Supreme Court of India

SOHAN SINGHversusSARWAN SINGH AND ORS.

Citation: 1996 INSC 901
Decided: 19 August 1996
Disposal: Dismissed
Bench: K RAMASWAMYG B PATTANAIK

Holding

A bank draft is as good as cash for the purpose of satisfying the consideration, and refusal to accept it amounts to a breach of the contract, justifying specific performance.

Summary

The petitioner and respondent entered into a sale agreement for land on June 14, 1986, with a total price of Rs.85,000 per killa, Rs.6,000 paid as earnest money and the balance of Rs.64,000 to be paid in cash at registration by July 15, 1987. At registration, the respondent presented a bank draft for the balance, but the petitioner refused to accept it and failed to execute the sale deed. The respondent sued for specific performance, and the lower courts held that the bank draft was equivalent to cash and that the petitioner’s refusal amounted to a breach, granting specific performance. The petitioner appealed, contending that only cash, not a bank draft, could satisfy the payment condition. The Supreme Court rejected this contention, holding that a bank draft is a valid form of payment equivalent to cash, and the petitioner’s refusal was a breach justifying the decree. Consequently, the special leave petition was dismissed.

Issues considered

Whether payment of the balance consideration by bank draft at the time of registration satisfies the contractual requirement of cash payment.
Whether the vendor's refusal to accept a bank draft constitutes a breach of the sale agreement.
Whether the decree of specific performance was legally justified in view of the mode of payment.

Subjects

sale agreementspecific performancebank draftconsiderationbreach of contractpayment moderegistration

Judgment

A                               SOHAN SINGH
                                        v.
                         SARWAN SINGH AND ORS.

                               AUGUST 19, 1996

B              (K. RAMASWAMY AND G.B. PATTANAlK, JJ.]

          Agreement for sale-Payment ofpart money-Balance to be paid at the
    time of registration--Vendee paying balance amount by way of bank draft
    instead of cash-Vendor refusing to receive draft and failing to execute the
C   sale deed-Courts granting decree of specific peifonnance on the ground that
    vendor committed breach of contract-Appeal-Held Bank draft is as good a
    payment of the consideration as caslt-17ie courts below have not committed
    any manifest eJTOr of law to decree the suit for specific peifonnance.

D        CIVIL APPELLATE JURISDICTION: Special Leave Petition (C)
    No. 15210 of 1996.

         From the Judgment and Order dated 20.2.96 of the Punjab &
    Haryana High Court in R.S.A. No. 333 of 1996.

           Ujjagar 3ingh, Devendra Verma and Naresh Bakshi for the
E
    Petitioner.

          The following Order of the Court was delivered :

          This special leave petition has been filed against the judgment and
F order of the Punjab and Haryana High Court at Chandigarh made in
  Second Appeal No. 333/96. The admitted position is that the petitioner had
  entered into an agreement on June 14, 1986 for sale of land admeasuring
  6 Kanals 13 marlas for consideration of Rs. 85,000 per killa and received
  Rs. 6,000 as earnest money and balance amount was agreed to be paid on
  registration. The sale deed was to be executed by July 15, 1987. Since the
G petitioner failed to execute the sale deed, ·the respondent filed suit for
  specific performance. All the courts below have concurrently found, as a
  fact, that respondent had presented a bank draft for the balance considera-
  tion of Rs. 64,000 at the time of registration and that the petitioner refused
  to receive the same. Bank draft is as good a payment of the consideration
H as cash. The petitioner committed breach of the conditions in the perfor-
                                       754
                    SOHANSINGHv. SARWANSINGH                               755

mance of the contract. Accordingly, the decree for specific performance           A
was granted. It is contended for the petitioner that payment by way of bank
draft is not payment of the consideration by cash at the time of the
registration of sale deed by sub-Registrar. Therefore, the petitioner com-
mitted no breach of any part of the contract. On the other hand, the
respondent-plaintiff committed breach of contract in not paying cash con-
                                                                                  B
sideration at the time of registration in terms of the agreement. The courts
below have committed manifest error of law in decreeing the suit for
specific performance of the contract. We find no force in the contention.
The payment by way of bank draft is as good a payment as cash-in-hand.
Instead of bringing the cash, he had brought bank draft. Under these
circumstances, the demand for payment of cash by the petitioner would be          c
had from the bank who would honour the same on behalf of the respon-
dent. The petitioner rightly presented the bank draft at the time of negotia-
tion which is legal tender of cash payment to the vendor/petitioner. The
refusal for receiving bank draft at the time of registration of the petitioner,
therefore, is a breach of the covenant in terms of the agreement. The courts      D
below have not committed by manifest error of law to decree the suit for
specific performance warranting interference.

      The special leave petition is accordingly dismissed.

T.N.A.                                                     Petition dismissed.

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