SUIT FOR SPECIFIC PERFORMANCE OF CONTRACT- PRACTICAL PROBLEMS
Specific performance is a remedy developed by principle of equity. A party to a contract who is damaged because the contract is breached by another party has the option to file a suit for specific performance compelling to perform his part of contract. Before an equity court will compel specific performance, however, the contract must be one which can be specifically performed. Section 16 (c) of the Act envisages that plaintiff must plead and prove that he had performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him, other than those terms the performance of which has been prevented or waived by the defendant. In our country, most of the specific performance suits relate to sales of immoveable properties and to some extent, transfer of shares. As the law of specific performance is basically founded on equity, considerations such as conduct of the plaintiff, the element of hardship that may be caused to one of the parties, the availability of adequate alternative relief and such other matters are taken into consideration. It is a discretionary relief.
SUIT FOR SPECIFIC PERFORMANCE:
A is owner of land. He executed an unregistered agreement of sale in favour of B and received Rs. 50,000/- as an advance out of sale price of Rs.1,00,000/-. A has to execute a Regd. Sale deed within three months from date of execution of agreement of sale. But, A refused to execute Regd. Sale deed and sold the said property to C for higher price. B can sue against A for specific performance.
From the above illustration, no doubt, B can file a suit for specific performance. This case involve several aspects such as, whether plaintiff is ready and willing to perform his part of contract or not; when would time is essence of contract?; Can C be impleaded in the suit as party? Is escalation of price is a ground in such a suit? Question of Lis Pendens; whether B is entitled for damages and compensation or not; whether an unregistered agreement of sale is admissible or not etc. All these aspects are dealt in the following paragraphs with relevant illustrations.
ELEMENTS THAT ARE INVOLVED IN A SUIT FOR SPECIFIC PERFORMANCE OF SUIT:-
Valid Contract :-
Normally, suit for specific performance of contract based on agreement of sale. Vague and uncertain agreement could not be given effect to.(Vimlesh Kumari Kulshrestha vs Sambhajirao, 2008 (2) Supreme 127). It was observed in Ambica Prasad vs Naziran Bibi, AIR 1939 All 64], [Balram v Natku, AIR 1928 PC 75 that there should be a valid contract for suit for specific performance of contract.
Unregistered agreement of sale :-
Un registered agreement of sale is admissible in evidence under Section 49(c) of the Registration Act in a suit for specific performance of contract. Unregistered sale deed is admissible in evidence in a suit for specific performance.(S.Kaladevi vs V.R.Somasundaram, AIR 2010 SC 1654).
Conduct of the parties:-
Any person seeking benefit of specific performance of contract must manifest that his conduct has been blemishless (H.P.Pyarejan vs Dasappa, AIR 2006 SC 1144). Similarly, conduct of defendant cannot be ignored (Silvey vs Arun Varghese, AIR 2008 SC 1568). The relief of specific performance is discretionary (V.R.Sudhakara Rao vs T.V.Kameswari, (2007) 6 SCC 650). It was held in Aniglase Yohannan v. Ramlatha, 2005 (7) SCC 534 that if the pleadings manifest that the conduct of the plaintiff entitles him to get the relief on perusal of the plaint he should not be denied the relief.
Readiness and Willingness:-
Section 16(c) of the Act mandates the plaintiff to aver in the plaint and establish the fact by evidence aliunde that he has always been ready and willing to perform his part of the contract. Distinction between “readiness” and “willingness” is that the former refers to financial capacity and the latter to the conduct of the Plaintiff wanting performance ((2011)1SCC429). The plaintiff’s readiness and willingness, which is a condition precedent, must be in accordance with the terms of the agreement (Bala Krishna vs Bhgawan Das, AIR 2008 SC 1786), however, the plaintiff need not carry money in his hand (M.K.Watts vs Usha Sharma, AIR 2004 P&H 295). In a suit for specific performance, plaintiff is to approach Court with clean hands.(G.Jayashree vs Bhagawan Das, AIR 2009 SC 1749). Right from the date of the execution till date of the decree he must prove that he is ready and has always been willing to perform his part of the contract.( N.P. Thirugnanam v. Dr. R. Jagan Mohan Rao and Ors, (1995) 5 SCC 115 at para 5). Even subsequent purchaser is entitled to raise objection as to readiness and willingness.(AIR 2009 SC 2157). To know the consequences in the case of absence of plea of readiness and willingness in the plaint, see ruling J.P. Builders and Anr.
Vs. A. Ramadas Rao and Anr, (2011)1SCC429).
Time is essence of contract:-
From the decision of a Constitution Bench of the Hon’ble Supreme Court in Chand Rani v.Kamal Rani MANU/SC/0285/1993 : 1993 (1) SCC 519, it is clearly known that in the case of sale of immovable property, time is never regarded as the essence of the contract. An intention to make time the essence of the contract must be expressed in unequivocal language. As to the point of limitation is concerned, the suit for specific performance has to be filed within reasonable time which depends upon facts and circumstances of each case.(AIR 2009 SC 2157, Azhar Sultana’s case). Even if it is not of the essence of the contract, the Court may infer that it is to be performed 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: the object of making the contract.( Smt. Chand Rani (dead) by LRs. Vs. Smt. Kamal Rani (dead) by LRs, 1993 (1) SCC 519)
Adding parties in specific performance suit:-
Order 1 Rule 10 CPC is wider than the scope of Order 22 Rule 10 CPC as to person whose presence before the court is necessary or proper for effective adjudication of the issue involved in the suit. . Order 22 Rule 10 CPC is an enabling provision and that it has certain parameters to continue the suit where right to sue is survival. Order 22, Rule 10, C.P.C. speaks of cases of an assignment, creation or devolution of any interest during the pendency of a suit and the suit may, by leave of the Court, be continued by or against the person to or upon whom such interest has come or devolved. (See the ruling Lingaraja Mohanty vs Binodini Mohanty & Ors. on 20 April, 2011; Thomson Press (India) Ltd. Vs. Nanak Builders and Investors P. Ltd. and Ors, 2013(3)SCALE26).
Essential elements to constitute ‘Lis Pendens’ :-
Answer:- Section 52 of T.P.Act delas with ‘Lis Pendens’. In order to constitute a lis pendens the following elements must be present :-(I) There must be a suit or proceeding pending in a Court of competent jurisdiction; (II) The suit or proceeding must not be collusive; (III) The litigation must be one in which right to immovable property is directly and specifically in question; (IV) There must be a transfer of or otherwise dealing with the property in dispute by any party to the litigation; (V) Such transfer must affect the rights of the other party that may ultimately accrue under the terms of the decree or order.
PRACTICAL PROBLEMS IN A SUIT FOR SPECIFIC PERFORMANCE
Problem No.1:- What will the Court consider to adjudge the readiness and willingness of plaintiff in a suit for specific performance?
ANSWER:- To adjudge whether the Plaintiff is ready and willing to perform his part of the contract, the Court must take into consideration the conduct of the Plaintiff prior and subsequent to the filing of the suit along with other attending circumstances and to prove willingness to perform plaintiff must enter witness box. Right from the date of the execution till date of the decree, he must prove that he is ready and has always been willing to perform his part of the contract. (Man Kaur (dead) by LRS. Vs. Hartar Singh Sangha, (2010)10SCC512)
Problem No.2:- Vendor executed an agreement of sale with a condition that in the event of his failure to execute a sale deed, the purchaser will not be entitled for specific performance but will only be entitled for return of the earnest money and/or payment of a sum named as liquidated damages. In such a case, whether suit for specific performance can be decreed?
Answer:- Liquidated damages means an amount contractually stipulated as a reasonable estimation of actual damage to be recovered by one party if the other party breaches. As the intention of the parties to bar specific performance of the contract and provide only for damages in the event of breach, is clearly expressed, the court may not grant specific performance, but can award liquidated damages and refund of earnest money.
Problem No.3:- The agreement of sale provides that in the event of breach by either party the purchaser will be entitled to specific performance, but the party in breach will have the option, instead of performing the contract, to pay a named amount as liquidated damages to the aggrieved party and on such payment, the aggrieved party shall not be entitled to specific performance. If that is so, whether the plaintiff is entitled for specific performance?
Answer:- In such a case, the purchaser will not be entitled to specific performance, as the terms of the contract give the party in default an option of paying money in lieu of specific performance.
Problem No.4:- If the purchaser failed to pay Rs. 4,00,000 within one month and thereby prevented the vendor from purchasing another property and shifting to such premises, the vendor will not be able to perform his obligation to deliver vacant possession. If so, whether such contract is valid?
Answer:- Section 53 of Indian Contract Act,1872 provides answer to this problem. Further, the following illustration succinctly explains solution for the problem.
‘’ ‘A’ executed an agreement of sale in favour of B. advance of Rs 4,00,000/- was paid to A out of sale price of Rs.10,00,000/-. Rs.4,00,000/- is to be paid to paid within one month to A to enable him to purchase an alternative property and to shift his residence from the property agreed to be sold, and sale deed has to be executed within three months from the date of agreement of sale and vacant possession of the premises should be given, against payment of balance price. If ‘B’ failed to pay Rs. 4,00,000 within one month and thereby prevented A from purchasing another property and shifting to such premises, ‘A’ will not be able to perform his obligation to deliver vacant possession. Thus the contract becomes voidable at the option of ‘A’ ‘’.
If the purchaser failed to pay Rs. 4,00,000 within one month and thereby prevented the vendor from purchasing another property and shifting to such premises, the vendor will not be able to perform his obligation to deliver vacant possession. Thus the contract becomes voidable at the option of the vendor. (Mrs. Saradamani Kandappan’s case, (2011)12SCC18)
Problem No.5 :- Vendor did not sign on agreement of sale but vendee signed. In such a case, suit for specific performance is maintainable?
The answer is affirmative. Suit for specific performance is maintainable in such a case. See the following illustration.
A is owner of land and receives Rs.80,000/- from B as an advance out of sale consideration of Rs.2,00,000/-. B vendee alone signed on the agreement of sale but A vendor did not sign on it. Later, A cannot contend that such agreement is invalid for want of his signature. Specific performance is maintainable.
The case of similar instance was decided in the case of Adbul Hakkem vs Naiyaz Ahmed, AIR 2004 AP 299, where the defendant contended that the plaintiff vendee alone signed the sale agreement but not the defendant vendor, as such there can be no contract, cannot be accepted. The Court held that specific performance is maintainable.
Problem No.6 :- Can a purchaser from a co-parcener enforce specific performance?
Answer to this question is that a purchaser from a co-parcener can enforce specific performance of his contract against the other co-parceners.
“A and B are joint tenants of land, his undivided moiety of which either may be alien in his lifetime, but which, subject to that right, devolves on the survivor. A contracts to sell his moiety to C, and dies. C may enforce specific performance of the contract against B.”
The above illustration, which is undoubtedly covered by the terms of the section 15 of the Act, is substantially the present case and shows that a purchaser from a co-parcener can enforce specific performance of his contract against the other co-parceners. (See 40 Ind Cas 429, T. Rangayya Reddy vs V.S. Subramanya Aiyar And Ors)
Problem No.7 :- If the plaintiff suffers losses in consequence of a contract. If that be so, whether specific performance of contract is maintainable?
Answer:- Yes. The following illustration succinctly explains about maintainability of the suit for specific performance.
A Sells land to a railway-company who contracts t execute certain works for his convenience. The company takes the land and use it for their railway. Specific performance of the contract to execute the work should be decreed in favour of A.
This illustration is useful to understand section 20 (3) of the Act. The Court can properly exercise discretion to decree a suit for specific performance in any case where the plaintiff has suffered losses in consequences of a contract.
Section 20 and illustration therein of Specific Relief Act, 1977(1920 A.D.) of Jammu & Kashmir which is applicable to the parties makes it explicitly clear thus:
A contract, otherwise proper to be specifically enforced, may be enforced, though a sum be named in it as the amount to be paid in case of its breach, and the party in default is willing to pay the same. (Manzoor Ahmed Margray Vs. Gulam Hassan Aram & Ors, 2003(6)ALT15(SC), 1999(6)SCALE350)
A contracts to grant B an under-lease of property held by A under C, and that he will apply to C for a licence necessary to the validity of the under-lease, and that, if the licence is not procured, A will pay B Rs. 10,000. A refuses to apply for the licence and offers to pay B Rs. 10,000. B is nevertheless entitled to have the contract specifically enforced if C consents to give the licence.
Problem No.8 :- A party to a contract is unable to perform the whole of his part of it, and the part which must be left unperformed forms a considerable portion of the whole, or does not admit of compensation in money. If so, whether he is entitled to obtain a decree for specific performance?
Answer: – Where a party to a contract is unable to perform the whole of his part of it, and the part which must be left unperformed forms a considerable portion of the whole, or does not admit of compensation in money, he is not entitled to obtain a decree for specific performance. But the Court may, at the suit of the other party, direct the party in default to perform specifically so much of his part of the contract as he can perform: provided that the plaintiff relinquishes all claim to farther performance, and all right to compensation either for the deficiency, or for the loss or damage sustained by him through the default of the defendant. (Manzoor Ahmed Margray Vs. Gulam Hassan Aram & Ors, 2003(6)ALT15(SC), 1999(6)SCALE350). The following illustration also gives answer to the problem.
A contracts to sell to B a piece of land consisting of 100 bighas. It turns out that 50 bighas of the land belong to A, and the other 50 bighas to a stranger, who refuses to part with them. A cannot obtain a decree against B for the specific performance of the contract; but if B is willing to pay the price agreed upon, and to take the 50 bighas which belong to A, waiving all right to compensation either for the deficiency or for loss sustained by him through A’s neglect or default, B is entitled to a decree directing A to convey those 50 bighas to him on payment of the purchase-money.
Problem No.9 :- The agreement of sale provides that in the event of breach by the vendor, the purchaser shall be entitled to an amount equivalent to the earnest money as damages. The agreement is silent as to specific performance. In such a case, whether the court can direct specific performance by the vendor?
Answer:- Even if there is no provision in the contract for specific performance, the court can direct specific performance by the vendor, if breach is established. But the court has the option, as per Section 21 of the Act, to award damages, if it comes to the conclusion that it is not a fit case for granting specific performance. (Man Kaur (dead) by LRS. Vs. Hartar Singh Sangha, (2010)10SCC512)
Inasmuch as the conduct of parties is very much important in a suit for specific performance, the party who seek for relief of specific performance must approach the Court of law with clean hands. Further, while preparing plaint and written statement of the parties, proper care and caution must be taken and the relief must be clear and specific. I may conclude with observations of Lord Chancellor Cottenham in Tasker v. Small 1834 (40) English Report 848 that “It is not disputed that, generally, to a bill for a specific performance of a contract for sale, the parties to the contract only are the proper parties; and, when the ground of the jurisdiction of Courts of Equity in suits of that kind is considered it could not properly be otherwise. The Court assumes jurisdiction in such cases, because a Court of law, giving damages only for the non- performance of the contract, in many cases does not afford an adequate remedy. But, in equity, as well as in law, the contract constitutes the right and regulates the liabilities of the parties; and the object of both proceedings is to place the party complaining as nearly as possible in the same situation as the defendant had agreed that he should be placed in. It is obvious that persons, strangers to the contract, and, therefore, neither entitled to the right, nor subject to the liabilities which arise out of it, are as much strangers to a proceeding to enforce the execution of it as they are to a proceeding to recover damages for the breach of it.”
Your Honor! – Sir, That is a brilliant erudite yet practically very helpful and lucid article – I personally wish you covered a little more about whether C can be impleaded and if so with what consequences to C in the suit by A against B in the example you first provided. Thank you
sir, what recourse does the plaintiff succeeding in a specific performance have as against the purchaser of property not impleaded but covered by lis pendens rule.
Excellent , Can I post a case study for comments ?
In problem no 8 does B have to pay the price of 100 bhigas land to get the 50 bhigas land in his name ?
Very informative article .
I am A and i sold my land(plot) to B for a consideration of an amount X and received 10% as an advance.A and B agreed to transact the deal through C .Bhas to pay remaining sum in next 4 months but before that A has to get his land demarcated.But I could do so in 4 months but i did so in next two months.But B did not raise any objection but was silent.But in 6th month i finished my obligation and asked B to pay the remaining so that specific performance i.e. i can transfer my title in your favour but he did not came forward for next 4 months so i returned his amount as it was advance not the earnest money.Now.he is insisting to carry the specific performance despite he is failure to comply within time.Whether A is entitled to cancel the agreement whereas he is insisting to abide .Pl guide me
Like to join regards
It would be grate indeed for me to join with people like you to serve common cause…
Thanks for valuable information
Could you please give some comments on the point that some third party who is a plaintiff in a suit filed against the vendor for recovery of money, files an application to add him as defendant contending that the agreement of sale is false and fabricated to defeat the decree that may be passed against the vendor. I am of the opinion that he can not come and added as party to the suit. Please enlighten me on this subject.
Thanks and regards
Nice Blog, thanks for sharing this kind of information.
Thank you very much for providing such a clear and useful article in an easy to understand manner.
A takes money by cash 5 lakhs and cheque 5 lakhs for sale agreement of immovable property on 1 month time period for execution of sale deed. But a does not honour his commitment and later dramatically says he never took cash at all. But both husband and wife signed on the bond paper while taking money. now they contend that they have signed on the blank stamp paper. will B be able to pray for the specfic performance in the court of law.
Sir,the article is amazing and lucid I felt and confident as my senior is guiding me
Sir,could you please give some comments how to prove the registered sale agreement when it’s execution is denied
if an unregistered agreement(time not fixed) executed by a power of attorney holder in jan 2003 and the power agent expires in December 2003 without executing the sale deed, what will be the fate of the sale agreement, can the agreement holder sue on the real owners for specific performance?
sir vendee purchased property from vendor . but that property acquired by the government. vendor cannot said details about that acquisition. but vendor gave a notice for registration. can vendee file a suit against vendor.
will declaration suit under specific relief act supercede Promoters law sec 12 A
sir i have a decree of specific performance in 1985 ,paid balance sale consideration in court.but my father havent got the sale deed registered by defendant nor through court .this is 2015 what is the remedy available to me..
excellent article very usefull for practcing advocats
1.whether the plaintiff entitled to get decree on on executed agreement, on forged and fabricated agreement.
2. what is relief to the defendant in the first appeal to set side the trial court decree on on executed agreement, forged and fabricated agreement.
3. whether the court has power or duty to consider the signatures on agreement and with real signature
4. what relief to the defendant in first appeal stage to prove the signatures are false and fabricated or forged
5. whether the plaintiff to prove the agreement is jejune by the way of attested witness (or) by the defendant
6. what is the relief to the defendant in the first appeal to prove the signature on ex to be false ? procedure to file the petition u/s 45 of Indian evidence act.
7. whether the signature clearly understands that are forged and fabricated but lower court fails to gone through that aspect . what relief to the defendant in the first appeal . i). to file the petition u/s 45 Indian evidence act ? or to show the same to the appeal judge by the way of arguments ?
8. whether the court to give the judgement to the plaintiff on on executed agreement which is clearly understands that signatures forged and fabricated. i) what is the relief in the first appeal to the defendant ? . ii). what is the duty of the first appellate court to consider the signatures are true or false.
I’m a lawyer and I have filled a suit for specific performance my suit is high profile and huge amount is involve. The tips given very helpful and now I can argue my case with confidence.
Very useful article
Indeed a very useful article.
Suppose A (Owner) agreed to sell prop to B. Took entire consideration amount. B agreed to sell it to C.
How can C get the property registered through SPA case?
Sir Pl give your valuable opinion on specific performance case on sale agreement… Here one old lady made sale agreement of her 40 acr land for 3 tenants..mean 3 sale agreements..and took diff diff advances and put different specific condition of time and diff instalments ..but at same intrest for each sale agreement..but 3 purchasers pay the required said amount.in 2 or 3 instalments…but .afterlapse of Time of one year Excess..here that land owner took the amount..but keep quiet..she expired and after that legal heirs also keep quiet../not Appeared..but in land ceiling declaration/high way road ext compensation..issues..names came only LAN lords.. So here purchasers went for Specific performance suit after 30 yrs..//agreement at 1969.. So whether purchasers can succeed in this..
I have filed a suit for specific performance against my brother-in-law. He has executed a agreement of sale dated 26.07.2012 and left India by 5th September 2012 and returned only in the month of June-2013 and said that i am cancelling the contract dated 26.07.2012 and forefeet the advance amount of Rs.10.75 lakhs against 23.00 lakhs. The suit is pending before the court of law. Kindly let me know what happen the result of the suit. I am always willing to perform the contract.
thanks a lot for such a nice blog. it really helps me in my daily practice advocasy. thanks again
Could anyone please let me know if there is a judgment or case law to the effect that a Decree in a suit for specific performance of contract of sale of immoveable property relates to the date of the contract.
My father signed an unregistered sale agreement to perform suit along with other brothers, later father don’t want to perform the sale deed as per sale agreement.
The other brothers were executed sale deed without my father, the purchaser filed a suit against my father with Unregistered sale agreement, In that agreement there is no clause saying that in case of failure the purchaser can go for court.
Kindly advice for my father with any judgement favour for my father to win in this suit.
Dr.K.Sreenivasan bangalore A very informative and useful blog
whether reply to legal notice by can be used against defendant admitted agreement in reply to legal notice suggest case laws and provision
defendant in reply to legal notice admitted agreement but says that the agreement is for security for repayment of loan and repaid
“A” is a owner of an agricultural land.
As the suit land was away from his residence and he was in need of money for paying debts he decided to sell it
“B” approached him and showed willingness to purchase the suit land.Accordingly it was agreed between A and B to sell the suit land for the consideration of Rs. 1 lakh.The agreement to sell was executed and it was decided that Rs. 40,000/-be paid on the date of agreement to sell and the remaining amount of Rs.60,000/- would be paid on or before the end of the financial year which was the condition precedent for executing the sale deed. The possession of the land was given to B on the belief that B would pay the remaining amount or part with possession.
File a suit to recover possession/Specific Performance on behalf of A
3. Necessary Document
I am very happy by seeing this articles on Law. There is an agreement of sale dated 03.11.2007. Condition is the owner filed a suit is pending for partition. He said after he get the property through his suit. He will register the property. But after he got the partition through suit. He did not informed to the purchaser. After some time he came to know that the suit filed by the owner is disposed off and he got the partition in his suit. The purchaser got the knowledge of the above partition on 15.06.2015. Now the point is when the limitation starts. Is the purchaser have three years limitation from the date of knowledge of the above suit disposed in favour of owner or not
sir, could u please give me suggestions that if a suit for specific performance of agreement for sale could be filed against the legal heirs of the vendor when the original vendor expired without executing the sale-deed
sir my case of specific performance has been dismissed and no refund of earnest money because i could not plead for alternate relief in plaint.now in appeal can i pray for alternate relief in appeal.pl guide
Sir One of my friend has filed a suit for specific performance basing on agreement to sell within three years of agreement of sale. The defendant was set exparte by substituted service. Does notice is mandatory before filing of the suit. If not citations related to it
very usefull and it is very easy to understand sir thanks for giving such knowledge to us
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I am very much benefited by going through your articles.
Sir, A sold the property under a contract of sale to B. My brother has purchased the same property from B under a contract of sale. My brother filed suit against A and B for specific performance. What is the position of the law in my matter.
Dear Sir, A sold the house property to B for consideration under a contract of sal. B resold the house property to my brother for consideration under a contract of slae. Both A and B failed to perform their respective contract of sales. So, my brother has filed a suit for specific performance against A who is the original owner and also B who has purchased the property under a contract of sale from him. What is the law position in this matter. Whether the suit is maintainable or not.