"Inaction Frustrated Very Purpose Of Sale"- Bombay HC While Quashing Decree For Specific Performance Of 2005 Contract For Sale

A Bombay High Court Bench of Justice Anuja Prabhudessai has quashed a Trial Court's decree for the specific performance of a 2005 contract for sale.

In that context, the Court observed that "The Plaintiffs failed to pay the balance amount within the stipulated time. During the interregnum period there is steep escalation of price. Hence, inaction of the Plaintiffs frustrated the very purpose of sale. As held by the Apex Court in Saradamani Kandappan (supra), the steep increase in prices is a circumstance, which makes it inequitable to grant the relief of specific performance. Moreover, decree of specific performance would dislocate several members of the Defendant’s family and this would cause undue hardship to the Defendants as compared to the hardship caused to the Plaintiffs."

Counsel Mayur Khandeparkar and Counsel Sanket Mungale appeared for the appellants. Senior Advocate Kevic Setalvad, among others, appeared for the applicants.

In this case, an appeal was filed against the order of a Trial Court, through which the defendants were directed to execute a sale deed within 2 months.

The plaintiffs, US residents Neeta and Paresh Shah gave power of attorney to Neeta’s brother Mukesh Shah to purchase a flat on their behalf in a building in Santacruz where he was residing. Mukesh executed an MoU dated June 3, 2005, with one Vilasben Dhruva (original defendant) to purchase her flat for Rs. 41.75 lakhs. The plaintiffs paid Rs. 2.51 lakhs as earnest money and promised to pay the balance amount by May 31, 2005. The sale was to be completed on receipt of NOC and no dues certificate from the housing society. The deadline for payment was extended to 31st October 2005 by mutual consent of the parties.

The plaintiffs sent a letter to Vilasben on October 29, 2005, claiming to be ready and willing to pay the balance amount and sought the vacant and peaceful possession of the flat along with no dues. Vilasben, on October 31, 2005, claimed that the plaintiffs failed to show their readiness and willingness to pay the balance amount and terminated the sale agreement. Thus, the plaintiffs had filed a suit for specific performance of the contract.

The High Court observed that the plaintiffs were required to demonstrate readiness and willingness regardless of any default by the original defendant. In that context, it was said that "the Plaintiffs have failed to prove that they were ready and willing to perform their part of contract and as such in terms of Section 16(c) of the Specific Relief Act they are barred from claiming specific performance not withstanding alleged breach by the Defendant vendor".

Further, the Court held that once an agreement to sell is legal and validly proved and further requirements for getting such decree are established, the Court has to exercise its discretion in favour of granting relief for specific performance. By extension of the same, it was further held that "It is held that subsequent rise in the price will not be treated as a hardship entailing refusal of the decree for specific performance. It is held that rise in price is a normal change of circumstance and therefore, on that ground alone, a decree for specific performance cannot be reversed."

Subsequently, the Court held that the plaintiffs failed to prove the requirements of getting the decree of specific performance, and that they were not entitled to discretionary relief either.

In light of the same, the suit was dismissed.

Cause Title: Girish Vinodchandra Dhruva & Ors. vs . Neena Paresh Shah & Anr.

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