Specific Performance of Contract Denied: Supreme Court Upholds Alternative Relief
The case of Ayillyath Yadunath Nambiar vs. P. Sreedharan revolved around a real estate dispute concerning the specific performance of a sale agreement. The Supreme Court was tasked with deciding whether the Kerala High Court was correct in denying the decree for specific performance and instead awarding monetary compensation with interest.
Background of the Case
The dispute arose when Ayillyath Yadunath Nambiar (plaintiff) entered into a sale agreement with P. Sreedharan (defendant) on January 20, 2005. The defendant, who owned the property, allegedly needed urgent cash to repay loans and thus agreed to sell the property. The total sale consideration was fixed at Rs. 64,60,600. However, before the execution of the sale deed, disputes arose between the parties, leading to litigation.
The plaintiff filed a suit for specific performance of the contract and sought an injunction to restrain the defendant from alienating the property. The trial court ruled in favor of the plaintiff, directing the defendant to execute the sale deed.
High Court Proceedings
The defendant challenged the trial court’s order before the Kerala High Court, which set aside the decree for specific performance. Instead, it awarded an alternative relief directing the defendant to refund Rs. 50 lakhs to the plaintiff with an interest of 12% per annum from January 20, 2005, until realization.
Appeal Before the Supreme Court
Both parties challenged the High Court’s ruling before the Supreme Court:
- The plaintiff sought restoration of the trial court’s decree, insisting on specific performance.
- The defendant sought complete dismissal of the suit, arguing that no agreement was ever executed.
Arguments Presented
Petitioner (Plaintiff) Arguments
- The plaintiff contended that the High Court erred in refusing specific performance despite finding that an agreement existed.
- He argued that he was always ready and willing to perform his part of the contract and had the necessary funds to complete the transaction.
- The defendant’s claim that he never received an advance payment was false, as the agreement clearly mentioned the amount paid.
Respondent (Defendant) Arguments
- The defendant denied executing the agreement and claimed that it was forged.
- He argued that even if an agreement existed, it was not intended to be acted upon and was merely a security arrangement for a loan.
- He contended that he had never received any money from the plaintiff, and the transaction was manipulated.
Supreme Court’s Analysis and Judgment
The Supreme Court examined the findings of the lower courts and noted the following key points:
Key Observations by the Supreme Court
- The Court upheld the High Court’s decision that the agreement was genuine and that an advance payment had been made.
- However, it agreed with the High Court that granting specific performance would not be equitable due to various suspicious circumstances.
- The Court pointed out that a significant portion of the payment was made in cash, which was unusual for high-value transactions.
- It noted that there was no clear evidence of possession being handed over to the plaintiff.
- The Court emphasized that the High Court had exercised its discretion in awarding alternative relief, which was a valid approach in specific performance cases.
Key Court Statement
“The High Court has advanced substantial justice between the parties by accepting the alternative relief claimed by the plaintiff of refund of the advance amount along with interest. The reasons given by the High Court were sufficient to arrive at a conclusion of not awarding the relief of specific performance.”
Final Judgment
- The Supreme Court dismissed both appeals, affirming the High Court’s decision.
- The defendant was directed to refund Rs. 50 lakhs to the plaintiff with 12% interest per annum from January 20, 2005.
- The Court ruled that specific performance was not warranted in this case.
Implications of the Judgment
This ruling has significant implications for real estate disputes:
- It clarifies that courts have the discretion to award alternative relief instead of specific performance.
- It emphasizes the importance of clear documentation and legal formalities in real estate transactions.
- It underscores that a plaintiff’s readiness and willingness must be established beyond mere verbal assertions.
Conclusion
The Supreme Court’s decision in this case reinforces the principle that specific performance is a discretionary relief and may not be granted if circumstances make it inequitable. By upholding the High Court’s ruling, the judgment ensures fairness while protecting property owners from undue hardship.
Petitioner Name: Ayillyath Yadunath Nambiar.Respondent Name: P. Sreedharan.Judgment By: Justice Vikram Nath, Justice Hemant Gupta.Place Of Incident: Kerala.Judgment Date: 18-08-2022.
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