S.20 Specific Relief Act | Defendant Can Raise Plea Of Hardship Only If It Was Unforeseeable At Contract Formation: Supreme Court

The Supreme Court today (Dec. 20) observed that a defendant could raise the ground of 'hardship' in performing the contract only if it is established by cogent evidence that she was unable to foresee the hardship at the time of entering into the contract.The Court further stated that Section 20 of the Specific Relief Act, 1963 ("SRA") would not apply if the defendant/seller failed to provide evidence showing that the hardship was unforeseeable when entering into the contract.Before the 2018 amendment to SRA, the Courts had the discretion to grant or not to grant specific performance of a contract, however, the amendment had made specific performance as the rule, and refusal is an exception, provided the contract meets the enforceability criteria under the law.The bench of Justice J.B. Pardiwala and Justice R. Mahadevan was hearing an appeal challenging the Tripura High Court's decision, which had overturned the trial court's ruling that decreed specific performance in favor of the appellant-plaintiff. The trial court had directed the respondents to execute the sale deed, rejecting their claim of hardship due to the suit property being their sole residence, as evidence showed they were not residing there during the seller's lifetime but elsewhere. The Appellant had entered into an agreement to sell with one Late Prabha Ranjan Das (seller) to purchase the latter's property for Rs. 17.5 Lacs and had given Rs. 4 Lacs in advance. The balance consideration ought to be paid at the time of execution of the sale deed. In between, the seller died before the date of execution of the sale deed. The Appellant sought specific performance of an agreement to sell from the seller's legal heirs i.e., respondents by filing a suit before the trial court. Referring to Section 20 of SRA, the Respondents refused to perform the contract citing hardship caused to them after the seller's death as the suit property was their sole residence. The Trial Court decreed the suit in favor of the appellant, directing the defendants to execute the sale deed upon payment of the remaining consideration. The High Court reversed the decision, citing hardship to the defendants, who claimed the property was their sole residence. Following this, an appeal was preferred before the Supreme Court. Before the Supreme Court, the Appellant contended that no hardship was caused to the defendants after the seller's death because they were not residing with the seller during his lifespan due to a family dispute and were residing at respondent no.1's parental home. Setting aside the High Court's decision, the judgment authored by Pardiwala J. emphasized that for taking refuge under Section 20 of SRA, it must be proved that the seller or the defendants were unaware of the consequences of the agreement at the time of its execution i.e., hardship to the defendants must be unforeseen and directly connected to the circumstances at the time of the contract. The Court sustained the Appellant's argument that the respondents were not residing with the seller, therefore the claim of the Respondent that the seller's house was their sole residence was rejected. “It appears from the evidence on record that Late Prabha Ranjan Das was not getting along well with his wife and son. His wife and son, i.e., the defendants were residing separately. It appears that they were residing at the parental home of the defendant No. 1. It is only when Prabha Ranjan Das passed away that the defendants tried to take over the suit property.”, the court observed. “The High Court seems to have overlooked the fact that the question of hardship in terms of Section 20(2)(b) of the Act, 1963 read with explanation (2) bears reference to hardship, which the defendant did not foresee at the time of entering into the contract. In other words, the issue of hardship would come into play only if it is established by cogent evidence that Late Prabha Ranjan Das who executed the Agreement of Sale was unable to foresee the hardship at the time of entering into the contract.”, the court observed. The Court noted that various factors necessitated the courts to not grant specific relief which depends on the facts and circumstances of each case but highlighted particular instances where the defendant could deny performance of the contract citing hardship. “one of the grounds for refusing specific performance, though they arise from circumstances post-contract, are factors which affect the person of the defendant rather than the subject-matter of the contract, and to which the plaintiff is in no way a contributory. It is these personal circumstances of the defendant, which this Court has alluded to in the earlier part of this judgment while dwelling upon the issue of hardship under Section 20(2)(b) of the Specific Relief Act, 1963. The discretion there being wide, it is certainly not limited to what is illustratively mentioned in the statute. At the cost of some repetition, it, therefore,...

S.20 Specific Relief Act | Defendant Can Raise Plea Of Hardship Only If It Was Unforeseeable At Contract Formation: Supreme Court

Yash Mittal

Tags