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CASE ANALYSIS

SMT. JANKI DEVI & OTHERS V/S SHRI HARISH CHANDER CHAWLA
[May 18, 2011]
Specific performance compels a man to perform his legal duty.

LAW OF CONTRACTS 1ST INTERNAL


ASSIGNMENT

Guided by-
Prof. Asawari Abhyankar
Submitted by-
Jaskeerat Singh Johar
1st year D Division
PRN- 15010126330
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Table of Contents
Index Of Authorities......................................................................3

Facts of the case...........................................................................4

Issues............................................................................................ 5

Rules Applicable............................................................................ 6

Judgment......................................................................................9

Analysis and Application.............................................................11

Conclusion..................................................................................13

Bibliography................................................................................ 14

Websites..................................................................................14

Books....................................................................................... 14

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Index of Authorities
Cases

Ambica Prasad vs Naziran Bibi, AIR 1939 All 64............................7


Balram v Natku, AIR 1928 PC 75...................................................7
Boddu Satyavathi vs Boddu Ramakrishna Rao on 7 November,
2006........................................................................................12
Lrs Of Bhinva Ram vs Sohan Ram on 28 April, 2005....................12
M/S Best On Health Ltd. And Others vs M/S Bestech India Pvt. Ltd on 30
June, 2014................................................................................... 8
Nanjappan vs Ramasamy on 17 November, 2011.......................12
Sarraju Venkataraghaviah vs Sarraju Chenchu Subbiah on 24 October,
1930...........................................................................................8
Semelhago v Paramadevan (2002) 49 RPR (3d) 88......................6
Sukumar vs Susheel, 76 C.W.N 116...............................................7

Rules

Indian Contract Act, 1872


Specific performance....................................................................6
Sections 9-25................................................................................7
Section 10 of the Specific Relief Act, 1963....................................8

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Facts of the case
Brief facts of the case as set out by the respondent in the
complaint are that the appellants in an agreement to sell dated
3.9.97 had agreed to sell the first floor of the property bearing no.
11/16, Old Rajinder Nagar, New Delhi with proportionate land
underneath to the respondent for a total consideration of
Rs.3,10,000/-. Out of the said sale consideration amount, an
amount of Rs 3,00,000 was paid by the respondent on 3.9.97,
while the balance amount of Rs.10,000/- was paid vide receipt
dated 4.9.97 and a number of documents to this effect were
executed by the appellants in favour of the respondent. That it
was agreed to handover the actual, vacant and physical
possession to the respondent by 31.3.99 failing which the
appellants were liable to pay damages @Rs.10,000 p.m for a
period of eighteen months and then @ Rs.20,000 p.m thereafter.
On failure of the appellants to do so the respondent served a legal
notice dated 20.9.2000 but no reply was received. Consequently
the respondent filed a suit for specific performance and
permanent injunction which in the judgment and decree dated
1.12.04 was decided in favour of the respondent and against the
appellants.

Feeling aggrieved with the same, the appellants have preferred the present appeal
in the honorable High Court of Delhi.

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Issues
When can specific performance of a contract

be enforced?
Who can obtain Specific performance of a

contract?
What are the defenses available to the

defendant in suit for specific performance of

contract?
Whether specific performance of contract can

be granted with doubtful title?

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Rules Applicable
Specific performance is an order of a court which requires a
party to perform a specific act, usually what is stated in a
contract.1 It is an alternative to awarding damages, and is classed
as an equitable remedy commonly used in the form of injunctive
relief concerning confidential information or real property.

While specific performance can be in the form of any type of


forced action2, it is usually used to complete a previously
established transaction, thus being the most effective remedy in
protecting the expectation interest of the innocent party to a
contract. It is usually the opposite of a prohibitory injunction but
there are mandatory injunctions which have a similar effect to
specific performance.

Specific performance is often guaranteed through the remedy of a


right of possession, giving the plaintiff the right to take possession
of the property in dispute. However, in the case of personal
performance contracts, it may also be ensured through the threat
of proceedings for contempt of court.

Orders of specific performance are granted when damages are


1 Joseph G LoPresti, The Evolution of Specific Performance: A Discussion of Specific
Performance and Equitable Damages before and after Semelhago v Paramadevan (2002) 49
RPR (3d) 88
2 When is specific performance?
See:http://www.law.harvard.edu/programs/olin_center/papers/pdf/Shavell_532.pdf

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not an adequate remedy, and in some specific cases such as land
sale. Such orders are discretionary, as with all equitable remedies,
so the availability of this remedy will depend on whether it is
appropriate in the circumstances of the case

Basic Rules.
Sections 9-25 deal with specific performance of contracts: Basic
rules.
Decree of specific performance is discretionary relief. 3
There should be a valid contract.4
If damages are an adequate remedy, no specific
performance would be ordered. For the act which requires
continued supervision of the Court, no specific performance
would be ordered.5
No specific performance would be ordered for contracts for
personal work or service
Equity will insist on the principle of mutuality
The person against whom the relief is claimed may take plea
6
by way of defense under law relating to contract.

3 [Sukumar vs Susheel, 76 C.W.N 116] [See section 20 of S.R.Act]

4 [ Ambica Prasad vs Naziran Bibi, AIR 1939 All 64], [Balram v Natku, AIR 1928 PC 75]

5 (Sec.14 (1) (d))

6 (Sec.9)

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Section 10 of the Specific Relief Act, 1963

It generally deals with the cases which must be specially


enforced7.

Section10. Cases in which specific performance of contract


enforceable.-
Except as otherwise the specific performance of any contract
may, in the discretion of the court, be enforced-

(a) When there exists no standard for ascertaining the actual


damage caused by the non- performance of the act agreed to be
done8; or
(b) When the act agreed to be done is such that compensation in
money for its non- performance would not afford adequate relief.

Explanation - Unless and until the contrary is proved, the court


shall presume-

7 Sarraju Venkataraghaviah vs Sarraju Chenchu Subbiah on 24 October, 1930


8 M/S Best On Health Ltd. And Others vs M/S Bestech India Pvt. Ltd on 30 June, 2014

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(i) That the breach of a contract to transfer immovable property
cannot be adequately relieved by compensation in money; and
(ii) That the breach of a contract to transfer movable property can
be so relieved except in the following cases:-
(a) Where the property is not an ordinary article of commerce, or
is of special value or interest to the plaintiff, or consists of goods
which are not easily obtainable in the market;
(b) Where the property is held by the defendant as the agent or
trustee of the plaintiff.

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Judgment
On all the issues, the learned trial court gave findings in favour of
the respondent and against the appellants. The learned trial court
did not believe the version of the appellants that they had signed
some blank papers which were later converted by the respondent
to fabricate the agreement to sell and receipts etc. The learned
trial court also found that no evidence was led by the appellants
to show that any case was pending against their firm at the
Bombay High Court and that the same was being pursued by the
respondent. The learned trial court also found that the documents
which were registered in the office of the Sub- Registrar i.e.
General Power of Attorney and two Special Power of Attorneys and
the two Wills dated 12.9.97 cannot be said to be forged and
fabricated as the appellants themselves had admitted the fact
that they had appeared before the Office of the Sub-Registrar to
execute the same.

So far the defense of the appellants that those documents were


cancelled by them on 25.9.2000 is concerned, the learned trial
court held that such a step was an afterthought on the part of the
appellants and that the same was done by them after the filing of
the said civil suit by the respondent.

The appellants have also not given any explanation as to why


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they choose not to send a reply to the legal notice dated
20.9.2000 which was duly received by them. The receipt of the
legal notice can be safely presumed from the fact that the
appellants in their written statement did not dispute the receipt of
the same. The appellants have also not disputed the correctness
of the address on the A.D. cards and the signatures on the A.D.
Cards.

In the present case, this court did not find that the learned trial
court has exercised its discretion in an arbitrary or unreasonable
manner as the appellants could not succeed in offering any
explanation for the execution of the sale documents and more
importantly the documents registered by them by presenting
themselves before the Office of the Sub- Registrar.

So far the damages awarded by the learned trial court @


Rs.20,000 per month from 1.10.2000 till the date of handing over
the possession of the suit property are concerned, the same are
set aside as no such relief was claimed by the respondents and
even otherwise such claim of damages at such exorbitant rate is
without any basis and manifestly unconscionable. Thus the relief
of Rs.1,80,000 for recovery along with interest @5% p.a. from the
date of filing of the suit till realization granted by the learned trial
court is accordingly upheld.

Therefore, in the light of the above discussion, there is no merit in

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the present appeal and the same is hereby dismissed, leaving the
parties to bear their own costs.

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Analysis and
Application
This is a clear case of specific performance and possible fraud.
After looking at the facts of the case some clear points come to
mind. The plaintiff is a businessman upon his own showing and
thus his plea that he signed documents of such importance
blindly is too farfetched. The plaintiff has thus failed to make out a
prima facie case for continuance of the interim injunction granted
on 13th July, 1998.

There is no Explanation in the pleadings or arguments as to why


the plaintiff who for his loan of Rs. 1,50,000/- did not execute any
documents was persuaded not only to sign the documents where
loan was given by the defendant but also to have them
registered. At least the fact of registration should have alerted the
plaintiff

Furthermore the documents executed i.e.


(a) Power of Attorney,
(b) Agreement to sell,
(c) Will
(d) The power of attorneys

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to deal with local authorities such as NDMC 9 etc., clearly leads to
the prima facie conclusion that the plaintiff had gone through a
transaction of sale. These documents are the routine documents
executed when a sale of immovable property takes place in Delhi
and the execution and further registration of the documents thus
prima facie indicates that what was intended was a sale of the
property and not the loan as alleged by the plaintiff.

Firstly, to claim a decree for specific performance, the plaintiff


approaching the Court has to first establish that there was a
concluding contract between the parties 10 for the sale of the
subject property. The second requirement is that that the plaintiff
has already performed his part of the contract in terms of the
agreement11; and thirdly, that he is always ready and willing to
fulfill the remaining part of his obligation 12. In the present case,
the plaintiff is satisfying these conditions to some extent but the
appellants have certainly failed to prove the defenses they have
so confidently claimed.
Thus taking all these facts into consideration it is clear why the
court gave decision in favour of the respondent.

9 New Delhi Municipal Council


10 Boddu Satyavathi vs Boddu Ramakrishna Rao on 7 November, 2006

11 Lrs Of Bhinva Ram vs Sohan Ram on 28 April, 2005

12 Nanjappan vs Ramasamy on 17 November, 2011

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Conclusion
It is a settled legal position that once a contract to transfer of
immovable property is proved on record then the normal rule is to
grant specific performance and not granting the same can be only
under exceptional circumstances 13. Some of the circumstances
have been mentioned in Section 20 (2) of the Specific Relief Act,
1963 as to under what circumstances the court shall exercise
such discretion, the same being that if under the terms of the
contract the plaintiff gets unfair advantage over the defendant
the court may not exercise its discretion in favour of the petitioner
or where the defendant would be put to undue hardship which he
did not foresee at the time of execution of the agreement and
where it is inequitable to grant specific relief in the given facts.
NO such thing has happened in the current case.

13 https://www.academia.edu/3091909/Exceptional_Nature_of_Specific_Performance_in_the_Indian_law PDF file

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Thus, this concludes that specific performance is available as a
decree only if the conditions mentioned above are satisfied and
also the evidence submitted by the appellants in this case was
not sufficient to prove any kind of fraud in the documents. There
were a few irregularities in the contract between the parties but
that is no reason for the court to doubt the validity of the
documents and proofs submitted by the respondent.

Hence, the court gave the decision in favour of the respondent


and supported the validity of the rules of specific performance
and specific relief act.

Bibliography
Websites
http://indiankanoon.org/doc/1271381/
http://en.wikipedia.org/wiki/Specific_performance
http://articlesonlaw.wordpress.com/2013/10/22/law-on-specific-
performance-of-contract/
http://indiankanoon.org/search/?formInput=cites:1271381

Books
Law study material for IPCC ICAI

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Contract Bare Act - Professionals

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