The Hon'ble Supreme Court, in the recent case of P. Ramasubbamma v. V. Vijayalakshmi and Ors.,1 has held that once the execution of an agreement to sell and the advance payment of substantial sale consideration is admitted by the owner of the suit property (vendor), there is nothing further required to be proved by the vendee in a suit for specific performance of an agreement to sell.
P.Ramasubbamma (Appellant), the original plaintiff, filed a suit for specific performance of an agreement to sell dated 12.04.2005. The Appellant had entered into the agreement to sell with V. Vijayalakshmi (First Respondent), who was the first defendant in the suit to purchase the suit schedule property for a sale consideration of INR 29 Lacs, under which an advance amount of INR 20 Lacs was also paid. The First Respondent had earlier executed a general power of attorney in favour of the second defendant in the suit (Second Respondent). On 25.03.2008, the Appellant made further payment of INR 6 lakhs towards sale consideration and an endorsement was made by the First Respondent on the agreement, acknowledging the receipt of INR 6 lakhs. According to the Appellant, despite repeated requests and demands, the First Respondent did not execute the sale deed in favour of the Appellant. Not only this, but the Second Respondent allegedly also misused the power of attorney executed, and clandestinely executed two sale deeds in favour of other respondents, to the instant case, only to defraud the Appellant. Considering this, the Appellant served a legal notice to the respondents, calling them to execute the sale deed in her favour by receiving balance sale consideration of INR 3 lakhs. Even after this, when the respondent didn't execute the sale deed, the Appellant filed a suit for specific performance of the agreement to sell.
While the First Respondent filed a written statement admitting the execution of agreement to sell and specifying her willingness to perform her part of contract, the other respondents took a common defence that agreement to sell is a 'created document' and contended that power of attorney executed by the First Respondent in favour of other respondents is a registered document. Thus, without cancelling the registered power of attorney and without the knowledge of other respondents, First Respondent (in collusion with the Appellant) had created the agreement to sell. Therefore, while arguing that the agreement to sell is a bogus document, the other respondents contended that no sale consideration is paid by the Appellant. While finding that the First Respondent was the absolute owner of the suit schedule property and had admitted to the execution of agreement to sell as well as the receipt of a substantial amount as part of the sale consideration, the Ld. Trial Court decreed the suit and passed a decree of specific performance. The Ld. Trial Court also held that the sale deed executed by other respondents are not binding on the First Respondent or the Appellant and therefore, making the Appellant entitled to the relief of specific performance of contract and to get the vacant possession of the suit schedule property. Aggrieved with this decree, the other respondents preferred an appeal before the High Court of Karnataka (High Court).
As the High Court allowed the said appeal, setting aside the decree passed by the Ld. Trial Court, it mainly relied upon Sections 20 and 34 of the Specific Relief Act, 1963 (Specific Relief Act). It was also observed by the High Court that since there was no prayer or a particular relief sought to declare that the sale deed in favour of other respondents was null and void, and not binding on the Appellant and the First Respondent, such a relief could not have been granted by the Ld. Trial Court. Feeling aggrieved by this judgment passed by the High Court, the Appellant preferred the present appeal before the Hon'ble Supreme Court.
Whether a party is entitled to the relief of specific performance when the execution of agreement is admitted and advance payment of substantial consideration is made?
Before the Hon'ble Supreme Court, the Appellant defended the decree passed by the Ld. Trial Court by contending that the original owner of the concerned property (First Respondent) had admitted the execution of the agreement and payment of substantial amount of consideration thereunder, and even the power of attorney executed by the First Respondent in favour of the Second Respondent was handed over to the Appellant at the time of execution of agreement to sell.
Relying on a catena of judgments, including Lala Durga Prasad and Ors. v. Lala Deep Chand and Ors., 1954 SCR 360 and Rathnavathi and Anr. v. Kavitha Ganashamdas, (2015) 5 SCC 223, the Appellant submitted that in a suit for specific performance, it was not necessary for the agreement holder to seek cancellation of sale deed executed in favour of a subsequent purchaser. The Appellant submitted that it was sufficient to implead the subsequent purchaser in the suit for specific relief against the original owner and seek a direction against such subsequent purchasers to join in the execution of the sale deed. Therefore, it was argued that the High Court had erred in setting aside the decree passed by the Ld. Trial Court in terms of Section 20 of the Specific Relief Act.
The Apex Court noted that the First Respondent, i.e., the original owner had admitted the execution of the agreement to sell and even admitted the advance receipt of substantial sale consideration. Further, the stamp papers of the agreement to sell dated 12.04.2005 were purchased in the name of the Second Respondent. Therefore, as such the Ld. Trial Court rightly decreed the suit for specific performance of agreement to sell. The Hon'ble Supreme Court opined that the High Court was not required to go into the aspect of the execution of the agreement to sell and payment of advance amounts once these aspects stood admitted and proved before the Ld. Trial Court.
In relation to the sale deeds executed by the Second Respondent in favour of other respondents, the Apex Court noted that specific issues regarding the same were framed before the Ld. Trial Court. In view of the matter, it was observed that the High Court had erred in setting aside the decree passed by the Ld. Trial Court on account of there being no specific relief/ prayer for cancellation of sale deeds executed by the Second Respondent in favour of other respondents. Therefore, the Hon'ble Supreme Court held that the High Court was not justified in quashing and setting aside the judgment and decree passed by the Ld. Trial Court.
The Apex Court noted that the High Court had relied heavily on Section 34 of the Specific Relief Act, 1963 (Specific Relief Act). However, it was observed that since specific issues were framed with respect to the sale deeds executed by Second Respondent in favour of other respondents and the parties had led evidence on the aforesaid issues which subsequently led to the rendering of the judgment and decree of the Ld. Trial Court, Section 34 of the Specific Relief Act would not have any application.
The Apex Court noted that since the Second Respondent was in the knowledge of the agreement to sell and despite the same, he sold the suit property in favour of other respondents, the Ld. Trial Court had rightly decreed the suit for specific performance and declared that sale deeds executed in favour of the other respondents as not binding upon the Appellant and the First Respondent. Thus, the Apex Court opined that the High Court committed an error in reversing the judgment and decree passed by the learned Trial Court by ignoring the vital facts of the case which are either admitted or proved in the instant case. Therefore, the Supreme Court allowed the present appeal, quashed the judgment passed by the High Court, and restored the decree passed by the Ld. Trial Court.
The judgement in the instant case is in line with the reasoning of the Hon'ble Supreme Court in another recent decision in Sughar Singh v. Hari Singh (Dead) Through LRs. & Ors.1. In Sughar Singh, the Apex Court had reiterated that specific performance under the Specific Relief Act after the 2018 amendment is no longer a discretionary relief. The Apex Court further observed that where the agreement's execution, part payment of consideration, and plaintiff's willingness are proven in cases dating prior to the 2018 amendment of the Specific Relief Act, the court should exercise its discretion in favour of the plaintiff to enforce specific performance of the agreement.
1 P. Ramasubbamma v. V. Vijayalakshmi and Ors., 2022 SCC OnLine SC 435.
Co-authored by Diya Dutta, a student of the Maharashtra National Law University, Mumbai.
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