In Civil  Appeal No. 5822 of 2022-SC- Sec.10 of Specific Relief Act as substituted by 2018 amendment, is prospective and cannot be applied to those transactions that took place prior to its coming into force: SC
Justices N.V.Ramana, Krishna Murari & Hima Kohli [25-08-2022]

Read Judgment: Smt. Katta Sujatha Reddy & Anr v. Siddamsetty Infra Projects Pvt. Ltd.& Ors

Tulip Kanth

New Delhi, August 26, 2022: Referring to the 2018 amendment of the Specific Relief Act,1963, the Supreme Court has opined that specific performance is not codified as an enforceable right which is not dependent anymore on equitable principles expounded by judges, rather it is founded on satisfaction of the requisite ingredients as provided under the Act.

Placing reliance upon the amended section 10 of the Specific Relief Act, which provides that specific performance of a contract shall be enforced by the court subject to the provisions contained in sections 11(2) , 14 and 16, the Larger Bench of Chief Justice N.V.Ramana, Justice Krishna Murari and Justice Hima Kohli asserted that this provision, which remained in the realm of the Courts discretion, was converted into a mandatory provision, prescribing a power the Courts had to exercise when the ingredients were fulfilled.

In this matter, Siddamsetty Infra Projects Pvt. Ltd- respondent, had filed a suit for specific performance against the appellants, Smt. Katta Sujatha Reddy and Smt. Kamireddy Geetha Reddy, who were respondents respectively, among others in the suit. One late D Narayana, predecessor in interest of the second and third respondents, was the owner of an agricultural land situated in Budvel Village in Hyderabad. The appellants acquired a certain extent of the land from the aforesaid predecessor interest through an agreement. In pursuance to this agreement, two registered Joint GPAs were executed in the name of the defendants from the owners.

The agreement and the registered GPA, in favour of the first respondent/purchaser (Siddamsetty Infra Projects Pvt. Ltd) could not materialize. Parties entered into two fresh agreements.  A total consideration of Rs 40,20,000  for the suit property was agreed upon between the parties. Out of the total agreed consideration, Rs.34,80,850, was paid by the purchaser to the vendors but the remaining amount of Rs 5,39,150 had admittedly not been paid within the stipulated time and the purchaser sent notices to  the vendors seeking specific performance of the agreement.

Thereafter, the purchaser filed the present suit before the Additional District Judge, seeking specific performance before the Trial Court but the same was dismissed.  Aggrieved by this order, when the plaintiff/purchaser approached the High Court, the appeal was partly allowed and the vendors were directed to register the suit property in favour of the purchaser, to the extent of the amount paid by the purchaser, i.e., 90% of the total sale consideration. Aggrieved by the impugned judgment, both the vendors and the purchaser were in appeal before this Court.

The High Court while overturning the trial Court’s judgment, stated that the discretion to grant specific performance was taken away by the 2018 amendment to Section 10 of the Specific Relief Act.The Bench was of the opinion that the 2018 amendment was not a mere procedural enactment, rather it had substantive principles built into its working and such amendments would not apply retrospectively.

“In view of the above discussion, we do not have any hesitation in holding that the 2018 amendment to the Specific Relief Act is prospective and cannot apply to those transactions that took place prior to its coming into force”, held the Bench while also adding that the 2018 Amendment Act couldnot be applied to the present set of facts.

Considering that under the earlier law, grant of specific performance was discretionary, the Bench,however, opined that it was mandated that such discretion ought to be used in a principled manner without leaving scope for any arbitrary application. As per the Bench, the purchaser ought to have been vigilant in the case at hand to enforce his right and could not have been lackadaisical in his approach. 

From the facts, it was clear that the purchaser had entered into an agreement way back on March 26/27, 1997, which had a clause mandating completion of the contract by payment of the remaining consideration within three months. The aforesaid clause was drafted to provide one last opportunity for the purchaser to make good their lapse which had happened on the earlier occasion. In this context, the time for performance of the contract including the payment lasted till the month of June 1997. It was necessary that the purchaser should have taken immediate steps to complete the transaction and if such steps were immediately completed then the purchaser would have a clear right for seeking enforcement for 3 years reckoned from the last date decided for completion of the contract, the Bench noted.

Looking at the fact that  the purchaser was not ready or willing to perform his part of the contract within the stipulated time, the Bench held that specific performance couldnot be granted for the entire contract.On the issue that the  purchaser was said to have paid 90% of the sale consideration and in lieu thereof, the High Court had held that the purchaser was entitled to 90% of the scheduled land, the Bench said, “…we do not think that it is an appropriate case for granting relief to the purchaser in terms of Section 12 of the Specific Relief Act, 1963 as the claim of the purchaser is barred by delay, laches and limitation.”

Thus, noting that the contract was breached due to the conduct of the plaintiff/purchaser, who were not willing to perform the contract after entering into a time sensitive agreement, the Bench directed the vendors/appellants to repay the said amount with interest and also ordered the vendors to pay the entire amount to the credit of the suit account within six months.