Court cannot refuse specific performance without reason

Court cannot refuse specific performance without reason

In a recent appeal, the Allahabad High Court reversed the decision of a lower appellate court not to order specific performance despite finding that the plaintiff had proved breach on the part of the defendant, and that the plaintiff was ready and willing to perform his obligations under the contract.

The case was originally brought for specific performance of an agreement executed in 1994 to sell immovable property for a total consideration of INR30,000 (USD400). The plaintiff pleaded that he had paid part-consideration of INR15,000, and that the agreement provided that an agreement for the sale of the property would have to be executed and registered as and when the purchaser called upon the vendor to do so, with the purchaser paying the balance of the sale consideration.

It was the case of the plaintiff that he had called upon the vendor to execute an agreement for sale and register it, at the same time offering to pay the balance of the consideration. However, the vendor, in breach of the contract to sell, refused to perform his part of the obligation. In the course of the dispute, the vendor died, and the case for specific performance was filed against the heirs of the vendor.

The defendants resisted on the basis that the contract was forged and the case fabricated. The trial court dismissed the case, holding that the plaintiff could not prove the signature of the vendor and therefore could not prove the validity of the contract.

The plaintiff appealed against the order of the trial court. The first appellate court reversed the findings of the trial court and held the contract to be proved. Furthermore, the first appellate court also held that the vendor had committed a breach of the contract, and that the plaintiff had proved that he was ready and willing to perform his part of the agreement.

However, the first appellate court did not grant specific performance and, instead, ordered the refund of the money already paid with interest, holding that the plaintiff had applied for such relief in the alternative to specific performance.

The plaintiff then appealed to the Allahabad High Court, which set aside the order of the first appellate court to the extent that the first appellate court had refused to grant specific performance, and remitted the matter to the first appellate court for fresh consideration of that aspect.

In so ordering, the Allahabad High Court held that the first appellate court had failed to observe its statutory obligation in section 20 of the Specific Relief Act, 1963, under which a court is required to consider relevant factors and give cogent reasons for exercising its discretion not to grant specific performance.

The discretion not to grant specific performance cannot be exercised arbitrarily. The first appellate court had similarly failed to give reasons for concluding that the return of monies paid was an adequate remedy.

The dispute digest is compiled by Numen Law Offices, a multidisciplinary law firm based in New Delhi & Mumbai. The authors can be contacted at Readers should not act on the basis of this information without seeking professional legal advice.