Satish Kumar vs Karan Singh

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 7385 OF 2013

Satish Kumar ….Appellant(s) versus Karan Singh and Another ….Respondent(s)

JUDGMENT

M.Y. EQBAL, J.

The question that needs consideration in the

instant appeal is as to whether the so called agreement to sell

dated 6.1.1995, which is extracted hereinbelow, is enforceable

in law for passing a decree for specific performance of

contract. The said agreement reads as under :-

”RECEIPT + AGREEMENT DATED 6.1.1995

Received a sum of amount Rs.2,30,000/-(Two Lac Thirty Thousand) from Karan Singh S/o Sh. Basti Ram R/o Village and PO Mahipal Pur New Delhi-110 037 on sixth January, 1995 against our DDA alternative plot F.No.32(5)113/87/L&B/Alt./2511 dated Signature Not Verified 11.8.1989 in the name of Sh. Jaishi S/o Sh. Digitally signed by Sanjay Kumar Ram Saran R/o V&PO Mahipalpur New Delhi. The total area of the above said plot is 400 Date: 2016.01.27 15:42:33 IST Reason:

1 Sq.Yds. The total premium settled for the above said plot is Rs.4,60,000/- (Four Lacs Sixty Thousand) will be given at the time of receive the lease after execution at the Registrar Office. No payment will be given in between.” Sd/-

Jaisi Ram In the presence of S/o Ram Saran J.N. Sehrawat Village Mahipal Pur V& PO Mahipal Pur New Delhi-110037.

2. The trial court after recording the evidence decreed the

suit of plaintiff-respondent for specific performance and the

High Court by the impugned judgment dismissed the appeal

filed by the appellant and affirmed the decree passed by the

Trial Court.

3. We have heard learned counsel appearing for the parties.

4. The plaintiff’s case in the plaint is that a decision was

taken by the Delhi Development Authority for allotment of a

plot of land measuring 400 Sq.yds. in favour of the

defendant-respondent. It was pleaded that in the year 1995

the defendant had desired to sell his right in the said

recommendation letter which was to be allotted by the DDA in

2 favour of the defendant. It was further pleaded that the

defendant agreed to sell his right in the aforesaid

recommendation letter and the plot to be allotted at a price of

Rs.4,60,000/-. For better appreciation para 6 of the plaint is

extracted hereinbelow :-

“6. That the negotiations in between the parties had taken place and the plaintiff had agreed to purchase the said rights of the defendant in the said recommendation letter and the plot to be allotted thereto. The dealings were finalized and a Receipt-cum-Agreement (for short Agreement) was also executed in between the parties on January 6, 1995.

It is stated that the defendant had agreed to sell his rights in the aforementioned recommendation letter and the plot to be allotted thereunder to the plaintiff for the sale consideration of Rs.4,60,000/- (Rupees Four lakhs and Sixty thousand only). A sum of Rs.2,30,000/- (Rupees Two Lakhs and Thirty Thousand only) was also paid by the plaintiff to the defendant on January 6, 1995 itself. Vide the said agreement dated January 6, 1995, the defendant had acknowledged receipt of the sum of Rs.2,30,000/- (Rupees Two Lakhs Thirty Thousand only) from the plaintiff. It was further agreed that the balance amount of Rs.2,30,000/- (Rupees Two Lakhs Thirty Thousand only) would be paid by the plaintiff to the defendant when the defendant hands over the original lease deed duly executed by the Delhi Development Authority in favour of the defendant.”

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5. Curiously enough although the total sale consideration

fixed was Rs. 4,60,000/- but the suit was valued at

Rs.6,77,262.75p. on the basis of the value fixed by the DDA in

respect of the plot in question.

6. During the pendency of the suit in the trial court the

original defendant who was an old person died and his legal

representative was substituted. The original defendant as also

the legal representative contested the suit denying and

disputing the alleged receipt-cum-agreement and stated that

no decree for specific performance can be passed. The trial

court held that the receipt-cum-agreement is a legal and valid

agreement to sell and shall be enforced by passing a decree for

specific performance. The High Court on the basis of evidence

adduced by the parties affirmed the finding recorded by the

trial court.

7. Prima facie, we are of the view that both the trial court

and the High Court have completely failed to consider the

provisions of Specific Relief Act and the principles laid down

4 by this Court in catena of decisions as to the requirement of

law for passing a decree for specific performance.

8. It is well settled that the jurisdiction to order specific

performance of contract is based on the existence of a valid

and enforceable contract. Where a valid and enforceable

contract has not been made, the Court will not make a

contract for them. Specific performance will not be ordered if

the contract itself suffers from some defect which makes the

contract invalid or unenforceable. The discretion of the Court

will not be there even though the contract is otherwise valid

and enforceable.

9. This Court in Mayawanti vs. Kaushalya Devi (1990) 3

SCC 1 held thus:-

“8. In a case of specific performance it is settled law, and indeed it cannot be doubted, that the jurisdiction to order specific performance of a contract is based on the existence of a valid and enforceable contract. The Law of Contract is based on the ideal of freedom of contract and it provides the limiting principles within which the parties are free to make their own contracts. Where a valid and enforceable contract has not been made, the

5 court will not make a contract for them. Specific performance will not be ordered if the contract itself suffers from some defect which makes the contract invalid or unenforceable. The discretion of the court will be there even though the contract is otherwise valid and enforceable and it can pass a decree of specific performance even before there has been any breach of the contract. It is, therefore, necessary first to see whether there has been a valid and enforceable contract and then to see the nature and obligation arising out of it. The contract being the foundation of the obligation the order of specific performance is to enforce that obligation.”

10. Exercise of discretionary power under Section 20 of the

Specific Relief Act for granting a decree, this Court in the case

of Parakunnan Veetill Joseph’s Son Mathew vs.

Nedumbara Kuruivila’s Son and others, AIR 1987 SC 2328

observed:-

“14. Section 20 of the Specific Relief Act, 1963 preserves judicial discretion of courts as to decreeing specific performance. The court should meticulously consider all facts and circumstances of the case. The court is not bound to grant specific performance merely because it is lawful to do so. The motive behind the litigation should also enter into the judicial verdict. The court should take care to see that it is not used as an instrument of oppression to have an unfair advantage to the plaintiff. The High Court has failed to consider the motive with which Varghese instituted the suit. It was instituted because Kuruvila could not get the estate and Mathew was not prepared to part

6 with it. The sheet anchor of the suit by Varghese is the agreement for sale Exhibit A-1. Since Chettiar had waived his rights thereunder, Varghese as an assignee could not get a better right to enforce that agreement. He is, therefore, not entitled to a decree for specific performance.”

11. In the instant case both the Trial Court and the High

Court have completely overlooked and failed to appreciate the

following facts:-

(a) The receipt + agreement dated 6.1.1995 is a document by which the defendant alleged to have received a sum of Rs.2,30,000/- against the alternative plot in question which the DDA recommended to give to the defendant. The said plot will in turn will be given by the defendant to the plaintiff after a lease was executed in favour of the defendant by the DDA;

(b) The total premium amount settled by the said agreement in respect of the plot was Rs.4,60,000/- whereas the defendant deposited a sum of Rs.8,13,389/- with the DDA for the allotment of the said plot;

(c) The plaintiff pleaded in his plaint that the defendant had agreed to sell his rights in the recommendation letter and the plot to be allotted thereunder to the plaintiff for a consideration of Rs.4,60,000/-;

(d) Although the right to get the plot was agreed to be sold to the plaintiff by the defendant for Rs.4,60,000/- but the suit was valued at Rs. 6,77,262.75p. being the rate fixed by the DDA.

7 12. On the basis of these admitted facts the Trial Court

erroneously held that the receipt-cum-agreement is an

enforceable contract and on that finding decreed the suit

which was affirmed by the High Court.

13. It is interesting to note that the High Court has noticed

the fact mentioned in para 24 of trial court judgment that

during the pendency of the lis DDA allotted the plot in

question in favour of the deceased father of the defendant

(original plaintiff) by executing a lease deed putting a condition

that the plot in question will remain non-transferable for a

period of ten years. Para 24 of the trial court judgment is

quoted hereinbelow:-

“It is stated on oath by Umed Singh (DW1) that the DDA allotted plot in dispute to his deceased father on certain terms and conditions, which were embodied in the lease deed. One of such conditions was that suit will remain non-transferable for a period of ten years.”

14. In spite of the aforesaid fact noticed by the High Court,

that the land so allotted to the defendant- is not transferable

8 for a period of 10 years, the High Court failed to hold that a

decree for specific performance cannot be passed.

15. We are sorry to hold that both the Trial Court and the

High Court have completely misconstrued the facts of the

case and misunderstood the law laid down by this Court in

the matter of exercising discretionary power for granting a

decree for specific performance.

16. After giving our anxious consideration to the matter, we

are of the view that the impugned order passed by the trial

court and affirmed by the High Court cannot be sustained in

law inasmuch as no decree for specific performance can be

passed on the basis of the alleged receipt-cum-agreement. We

therefore, allow this appeal and set aside the judgments

passed by the Trial Court and the High Court.

17. Consequently, we direct the appellant to refund a sum of

Rs.4,30,000/- (Rupees Four Lakhs Thirty Thousand) which

was paid by the respondents to the appellant together with

interest @ 6% per annum from the date of such receipt within

9 two months from today. Any amount deposited by the

respondents in the High Court shall be withdrawn by them.

…………………………….J. (M.Y. Eqbal)

…………………………….J. (Arun Mishra) New Delhi January 21, 2016

10 ITEM NO.105 COURT NO.7 SECTION XIV

S U P R E M E C O U R T O F I N D I A RECORD OF PROCEEDINGS

Civil Appeal No. 7385/2013

SATISH KUMAR Appellant(s) VERSUS

KARAN SINGH AND ANR Respondent(s) (With office report)

Date : 21/01/2016 This appeal was called on for hearing today.

CORAM :

HON'BLE MR. JUSTICE M.Y. EQBAL HON'BLE MR. JUSTICE ARUN MISHRA

For Appellant(s) Mr. Pallav Shishodia, Sr.Adv.

Mr. S.C. Sagar, Adv.

Mr. Nikilesh Ramachandran,Adv.

For Respondent(s) Mr. Sanjay Kumar Tyagi,Adv.

Mr. Sunil Gupta, Sr.Adv. Mr. Mohit Chaudhary, Adv. Ms. Damnini Chawla, Adv. Mr. Imranj Ali, Adv. Ms. Puja Sharma,Adv.

UPON hearing the counsel the Court made the following JUDGMENT

The appeal is allowed in terms of the signed reportable judgment.

(USHA BHARDWAJ) (INDU POKHRIYAL) AR-CUM-PS COURT MASTER

Signed reportable judgment is placed on the file.

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