Person by whom promise is to be performed.—If itappears from the nature of the case that it was the intention ofthe parties to any contract that any promise contained in it shouldbe performed by the promisor himself, such promise must beperformed by the promisor. In other cases, the promisor or hisrepresentative may employ a competent person to perform it.”G

It is clear from the above that the promisor ‘may employ acompetent person’, or assign the contract to a third party as the casemay be, to perform the promise only if the parties did not intend thatthe promisor himself must perform it. Hence in a case where thecontract is of personal nature, the promisor must necessarily show thatHthe promisee was agreeable to performance of the contract by a third person/assignee, so as to claim exemption from the condition specifiedin Section 40 of the Contract Act. If the promisee’s consent is notobtained, the assignee cannot seek specific performance of the contract.

B. Application of the above principles to the present case

11. Hence, in light of the above discussion, whether or not anassignee can seek specific performance would depend upon theconstruction of the contract in each case. The Court would have todetermine the nature of interest sought to be transferred, whether suchinterest was meant to be enforceable only between the parties to thecontract and whether the contract expressly or by necessary implicationbars assignment of such interest.

In the present case, the 1986 agreement provided that theAppellants shall execute sale deed in favour of the original vendees or‘name proposed by the vendee’ subject to the assurance that the latterwould pay the remaining consideration and betterment tax within thestipulated time, and that the former would obtain the necessarypermissions for construction on the suit property.

We are of the opinion that the term ‘name proposed by thevendee’ in the 1986 agreement refers to a nominee to be proposed atthe time of execution of the sale deed and not a subsequent assignee.At the same time, it is true the 1986 agreement does not contain anyexpress bar against assignability. The question which arises then iswhether the purported assignment in favour of Respondent Nos. 1 underthe 1987 agreements is legally valid.

The decisions in Shyam Singh (supra) and Ram Baran Prasad(supra) relied upon by Respondent Nos. 1 will not help their case asthis Court found on the particular facts of those cases that the termsof the contracts in those cases did not implicitly bar assignment. Thesedecisions cannot be taken to lay down a blanket rule that in every casewhere there is no express bar against assignability stipulated in thecontract, assignment of the interest therein should be upheld withoutlooking at the context in which the parties contracted with each other.It has to be seen whether the terms of the contract, and thecircumstances in which the contract was entered into, lead to aninference that the parties did not intend to make their interest thereinassignable.This is the principle of law as authoritatively stated by theConstitution Bench in Khardah Company (supra):

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SUPREME COURT REPORTS

A“…We agree that when a contract has been reduced to writingwe must look only to that writing for ascertaining the terms ofthe agreement between the parties but it does not follow fromthis that it is only what is set out expressly and in so many wordsin the document that can constitute a term of the contractbetween the parties. If on a reading of the document as a whole,Bit can fairly be deduced from the words actually used thereinthat the parties had agreed on a particular term, there is nothingin law which prevents them from setting up that term. The termsof a contract can be expressed or implied from what has beenexpressed. It is in the ultimate analysis a question of constructionCof the contract. And again it is well established that in construinga contract it would be legitimate to take into account surroundingcircumstances. Therefore on the question whether there was an-agreement between the parties that the contract was to be nontransferable, the absence of a specific clause forbidding transferis not conclusive. What has to be seen is whether it could beDheld on a reasonable interpretation of the contract, aided by suchconsiderations as can legitimately be taken into account that theagreement of the parties was that it was not to be transferred.When once a conclusion is reached that such was theunderstanding of the parties, there is nothing in law which prevents”Eeffect from being given to it.

12. Section 40 of the Transfer of Property Act states that acontract for sale of immovable property is a contract that “a sale shalltake place on terms settled between the parties”. It is a settled positionFthat such a contract does not by itself create any interest in or chargeon the property. The buyer only obtains a right to get the sale deedexecuted, upon fulfilment of the applicable terms and conditions asconsented to by all the parties. Hence the 1986 agreement, being anagreement to sell the suit property, is a clear case of a contractGcombining mutual rights and obligations. The original vendees were toobtain the right to get the sale deed executed in respect of the suitproperty upon fulfilment of the conditions specified in the 1986agreement.

The 1987 agreements purport to assign the aforesaid rights andHobligations of the original vendees in favour of Respondent Nos. 1/

Plaintiffs. Upon comparison of the 1986 agreement and the 1987agreements, we find that the 1987 agreements amount to nothing but asubstitution of liabilities wherein Respondent Nos. 1 have assumed thesame obligations which the original vendees were supposed to haveperformed under the 1986 agreements. This includes not only theobligation to pay betterment tax but also the obligation to reimburse thecost of acquiring planning permissions and to get the suit propertylevelled for the purpose of construction.

Additionally, the 1987 agreements also provide that the plaintiffscan prepare the scheme for construction of housing society on the suitproperty, get the members of the society registered and executeagreements with them, and publish advertisement boards regarding thescheme. Hence this is not a case of assignment of agreement for salesimplicitor, but assignment of what is akin to a development agreementfor a housing scheme on the suit property. A contract of this nature isordinarily based upon certain personal understanding between the partiesregarding the course of business to be undertaken on the suit property.

It is not disputed that the original vendees had not fulfilled theirobligations under the 1986 agreement prior to the purported ‘assignment’under the 1987 agreements. Hence they had not ‘performed their partof the contract’ as required under Section 15(b) of the Specific ReliefAct. Applying the law as stated above, the assignment of such a contractcannot be enforced without proving that it was with the knowledge andconsent of the original owners/Appellants.

13. It is further relevant to note that under the 1987 agreements,payment of the remaining consideration amount is to be made to theoriginal vendees, not the Appellants, and possession of the suit propertyis to be handed over by the original vendees. Even the consideration tobe paid was twice the rate as specified in the 1986 agreement. The1987 agreements nowhere provide for discharge of the original vendees’pending obligations towards the Appellants by Respondent Nos. 1.Hence we are inclined to accept the Appellants’ argument that the 1987agreements were not a case of assignment but appear to be independentagreements for sale which were contingent on the execution of the 1986agreement. Therefore, the only way Respondent Nos. 1 can seekspecific performance of the 1986 agreement against the Appellants isby proving the Appellants’ knowledge of and consent to transfer of theoriginal vendees’ rights and liabilities to Respondent Nos. 1.

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A14. It is true that Section 15(b) does not stipulate in what formthe promisee’s ‘acceptance’ of performance by a representative-in-interest of the promisor should be communicated. It may be eitherthrough express written consent, or implied from the actions of thepromisee; though as a matter of caution, the former mode of acceptancewould inevitably have higher evidentiary value. However in the presentBcase, as the trial court and the Learned District Judge have rightlyappreciated on facts, we do not find that the Appellants have either bywords or by conduct, consented to the assignment of the 1986 agreementin favour of Respondent Nos. 1.

The mere fact that the original owner Mr. Naranbhai Patel signedCthe development permissions for the suit property and may have beenpresent at the Bhoomi Pujan does not indicate that he consented toassignment of the 1986 agreement. The 1986 agreement stipulated thatthe original owners would give their signatures for obtaining necessarypermissions for the proposed development on the suit property. Hence,Das the trial court has rightly noted, Mr. Naranbhai Patel was onlycarrying out his contractual obligation as he had promised to the originalvendees. This does not indicate that he was under the impression thatthe said permissions were now to be obtained for the benefit ofRespondent Nos. 1.

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It is pertinent to note that Respondent Nos. 1 conceded beforethe trial court that the Appellants had given their signatures on the layoutplan for the housing scheme on the suit property to the original vendees,not to Respondent Nos. 1. Even the advertisement regarding the ‘UnnatiPark’ housing scheme nowhere indicates that the Appellants/originalFowners were developing the project on the suit property in partnershipwith Respondent Nos. 1.

Thus we conclude that there was no valid assignment of rightsflowing from the 1986 agreement to Respondent Nos. 1, and theycannot seek specific performance against the Appellants.

GIV. Whether the Plaintiffs are entitled to SpecificPerformance?

15. Having found that Respondent Nos. 1 cannot seek specificperformance of the 1986 agreement, it may be considered whether theycan seek any remedy qua the 1987 agreements as against the AppellantsHand the original vendees. Since there is no privity of contract between the Appellants and Respondent Nos. 1 there no longer remains anyquestion of granting specific performance as against the former.

16. Further, as noted above, the terms of the 1987 agreementsindicate that they are contingent contracts, as defined under Section31 of the Contract Act:

“31. “Contingent contract” defined.—A “contingent contract”is a contract to do or not to do something, if some event, collateralto such contract, does or does not happen.”

Sections 32 and 35 further state that:

“32. Enforcement of contracts contingent on an eventhappening.—Contingent contracts to do or not to do anythingif an uncertain future event happens, cannot be enforced by lawunless and until that event has happened.”

“35. When contracts become void, which are contingent—on happening of specified event within fixed time.Contingent contracts to do or not to do anything, if a specifieduncertain event happens within a fixed time, become void if, atthe expiration of the time fixed, such event has not happened, orif, before the time fixed, such event becomes impossible.”

The 1987 agreements are clearly contingent contracts inasmuchas they could only be enforced had the original vendees obtained theright to get the sale deed executed, and taken possession of the suitproperty as per the terms of the 1986 agreement. Once the 1986agreement was cancelled by the Appellants, the original vendees’ rightsthereunder ceased to exist.

17. Respondent Nos. 1 contend that the Power-of-Attorney dated11.11.2001 (supra) in favour of Mr. Dhananjay Patel shows that the1986 agreement was not cancelled and that the original vendeescontinued to retain their right to get the sale deed executed in theirfavour. It was brought to our notice by the Appellants that the aforesaidPower-of-Attorney was subsequently cancelled by the original vendeeson 6.6.2003, on the ground that Mr. Dhananjay Patel had obtained thePower-of-Attorney through misrepresentation. However, it is importantto note that the original vendees have stated in the aforesaid cancellationnotice that they have ‘joint ownership’ of the suit property. Thereforewe find some merit in the argument that the Appellants and the originalvendees are acting in collusion.

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ANevertheless, regardless of what may be stated in the Power-of-Attorney, it has to be seen whether the original vendees have legallyacquired any rights in the suit property. Respondent Nos. 1 haveadmitted in their plaints that the Town Planning Scheme was finalizedprior to the 1986 agreement. Hence the deadline stipulated under the1986 agreement for payment of remaining consideration by the originalBvendees, i.e., within three months of finalization of the Scheme, haslong since lapsed. Since the original vendees never paid the remainingconsideration within the time specified in the 1986 agreement, their rightsthereunder never fructified.

Even assuming that the original vendees acquired some interestCin the suit property, the subsequent withdrawal of the suit SCS No. 194/1988 shows that the original vendees do not intend to enforce the 1986agreement. The trial court has found that though the suit property dejure vested with the concerned government authority under the TownPlanning Scheme, the de facto possession of the property remains withDthe Appellants and the original vendees have not taken possessionthereof. Furthermore, both the trial court and the learned District Judgehave on facts found that the original vendees have not shown anyreadiness or willingness to pay the remaining consideration to theAppellants. Hence since the original vendees have abandoned theirrights under the 1986 agreement, enforcement of the 1987 agreementsEhas become virtually impossible and Respondent Nos. 1 cannot seekspecific performance of the latter. Consequently the 1987 agreementsare void and unenforceable as provided under Sections 32 and 35 ofthe Contract Act.

18. It is relevant to note at this juncture that Respondent Nos. 1Fhave also pleaded that the Power-of-Attorney dated 11.11.2001 (supra)was executed in breach of the interim injunction order issued by thetrial court directing maintenance of status quo in respect of the suitproperty. Hence they seek that action should be taken against theAppellants and the original vendees under Order XXXIX, Rule 2A ofthe Code of Civil Procedure, 1908 for breach of the injunction order.GHowever, we are in agreement with the trial court’s findings that thePlaintiffs’ application under Order XXXIX was moved after a delay ofthree years and six months, and the said delay has not been satisfactorilyexplained. Hence the application is barred by laches. In any case, sincethe original vendees have revoked the Power-of-Attorney, status-quoHhas been restored, and the Plaintiffs’ cause of action no longer exists.

The Learned District Judge and the High Court in the impugnedjudgement have affirmed the trial court’s reasoning on this aspect, andwe see no reason to overturn their concurrent findings on this matter.

It was also re-iterated before us by Respondent Nos. 1 that theoriginal vendees were misled into withdrawing their suit SCS No. 194/1988 and that the same should not be binding upon the plaintiffs.However given that the withdrawal of the suit has attained finality beforethis Court, and the Trial Court and the High Court have concurrentlyfound in the separate application made by the plaintiffs in SCS No. 658/1988, by orders dated 24.1.2008 and 25.3.2008 supra (respectively), thatthe original vendees cannot be compelled to continue their suit againsttheir desire, we are not inclined to interfere with the same.

V. Alternative Remedy to be given to the plaintiffs

19. Though we have found that on facts and law, RespondentNos. 1 are not entitled to specific performance of the 1986 and 1987agreements, prima facie it does appear that the Appellants and theoriginal vendees have colluded to frustrate performance of the 1987agreements. The trial court had directed the original vendees toreimburse earnest money of Rs. 5000 paid by Respondent Nos. 1towards each of the 1987 agreements with an interest of 9% p.a. from14.9.1987 till the date of realization. We are in agreement with theaforesaid direction.

With regard to the appropriate remedy to be provided toRespondent Nos. 1, it may also be pertinent to refer to Section 53 ofthe Contract Act, which provides that:

“53. Liability of party preventing event on which thecontract is to take effect.—When a contract containsreciprocal promises, and one party to the contract prevents theother from performing his promise, the contract becomes voidableat the option of the party so prevented: and he is entitled tocompensation from the other party for any loss which he maysustain in consequence of the non-performance of the contract.”

Therefore, since the original vendees seem to have relinquishedtheir rights in the 1986 agreement so as to frustrate performance ofthe 1987 agreements, it would be just in these circumstances to awardcompensation to the Plaintiffs for the loss of opportunity andinconvenience suffered by them. Though no remedy is available as A

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Aagainst the Appellants on account of absence of privity of contract, weconsider it apposite to direct the original vendees, that is, RespondentNos. 3-11 in the four appeals, to pay Rs. 1,80,000/-, with interest atthe rate of 9% per annum from the date of the suits, as damages tothe Plaintiffs/Respondent Nos. 1 in these appeals, as prayed for in theirpleadings. We also direct the High Court to expeditiously release andBremit back the consideration amount deposited by Respondent Nos. 1in lieu of specific performance.

20. Hence these appeals are partly allowed, and the impugnedjudgement is set aside, in the aforesaid terms.

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Kalpana K. Tripathy

Appeals partly allowed.

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