Plaintiff Who Fails To Perform Essential Terms Of Contract Cannot Seek Specific Performance U/S 16(c) Specific Relief Act: Patna HC
The Patna High Court has held that a plaintiff who fails to perform the essential terms of a contract and is unable to demonstrate readiness and willingness to perform his obligations is disentitled from seeking specific performance under Section 16(c) of the Specific Relief Act, 1963.
A Single Judge Bench of Justice Jitendra Kumar was hearing a first appeal filed by the defendant against the judgment and decree dated 07.02.2017 passed in Title Suit No. 564 of 2011, whereby the Trial Court had directed refund of Rs. 43.30 lakh along with interest and compensation of Rs. 5 lakh, while refusing the relief of specific performance sought by the plaintiff.
The dispute arose out of an agreement for sale dated 23.08.2010 concerning a house property built over land measuring 3 kathas and 10 dhurs for a total consideration of Rs. 1.55 crore. The plaintiff's case was that despite having performed his part of the contract and being ready and willing to perform the remaining obligations, the defendant failed to execute the sale deed. In the alternative, the plaintiff sought refund of Rs. 43.30 lakh paid towards the sale consideration along with interest.
The defendant contested the suit, contending that the plaintiff himself had failed to comply with the payment schedule stipulated under the agreement and was therefore not entitled either to specific performance or refund of the entire advance amount.
The Trial Court found that although the agreement for sale was undisputed, the plaintiff had failed to establish readiness and willingness to perform his obligations. Accordingly, it denied specific performance but directed refund of the entire amount paid along with interest and compensation.
Before the High Court, the defendant argued that the Trial Court's findings were contradictory. Having found that the plaintiff failed to perform his obligations, the Court could not have simultaneously directed refund of the entire amount and awarded compensation.
The High Court noted that under the agreement, the plaintiff had already paid Rs. 35 lakh and was unconditionally required to pay a further Rs. 25 lakh within four months of execution of the agreement. The Court observed that there was neither any pleading nor evidence showing that the plaintiff had paid or was ready and willing to pay the stipulated amount.
The High Court held that the plaintiff had failed to perform his contractual obligations. Referring to Section 16(c) of the Specific Relief Act, the Court observed:
“Sub-Section (c) of Section 16 of the Act clearly shows that if the Plaintiff fails to perform his part of the essential terms and conditions of the contract, which was required to be performed by him, he cannot enforce the specific performance of the contract.”
The Court further held that under the agreement, the defendant was entitled to deduct 10% of the advance money in the event of default by the purchaser. The Bench observed that the plaintiff was therefore entitled only to the balance amount after deduction of 10% from the advance payment.
At the same time, the Court found that the defendant had retained the money without refunding the amount due and was therefore liable to pay reasonable interest to avoid unjust enrichment. Calculating the contractual deduction, the Court held that 10% of Rs. 43.30 lakh amounted to Rs. 4.33 lakh and therefore the amount refundable to the plaintiff was Rs. 38.97 lakh.
Accordingly, the Court set aside the Trial Court's decree and directed the defendant to pay Rs. 38.97 lakh with interest at 6% per annum from 23.12.2010 within two months, failing which penal interest at 12% per annum would become payable.
Case Title: Prusottam Swaroop v. Umesh Kumar Sahu.
Case Number: First Appeal No. 67 of 2017.
Appearance: Mr. Dhiraj Sagar and Mr. Santosh Kumar Singh for the Appellant. Senior Advocate Mr. P.N. Shahi, assisted by Mr. Bipin Bihari, for the Respondent.