Prafulla C. Pant, J.— This appeal is directed against the judgment and order dated 22-1-2014, passed by the High Court of Punjab and Haryana in Ramesh Chand v. Asruddin 2014 SCC OnLine P&H 1445 whereby the said Court has dismissed the appeal, and affirmed the decree passed by the first appellate court regarding specific performance of contract, in a suit filed by the plaintiff/Respondent 1.
2. We have heard the learned counsel for the parties and perused the papers on record.
3. Brief facts of the case are that the plaintiff/Respondent 1 Asaruddin entered into an agreement with Defendant 1.appellant Ramesh Chand on 21-6-2004, whereby the appellant agreed to sell his land measuring 12 kanal 16 marlas, situated in Village Mohammed Nagar, Tehsil Ferozpur Jhirka, District Gurgaon, to Respondent 1 for an amount of rupees six lakhs. An agreement for sale was executed between the parties after the appellant accepted rupees four lakhs as a part of consideration. It was further agreed between the parties that the land in suit, mortgaged with Defendant 2.Respondent 2 Gurgaon Gramin Bank, Nagina, would be redeemed by the appellant before execution of the sale deed. It is pleaded by the plaintiff/Respondent 1 that he was and is always ready and willing to perform his part of contract. The plaintiff/Respondent 1 gave notice to the appellant to execute the sale deed on 30-11-2004, and remained present with the balance amount of consideration in the Office of Sub-Registrar, Nagina, and got his presence marked. But the appellant failed to turn up to execute the sale deed, as agreed between him and Respondent 1. Hence the suit for specific performance of contract.
4. The appellant-Defendant 1 contested the suit and filed the written statement before the trial court. He denied the execution of the agreement dated 21-6-2004 to sell his land. It is pleaded by the appellant before the trial court that he had already executed agreement dated 7-5-2004 to sell the land in favour of one Pravin Kumar, resident of Tauru, for an amount of Rs 7,62,200 after receiving Rs 1,20,000 as earnest money. In the circumstances, there was no occasion to enter into an agreement with Respondent 1 to sell the same land. It is further pleaded that since the answering defendant was in the need of money, he had taken loan of Rs 1,50,000 from the plaintiff on 21-6-2004, on interest @ 1.5% per month. The appellant specifically denied having received rupees four lakhs, as alleged by the plaintiff. It is further pleaded that when Respondent 1 made demand for repayment of Rs 1,50,000 with interest, and created pressure, the answering defendant asked Pravin Kumar to make payment of Rs 1,80,000 to the plaintiff. It is further alleged that after the said payment was made to the plaintiff on 10-11-2005 by Pravin Kumar, the alleged agreement dated 21-6-2004, which was a kind of security, stood cancelled. And Respondent 1 should have returned the document to the plaintiff.
5. On the basis of the pleadings of the parties, the Civil Judge (Junior Division), Ferozpur Jhirka, framed as many as ten issues on 6-9-2005. After recording oral testimony of the witnesses of the parties, and considering the documentary evidence on record, the trial court came to the conclusion that it is not a fit case for specific performance of contract, and disposed of the suit with a finding that the agreement executed between the plaintiff and Defendant 1 was in substance an agreement of security for repayment of loan and directed Defendant 1 to pay back earnest money of rupees four lakhs with 8% interest per annum from 21-6-2004 till payment is made to the plaintiff.
6. Aggrieved by the decree passed by the trial court, the plaintiff filed Civil Appeal No. 51 of 2010 before the first appellate court. After hearing the parties, the appellate court (Additional District Judge, Nuh) vide judgment and order dated 14-2-2011, allowed the appeal, and decreed the suit for specific performance of contract, directing Defendant 1 to execute the sale deed in terms of the agreement dated 21-6-2004, after accepting balance rupees two lakhs from the plaintiff. This made Defendant 1 Ramesh Chand to file Regular Second Appeal No. 1344 of 2011 before the High Court. During the second appeal, Defendant 1 appears to have died, and his legal heirs prosecuted the appeal. After hearing the parties, the High Court dismissed the appeal upholding the order passed by the first appellate court. Hence this appeal before us through special leave. During this appeal the plaintiff/Respondent 1 also expired, and his legal heirs got substituted.
7. The learned counsel for the appellant argued before us that the first appellate court and the High Court have erred in law in not considering the fact that the appellant had already executed an agreement of sale on 7-5-2004 in favour of one Pravin Kumar, and the decree of specific performance of contract in the subsequent agreement, if any, in favour of Respondent 1 was not at all desirable. On the other hand, on behalf of Respondent 1 it is contended that he cannot be denied the fruits of decree of specific performance after the findings recorded by the first appellate court which stood affirmed by the High Court.
8. Section 20 of the Specific Relief Act, 1963, provides that the jurisdiction to decree specific performance is discretionary, and the court is not bound to grant such relief merely because it is lawful to do so. However, the discretion of the court is not arbitrary but sound and reasonable, guided by judicial principles. Sub-section (2) of Section 20 of the Act provides the three situations in which the court may exercise discretion not to decree specific performance. One such situation is contained in clause (a) of sub-section (2) of Section 20 which provides that where the terms of the contract or the conduct of the parties at the time of entering into the contract or the other circumstances under which the contract was entered into are such that the contract, though not voidable, gives the plaintiff an unfair advantage over the defendant, the decree of specific performance need not be passed. It is pertinent to mention here that in the present case, though execution of the agreement dated 21-6-2004 between the parties is proved, but it is nowhere pleaded or proved by the plaintiff that he got redeemed the mortgaged land in favour of Defendant 2 in terms of the agreement, nor is it specifically pleaded that he was ready and willing to get the property redeemed from the mortgage.
9. In the above facts and circumstances of the case and the judicial principle discussed above, we are of the opinion that it is a fit case where instead of granting decree of specific performance, the plaintiff can be compensated by directing the appellant to pay a reasonable and sufficient amount to him. We are of the view that mere refund of rupees four lakhs with interest @ of 8% per annum, as directed by the trial court, would be highly insufficient. In our considered opinion, it would be just and appropriate to direct the appellants (legal representatives of original Defendant 1, since dead) to repay rupees four lakhs along with interest at the rate of 18% per annum from 21-6-2004 till date within a period of three months from today to the LRs of Respondent 1 (mentioned in IA No. … of 2015 dated 7-9-2015). If they do so, the decree of specific performance shall stand set aside. We clarify that if the amount is not paid or deposited before the trial court in favour of the LRs of Respondent 1 within a period of three months, as directed above, the decree of specific performance shall stand affirmed. We order accordingly.
10. The appeal stands disposed of. Pending IA(s) also stand disposed of. No order as to costs.