Supreme Court of India
SMT. KATTA SUJATHA REDDY & ANR.versusSIDDAMSETTY INFRA PROJECTS PVT. LTD.& ORS.
- Citation
- 2022 INSC 865
- Decided
- 25 August 2022
- Disposal
- Disposed off
- Bench
- N V RAMANA
Holding
The suit for specific performance is barred by limitation, the 2018 amendment to the Specific Relief Act is prospective and does not apply retrospectively, and therefore specific performance cannot be granted.
Summary
The purchaser entered into two sale agreements in 1997, paying 90% of the price but failing to pay the remaining 10% within the three‑month period stipulated as essential. After sending two notices in 2000 and 2002, the purchaser filed a suit for specific performance in 2002, which the trial court dismissed as time‑barred. The High Court reversed that decision, holding that the time clause was not essential and that the 2018 amendment to Section 10 of the Specific Relief Act applied retrospectively, thereby mandating specific performance. The Supreme Court held that the contract expressly made time of the essence, the suit was barred by Article 54 of the Limitation Act, and the 2018 amendment is prospective, not retrospective, so it cannot revive the claim. Consequently, specific performance was denied and the vendors were ordered to return the amount paid with interest. The appeal was allowed.
Issues considered
- Whether the suit for specific performance is barred by the limitation period under Article 54 of the Limitation Act, 1963.
- Whether time was of the essence of the contract and whether the breach of the time clause defeats specific performance.
- Whether the 2018 amendment to Section 10 of the Specific Relief Act, 1963 is prospective or retrospective and its effect on the present dispute.
- Whether Section 12 of the Specific Relief Act, 1963 permits part‑performance relief in the present facts.
- Whether the doctrine of good faith can be read into the contract to overcome the explicit time condition.
Legislation cited
- Limitation Act, 1963s. Article 47, s. Article 54
- Specific Relief Act, 1963s. Section 10, s. Section 11(2), s. Section 12, s. Section 14, s. Section 16(c)
Subjects
specific performancelimitation periodtime is of the essenceSpecific Relief Act amendmentprospective legislationgood faithcontract breachlaches
Judgment
416 [2022]REPORTS
SUPREME COURT 17 S.C.R. 416 [2022] 17 S.C.R.
A SMT. KATTA SUJATHA REDDY & ANR.
v.
SIDDAMSETTY INFRA PROJECTS PVT. LTD.& ORS.
(Civil Appeal No. 5822 of 2022)
B AUGUST 25, 2022
[N. V. RAMANA, CJI, KRISHNA MURARI AND
HIMA KOHLI, JJ.]
Specific Performance – Limitation Act, 1963 – Article 54 –
Limitation period for Specific Performance – Specific Relief Act,
C
1963 – ss. 10, 12 – Appellant herein (Purchaser) entered into an
agreement with the Respondents herein (Vendors) in 1997 to
purchase two stretches of land, and paid 90% of total amount by
cash and cheque – Remaining 10% was to be paid within 3 months
as per clause 3 of the agreement, which was defaulted by the
D appellant – However, appellant sent two notices to the respondents
in 2000 and 2002 seeking performance of the agreement by agreeing
to deposit the balance sale consideration – Thereafter, appellant
filed a suit seeking specific performance in 2002 – Trial court
dismissed the suit holding that it was barred by limitation – Appellant
approached High Court – High Court held that the trial Court erred
E
in making the distinction between time fixed for payment of sale
consideration and time for performance of contract – Further, held
that the purchaser was ready and willing to perform his contract,
and through his acts, proved his bonafides by already paying 90%
of the sale consideration within the stipulated period and by later
F depositing the balance amount in court – Also held that amended
Section 10 of the Specific Relief Act, which provides that specific
performance shall be enforced by courts subject to conditions
mentioned, shall apply retrospectively and therefore benefit the
appellent – HC partly allowed the appeal and directed the resondents
to register the suit property in favour of the appellant to the extent
G
of the amount paid by the appellant, i.e., 90% of the total sale
consideration, within a period of 3 months – Aggrieved, both
appellant and respondents approached this Court – Held: Fixed
time period was mandated by Clause 3 of the agreement and
accordingly, the suit filed by the purchaser was clearly barred by
H
416
SMT. KATTA SUJATHA REDDY v. SIDDAMSETTY 417
INFRA PROJECTS PVT. LTD.
limitation in view of the provision provided under Article 54 of the A
Limitation Act – Amended Section 10 of the Specific Relief Act
brought by the amendment of 2018 was not mere procedural
enactment, rather it had substantive principles built in it and thus,
the same would not apply retrospectively – As far as entitled to the
relief of specific performance is concerned, it is clear that the
B
purchaser did not voluntarily adhere to the time stipulation under
the contract – In order to bypass the condition of time being the
essence, the purchaser invoked the standard of good faith – Unless
such duty is expressly stipulated, good faith standard cannot be
implicitly read into any contract – Prior to 2018 amendment, general
standard of good faith to imply broader good faith obligations C
cannot be accepted to give a go-by to the explicit conditions for
maintaining the sanctity of contract – Such broad standards will
have potentially far-reaching consequences - The purchaser was
not ready or willing to perform his part of the contract within the
time stipulated and accordingly, specific performance cannot be
D
granted for the entire contract – There is no doubt that the claim of
appellant is hit by delay and laches on their part as they did not
take appropriate measures within the stipulated time and filing of
the suit was delayed by almost five years – Thus, no relief can also
be granted to the appellant u/s. 12 of the Specific Relief Act –
Respondents directed to repay the deposited amount with interest. E
Disposing of the appeals, the Court
HELD:
1. The vendors were entitled to rescind the contract as
there was a breach of condition, i.e, ‘time was the essence’. F
Coming back to the point of limitation, it is clear that Article 54
of the Limitation Act mandates that in this case at hand, the date
fixed for payment of consideration was three months from the
date of the agreements (i.e. 26.03.1997 and 27.03.1997). In any
case, the time period for filing the suit had commenced from 26/
27.6.1997 and would have expired after three years, i.e., in the G
end of June 2000. [Para 35][434-B-C]
2. The purchaser has contended that the legal notice issued
by them on 31.03.2000, would be sufficient to get past the bar of
limitation, as the purchaser has paid the advance amount to a
H
418 SUPREME COURT REPORTS [2022] 17 S.C.R.
A large extent. Although this argument seems to be very attractive
at first blush, the same cannot be sustained in the eyes of the law
for the reason that when a condition of a contract is breached and
the consequences ensue for that breach, a party cannot claim
equity to escape such consequences. In this context, this Court
notes that Article 54 of the Limitation Act provides for two
B
consequences based on the presence of fixed time period of
performance. It is only in a case where the time period for
performance is not fixed that the purchaser can take recourse to
the notices issued and the vendors’ reply thereto. In the case at
hand, the aforesaid circumstances do not come into play as a fixed
C time period was clearly mandated by Clause 3 read with Clause
23 of the agreements to sell, as explained above. [Paras 36 and
37] [434-D-F]
3. In light of the above, this Court notes that the suit filed
by the purchaser was clearly barred by limitation in view of the
D first part of Article 54 of the Limitation Act and no amount of
payment of advance could have remedied such a breach of
condition. [Para 38][434-F-G]
4. This Court does not subscribe to the aforesaid reasoning
provided by the High Court for the simple reason that after the
E 2018 amendment, specific performance, which stood as a
discretionary remedy, is not codified as an enforceable right which
is not dependent anymore on equitable principles expounded by
judges, rather it is founded on satisfaction of the requisite
ingredients as provided under the Specific Relief Act. For
determination of whether a substituted law is procedural or
F substantive, reference to the nature of the parent enactment may
not be material. Instead, it is the nature of the amendments which
determine whether they are in the realm of procedural or
substantive law. [Para 45][436-D-E]
5. Having come to the conclusion that the 2018 amendment
G was not a mere procedural enactment, rather it had substantive
principles built into its working, this Court cannot hold that such
amendments would apply retrospectively. [Para 51][438-G]
H
SMT. KATTA SUJATHA REDDY v. SIDDAMSETTY 419
INFRA PROJECTS PVT. LTD.
6. It is clear that when a substantive law is brought about A
by amendment, there is no assumption that the same ought to be
given retrospective effect. Rather, there is a requirement for the
legislature to expressly clarify whether the aforesaid amendments
ought to be retrospective or not. [Para 53][440-C]
7. In the case at hand, the amendment act contemplates B
that the said substituted provisions would come into force on
such date as the Central Government may appoint, by notification
in the Official Gazette, or different dates may be appointed for
different provisions of the Act. It may be noted that 01.10.2018
was the appointed date on which the amended provisions would
come into effect. [Para 55][440-F] C
8. This Court does not have any hesitation in holding that
the 2018 amendment to the Specific Relief Act is prospective
and cannot apply to those transactions that took place prior to its
coming into force. [Para 56][440-G]
D
9. It was necessary that the purchaser should have taken
immediate steps to complete the transaction and if such steps
were immediately completed then the purchaser would have a
clear right for seeking enforcement for 3 years reckoned from
the last date decided for completion of the contract. [Para 59][442-
D-E] E
10. It is clear that the purchaser did not voluntarily adhere
to the time stipulation under the contract. In order to by-pass
the condition of time being the essence, the purchaser invoked
the standard of good faith. Aforesaid standard prescribes a higher
duty of care for parties entering into a contract. Unless such duty F
is expressly stipulated, good faith standard cannot be implicitly
read into any contract. [Para 65][444-D]
11. This Court does not subscribe to acceptance of a general
standard of good faith to imply broader good faith obligations only
to give a go-by to the explicit conditions for maintaining the G
sanctity of contract. Such broad standards will have potentially
far reaching consequences. This Court agrees that such an
implicit reading would come into play post the 2018 Amendment
H
420 SUPREME COURT REPORTS [2022] 17 S.C.R.
A to the Specific Relief Act which enables specific performance of
contracts to uphold their sanctity. However, from the facts and
circumstances of this case, we cannot accept that such higher
standards of good faith was relevant. [Para 66][444-E-F]
12. It is clear that Section 16(c) of the Specific Relief Act
B would only come into force if the purchaser was ready and willing
to perform the contract within the three month period prescribed
under Clause 3 of the agreements. The aforesaid conclusion is
also bolstered by the fact that specific performance can only be
granted when essential terms of contract are not violated in terms
C of Section 16(b). [Para 68][444-G-H]
13. This Court does not think that it is an appropriate case
for granting relief to the purchaser in terms of Section 12 of the
Specific Relief Act, 1963 as the claim of the purchaser is barred
by delay, laches and limitation. [Para 78][449-E]
D 14. This Court is of the firm opinion that the contract was
breached due to the conduct of the plaintiff/purchaser, who were
not willing to perform the contract after entering into a time
sensitive agreement. In any case, it is an admitted fact that plaintiff
had paid only part consideration. Though there is a forfeiture
E clause in the agreement, this Court with a view of rendering
complete justice between the parties, deems it appropriate to
direct the vendors/appellants to repay the said amount with
interest @ 7.5% p.a. from the date such payment was made by
the purchaser to the vendors, till the entire amount is paid back.
We further direct the vendors to pay the entire amount to the
F credit of the suit account within six months from the date of receipt
of a copy of the order. [Para 79][449-E-G]
Chand Rani (dead) by Lrs. v. Kamal Rani (dead) by Lrs.
(1993) 1 SCC 519 : [1992] 3 Suppl. SCR 798;
Whiteley Limited v. Hilt (1918) 2 K.B. 808;
G
Shyam Sunder and Others (2001) 8 SCC 24: [2001] 1
Suppl. SCR 115; Saradamani Kandappan v.
H
SMT. KATTA SUJATHA REDDY v. SIDDAMSETTY 421
INFRA PROJECTS PVT. LTD.
S. Rajalakshmi and Other, (2011) 12 SCC 18 : [2011] A
8 SCR 874; Jaswinder Kaur v. Gurmeet Singh (2017)
12 SCC 810 : [2017] 5 SCR 430; Rachakonda
Narayana v. Ponthala Parvathamma (2001) 8 SCC 173;
[2001] 2 Suppl. SCR 71; Radheshyam Kamila v. Kiran
Bala Dasi AIR 1971 Cal 341; Adhunik Steels Limited v.
B
Orissa Manganese and Minerals (P) Ltd. (2007) 7 SCC
125 : [2007] 8 SCR 213 - referred to.
Case Law Reference
[1992] 3 Suppl. SCR 798 referred to Para 31
C
[2001] 1 Suppl. SCR 115 referred to Para 44
[2011] 8 SCR 874 referred to Para 57
[2017] 5 SCR 430 referred to Para 76
[2001] 2 Suppl. SCR 71 referred to Para 77 D
[2007] 8 SCR 213 referred to Para 46
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5822
of 2022.
E
From the Judgment and Order dated 23.04.2021 of the High Court
for the State of Telangana at Hyderabad in Appeal Suit No. 998 of 2010.
With
Civil Appeal Nos. 5823 and 5824 of 2022.
F
H.N. Salve, Mukul Rohatgi, Dushyant A. Dave, Harin P. Raval,
Manan Kumar Mishra, Sr.Advs, Mahesh Agarwal, Ankur Saigal, Rishabh
Parikh, Sundeep Reddy, Rajesh Kumar, E. C. Agrawala, Ms. Bina
Madhavan, Krishna Kumar Singh, Ms. Rao Vishwaja, Durga Dutt,
Ms. Anjul Dwivedi, Rohit Priyadarshi, U.N. Mishra, Vaibhav Shukla, G
Advs. for the appearing parties.
H
422 SUPREME COURT REPORTS [2022] 17 S.C.R.
A The Judgment of the Court was delivered by
KRISHNA MURARI, J.
1. Leave granted in all the matters.
C.A. NO. 5822 OF 2022 (ARISING OUT OF SLP (C) NO.
13565 OF 2021)
B
2. The present civil appeal arises out of the impugned judgment
dated 23.04.2021 in A.S. No. 998 of 2010, passed by the High Court
for the State of Telangana at Hyderabad.
3. Siddamsetty Infra Projects Pvt. Ltd., who is the respondent
C herein, had filed a suit for specific performance against the appellants,
Smt. Katta Sujatha Reddy and Smt. Kamireddy Geetha Reddy, who
were respondents 6 & 8 respectively, among others in the suit.
4. A conspectus of the facts necessary for the disposal of the
appeals is as follows: One late D Narayana, predecessor-in-interest of
the respondent no. 2 and 3, was the owner of an agricultural land bearing
D
Sy. No. 300-309, admeasuring 141.05 acres, situated in Budvel Village,
Rajendra Nagar Mandal, Ranga Reddy District, Hyderabad. The
appellants herein acquired certain extent of the land from the aforesaid
predecessor-in-interest through an agreement dated 19.03.1994. In
pursuance to this agreement, two registered Joint GPA’S dated
E 28.03.1994 were executed in the name of the defendant Nos. 5 and 6
from the above-mentioned owners, for an extent of Acs. 127.27 gts. of
land.
5. The agreement dated 19.03.1994 and the registered GPA, in
favour of the respondent no. 1/purchaser (Siddamsetty Infra Projects
F Pvt. Ltd.) could not materialize. Parties entered into two fresh
agreements dated 26.03.1997 and 27.03.1997 inter alia appellant
(hereinafter referred to as ‘vendors’) herein to purchase an extent of
Acs. 40.08 gts. The agreement dated 26.03.1997 pertained to Acs. 35.15
gts. land for a consideration of Rs.38,37,500/- while the agreement dated
27.03.1997 pertained to Acs 1.33 gts of land for a consideration of
G Rs.1,82,500/-.
6. The total suit scheduled property thus consists of Acs. 40.08
gts of land situated in Sy No. 301 (part), 302, 303, 304 (part) of Budvel
Village, Rajendranagar Mandal, R.R. District for which a total
consideration of Rs.40,20,000/- was agreed upon between the parties.
H Out of the total agreed consideration, Rs.34,80,850/- was paid by the
SMT. KATTA SUJATHA REDDY v. SIDDAMSETTY 423
INFRA PROJECTS PVT. LTD. [KRISHNA MURARI, J.]
purchaser to the vendors by way of cash and cheques, which fact is not A
disputed.
7. The remaining amount of Rs.5,39,150/- was to be paid within 3
months, as per clause 3 of the agreements. This amount had admittedly
not been paid within the stipulated time. On 31.03.2000, the purchaser
allegedly sent the first notice dated 08.02.2000 to the vendors seeking B
specific performance of the agreement. Thereafter, a second notice was
sent by the plaintiff on 06.07.2002. The purchaser, having no other
alternative, filed the present suit, being OS No. 88 of 2002, before the
Additional District Judge, Ranga Reddy District, LB Nagar, Hyderabad,
seeking specific performance. The trial Court framed 5 issues for
consideration which are as under: C
1. Whether the purchaser is entitled for Specific Performance of
agreement dt. 27.3.1997 and 26.3.1997 directing the vendors
to execute a registered sale deed in favour of purchaser in
respect of suit land?
D
2. Whether the time is essence of the contract as pleaded by the
vendors, if so whether the purchaser is not entitled for Specific
Performance of agreement of sale as pleaded by him?
3. Whether the suit filed by the purchaser is barred by limitation?
4. Whether the purchaser is entitled for alternative reliefs of E
delivery of possession and for refund of Rs. 34,80,850/- with
interest @36% per annum as pleaded in the plaint?
5. To what relief?
8. In response to issues (1) and (2), taking into consideration the
evidence available on record, the trial Court held that the purchaser was F
never put in possession of the property. On the issue of payment, it was
held that the purchaser never made the total payment of Rs.34,70,000/-
under the agreement of sale. It was discovered during the course of
cross and chief examination, that the purchaser had issued a cheque for
Rs. 5,00,000/- which was dishonoured. This information was not shared G
by the purchaser and hence the purchaser had suppressed material
evidence.
9. The trial Court further held that the burden of proof lies on the
person who pleads that time is the essence of the contract. It was further
observed that in respect of an immovable property, time is not the essence H
424 SUPREME COURT REPORTS [2022] 17 S.C.R.
A of the contract unless the same is explicitly mentioned in the agreement
of sale and the parties through their conduct have treated time as the
essence of the contract. The lower Court observed that Clause 3 in the
contract stipulates a time bar of 3 months for the payment of the sale
consideration and furnishing of necessary certificates by the purchaser
and the vendor respectively. The vendor through their conduct had never
B
intended to treat time as the essence of the contract. On delay of payments
made by the purchaser, the vendor never issued any notice to them. This
showed that the vendor never intended to treat time as the essence of
the contract. The vendor also painted a picture that it did procure the
necessary documents as required under clause 3 of the contract, but it
C never did the same. The vendor made a false plea about the duty to be
performed by it under clause 3 of the contract.
10. The trial Court further held that while there exists a false
plea on the part of the vendor, the same however does not benefit the
case of the purchaser because there are grave laches on his part too.
D The purchaser himself having approached the Court with unclean hands,
he cannot get the benefit of the false plea made by the vendor.
11. The trial court also came to the conclusion that the purchaser
was never ready to pay the balance sale consideration, if so, he would
have either issued a notice to the vendor making out his willingness to
E pay. Hence, on the basis of all the above mentioned observations, it was
held that the purchaser is not entitled for specific performance of the
agreements of sale and that the parties never intended to treat time as
an essence of the contract.
12. With regard to issue (3), the trial Court held that part one of
F Article 54 of the Limitation Act,1963 will come into operation, as per
which the three-year period has to be computed from the date so stipulated,
which comes to on or before 27.06.2000, in the present case. The current
suit however was presented on 09.08.2002, after a lapse of two years.
Even for the recovery of the advance amount, the suit was barred by
time as provided under Article 47 of the Limitation Act. When the main
G suit itself is barred, then alternative relief also cannot be granted. Hence,
the trial Court held that the suit is barred by limitation. In the light of
the above findings, the trial Court dismissed the suit holding that the
plaintiff is not entitled for the relief of specific performance.
13. Aggrieved by the aforesaid order of the trial Court, the plaintiff/
H purchaser approached the High Court by way of a first appeal, being
SMT. KATTA SUJATHA REDDY v. SIDDAMSETTY 425
INFRA PROJECTS PVT. LTD. [KRISHNA MURARI, J.]
A.S. No. 998/2010. The High Court framed 7 issues for adjudication of A
the matter which are as under;-
1. Whether the suit is barred by limitation?
2. Whether the purchaser proved it’s possession over the suit
schedule property?
B
3. Whether the plaintiff was ready and willing to perform his
part of the contract and paid balance sale consideration within
the stipulated time in the suit agreements?
4. Whether the trial court is right in holding that the time is not
the essence of the contract and whether the same can be C
attacked by the defendants without filing cross objections?
5. Whether the trial court is right in not exercising its discretion
for granting relief of specific performance?
6. Whether Section 10 of the Act as substituted by Act 18 of
2018 is prospective or retrospective in nature? D
7. To what relief?
14. In response to point (1), the High Court has held that Clause 3
of the agreements did not stipulate time as the essence of the contract.
Moreover, the vendor has not exercised the option of forfeiting the
advance amount as per Clause 3 of the agreements. The High Court E
further held that the trial Court has erred in making the distinction between
time fixed for payment of sale consideration and time for performance
of contract.
15. On point (2), the High Court held that the vendors surrendered
almost all their rights over the suit schedule property and allowed the F
purchaser to exercise his rights over the suit property as per the contract.
It was wrongly held by the trial Court that since the name of the
purchaser was deleted in Exs. B10 & B11, the purchaser was not in
possession of the property. On the basis of this, the trial Court also held
that the purchaser did not approach the court with clean hands. One G
more point that came in favour of the purchaser was that one of the
parties to the sale agreement had categorically admitted that the purchaser
was put in possession of the property. This fact was never contested by
any party. The High Court held that just because the possession aspect
is not mentioned in Exs. A2, A3, A4, A5, A29 & A30 or in the first notice,
H
426 SUPREME COURT REPORTS [2022] 17 S.C.R.
A it cannot be said that the purchaser was not in possession of the suit
schedule property.
16. On point (3), the High Court observed that the vendors were
at fault for not obtaining the necessary certificates as per Clause 3 of
the contract for completing the sale transaction. Further, to show his
B bonafides, the purchaser filed an application for permission to deposit the
balance sale consideration of Rs. 5,39,150/- and the same was ordered
and became final. The High Court further held that no person would
drag on the matter for this long for a payment of 10% of total sale
consideration. The purchaser was ready and willing to perform his
contract, had already paid 90% of the sale consideration within the
C stipulated period and had deposited the balance amount in Court. Hence,
the purchaser was ready and willing to perform his contract, and through
his acts, proved his bonafides.
17. On point (4), the High Court held that the trial Court had correctly
assessed the judgments and the fact situation and held that time is not
D the essence of the contract in the present case.
18. On point (5), the High Court held that the trial Court should
have exercised its discretion and should have granted specific performance
in favour of the purchaser. It was held that the vendors took a false plea
in their written statements as well as in their chief examinations stating
E that they did not receive the sale consideration. The vendors further
took the false plea that the necessary documents and certificates as per
clause 3 of the contract were obtained from the concerned departments,
and hence the said point was answered in favour of the purchaser.
19. On point (6), the High Court held that when a provision is
F replaced by way of substitution, the substituted legislation operates
retrospectively and not prospectively. It further held that specific relief
in essence is a part of the law of procedure, and hence it is a
retrospective law. The High Court then went on to state that an appeal
is a continuation of the suit, and hence any change in law between the
G date of passing of the decree and the decision of the appeal must be
taken into consideration. Based on the above analysis, the High Court
held that Section 3 of the Amended Act is retrospective in nature and
applies to pending proceedings.
20. On point (7), the High Court held that since the purchaser
succeeded on all points, it partly allowed the appeal and directed the
H
SMT. KATTA SUJATHA REDDY v. SIDDAMSETTY 427
INFRA PROJECTS PVT. LTD. [KRISHNA MURARI, J.]
vendors to register the suit property in favour of the purchaser, to the A
extent of the amount paid by the purchaser, i.e., 90% of the total sale
consideration, within a period of 3 months. Further, it was ordered that
the sum of Rs.5,39,150/- deposited by the purchaser, by virtue of the trial
Court order dated 11.07.2005 in IA No. 925/2005, was to be refunded to
the purchaser with interest, if any accrued thereon.
B
21. Aggrieved by the impugned judgment, both the vendors and
the purchaser are in appeal before this Court.
22. Mr. Dushyant Dave and Mr. Harin P. Raval, learned Senior
Counsel appearing on behalf of the purchaser, submitted as follows:
i. The High Court was correct in exercising its jurisdiction C
and the impugned judgment is based on both, oral and
documentary evidence. The reasons given for granting the
relief of specific performance are in accordance with the
settled principles of law.
ii. Both the trial Court and the High Court have concurrently D
found that time is not the essence of the contract. No time
was fixed for the performance of the contract itself. The
period of 3 months stipulated under Clause 3 of the
agreements to sell, is only for payment of the sale
consideration. As a result, when no date is fixed for the E
performance of the contract, the limitation period
commences from the date of specific refusal. In the case
at hand, specific refusal of the vendors to perform their
obligations had occurred on 14.04.2000 and 22.07.2002 and
therefore, the suit was filed well within the limitation period.
F
iii. The purchaser has clearly established that they were always
ready and willing to perform their part of the contract. They
have admittedly paid 90% of the sale consideration within 3
months of the agreements to sell. The purchaser also issued
two legal notices dated 08.02.2000 and 06.07.2002 to the
vendors indicating their readiness to pay the balance amount. G
The vendors avoided receiving the sale consideration despite
the purchaser’s repeated requests. Additionally, the vendors
did not procure the requisite permissions.
iv. Defendant No.5 has admitted in her pleadings that the
purchaser was put in possession of the suit property. Such H
428 SUPREME COURT REPORTS [2022] 17 S.C.R.
A statement was neither challenged by the vendors in the
rejoinder and nor was it mentioned in the evidence led by
the DWs that her statement is incorrect. Moreover,
Defendant No.5 is a proper party to the suit.
v. The stand of the parties on possession cannot be a ground
B on which the Court can refuse grant of specific
performance. Delivery of possession is ancillary to the relief
sought and such an issue would be inconsequential.
vi. In the light of the amendment to Section 10 of the Specific
Relief Act, the jurisdiction to grant specific performance of
C a contract is no longer discretionary and it is mandatory
for Courts to grant such relief, unless the case at hand
falls within the statutorily carved out exceptions.
23. Mr. Mukul Rohatgi and Mr. Harish Salve, learned Senior
Counsel appearing on behalf of the vendors, submitted as follows:
D i. The purchaser did not approach the Court with clean hands.
The balance amount was not paid within the stipulated time
period and the trial Court found the purchaser’s statement
regarding possession to be false inter alia, for the following
reasons:
E (a) In the suit, there was an alternate prayer seeking
possession. If the purchaser was already in possession,
such a prayer would not have been made.
(b) The purchaser has not mentioned any specific date as to
when they were put in possession of the property.
F
(c) As per the draft sale deed prepared by the purchaser,
there is no mention of the fact that they had already
been granted possession of the property. In fact, the draft
sale deed indicates that the purchaser would be put in
possession on execution of the sale deed.
G (d) PW2 (neighbour) deposed that the purchaser had laid
roads, constructed two rooms, put up fencing, etc. on the
property. However, the same is falsified by the documents
on record. The photographs of the property show that
there are no road or rooms on the property. Additionally,
H no such pleading is made in the suit.
SMT. KATTA SUJATHA REDDY v. SIDDAMSETTY 429
INFRA PROJECTS PVT. LTD. [KRISHNA MURARI, J.]
ii. The suit filed by the purchaser is barred by limitation and the A
trial Court held so correctly. The parties executed the
agreements to sell on 26.03.1997 and 27.03.1997 and the
purchaser was to pay the balance amount within 3 months,
i.e., by 27.06.1997. It is the purchaser’s case that the vendors
evaded execution of the sale deed as early as in June 1997.
B
Therefore, the limitation would start running in June 1997 and
expire in June 2000. The suit, however, was filed only on
09.08.2002 and is, therefore, clearly barred by limitation. The
purchaser’s oral evidence also shows that the right to sue
accrued in the year 1997 itself.
iii. Additionally, the notice purportedly dated 08.02.2000, was C
actually despatched on 31.03.2000 and was purposely
backdated.
iv. The purchaser was not ready and willing to perform the
contract. The evidence on record indicates that the purchaser
not only failed to pay the balance consideration within the D
stipulated 3 months, but also failed to pay the same within a
period of 3 years of the agreement.
v. A suit for specific performance cannot be decreed in a
piecemeal manner. The High Court ought to have accepted
the trial Court’s decision and rejected the purchaser’s appeal. E
Moreover, grant of specific relief only to the extent of 90%
itself indicates that the purchaser was not ready and willing to
perform the contract and consequently, is not entitled to the
decree.
vi. The High Court, while overturning the trial Court’s judgement, F
stated that the discretion to grant specific performance was
taken away by the 2018 amendment to Section 10 of the
Specific Relief Act. However, both the Delhi High Court and
Karnataka High Court have rightly taken the view that the
amendment, being substantive, would be applicable G
prospectively. The impugned judgement erroneously states that
the amendment is merely procedural and would apply
retrospectively.
vii. The High Court has misconstrued Section 12 of the Specific
Relief Act. The section would not be applicable to the present
H
430 SUPREME COURT REPORTS [2022] 17 S.C.R.
A case as the question of ‘inability to perform a contract’ does
not arise.
viii. Reliance on Defendant No.5’s pleadings in support of the
plaintiff is misplaced. She has nothing to do with the agreements
in question and had filed a collusive written statement.
B Moreover, knowing such a statement is collusive, she never
entered the witness box.
24. We have heard the learned Senior counsel appearing on either
side and perused the entire material available on record. In the light of
the arguments advanced, the following issues fall for consideration.
C A. Whether the suit for specific performance is barred by
limitation?
B. Whether the amended Section 10 of the Specific Relief Act
is prospective or retrospective in operation?
D C. Whether the purchaser is entitled to the relief of specific
performance?
D. In any case, whether the purchaser is entitled to take benefit
of Section 12 of the Specific Relief Act in view of the part
payment made in respect of the contract?
E Issue A
25. Before dealing with issue “A”, we would like to highlight certain
facts which may be relevant. On 26.03.1997 and 27.03.1997 two
agreements to sell were executed between the vendors and purchaser
for two separate parcels of land in survey no. 301(part), 302, 303, 304
F (part). The sale considerations for the aforesaid land were
Rs.38,37,500/- and Rs. 1,82,500/- respectively. Out of the above sale
considerations, the vendors received an advance of Rs.34,70,000/- and
Rs.10,850/- in furtherance of the performance of the aforesaid agreement.
26. A notice dated 08.02.2000 was despatched by the purchaser
G on 31.03.2000, calling upon the appellants herein to execute the sale
deed at a convenient date, suitable to the vendors herein.
27. The vendor replied to the aforesaid notice by letter dated
14.04.2000 by stating that the purchaser never offered to pay the balance
sale consideration and issuance of the notice dated 08.02.2000, was nothing
H but a subterfuge to get over the limitation.
SMT. KATTA SUJATHA REDDY v. SIDDAMSETTY 431
INFRA PROJECTS PVT. LTD. [KRISHNA MURARI, J.]
28. Thereafter, a suit was filed by the purchaser only on 09.08.2002. A
In the suit, the averments made by the purchaser as to the limitation are
as under:
“LIMITATION: The suit is within limitation in continuation
of efforts. Some defendants are agreeing to execute the sale
deed and some defendants are continuing and evading the B
execution of the sale deed. Time is not the essence of the
contract. The suit is within limitation in view of reply notice.”
29. The Defendant No.6-vendors herein filed a written statement
dated 25.10.2002, wherein they replied to the question of limitation as
under: C
“8 (Pg NO. 175) .It is submitted that, in reply to Para no. 10
of the plaint that, the plaintiff has got issued legal notice dated
8.02.2000 to the defendant & the defendant no. 8 and posted
the said notice on 31.3.2000 under the registered post, the
said fact is revealed that, the Plaintiff purposefully made the D
notice dated as 8.2.2000 which was posted on 31.03.2000
with ulterior motive. The Plaintiff to cover up the limitation
period of 3 years creates the date 8.02.2000. It is not true
that, the defendant and the defendant no. 8 Smt. Kamreddy
Geetha Reddy are not the joint GPA holder of the vendors. It
is false that, there was no response from defendant no. 6 and E
defendant no. 8 to the said notice, in fact the defendant got
issued a reply legal notice dated 14.04.2000 to the said alleged
legal notice dated 8.2.2000. After receipt of the reply legal
notice the Plaintiff kept quiet for nearly 2 ½ years and got
issued another legal notice dated 6.7.2002. The defendant F
had got issued reply legal notice on 22.7.2002 to the notice
dated 6.7.2002 by stating that the agreements are barred by
limitation and the plaintiff never in possession of the suit
property and moreover he has not performed his part
performance in paying the balance sale consideration within
the stipulated period and the notice dated 8.02.2000 was G
posted on 31.02.2000 with malafide intention.”
30. In the above light, the first question that this Court needs to
consider pertains to the aspect of limitation. The First Schedule to the
Limitation Act, 1963 provides for the period of limitation in the following
manner: H
432 SUPREME COURT REPORTS [2022] 17 S.C.R.
A
B
The High Court, while dealing with the aspect of limitation, has
C given a reasoning that Clause 3 of the agreements to sell did not have a
specific calendar date for performance of the contract, but rather, provided
only for payment of the entire sale consideration within 3 months from
the date of the agreements. Further, the High Court construed the obligation
of the vendors to produce requisite certificates and permission as a
condition for the purchaser to complete the sale transaction. In view of
D the same, the High Court concluded that the first part of Article 54 was
incorrectly applied by the trial Court and accordingly held that the suit
was not barred by limitation.
31. At the outset, this Court has perused Clause 3 of the agreements,
which is in two parts. The first part provides for the purchaser’s obligation,
E while the second part details the obligation of the vendors to provide the
requisite certificates. Although both the obligations were required to be
completed within the stipulated period of three months, there is a
substantive difference between these two sets of obligations. The
obligation upon the vendors concerned was production of certain
certificates, such as income tax exemption certificate and agriculture
F
certificate. No consequences were spelt out for non- performance of
such obligations. Whereas the obligation on the purchaser, was to make
the complete payment of the sale consideration within three months.
The clause further mandates forfeiture of the advance amount if the
payment obligation is not met within the time period stipulated therein.
G In this context, this Court in Chand Rani (dead) by Lrs. v. Kamal
Rani (dead) by Lrs1., held as under:
“25. From an analysis of the above case law it is clear that in
the case of sale of immovable property there is no presumption
H 1
(1993) 1 SCC 519
SMT. KATTA SUJATHA REDDY v. SIDDAMSETTY 433
INFRA PROJECTS PVT. LTD. [KRISHNA MURARI, J.]
as to time being the essence of the contract. Even if it is not of A
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
B
3. from the surrounding circumstances, for example: the
object of making the contract.”
32. Coming to the aforesaid indicators, the language of the
agreements makes it clear that severe consequences of forfeiture would
ensue if the payment is not made within three months of the date of the C
agreements. It may be noted that as per Clause 21, the parties had
entered into an earlier agreement to sell dated 19.03.1994, which did
not materialize and accordingly the agreed price therein was no longer
applicable. It is in this context that the fresh agreements were entered
into between the parties, so as to provide a last opportunity for them to
successfully enter into a sale-purchase agreement. The aforesaid intention D
of the parties is also made clear through Clause 23 of the agreement to
sell, which reads as under:
“23. The parties of the second part herein undertake on any
pretext they will not make any claim for enhancing the agreed
sale consideration.” E
33. The aforesaid clause clearly freezes any enhancement of the
agreed sale consideration, which cannot be independent of a fixed time
period. A contrary interpretation would render the contract commercially
unreasonable and unworkable. The moratorium on the enhancement of
rates prescribed under Clause 23 should be interpreted to be predicated F
on a fixed time and be executable within a reasonable period. The same
should not be utilized to render the commercial wisdom between the
parties otiose, which is inherent in drafting such clauses.
34. From the above analysis, it is clear that the contract was
strictly conditioned on a time frame. At this stage, it may be relevant to G
quote Section 55 of the Contract Act, which reads as under:
“55. Effect of failure to perform at fixed time, in contract in
which time is essential When a party to a contract promises
to do a certain thing at or before a specified time, or certain
things at or before specified times, and fails to do any such H
434 SUPREME COURT REPORTS [2022] 17 S.C.R.
A thing at or before the specified time, the contract, or so much
of it as has not been performed, becomes voidable at the option
of the promisee, if the intention of the parties was that time
should be of the essence of the contract.”
35. In view of the aforesaid provisions, the vendors were entitled
B to rescind the contract as there was a breach of condition, i.e, ‘time
was the essence’. Coming back to the point of limitation, it is clear that
Article 54 of the Limitation Act mandates that in this case at hand, the
date fixed for payment of consideration was three months from the date
of the agreements (i.e. 26.03.1997 and 27.03.1997). In any case, the
time period for filing the suit had commenced from 26/27.6.1997 and
C would have expired after three years, i.e., in the end of June 2000.
36. The purchaser has contended that the legal notice issued by
them on 31.03.2000, would be sufficient to get past the bar of limitation,
as the purchaser has paid the advance amount to a large extent. Although
this argument seems to be very attractive at first blush, the same cannot
D be sustained in the eyes of the law for the reason that when a condition
of a contract is breached and the consequences ensue for that breach, a
party cannot claim equity to escape such consequences.
37. In this context, we may note that Article 54 of the Limitation
Act provides for two consequences based on the presence of fixed time
E period of performance. It is only in a case where the time period for
performance is not fixed that the purchaser can take recourse to the
notices issued and the vendors’ reply thereto. In the case at hand, the
aforesaid circumstances do not come into play as a fixed time period
was clearly mandated by Clause 3 read with Clause 23 of the agreements
F to sell, as explained above.
38. In light of the above, we may note that the suit filed by the
purchaser was clearly barred by limitation in view of the first part of
Article 54 of the Limitation Act and no amount of payment of advance
could have remedied such a breach of condition.
G 39. Having come to the aforesaid conclusion, there would not have
been any reason for this Court to continue the analysis on merits. However,
we feel that even on merits, the purchaser’s case cannot be
countenanced in law and we accordingly adumbrate on the following
aspects.
H
SMT. KATTA SUJATHA REDDY v. SIDDAMSETTY 435
INFRA PROJECTS PVT. LTD. [KRISHNA MURARI, J.]
Issue B A
40. At the outset, we may notice that this question assumes great
significance as application of the 2018 Amendment Act to the present
set of circumstances would determine whether specific performance
ought to be applied mandatorily or the aforesaid decision is a discretion
of the Court to examine whether equity demands such application instead B
of granting damages if any.
41. We may note that the Specific Relief Act, 1963 is the second
legislation, replacing the earlier 1877 enactment of the Specific Relief
Act. The 1963 Act was enacted after consideration of the Law
Commission in its Ninth Report. The 1963 Act more or less followed the C
English position on equitable remedy of specific performance. In Common
Law, the remedy of specific performance was unknown in the initial
days and courts only granted damages for the value of goods if there
was any breach of contract. Accordingly English Courts, in the early
years, granted monetary relief. In order to rectify the harsh stance of
law, Courts of Equity in England started granting relief of specific D
performance if the Court of Equity found that granting damages would
be inadequate or some special equitable rights of the plaintiff under a
trust have been breached.
42. In any case, grant of such relief, which emanated from equitable
principles, remained discretionary. This principle is clearly explained by E
Swinfen Eady M.R., in Whiteley Limited v. Hilt2, in the following
manner:
“The power vested in the Court to order the delivery up of a
particular chattel is discretionary, and ought not to be
exercised when the chattel is an ordinary article of commerce F
and of no special value or interest, and not alleged to be of
any special value to the plaintiff and where the damages would
fully compensate.”
43. However, this was not the position under the Civil Law. Under
the Civil Law of contracts, adherence to the sanctity of contract is G
enforced with greater rigour by inversing the situation. The reason for
choice of damages and specific performance range from legal to
economic. It is in this context that the Courts cannot engage on the
2
(1918) 2 K.B. 808 H
436 SUPREME COURT REPORTS [2022] 17 S.C.R.
A merits of having damages or specific performance or a hybrid. It is best
left to the legislature to choose the course best-suited to the economy
without sheepishly following the typecast approach in England or Civil
Law systems.
44. The High Court, in the impugned order, has taken a different
B approach in categorising the Specific Relief Act, 1963 as procedural and
holding that the 2018 amendment is also a procedural provision which
requires to be given retrospective effect. The High Court places reliance
on an old case of Radheshyam Kamila v. Kiran Bala Dasi3, wherein
the High Court, while relying upon the commentary of Pollock & Mulla
on Indian Contract Act and Specific Relief Act (4th edition) specifically
C observed that “specific relief, as a form of judicial process, belongs to
the law of procedure”. In this context, the Court came to a conclusion
that such procedural amendment ought to be given retrospective effect.
45. We do not subscribe to the aforesaid reasoning provided by
the High Court for the simple reason that after the 2018 amendment,
D specific performance, which stood as a discretionary remedy, is not
codified as an enforceable right which is not dependent anymore on
equitable principles expounded by judges, rather it is founded on
satisfaction of the requisite ingredients as provided under the Specific
Relief Act. For determination of whether a substituted law is procedural
E or substantive, reference to the nature of the parent enactment may not
be material. Instead, it is the nature of the amendments which determine
whether they are in the realm of procedural or substantive law.
46. The High Court’s reliance on Adhunik Steels Limited v. Orissa
Manganese and Minerals (P) ltd.4, was also misplaced. In that case,
F the Court was concerned with the interpretation of Section 9 of the
Arbitration Act, that deals with granting of injunctions. The specific
question before the Court was whether the provisions of the CPC or the
provisions of the Specific Relief Act have a bearing on Section 9 of the
Arbitration and Conciliation Act, 1996.
G 47. While discussing the nature of the Specific Relief Act, in the
aforesaid case, this Court had observed as under:-
“16. Injunction is a form of specific relief. It is an order of a
court requiring a party either to do a specific act or acts or to
3
AIR 1971 Cal 341
4
H (2007) 7 SCC 125
SMT. KATTA SUJATHA REDDY v. SIDDAMSETTY 437
INFRA PROJECTS PVT. LTD. [KRISHNA MURARI, J.]
refrain from doing a specific act or acts either for a limited A
period or without limit of time. In relation to a breach of
contract, the proper remedy against a defendant who acts in
breach of his obligations under a contract, is either damages
or specific relief. The two principal varieties of specific relief
are, decree of specific performance and the injunction (See
B
David Bean on Injunctions). The Specific Relief Act, 1963
was intended to be “an Act to define and amend the law
relating to certain kinds of specific reliefs”. Specific relief is
relief in specie. It is a remedy which aims at the exact fulfilment
of an obligation. According to Dr. Banerjee in his Tagore
Law Lectures on Specific Relief, the remedy for the C
non-performance of a duty are (1) compensatory, (2) specific.
In the former, the court awards damages for breach of the
obligation. In the latter, it directs the party in default to do or
forbear from doing the very thing, which he is bound to do or
forbear from doing. The law of specific relief is said to be, in
D
its essence, a part of the law of procedure, for, specific relief
is a form of judicial redress. Thus, the Specific Relief Act,
1963 purports to define and amend the law relating to certain
kinds of specific reliefs obtainable in civil courts. It does not
deal with the remedies connected with compensatory reliefs
except as incidental and to a limited extent. The right to relief E
of injunctions is contained in Part III of the Specific Relief
Act. Section 36 provides that preventive relief may be granted
at the discretion of the court by injunction, temporary or
perpetual. Section 38 indicates when perpetual injunctions
are granted and Section 39 indicates when mandatory
F
injunctions are granted. Section 40 provides that damages
may be awarded either in lieu of or in addition to injunctions.
Section 41 provides for contingencies when an injunction
cannot be granted. Section 42 enables, notwithstanding
anything contained in Section 41, particularly Clause (e)
providing that no injunction can be granted to prevent the G
breach of a contract the performance of which would not be
specifically enforced, the granting of an injunction to perform
a negative covenant. Thus, the power to grant injunctions by
way of specific relief is covered by the Specific Relief Act,
1963.”
H
438 SUPREME COURT REPORTS [2022] 17 S.C.R.
A However, the conclusion in the above paragraph, taken in isolation,
would not support the final outcome in the aforesaid case, wherein it
was held that an injunction order granted under Section 9 of the
Arbitration and Conciliation Act would involve consideration of settled
principles under the Code of Civil Procedure or the Specific Relief Act.
It was nowhere stated in the aforesaid case that the Specific Relief Act
B
of 1963 stricto sensu provided for only procedural mechanism. We
find it difficult to read the aforesaid case in the manner alluded to by
the High Court.
48. In any case, the amendment carried out in 2018 was enacted
to further bolster adherence to the sanctity of contracts. This approach
C was radical and created new rights and obligations which did not exist
prior to such an amendment. Section 10, after amendment, reads as
under:
10. Specific performance in respect of contracts.—The specific
performance of a contract shall be enforced by the court
D subject to the provisions contained in sub-section (2) of
section 11, section 14 and section 16.
49. This provision, which remained in the realm of the Courts’
discretion, was converted into a mandatory provision, prescribing a power
the Courts had to exercise when the ingredients were fulfilled. This was
E a significant step in the growth of commercial law as the sanctity of
contracts was reinforced with parties having to comply with contracts
and thereby reducing efficient breaches.
50. Under the pre-amended Specific Relief Act, one of the major
considerations for grant of specific performance was the adequacy of
F damages under Section 14(1)(a). However, this consideration has now
been completely done away with, in order to provide better compensation
to the aggrieved party in the form of specific performance.
51. Having come to the conclusion that the 2018 amendment was
not a mere procedural enactment, rather it had substantive principles
G built into its working, this Court cannot hold that such amendments would
apply retrospectively.
52. In Shyam Sunder and others V. Ram Kumar and Another5,
this Court held as under:
5
H (2001) 8 SCC 24
SMT. KATTA SUJATHA REDDY v. SIDDAMSETTY 439
INFRA PROJECTS PVT. LTD. [KRISHNA MURARI, J.]
“28. From the aforesaid decisions the legal position that A
emerges is that when a repeal of an enactment is followed by
a fresh legislation, such legislation does not affect the
substantive rights of the parties on the date of the suit or
adjudication of the suit unless such a legislation is
retrospective and a court of appeal cannot take into
B
consideration a new law brought into existence after the
judgment appealed from has been rendered because the rights
of the parties in an appeal are determined under the law in
force on the date of the suit. However, the position in law
would be different in the matters which relate to procedural
law but so far as substantive rights of parties are concerned, C
they remain unaffected by the amendment in the enactment.
We are, therefore, of the view that where a repeal of provisions
of an enactment is followed by fresh legislation by an
amending Act, such legislation is prospective in operation and
does not affect substantive or vested rights of the parties unless
D
made retrospective either expressly or by necessary
intendment. We are further of the view that there is a
presumption against the retrospective operation of a statute
and further a statute is not to be construed to have a greater
retrospective operation than its language renders necessary,
but an amending Act which affects the procedure is presumed E
to be retrospective, unless the amending Act provides otherwise.
We have carefully looked into the new substituted Section 15
brought in the parent Act by the Amendment Act, 1995 but do
not find it either expressly or by necessary implication
retrospective in operation which may affect the rights of the
F
parties on the date of adjudication of the suit and the same is
required to be taken into consideration by the appellate court.
In Shanti Devi v. Hukum Chand [(1996) 5 SCC 768] this Court
had occasion to interpret the substituted Section 15 with which
we are concerned and held that on a plain reading of Section
15, it is clear that it has been introduced prospectively and G
there is no question of such section affecting in any manner
the judgment and decree passed in the suit for pre-emption
affirmed by the High Court in the second appeal. We are
respectfully in agreement with the view expressed in the said
decision and hold that the substituted Section 15 in the
H
440 SUPREME COURT REPORTS [2022] 17 S.C.R.
A absence of anything in it to show that it is retrospective, does
not affect the right of the parties which accrued to them on
the date of the suit or on the date of passing of the decree by
the court of first instance. We are also of the view that the
present appeals are unaffected by change in law insofar it
related to determination of the substantive rights of the parties
B
and the same are required to be decided in the light of the law
of pre-emption as it existed on the date of passing of the
decree.”
53. From the aforesaid decision, it is clear that when a substantive
law is brought about by amendment, there is no assumption that the
C same ought to be given retrospective effect. Rather, there is a requirement
for the legislature to expressly clarify whether the aforesaid amendments
ought to be retrospective or not.
54. In the light of the aforesaid discussion, it is clear that ordinarily,
the effect of amendment by substitution would be that the earlier
D provisions would be repealed, and amended provisions would be enacted
in place of the earlier provisions from the date of inception of that
enactment. However, if the substituted provisions contain any substantive
provisions which create new rights, obligations, or take away any vested
rights, then such substitution cannot automatically be assumed to have
E come into force retrospectively. In such cases, the legislature has to
expressly provide as to whether such substitution is to be construed
retrospectively or not.
55. In the case at hand, the amendment act contemplates that the
said substituted provisions would come into force on such date as the
F Central Government may appoint, by notification in the Official Gazette,
or different dates may be appointed for different provisions of the Act. It
may be noted that 01.10.2018 was the appointed date on which the
amended provisions would come into effect.
56. In view of the above discussion, we do not have any hesitation
G in holding that the 2018 amendment to the Specific Relief Act is
prospective and cannot apply to those transactions that took place prior
to its coming into force.
ISSUE C
57. From the above, it is clear that the 2018 Amendment Act is
H prospective and cannot be applied to the present set of facts. Under the
SMT. KATTA SUJATHA REDDY v. SIDDAMSETTY 441
INFRA PROJECTS PVT. LTD. [KRISHNA MURARI, J.]
earlier law, grant of specific performance was discretionary. However, it A
was mandated that such discretion ought to be used in a principled
manner without leaving scope for any arbitrary application. In
Saradamani Kandappan v. S. Rajalakshmi and other 6, this court
held a under:-
42. Therefore there is an urgent need to revisit the principle B
that time is not of the essence in contracts relating to immovable
properties and also explain the current position of law with
regard to contracts relating to immovable property made after
1975, in view of the changed circumstances arising from
inflation and steep increase in prices. We do not propose to
undertake that exercise in this case, nor referring the matter C
to a larger Bench as we have held on facts in this case that
time is the essence of the contract, even with reference to the
principles in Chand Rani [(1993) 1 SCC 519] and other cases.
Be that as it may.
43. Till the issue is considered in an appropriate case, we can D
only reiterate what has been suggested in K.S. Vidyanadam
[(1997) 3 SCC 1]:
(i) The courts, while exercising discretion in suits for specific
performance, should bear in mind that when the parties
prescribe a time/period, for taking certain steps or for E
completion of the transaction, that must have some
significance and therefore time/period prescribed cannot be
ignored.
(ii) The courts will apply greater scrutiny and strictness when
considering whether the purchaser was “ready and willing” F
to perform his part of the contract.
(iii) Every suit for specific performance need not be decreed
merely because it is filed within the period of limitation by
ignoring the time-limits stipulated in the agreement. The courts
will also “frown” upon suits which are not filed immediately G
after the breach/refusal. The fact that limitation is three years
does not mean that a purchaser can wait for 1 or 2 years to
file a suit and obtain specific performance. The three-year
6
(2011) 12 SCC 18 H
442 SUPREME COURT REPORTS [2022] 17 S.C.R.
A period is intended to assist the purchasers in special cases,
as for example, where the major part of the consideration
has been paid to the vendor and possession has been delivered
in part-performance, where equity shifts in favour of the
purchaser.”
B 58. From the aforesaid, it is clear that the purchaser ought to have
been vigilant in the case at hand to enforce his right and could not have
been lackadaisical in his approach. From the facts, it is clear that the
purchaser had entered into an agreement way back on 26/27.03.1997,
which had a clause mandating completion of the contract by payment of
the remaining consideration within three months. The aforesaid clause
C was drafted, as alluded to earlier, for providing one last opportunity for
the purchaser to make good their lapse which had happened on the
earlier occasion. In this context, the time for performance of the contract
including the payment lasted till the month of June 1997.
59. It was necessary that the purchaser should have taken
D immediate steps to complete the transaction and if such steps were
immediately completed then the purchaser would have a clear right for
seeking enforcement for 3 years reckoned from the last date decided
for completion of the contract.
60. The notice dated 08.02.2000, issued on behalf of the purchaser
E implicitly acknowledges the fact that time was considered as the essence
even by the purchaser themselves and due to breach of the same, they
sought novation of the agreement to sell in the following manner:
“However the due efforts by my client’s proved little light hope
when you have strongly urged my clients to come up with the
F balance of sale consideration in view of the fact that other
interested parties are not available at that moment and you
asked my clients to renew their efforts by end of Jan’ 2000
and thereafter you have promised to complete the transaction
by executing the sale deed in favour of my client.”
G (emphasis supplied)
61. Aforesaid notice, at best reflects an intention by the vendor to
renegotiate the terms, which was not accepted in toto by the vendor.
62. The next aspect which this Court needs to consider is whether
the parties had requisite willingness and readiness to perform the contract.
H
SMT. KATTA SUJATHA REDDY v. SIDDAMSETTY 443
INFRA PROJECTS PVT. LTD. [KRISHNA MURARI, J.]
The aforesaid requirement is one of the essential ingredients under Section A
16 of the Specific Relief Act, 1963 which reads as under:
16. Personal Bars to relief.- Specific Performance of a contract
cannot be enforced in favour of a person-
…
B
(c) who fails to aver and prove that he has performed or always
been ready and willing to perform the essential terms of the
contract which are to be performed by him, other than terms
the performance of which has been prevented or waived by
the defendant.
63. It is clear that in order to prove readiness and willingness, the C
burden is on the purchaser to prove that they were always ready and it
is only the vendor who refused to perform the contract for extraneous
considerations. In order to support their averments, the purchaser (Sunil
Siddam Setty) entered into the witness box and deposed as PW1.
64. In his cross examination, PW1 deposed as below: D
“We have paid a sum Rs. 10,850/- towards advance of sale
consideration on 27.03.1997, when one of the agreement of
sale was executed. It is true one cheque which was issued by
us for a sum of Rs. 5,00,000/- was bounced. When the said
fact was brought to our notice, we issued a demand draft for E
the sum of Rs. 5,00,000/- within 10 of [sic.] 15 days and
obtained a separate receipt for that amount from Deft. No. 6
by name Katta Sujatha Reddy. It is mentioned in the agreement
for sale dt. 26.03.1997 the transaction has to be completed
within three months. Witness volunteers and says; the three
F
month time was stipulated with some conditions.
It is mentioned in another agreement of sale dated 27.03.1997
that the sale transaction has to be completed within three
months with some conditions.
… G
Q. How many times you met the Defendant and demanded
for execution in the year 1997?
Ans.- … We did not issue any notice to the defendants in the
year 1997 by demanding them to receive the balance of sale
consideration and execute sale deed in our favour. H
444 SUPREME COURT REPORTS [2022] 17 S.C.R.
A It is not true to suggest that I was not ready and willing to
perform my part of contract and that I never had balance of
sale consideration and that I did not demand the defendants
within stipulated period to receive the balance of sale
consideration and to execute the sale deed and that due to
it, I am not entitled to get the relief of specific performance of
B
agreement of sale as prayed in my suit. …
I did not get issued any written notice to D5 prior to
06.07.2002. Witness volunteers and says: that the entire
transaction had taken place in good faith and they never
anticipated court proceedings at that time.
C
(emphasis supplied)
65. From the above it is clear that the purchaser did not voluntarily
adhere to the time stipulation under the contract. In order to by-pass the
condition of time being the essence, the purchaser invoked the standard
D of good faith. Aforesaid standard prescribes a higher duty of care for
parties entering into a contract. Unless such duty is expressly stipulated,
good faith standard cannot be implicitly read into any contract.
66. This Court does not subscribe to acceptance of a general
standard of good faith to imply broader good faith obligations only to
E give a go-by to the explicit conditions for maintaining the sanctity of
contract. Such broad standards will have potentially far reaching
consequences. This Court agrees that such an implicit reading would
come into play post the 2018 Amendment to the Specific Relief Act
which enables specific performance of contracts to uphold their sanctity.
However, from the facts and circumstances of this case, we cannot
F accept that such higher standards of good faith was relevant.
67. On the aspect of the vendor’s obligation to provide requisite
and necessary documents, DW1 (Smt. Katta Sujatha Reddy), has averred
that all the documents were available. It is only after the purchaser was
satisfied about the sound title that he entered into the agreement to sell.
G
68. In the light of the above, it is clear that Section 16(c) of the
Specific Relief Act would only come into force if the purchaser was
ready and willing to perform the contract within the three month period
prescribed under Clause 3 of the agreements. The aforesaid conclusion
H
SMT. KATTA SUJATHA REDDY v. SIDDAMSETTY 445
INFRA PROJECTS PVT. LTD. [KRISHNA MURARI, J.]
is also bolstered by the fact that specific performance can only be granted A
when essential terms of contract are not violated in terms of Section
16(b).
69. From the above, we can safely conclude that the purchaser
was not ready or willing to perform his part of the contract within the
time stipulated and accordingly, specific performance cannot be granted B
for the entire contract.
70. The last aspect which we need to consider in this matter is
whether possession was with the purchaser after entering into
agreements to sell in 1997. On this aspect, the High Court has decided in
favour of the purchaser by relying upon the evidence of PW1 and the C
proceedings before the Revenue Authorities. However, we are of the
opinion that the High Court has not duly considered the statement of
PW1 in its proper perspective. PW1 during the course of
cross-examination, has not specifically pointed out as to when was the
purchaser put into possession of the property. PW1 has not further proved
that there was any development cost incurred by him for developing the D
aforesaid land.
71. The claim of PW2 that the disputed land was developed by
the purchaser, is clearly unacceptable in the light of exhibits A22 to A26
which are the photographs of the property that show that no development
had taken place, as averred by the purchaser. Reliance on the revenue E
records concerning mutation may not be of any significance when the
question of possession is to be decided solely on the facts as available on
the records.
72. In this context, we do not propose to burden this judgment
with a detailed discussion of the testimonies of DW2 and DW3 which F
clearly go to show that the purchaser was never in possession of the
aforesaid land.
73. If the agreement of sale is coupled with possession, it requires
stamp duty and stamp duty has to be paid as per Schedule 1A of Article
47A of the Stamp Act. Further, asking for the relief of recovery of G
possession also shows that the plaintiff was not in possession of the
property. The trial Court has rightly answered this point against the plaintiff
and the Appellate Court, on an erroneous appreciation of the facts and
law, reversed the said findings.
H
446 SUPREME COURT REPORTS [2022] 17 S.C.R.
A ISSUE D-
74. The last aspect which has been argued before us concerns
application of Section 12 of the Specific Relief Act, 1963. This issue
arises from the fact that the purchaser is said to have paid 90 percent of
the sale consideration and in lieu thereof, the High Court has held that
B the purchaser is entitled to ninety percent of the scheduled land.
75. Although this argument appears to be attractive in the first
gloss, however a deeper examination of the same would paint a contrary
picture. Section 12 of the Specific Relief Act, 1963 reads as under:
12. Specific performance of part of contract.—
C
(1) Except as otherwise hereinafter provided in this section,
the court shall not direct the specific performance of a part of
a contract.
(2) Where a party to a contract is unable to perform the whole
D of his part of it, but the part which must be left unperformed
by only a small proportion to the whole in value and admits
of compensation in money, the court may, at the suit of either
party, direct the specific performance of so much of the
contract as can be performed, and award compensation in
money for the deficiency.
E
(3) 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
either—
(a) forms a considerable part of the whole, though admitting
of compensation in money; or
F
(b) 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 other party, direct the party in default to
perform specifically so much of his part of the contract as he
can perform, if the other party—
G
(i) in a case falling under clause (a), pays or has paid the
agreed consideration for the whole of the contract reduced
by the consideration for the part which must be left
unperformed and a case falling under clause (b), 1[pays or
had paid] the consideration for the whole of the contract
H without any abatement; and
SMT. KATTA SUJATHA REDDY v. SIDDAMSETTY 447
INFRA PROJECTS PVT. LTD. [KRISHNA MURARI, J.]
(ii) in either case, relinquishes all claims to the performance A
of the remaining part of the contract and all right to
compensation, either for the deficiency or for the loss or
damage sustained by him through the default of the defendant.
(4) When a part of a contract which, taken by itself, can and
ought to be specifically performed, stands on a separate and B
independent footing from another part of the same contract
which cannot or ought not to be specifically performed, the
court may direct specific performance of the former part.
Explanation.—For the purposes of this section, a party to a
contract shall be deemed to be unable to perform the whole C
of his part of it if a portion of its subject matter existing at
the date of the contract has ceased to exist at the time of its
performance.
76. The aforesaid provision has been interpreted by this Court on
several occasions. In the case of Jaswinder Kaur v. Gurmeet Singh7, D
this Court held as under:-
“20. Section 12(1) provides that specific performance can be
granted on part of a contract only in the circumstances
mentioned in the section. Section 12(2) deals with breach the
contract if a party is unable to perform the whole of its part E
and such part bears a small proportion to the whole in value
and admits compensation in money. The expression “unable
to perform” in Section 12(2) for instance would mean that a
part of the property destroyed after contract or act of God or
an act by which it would cease to exist. In such a case party
to a contract shall be deemed to be unable to perform the F
whole or its part of the contract. Such a person would come
within the words “party in default”. The inability to perform
may arise by deficiency in quantity of subject-matter or
deficiencies or some legal prohibition or such other causes.
None of such causes is present in the instant case. G
21. Section 12 of the Act does not apply where the inability to
perform specific performance on part of contract arises because
of the plaintiff’s own conduct as held in Abdul Rahim v.
Maidhar Gazi [Abdul Rahim v. Maidhar Gazi, 1928 SCC
7
(2017) 12 SCC 810 H
448 SUPREME COURT REPORTS [2022] 17 S.C.R.
A OnLine Cal 20 : AIR 1928 Cal 584] . In Graham v. Krishna
Chunder Dey [Graham v. Krishna Chunder Dey, 1924 SCC
OnLine PC 63 : (1924-25) 52 IA 90 : AIR 1925 PC 45] it
has been laid down that the Explanation in the section exhaust
all the circumstances in which part-performance can be
granted. Section 12(2) deals with the situation where a party
B
is unable to perform and such part is only a small proportion
in value and capable of compensation in form of money. It
was not a case covered in Section 12(2) at all. Under Section
12(3) party in default is entitled to specific performance on
payment of whole consideration or for the part left unperformed
C but here in the instant case the plaintiff being in default could
not be said to be entitled to invoke Section 12(3) also.”
77. From the above, it is clear that there was no inability on part
of the parties to perform the rest of the contract or the remaining part
was waived. In this case, the purchaser breached the essential condition
D of the contract, which altogether disentitles him to claim specific
performance. There is no doubt that the claim of purchaser is hit by
delay and laches on their part as they did not take appropriate measures
within the stipulated time and filing of the suit was delayed by almost
five years. In this context, in Rachakonda Narayana v. Ponthala
Parvathamma8, this Court held as under:
E
“8. A perusal of sub-section (3) of Section 12 shows that the
first part of the said provisions mandates refusal of specific
performance of a contract on certain conditions. However,
the latter part of the provisions permits a court to direct the
party in default to perform specifically so much of his part of
F the contract as he can perform if the other party pays or has
paid the agreed consideration for the whole of the contract
and relinquishes all claims to the performance of the remaining
part of the contract and all the rights to compensation for the
loss sustained by him. If a suit is laid by the other party, the
G court may direct the defaulting party to perform that part of
the contract which is performable on satisfying two
preconditions i.e. (i) the plaintiff pays or has already paid
the whole of the consideration amount under the agreement,
8
H (2001) 8 SCC 173
SMT. KATTA SUJATHA REDDY v. SIDDAMSETTY 449
INFRA PROJECTS PVT. LTD. [KRISHNA MURARI, J.]
and that (ii) the plaintiff relinquishes all claims to the A
performance of the other part of the contract which the
defaulting party is incapable to perform and all rights to
compensation for loss sustained by him. Thus, the ingredients
which would attract specific performance of the part of the
contract, are: (i) if a party to an agreement is unable to perform
B
a part of the contract, he is to be treated as defaulting party
to that extent, and (ii) the other party to an agreement must,
in a suit for such specific performance, either pay or has
paid the whole of the agreed amount, for that part of the
contract which is capable of being performed by the
defaulting party and also relinquish his claim in respect of C
the other part of the contract which the defaulting party is
not capable to perform and relinquishes the claim of
compensation in respect of loss sustained by him. If such
ingredients are satisfied, the discretionary relief of specific
performance is ordinarily granted unless there is delay or
D
laches or any other disability on the part of the other party.
(emphasis supplied)
78. Therefore, we do not think that it is an appropriate case for
granting relief to the purchaser in terms of Section 12 of the Specific
Relief Act, 1963 as the claim of the purchaser is barred by delay, laches E
and limitation.
79. We are of the firm opinion that the contract was breached due
to the conduct of the plaintiff/purchaser, who were not willing to perform
the contract after entering into a time sensitive agreement. In any case,
it is an admitted fact that plaintiff had paid only part consideration. Though F
there is a forfeiture clause in the agreement, this Court with a view of
rendering complete justice between the parties, deems it appropriate to
direct the vendors/appellants to repay the said amount with interest @
7.5% p.a. from the date such payment was made by the purchaser to
the vendors, till the entire amount is paid back. We further direct the
vendors to pay the entire amount to the credit of the suit account within G
six months from the date of receipt of a copy of the order.
80. The appeal is allowed on the above terms and the parties are
left to bear their own costs.
H
450 SUPREME COURT REPORTS [2022] 17 S.C.R.
A C.A. NO.5823/2022 (ARISING OUT OF SLP (C) NO.
19920/2021) AND C.A. NO. 5824/2022 (ARISING OUT OF
SLP(C) NO.19286/2021)
81. In light of the above judgment, the present appeals are disposed
of accordingly.
B
Ankit Gyan and Anurag Bhaskar Appeals disposed of.
(Assisted by : Ajay, LCRA)
C
D
E
F
G
H
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