Supreme Court Denies Specific Performance in Land Sale Dispute

The case of Surinder Kaur (Deceased) Through LRs vs. Bahadur Singh (Deceased) Through LRs revolved around a dispute regarding the specific performance of a land sale agreement. The Supreme Court, in its judgment on September 11, 2019, held that a vendee who fails to fulfill a key promise in the contract cannot claim discretionary relief under The Specific Relief Act, 1963.

Background of the Case

On May 13, 1964, an agreement was entered into between Mohinder Kaur (predecessor of the appellants) and Bahadur Singh (predecessor of the respondents) for the sale of agricultural land. The total sale consideration was agreed at Rs. 5605/-, out of which Rs. 1000/- was paid as earnest money. The balance was to be paid upon registration of the sale deed. The possession of the land was handed over to the vendee (Bahadur Singh) on the date of the agreement itself.

The agreement contained a crucial clause:

“If the High Court decision in the pending civil appeal is not rendered within one year, the vendee shall pay the customary rent for the land.”

As the litigation concerning the land continued, the final decision was rendered only on January 17, 1977. When Mohinder Kaur refused to execute the sale deed, Bahadur Singh filed a suit for specific performance.

Legal Issues and Arguments

Arguments by the Appellants:

• The contract explicitly required Bahadur Singh to pay rent if the litigation was not resolved within a year.
• Despite enjoying possession for over 13 years, he did not pay a single penny in rent.
• Failure to fulfill this key obligation made him ineligible for specific performance.
• The relief of specific performance under Section 20 of The Specific Relief Act is discretionary, and the vendee’s failure to pay rent should disqualify him.

Arguments by the Respondents:

• The non-payment of rent was a separate obligation and did not affect the enforceability of the sale agreement.
• The vendor could have filed a suit for rent recovery instead of refusing to execute the sale deed.
• Since possession was already transferred, the vendee was entitled to specific performance.

Supreme Court’s Observations

The Supreme Court analyzed whether the obligation to pay rent was a reciprocal promise or an independent term of the contract. The Court ruled:

“The possession of the land was given only on the understanding that rent would be paid. This was a reciprocal promise and an essential part of the contract.”

The Court also referred to Section 16(c) of The Specific Relief Act, which states that a person seeking specific performance must prove that he has performed or was always ready and willing to perform the essential terms of the contract.

In rejecting the respondent’s claim, the Court held:

“Bahadur Singh enjoyed possession of the land for 13 years without paying rent. Even in his legal pleadings, he did not offer to pay the rent. He cannot seek the equitable relief of specific performance while violating an essential term of the agreement.”

Key Rulings and Conclusion

The Supreme Court allowed the appeal and dismissed the suit for specific performance. It ruled that:

• Specific performance is a discretionary remedy, and a party who fails to honor key obligations cannot seek enforcement of the contract.
• The failure to pay rent for 13 years made it inequitable to grant specific performance.
• The alternative claim for a refund of the earnest money was also rejected since the respondents had enjoyed possession for 55 years without paying any rent.

The judgment reinforces the principle that equity plays a crucial role in granting specific performance and that a party must approach the court with clean hands.

Petitioner Name: Surinder Kaur (Deceased) Through LRs.
Respondent Name: Bahadur Singh (Deceased) Through LRs.
Judgment By: Justice Deepak Gupta, Justice Aniruddha Bose.
Place Of Incident: Punjab.
Judgment Date: 11-09-2019.

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