Specific Performance in Property Disputes: Supreme Court Overturns High Court Order

The case of T.D. Vivek Kumar & Anr. vs. Ranbir Chaudhary revolved around a dispute over a property sale agreement and the extent to which courts can grant specific performance of a contract. The Supreme Court examined whether the High Court of Punjab and Haryana was justified in overturning the concurrent decisions of the trial and appellate courts, which had refused to grant specific performance but had instead awarded a refund of double the advance amount as per the contract.

In a detailed judgment, the Supreme Court ruled in favor of the original defendants, reinstating the trial court’s decision that specific performance should not be granted since the agreement explicitly provided for an alternative remedy of double the advance payment.

Background of the Case

The dispute arose from a sale agreement between T.D. Vivek Kumar (defendant) and Ranbir Chaudhary (plaintiff) for the sale of a plot valued at ₹17,61,700. The agreement stipulated that the sale deed would be executed by September 18, 2004. An advance payment of ₹2,00,000 was made by the plaintiff at the time of agreement.

The agreement also contained a clause stating that if the seller failed to execute the sale deed, he would be liable to return double the advance amount (i.e., ₹4,00,000) to the buyer.

Legal Proceedings

The plaintiff filed a suit for specific performance of the sale agreement, claiming that he was ready and willing to complete the transaction.
The defendants contested the claim, arguing that as per the contract, the plaintiff was entitled only to a refund of double the advance payment in case of non-execution of the sale deed.
The trial court ruled in favor of the defendants, denying specific performance but directing them to refund ₹4,00,000 to the plaintiff.
The first appellate court upheld the trial court’s decision.
The plaintiff then appealed to the High Court, which reversed the lower courts’ findings and granted specific performance.
The defendants challenged the High Court’s order before the Supreme Court.

Arguments Presented

Petitioners (Defendants) Arguments

The agreement explicitly provided that in case of non-performance by the seller, the buyer would be entitled to double the advance amount, not specific performance.
The trial court and first appellate court had correctly interpreted the contract and the law by refusing specific performance.
The High Court failed to frame a substantial question of law before deciding the second appeal, which was a procedural error.
The High Court overlooked a key provision of the sale agreement while granting relief beyond what was contractually agreed upon.
The Supreme Court’s precedent in P. D’souza vs. Shondrilo Naidu (2004) held that when a contract provides an alternative remedy, specific performance need not be granted.

Respondent (Plaintiff) Arguments

The plaintiff was always ready and willing to perform his part of the contract.
The defendants failed to execute the sale deed despite the plaintiff’s repeated attempts.
Both the trial and appellate courts acknowledged the plaintiff’s readiness and willingness, which justified the High Court’s intervention.
The clause specifying double refund of advance did not bar the remedy of specific performance.
The High Court’s decision aligned with the principle that contracts should be enforced as agreed by the parties.

Supreme Court’s Observations

The Supreme Court, led by Justices M.R. Shah and C.T. Ravikumar, made the following key observations:

Procedural Lapse by the High Court: The High Court erred by not framing a substantial question of law before deciding the second appeal, violating the procedural requirement under Section 100 of the Civil Procedure Code.
Interpretation of the Sale Agreement: Clause 2 of the agreement explicitly stated that if the seller failed to execute the sale deed, he would be responsible for paying double the advance amount. This indicated that the parties had agreed upon a clear alternative remedy, negating the need for specific performance.
Binding Nature of Contract Terms: The Court emphasized that parties are bound by the terms they agree upon, and courts should not rewrite contracts.
Precedent from P. D’souza Case: The Court cited its earlier ruling in P. D’souza vs. Shondrilo Naidu to support the principle that specific performance is discretionary and should not be granted if an alternative remedy is provided in the contract.

Final Judgment

The Supreme Court overturned the High Court’s decision and restored the judgments of the trial and appellate courts. The key conclusions were:

The High Court’s grant of specific performance was legally unsustainable.
The plaintiff was entitled only to a refund of ₹4,00,000, as specified in the contract.
The contract’s express terms should be upheld, ensuring predictability in commercial transactions.
The High Court’s procedural error in failing to frame a substantial question of law further invalidated its decision.

Implications of the Judgment

The Supreme Court’s ruling sets an important precedent for property disputes and contractual enforcement in India. The judgment reaffirms the principle that:

Courts should not rewrite contracts agreed upon by parties.
Specific performance is discretionary and not an automatic remedy.
Where a contract provides for an alternative remedy (such as monetary compensation), specific performance may not be granted.
High Courts must frame substantial questions of law before deciding second appeals.

Conclusion

The decision in T.D. Vivek Kumar & Anr. vs. Ranbir Chaudhary reinforces the importance of adhering to contract terms and the limited scope of judicial intervention in commercial agreements. The ruling safeguards the sanctity of contracts, ensuring that parties cannot seek additional remedies beyond what was contractually agreed upon.

For businesses and individuals involved in real estate transactions, this judgment highlights the significance of carefully drafting contracts and understanding the legal implications of alternative remedies. The Supreme Court’s verdict is a landmark ruling that upholds contractual certainty and judicial discipline in enforcing agreements.

Petitioner Name: T.D. Vivek Kumar & Anr..
Respondent Name: Ranbir Chaudhary.
Judgment By: Justice M.R. Shah, Justice C.T. Ravikumar.
Place Of Incident: Faridabad, Haryana.
Judgment Date: 28-04-2023.

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