Hon’ble Mr. Justice Yogeshwar Dayal For the Plaintiff : Mr. S. R. Bhagat, Advocate.
For the Defendants : Mr. G.L. Rawal, Advocate for Deft. No.9.
The suit coming on this day for final disposal before this Court in the presence of counsel for the parties as aforesaid; it is ordered that a decree as prayed by the plaintiff and the same is hereby passed in favour of the plaintiff and against the Defendants 1 to 8 only.
It is lastly ordered that Defendants 1 to 8 herein do pay to the plaintiff herein the cost of the suit incurred by the latter as Rs.18,028.75p (Rs. Eighteen Thousand Twenty Eight and Paise
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Page 16 Seventy Five only) as taxed by the Taxing Officer of this court and noted in the margin of this decree.
Given under my hand and the seal of the court this the 30th day of April, 1984.
Sd/ Dy. Registrar”
16. Appeal was dismissed as time barred. A few months thereafter an Application under Order IX Rule 13 of Code of Civil Procedure, 1908 was filed for setting aside the ex parte decree. That too was dismissed. It appears the vendors lost all hope and left things as they were at that stage. It is seen from the pleadings that attempts were also made for an out of court settlement, but in vain.
17. We do not think that the vendors would be justified in setting up any defence on executability of the decree both on law and facts of the case. At the risk of redundancy, on referring to the facts, it can be seen that the vendors had in fact wanted to fructify the agreement for sale. Having received the advance amount of Rs.1,40,000/-, they had parted possession of a part of the property, viz., garage. They had jointly made an application to the L&DO in terms of the
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Page 17 agreement, for permission to transfer the property. The L&DO did grant the permission but on condition of deposit of an amount of Rs.7,17,330/- towards the unearned increase, which is more than 50% of the sale consideration. The value of the property had shot up by that time. It is pertinent to note that as per the original agreement, the unearned increase was to be paid by the vendors. On account of the escalation, it appears, their hearts started burning and they were extremely reluctant to part with the property. Their attempts thereafter have always been, one way or the other, to delay, if not deny, their obligation for conveyance of the property.
18. The main contention of the vendors is that that there is no decree in terms of Section 2 (2) of the Code of Civil Procedure, 1908 because there is no formal expression of adjudication and the court has not conclusively determined the rights of the parties. But it has to be seen that the vendors did not contest the suit. They had not even filed a written statement. In that context only, the suit was decreed as prayed for.
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Page 18 In the Judgment dated 30.04.1984, the Court has referred to the averments in the plaint. The opening and concluding sentences of the Judgment read as follows:
“Plaintiff, S. Kuldeep Singh has filed the present suit against Shri Banarsi Dass and 8 others for specific performance of an agreement to sell dated 29/30th July 1980. The agreement relates to plot No.9, Block No.171 in the layout plan of the New Capital of Delhi, now known as Bungalow No.9, Sunder Nagar, New Delhi. … xxx xxx xxx xxx xxx However, since the Defendants have failed to file written statement, as directed in my order dated 15th February, 1984, I proceed to pronounce the judgment under the provisions of order 8 rule 10 of the Code of Civil Procedure and decree the suit of the plaintiff as prayed for with costs against Defendants 1 to 8 only as there is no relief prayed against Defendant No.9.”
19. Having referred to the entire contentions of the plaintiff, the Judgment was pronounced under Order VIII Rule 10 of the Code of Civil Procedure, 1908 since there was no written statement. The Court has taken the position that the defendants had failed to file written statement. Therefore, the Court, in the facts of the case, opted to pronounce the Judgment, under
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Page 19 Order VIII Rule 10 of the Code of Civil Procedure, 1908 and draw the decree accordingly.
20. No doubt, the decree passed under Order VIII Rule 10 of the Code of Civil Procedure, 1908 is an ex parte decree. But merely because it is an ex parte decree, the same does not cease to have the force of the decree. It is a valid decree for all purposes.
21. It is also worthwhile to note that the Judgment was pronounced under the pre-amended Rule 10 under Order VIII of the Code of Civil Procedure, 1908 and there was more discretion with the Court regarding pronouncement of the Judgment in the absence of written statement. Still further, it is to be noted that Rule 10 speaks about the requirement of written statement indicating thereby that there are cases where written statement was required to be filed. Written statement is the defense of the defendants. They chose not to file it. Despite the absence of such defense, the court still applied its mind and after referring to the pleadings, pronounced a Judgment allowing the suit for specific performance. Though the
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Page 20 Judgment says that the suit is decreed as prayed for and though all the prayers have been incorporated in the decree, it is to be noted that the suit is one for specific performance of the agreement. The suit that has been decreed is the suit for specific performance of the agreement. Once the decree for specific performance attained finality, they cannot thereafter turn round and make weak and lame contentions regarding the executability of the decree.
22. If the suit for specific performance is not decreed as prayed for, then alone the question of any reference
to the alternative relief would arise. Therefore, there is no question of any ambiguity. As held by this Court in Topanmal Chhotamal v. Kundomal Gangaram and Others3 and consistently followed thereafter, even if there is any ambiguity, it is for the executing court to construe the decree if necessary after referring to the Judgment. If sufficient guidance is not
3 AIR 1960 Supreme Court 388 – Paragraph 4- “At the worst the decree can be said to be ambiguous. In such a case it is the duty of the executing Court to construe the decree. For the purpose of interpreting a decree, when its terms are ambiguous, the Court would certainly be entitled to look into the pleadings and the Judgment. …”
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Page 21 available even from the Judgment, the Court is even free to refer to the pleadings so as to construe the true import of the decree. No doubt, the court cannot go behind the decree or beyond the decree. But while executing a decree for specific performance, the Court, in case of any ambiguity, has necessarily to construe the decree so as to give effect to the intention of the parties. Thus, there is no question of any alternate relief regarding the damages etc. in the present case since the suit for the specific performance for the conveyance of the property has been decreed.
23. There is no case that the court does not have jurisdiction to pass the decree. Nor is there any case that the decree is a nullity on account of any jurisdictional error. Hence, the decree is executable for all intents and purposes but limited to the shares of the vendors. The claim of Rajinder Kumar would depend on the outcome of the pending suit.
24. Now we shall deal with the issue regarding the approach of the High Court in dealing with the
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Page 22 application for rescission. Apparently, the purchaser- Kuldeep Singh was also not quite serious in pursuing the cause. Though the decree is dated 30.04.1984, the execution petition was filed only after six and a half years, on 07.11.1990. No doubt, it was within the time prescribed by the law of limitation. But the efflux of time assumes importance and seriousness in the background of the escalation of price in real estate.
25. It is very strange that no serious steps have been taken by the executing court for almost a decade. While so, only on 24.04.1999, respondents 3 to 7 and 13 filed Application – IA No. 4274 of 1999 in the suit for rescinding the agreement for sale. The main ground taken in the Application for rescission of the agreement was that the plaintiff/purchaser failed to deposit the balance consideration of Rs.12,60,000/-. It was also contended that between the date of decree in 1984 and the date of filing the Application for rescission, even the notified rates in land value shot up from Rs.2,000/- per square yard to Rs.13,860/- per square meter and the unearned increase would be
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Page 23 around Rs.50,00,000/- and, thus, it would be highly unjust, unconscionable and inequitable to compel the vendors to make the payment of the unearned increase. It was also averred that the vendors were prepared to pay a reasonable compensation to the purchaser. The purchaser-Kuldeep Singh in response to the Application for rescission, stated that the court had not fixed any time for deposit of the balance amount, the balance amount was payable only on the execution and registration of the conveyance deed. He also contended that execution was possible only on permission from the L&DO on payment of unearned increase by the vendors and for which the vendors are at fault in not having taken any serious steps in completing their obligations under the decree; and that the purchaser had always been ready and willing to perform his part of the agreement.
26. By Order dated 23.02.2000, the learned Single Judge dismissed the applications holding that the purchaser was not at fault either in having done something or in
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Page 24 not having done something which stood in the way of the execution of the decree. On the contrary, it was the vendors who did not perform their duties in the sequence of events prior to and leading to the registration of the sale deed. In short, it was held that the vendors having not performed their obligations under the agreement, they could not approach the court for rescinding the agreement on the ground that the purchaser had not deposited the balance amount.
27. It is extremely important and crucially relevant to note that the court did not advert to one of the main contentions regarding the escalation in land value by which the vendors had to incur the liability of around four times the balance consideration by way of payment of unearned increase to the L&DO so as to complete their obligation. It is pertinent also to note that the said unconscionable liability for the vendors arose only on account of the delayed execution of the decree.
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28. It is significant to note that during the pendency of the appeals, the purchaser sought permission of the court to deposit the balance consideration and, on 06.01.2010, the same was granted. He, accordingly, deposited some amounts towards the liability of unearned income also.
29. It appears from the Order dated 06.01.2010 in FAO (OS) No. 66 of 2002 that only oral submissions were made for the deposit of balance consideration, by the respondent-Kuldeep Singh. For the purpose of ready reference, we may extract the Order as such:
“Learned counsel for Respondent No.1 (Kuldeep Singh) says that the balance consideration in terms of the contract entered into between the parties will be deposited by his client on or before 11th January, 2010. Learned counsel for Respondent No.1 also says that the unearned increase that is required to be calculated by the L and DO has not yet been so calculated but his client is prepared to deposit an amount of Rs. 10 lakhs on account in this regard. This amount will be deposited with the Registrar General of this Court on or before 11th January, 2010.
List for directions on 12th January, 2010.
Arguments have been heard and concluded and judgment is reserved. The matter is listed on 12th January, 2010 only for compliance with regard to the deposit.”
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30. We have referred to above development to keep in mind one significant and important aspect of the matter that the vendors did not get an opportunity to make their response to the oral submission made by the purchaser with regard to deposit of the balance consideration, after passage of around 26 years after the decree.
31. Having regard to the facts and circumstances which we have discussed above, we are afraid the High Court has not made an attempt to balance equity. As in the case of a decree for specific performance where equity weighs with the court so is the situation in considering an application under Section 28 of the Specific Relief Act, 1963 for rescinding the contract. Under Section 28 of the Specific Relief Act, 1963, a vendor is free to apply to the Court which made decree to have the contract rescinded in case the purchaser has not paid the purchase money or other sum which the Court has ordered him to pay within the period allowed by the decree or such other period as the court may allow. On such an
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Page 27 application, the Court may, by order, rescind the contract “as the justice of the case may require”. It is now settled law that a suit for specific performance does not come to an end on passing of a decree and the Court which passed the decree retains control over the decree even after the decree has been passed and the decree is sometimes described as the preliminary decree.
In Hungerford Investment
Trust Limited (In
Voluntary Liquidation) v. Haridas Mundhra and Others4, it has been held that:
“22. It is settled by a long course of decisions of the Indian High Courts that the Court which passes a decree for specific performance retains control over the decree even after the decree has been passed. In Mahommadalli Sahib v. Abdul Khadir Saheb (1930) MLJ Vol. 59, p.351 it was held that the Court which passes a decree for specific performance has the power to extend the time fixed in the decree for the reason that Court retains control over the decree, that the contract between the parties is not extinguished by the passing of a decree for specific performance and that the contract subsists notwithstanding the passing of the decree. …”
(Emphasis supplied) 4 (1972) 3 SCC 684.
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33. The discretionary power vested in court by Section 28 of the Specific Relief Act, 1963 is intended to apply in such circumstances:
“The effect of this provision is to empower the court which passed the decree for specific performance to rescind the contract and set aside the decree which it has passed earlier if the successful plaintiff failed to comply with the terms of the decree by making payment of the purchase money or other sums which the court ordered him to pay. …5”
(Emphasis supplied)
34. The decree for specific performance is a decree in favour of both the plaintiff and the defendant in the suit, as held by this Court in Hungerford Investment Trust Limited case (supra). Hence, the decree can be executed either by the plaintiff or the defendant.
35. The plaintiff or the defendant is also free to approach the court for appropriate clarification/directions in the event of any ambiguity or supervening factors making the execution of the decree inexecutable. To quote Fry (ibid) (please see Pages-546-548):
5 Pollock & Mulla, The Indian Contract and Specific Relief Acts, 14th Edition, Page 2064.
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Page 29 “1170. It may and not unfrequently does happen that after judgment has been given for the specific performance of a contract, some further relief becomes necessary, in consequence of one or other of the parties making default in the performance of something which ought under the judgment to be performed by him or on his part ; as, for instance, where a vendor refuses or in unable to execute a proper conveyance of the property, or a purchaser to pay the purchase- money. The character of the consequential relief appropriate to any particular case will of course vary according to the nature of the subject-matter of the contract and the position which the applicant occupies in the transaction; but in every case the application must, under the present practice, be made only to the Court by which the judgment was pronounced, and the multiplicity of legal proceedings which sometimes occurred before the fusion of the jurisdictions of the Courts of Chancery and Common Law is now practically impossible.
1171. There are two kinds of relief after judgment for specific performance of which either party to the contract may, in a proper case, avail himself.
1172.(i.) He may obtain (on motion in the action) an order appointing a definite time and place for completion of the contract by payment of the unpaid purchase-money and delivery over of the executed conveyance and title-deeds, or a period within which the judgment is to be obeyed, and, if the other party fails to obey the order, may thereupon at once issue a writ of sequestration against the defaulting party’s estate and effects. Furthermore, if the default was in the payment of money, the plaintiff may issue his fi.fa. or elegit: if in some act other than or besides the payment of money, he may move, on notice to the defaulter, for a writ of attachment against him. Indeed, in a case where a person who had agreed to accept a lease would not, though ordered by the Court to do so, execute the lease, it was held that an
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Page 30 attachment was the only means to which the Court could resort for enforcing such execution.
1173. (ii.) He may apply to the Court (by motion in the action) for an order rescinding the contract. On an application of this kind, if it appears that the party moved against has positively refused to complete the contract, its immediate rescission may be ordered : otherwise, the order will be for rescission in default of completion within a limited time. And where a deposit has been paid, and there is no condition of the contract determining, expressly or impliedly, what is to be done with it in the event of such a rescission, the Court will decline to order the deposit to be returned to a defaulting purchaser. An order for the defendant to pay the plaintiff’s costs, and a stay of further proceedings in the action, except such proceedings as may be necessary for recovery of the costs of the action and the costs of the motion, may also be obtained on this application. A vendor plaintiff is not debarred from moving for an order for rescission by the fact that the judgment at the trial contained a declaration of his vendor’s lien, and gave him liberty to apply as to enforcing it.
In some cases the order has expressly excepted from the stay of proceedings any application to the Court to award and assess damages sustained by the plaintiff’s by reason or in consequence of the breach of contract. In Henty v. Schroder (12 Ch.D.666), however, Jessel M.R. declined to make this exception, consider that the plaintiffs could not at the same time obtain an order to have the contract rescinded and claim damages for the breach of it. If this be so, it would seem that in many cases the Court must fail to give the plaintiff the full measure of relief requisite for replacing him in the position in which he stood before the contract,-the repayment, for instance, of expenses incurred by him in showing his title.”
(Emphasis supplied)
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36. Dealing with a situation where deterioration takes place by the conduct, according to Fry (ibid) (please see Page 654):
“1431. If, after the contract and before the purchaser takes, or ought to take, possession, any deterioration take place by the conduct of the vendor or his tenants, he will be accountable for it to the purchaser. “He is not entitled to treat the estate as his own. If he willfully damages or injures it, he is liable to the purchaser ; and more than that, he is liable if he does not take reasonable care of it.” And this liability may be enforced by action, even after a conveyance made in ignorance of the facts.
1432. Where a purchaser had paid his money into Court under an order, and was held entitled to compensation for deterioration, which had taken place while the vendors retained possession, he was allowed the amount out of his purchase- money, with interest at 4 per cent., and the costs of an issue to ascertain the amount of damage.”
(Emphasis supplied)
37. In the instant case, converse is the position. If the purchaser is entitled to claim compensation for deterioration, a fortiori it must be held that vendor should also be entitled to compensation for accretion in value of the subject matter of the agreement for specific performance, in case the execution thereof is unduly delayed by the purchaser. Section 28 of the Specific Relief Act provides that the
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Page 32 court has to pass an order as the justice of the case may require. Justice is not an abstract proposition. It is a concrete reality. The parties on approaching the court must get the feeling that justice has been done in the facts and circumstances of the case, particularly in specific performance related cases, in terms of equity, equality and fairness.
38. In the facts and circumstances of the case, it is very difficult to balance the equity and balance the rights of both the parties in the background of their conduct. No doubt there was no time fixed in the agreement for payment of the purchase money. That was also contingent on a series of obligations to be performed by the vendor and the duty of the purchaser to pay the purchase money was only thereafter. But if we closely analyze the pleadings and submissions, we can see that the purchaser had made an attempt, though belatedly, for getting the obligations performed even at his expense.
39. The plaintiff purchaser very well knew that the vendors have been delaying the performance of their
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Page 33 obligation under the agreement and things were getting complicated. It was open to the plaintiff, in such circumstances, to file an application, rather he ought to have filed an application in court on the original side for appropriate direction with regard to the payment of purchase money and for other procedural formalities. Despite the application filed by the vendor for rescission of the agreement in 1999, for the first time, an oral prayer was made by the purchaser before the court for the deposit of balance of purchase money only in the year 2010.
That too was merely an oral submission.
Consequently, the defendants never had an opportunity to respond to the same or contest the proposition. Therefore, it is abundantly clear that in the peculiar factual background of this case, the plaintiff purchaser was also at fault in not taking prompt steps.
40. In this context, one more reference to Hungerford Investment Trust Limited (supra) would be relevant:
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Page 34 “25. It was contended on behalf of Mundhra that he was always ready and willing to pay the purchase money, but since the decree did not specify any time for payment of the money, there was no default on his part. In other words, the contention was that since the decree did not specify a time within which the purchase money should be paid and, since an application for fixing the time was made by the appellant and dismissed by the Court, Mundhra cannot be said to have been in default in not paying the purchase money so that the Appellant might apply for rescission of the decree. If a contract does not specify the time for performance, the Law will imply that the parties intended that the obligation under the contract should be performed within a reasonable time. Section 46 of the Contract Act provides that where, by a contract, a promiser is to perform his promise without application by the promise, and no time for performance is specified, the engagement must be performed within a reasonable time and the question "what is reasonable time" is, in each particular case, a question of fact. ...”
(Emphasis supplied)
41. Analyzing the conduct of the vendors-defendants also, one can see that they are equally at fault. In the contract, no time was fixed for payment and, therefore, the purchaser was obliged to pay the purchase money within a reasonable time. Owing to the laches or lapses on the part of the parties in case there is any insurmountable difficulty, hardship or, on account of subsequent development, any inequitable situation had arisen, either party was free to
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Page 35 approach the court for appropriate direction. Though the suit was decreed in the year 1984 and execution petition filed in 1990, the application for rescission was filed only in the year 1999.
42. In Nirmala Anand v. Advent Corporation (P) Ltd. and Others6, it has been held by this Court:
“6. It is true that grant of decree of specific performance lies in the discretion of the court and it is also well settled that it is not always necessary to grant specific performance simply for the reason that it is legal to do so. It is further well settled that the court in its discretion can impose any reasonable condition including payment of an additional amount by one party to the other while granting or refusing decree of specific performance. Whether the purchaser shall be directed to pay an additional amount to the seller or converse would depend upon the facts and circumstances of a case. Ordinarily, the plaintiff is not to be denied the relief of specific performance only on account of the phenomenal increase of price during the pendency of litigation. That may be, in a given case, one of the considerations besides many others to be taken into consideration for refusing the decree of specific performance. As a general rule, it cannot be held that ordinarily the plaintiff cannot be allowed to have, for her alone, the entire benefit of phenomenal increase of the value of the property during the pendency of the litigation. While balancing the equities, one of the consideration to be kept in view is as to who is the defaulting party. It is also to be borne in mind whether a party is trying to take undue advantage over the other as also the hardship that may be 6 (2002) 8 SCC 146
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Page 36 caused to the defendant by directing the specific performance. There may be other circumstances on which parties may not have any control. The totality of the circumstances is required to be seen.”
(Emphasis supplied) In the above case, this Court balanced the equity by directing payment of Rs.6,25,000/- in the place of Rs.25,000/-.
43. In Satya Jain (Dead) Through Lrs. and Others v.
Anis Ahmed Rushdie (Dead) Through Lrs. and Others7, it has been held that:
“38. The ultimate question that has now to be considered is: whether the plaintiff should be held to be entitled to a decree for specific performance of the agreement of 22-12-1970?
39. The long efflux of time (over 40 years) that has occurred and the galloping value of real estate in the meantime are the twin inhibiting factors in this regard. The same, however, have to be balanced with the fact that the plaintiffs are in no way responsible for the delay that has occurred and their keen participation in the proceedings till date show the live interest on the part of the plaintiffs to have the agreement enforced in law.
40. The discretion to direct specific performance of an agreement and that too after elapse of a long period of time, undoubtedly, has to be exercised on sound, reasonable, rational and acceptable principles. The parameters for the exercise of discretion vested by Section 20 of the 7 (2013) 8 SCC 131
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(Emphasis supplied)
44. The circle rate of the residential property based on which the unearned increase is calculated by the 8 (2007) 10 SCC 231 9 (2012) 5 SCC 712
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Page 38 L&DO, would show a sharp increase during the period. Sunder Nagar comes under Category ‘A’ colonies. Under the Delhi Stamp (Prevention of Undervaluation of Instruments) Rules, 2007, the notified circle rate for Category ‘A’ colonies from July 2007 was Rs.43,000/- per square meter and from February 8, 2011, it was Rs.86,000/- per square meter. From November 16, 2011, it was Rs.2,15,000/-
per square meter and from January 5, 2012, it is Rs.6,45,000/- per square meter.
45. In the peculiar facts and circumstances of the case, we are of the view that the trial court should have passed an equitable order while considering the application for rescission. Having regard to the fact that the decree was passed in 1984, we feel that it would be unjust and unfair to relegate the parties to the trial court at this distance of time. For doing complete justice to the parties, we are of the view that it is a case where the purchaser should be directed to pay the land value to the vendors as per the circle rate notified for the residential property in
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Page 39 Category ‘A’ colonies prevailing during November 16, 2011 to January 5, 2012, at the rate of Rs.2,15,000/- per square meter. The purchaser shall also be liable to meet the liability arising by way of unearned increase to be paid to the Land and Development Office. He is free to withdraw the amounts deposited by him in the court as per order dated 06.01.2010. It is also ordered that in case the plaintiff does not deposit the amount to be paid to the vendors within three months from today, the vendors shall deposit in court within two months thereafter the amount calculated as per the circle rate referred to above by way of compensation to be paid to the purchaser, and in which event, they shall stand discharged of their obligations under the contract and the decree. In the event of the purchaser depositing the amount as above, the execution proceedings shall be finalized within another one month. The Court in seisin of the Suit OS No. 1428 of 1981 shall dispose of the same within three months from today.
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46. The Appeal filed by Rajinder Kumar [arising out of SLP (C) No. 19215/2011] is dismissed and the other Appeals are partly allowed as above. There is no order as to costs.
. J.
(CHANDRAMAULI KR.
PRASAD)
… J.
(KURIAN JOSEPH)
New Delhi; February 07, 2014.
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