Jayakantham & Others v. Abaykumar - (Supreme Court) (21 Feb 2017)

Jurisdiction to Decree Specific Performance is Discretionary. Yet, Discretion of Court is Not Arbitrary but is “Sound and Reasonable”, to be “Guided by Judicial Principles”

MANU/SC/0193/2017

Contract

Instant Appeal arises from a judgment rendered by a Single Judge of Madras High Court. Dismissing second appeal, Single Judge confirmed judgment of Principal District Judge, by which an appeal against judgment of Sub-Judge was dismissed. Trial court decreed suit for specific performance instituted by Respondent against Appellants. Appellants submitted that this is a fit and proper case where specific performance ought not to be ordered and a decree for compensation in lieu thereof would meet the ends of justice.

Section 20(1) of Specific Relief Act, 1963 indicates that, jurisdiction to decree specific performance is discretionary. Yet, discretion of Court is not arbitrary but is “sound and reasonable”, to be “guided by judicial principles”. Exercise of discretion is capable of being corrected by a Court of appeal in hierarchy of appellate Courts. Sub-section 2 of Section 20 of Act contains a stipulation of those cases where the court may exercise its discretion not to grant specific performance.

However, explanation 1 stipulates that mere inadequacy of consideration, or mere fact that, contract is onerous to Defendant or improvident in its nature, will not constitute an unfair advantage within the meaning of clause (a) or hardship within the meaning of clause (b). Moreover, explanation 2 requires that the issue as to whether performance of a contract involves hardship on the defendant has to be determined with reference to the circumstances existing at the time of the contract, except where the hardship has been caused from an act of the plaintiff subsequent to the contract.

In present case, material on record contains several aspects which will have to weigh in the balance. There is no dispute about fact that, father of the respondent who entered into an agreement on his behalf (and deposed in evidence) carried on money-lending business. The consistent case of Appellants in reply to the legal notice, in the written statement as well as in the course of evidence was that there was a transaction of a loan with the father of Respondent.

Material which has been placed on record indicates that, terms of contract, conduct of parties at time of entering into agreement and circumstances under which contract was entered into gave Plaintiff an unfair advantage over defendants. These circumstances make it inequitable to enforce specific performance. A decree for the payment of compensation in lieu of specific performance would meet the ends of justice.

Father of Respondent paid an amount of Rs. 60 thousand to the appellants in June 1999 of the total agreed consideration of Rs. 1.60 lakhs. Appellants have voluntarily offered to pay an amount of Rs. 10 lakhs, as just compensation in lieu of specific performance. Decree for specific performance is set aside and substituted with a direction to Appellants to pay a sum of Rs. 15 lakhs to the respondent in lieu of specific performance.

Tags : PAYMENT SPECIFIC PERFORMANCE