Court’s Decision
The Kerala High Court dismissed both appeals—RFA No. 20 of 2016 and RFA No. 332 of 2017—arising from a suit for specific performance of a sale agreement. The Court upheld the trial court’s decision to deny specific performance but affirmed the decree for refund of advance sale consideration of ₹25 lakhs with 9% interest per annum. The Court held:
“The transaction between the parties was not one intended as an agreement for sale… This is not a fit case where the discretion under Section 20 of the Specific Relief Act is to be exercised.”
Facts
The plaintiff filed a suit for specific performance of an agreement for sale dated 26.09.2007 concerning 20 cents of land priced at ₹3.5 lakhs per cent. An advance of ₹25 lakhs was allegedly paid, and the period for performance was extended to 31.12.2007 via an endorsement (Ext.A1(a)). The defendant admitted the signatures but contended that the agreement was fabricated using blank stamp papers obtained under coercion. The trial court upheld the genuineness of the agreement but declined specific performance due to the plaintiff’s failure to establish readiness and willingness.
Issues
- Whether Ext.A1 agreement was executed by the defendant?
- Whether Ext.A1 is liable to be specifically enforced?
- Whether the discretion under Section 20 of the Specific Relief Act should be exercised in favour of the plaintiff?
- Whether the trial court’s judgment warrants interference?
Petitioner’s Arguments
The plaintiff contended that the agreement was validly executed with ₹25 lakhs paid as advance. Ext.A1 and its extension (Ext.A1(a)) were signed by the defendant. He also claimed possession of original title deeds and cited Ext.A6 bank certificate showing a balance of ₹39,93,718/- to establish readiness and willingness.
Respondent’s Arguments
The defendant denied execution of the agreement and asserted that blank stamp papers were signed under coercion. He claimed the land, being in a prime area, was worth much more—around ₹10 lakhs per cent—and that the agreement was fabricated. He also contended that no reasonable explanation was offered for withholding original title documents with the plaintiff.
Analysis of the Law
The Court examined Section 20 of the Specific Relief Act, emphasizing that specific performance is discretionary. It observed contradictions in the defendant’s account of coercion, noting inconsistency in his statements regarding the location of the alleged extortion. However, it found the overall transaction dubious due to:
- The plaintiff’s claim of having received original title deeds despite paying only part of the consideration.
- The involvement of PW3 (a witness to the agreement and current occupant of the property) in supporting the plaintiff’s case.
- The property’s high value and strategic location not aligning with the sale terms.
Precedent Analysis
The Court relied on:
- K. Bhaskaran Nair v. Habeeb Mohammed & Ors. [2002 (1) KLT 864]
- Sarada v. Divakara Kurup [2012 (4) KHC 623]
Both cases emphasize that agreements accompanied by the handing over of original title deeds despite partial payment should be viewed with suspicion and may not represent genuine sale intentions.
Court’s Reasoning
- Execution Proven: The Court held that Ext.A1 and Ext.A1(a) were executed by the defendant, dismissing allegations of coercion due to lack of police complaints or timely legal action.
- Readiness and Willingness: The Court agreed with the trial court that the plaintiff had not sufficiently established financial readiness during the contract period. Although involved in business, he failed to provide his full bank statements.
- Discretion under Section 20: Considering the suspicious nature of the transaction, the Court held that discretion under Section 20 of the Specific Relief Act could not be exercised in the plaintiff’s favour.
Conclusion
The Court declined specific performance and upheld the refund of ₹25 lakhs advanced by the plaintiff with interest at 9% per annum. Both appeals were dismissed with no order as to costs.
Implications
The judgment reiterates the principle that specific performance is a discretionary remedy and not one of right. Even where execution is proven, courts can deny enforcement if the circumstances suggest a lack of bona fides. The ruling underscores the importance of financial preparedness and credibility in seeking equitable relief under the Specific Relief Act.
Summary of Referred Cases
- K. Bhaskaran Nair v. Habeeb Mohammed & Ors. [2002 (1) KLT 864]: Held that where original title deeds are handed over to a buyer upon partial payment, courts should exercise caution before granting specific performance.
- Sarada v. Divakara Kurup [2012 (4) KHC 623]: Reaffirmed the above principle and emphasized the suspicious nature of such transactions.
