Read Time: 12 minutes

Synopsis

The Supreme Court has said mere rise in price subsequent to the date of the contract or inadequacy of price is not to be treated as a hardship entailing refusal of specific performance of the contract.

A bench of Justices J B Pardiwala and R Mahadevan said that the hardship involved should be one not foreseen by the party and should be collateral to the contract. In sum, it is not just one factor or two, that is relevant for consideration. But it is the some total on various factors which is required to enter into the judicial verdict, the court explained.

The court set aside the Tripura High Court's judgment of July 29, 2022, which allowed the appeal filed by respondent Bandhana Modak (Das) and another against a decree passed by the Civil Judge West Tripura, Agartala granting specific performance of agreement of sale in a suit instituted by Parswanath Saha, the appellant (original plaintiff).

The appellant entered into a registered agreement of sale on May 27, 2016 with respect to the suit property for sale consideration of Rs 17.50 lakh. An amount of Rs four lakh only was paid to Late Prabha Ranjan Das towards earnest money. Prabha Ranjan Das, however, passed away on July 05, 2016 leaving behind the respondents (original defendants wife and minor son of Das) as his lawful heirs.

As respondents declined to execute the sale deed, the appellant instituted the suit for specific performance of the contract which came to be allowed in his favour.

The High Court, however, allowed the appeal by the respondents essentially on the ground that Late Prabha Ranjan Das was unable to foresee the hardship that would be caused to him and the family at the time when he executed the agreement of sale with respect to the suit property.

The High Court took the view that the defendants had been able to establish that except the suit land they did not have any other property and if they had to part with the suit property that could cause lot of hardship to them.

Referring to Section 20 of the Specific Relief Act, 1963, the bench said the relief of specific performance having its roots in equity, the Specific Relief Act, 1963, prior to its amendment has preserved the discretion of the court not to grant the relief even though the agreement is specifically performable in law.

The only fetters imposed by the statute on the exercise of the discretion are that the discretion must not be exercised arbitrarily but soundly and reasonably and guided by judicial principles, the bench said.

While evaluating whether specific performance ought to have been decreed in the present case, the court said, it would be necessary to bear in mind the fundamental principles of law.

"The court is not bound to grant the relief of specific performance merely because it is lawful to do so. Section 20(1) of the Specific Relief Act, 1963 indicates that the jurisdiction to decree specific performance is discretionary. Yet, the discretion of the court is not arbitrary but is 'sound and reasonable', to be 'guided by judicial principles'. The exercise of discretion is capable of being corrected by a court of appeal in the hierarchy of appellate courts. Sub-section (2) of Section 20 contains a stipulation of those cases where the court may exercise its discretion not to grant specific performance," the bench said.

In the case, the court said, the High Court seemed to have been carried away by the fact that in the written statement the defendants did plead that hardship could be caused if they would be asked to execute the sale deed of the suit property.

The bench noted the High Court thought it fit to reverse the decree only on the ground that if the defendants were asked to execute the sale deed of the suit property, i.e., the residential house they would be rendered shelterless.

The court felt the High Court committed an error in taking the view that the plaintiff was not entitled to the decree for specific performance as the same would cause hardship to the defendants.

"The High Court seems to have overlooked the fact that the question of hardship in terms of Section 20(2)(b) of the Act, 1963 read with explanation (2) bears reference to hardship, which the defendant did not foresee at the time of entering into the contract. In other words, the issue of hardship would come into play only if it is established by cogent evidence that Late Prabha Ranjan Das who executed the agreement of sale was unable to foresee the hardship at the time of entering into the contract," the bench said.

The court found nothing to indicate in the pleadings or evidence that there was a hardship of the kind which Late Prabha Ranjan Das did not foresee at the time he executed the agreement of sale or that the hardship which the defendants could face was the result of an act of the plaintiff based on his supervening acts.

"It appears from the evidence on record that Late Prabha Ranjan Das was not getting along well with his wife and son. His wife and son, i.e., the defendants were residing separately. It appears that they were residing at the parental home of the defendant no 1. It is only when Prabha Ranjan Das passed away that the defendants tried to take over the suit property," the bench noted.

Allowing the appeal, the bench said, the High Court committed an error in setting aside the decree passed by the trial court of specific performance.

Court, thus, restored the original decree with a modification that the appellant would pay enhanced sum of Rs 20 lakh instead of balance 13.50 lakh to the defendants, being the widow and a minor son, for executing the sale deed in his favour.

Case Title: Parswanath Saha Vs Bandhana Modak (Saha) And Anr