JAGDISH SINGH v. NATTHU SINGH

Citation: [1991] SUPP. 2 S.C.R. 567

Court: Supreme Court of India

Bench: M.N. VENKATACHALIAH, S.C. AGRAWAL

Case summary

If the amendment relates to the relief ;B o~ compensation in lieu of or in addition to specific performance where tile plaintiff has not abandoned his relief of specific-performance the court Will allow the amendment at any stage of the proceeding....

Judgment text

The Judgment of the Court was delivered by :( VENKATACHALIAH, J. Special leave 'is granted and the appeal taken-up for final hearing and disposed of by this judgment. We have. heard Sri Manoj Swarup, learned counsel for the Appellant and Shri GooowiU Indeevar for the Respondent. ! 2. Appellant was Defendant in a suit for specific performance. He seeks special leave to appeal to this Court from the judgment and order dated 5. 4. 1991 of the High Court of Allahabad in Second Appeal No. 3395 of 1978 decreeing, in reversal of the decrees of dismissal entered by the two courts below, specific performance ofan agreement for sale of land. 3. On 3. 7. 1973 Respondent-Natthu Singh sold Plot No. 195 meas~ uring 5 bighas and 18 bis~as and Plot No. 196 measuring 9 bighas and 8 biswas of Gulistapur ViUage, Pargana Dadri to the appellant for a consid~ eration of Rs. 15,000. On the very day, i. e. , 3. 7.

1973, another agreement Di was entered into between the parties whereunder Appellant agreed to reconvey the said properties to the Respondent against payment ofRs. 15,000~ within two years. I On 2. 6. 1975, well within the period of two years stipulated for the performance of the agreement to re-sell, Respondent instituted the suit for specific performance alleging that despite off~r of performance and ten, 1 dering the price, Appellant, with the dishonest intention of appropriating the properties to himself refused reconveyance. The Appelhμ1t contested the suit principally on the ground that Respondent was never ready and willing to perform the contract and that Respondent himself was in breach: 4.

The trial court framed the necessary and relevant issues stemming from the pleadings and on its own appreciation of the evidence on record came to find against the Respondent that he was ready and willing to perform the contract; and that the agreement, being one of reconveyance1 time was of its essence. The suit was accordingly dismissed. Respondent's first appeal before the learned Ilnd Additional District Judge, Bulandshahar was also unsuccessful. · ' · 5. However, in Respondent's second appeal, the High Court re-' versed the findings of the two courts below and allowing the appeal held that Respondent-Plaintiff was ready and willing to perform the contract; that the Appellant was the party in breach; and that, therefore, Respondent was entitled to a decree. This decree is assailed in this appeal. H' 6.

Sri Manoj Swarup appearing in support of the appeal urged two contentions; the first is that the High Court was in error in embarking upon a re-appraisal of the evidence in a second-appeal to distrub concurrent findings of fact that Respondent was-not willing and ready to perform the contract. The second contention is that contract itself became incapable of specific perfonnance in view of the fact that during the pendency of second appeal the State h~d initiated proceedings for compulsory acquisition of the suit-properties and the subject-matter of the suit itself ceased to be available. Counsel says the power to give compensation as an alternative to specific performance did not extend to a case in which the relief ofspecific performance had itself become impossible. 7.

On the first question, as to the readiness of the Respondent to perform his obligations, the High Court noticed that on 30th January, 1974 even before institution of the suit Respondent and his brother had sold another property belonging to them for a price of Rs. 30,000 and that Respondent had the necessary wherewithal to perform his part of the bargain. The High Court held : "... Thus, the plaintiff admittedly had received Rs. 15,000/- on 30. 1. 1974 and soon thereafter the first notice was issued to the defendant asking him to indicate a date for executing the saledeed and also expressing his readiness and willingness. There is no evidence on the record that between 30. 1. 1974 and the date of suit or thereafter the plaintiff had parted with this money. " The· High Court also. noticed that the two notices dated 23. 3. 1974 and 6. 5.

1975 respectively issued by the Respondent to the Appellant before the suit contained the avennents that he was ready and willing to perform the contract. The notices were, no doubt, not actually served on the appellant as they had come back unserved upon the alleged refusal by the appellant to accept them. The High Court relied upon the avennents in the notices which could be treated as a part to the plaint having been referred to and relied upon therein. 8. In our opinion, the High Court was right in its view. The notices must be presumed to have been served as contemplated by Section 27 of the General Clauses Act. As to the jurisdiction of the High Court to reappreciate evidence in a second appeal it is to be observed that where the findings by the Court of facts is vitiated by non-consideration of relevant evidence or by an essentially erroneous approach to the matter, the High Court is not precluded from recording proper findings. We find no substance in the first contention.

· 9. The second contention is, however, not without its interesting aspects. During the pendency of the second appeal, the properties were .. , acquired by the State for a public purpose. This is not disputed. It would appear that a compensation of Rs. 4 lakhs or thereabouts has been deter-:mined. That sum, along with the generous solatium and the rates of inter~ I est provided by the statute would now be a much larger amount. Before the High Court, Appellant sought to rely upon the decision of this Court in Piarey Lal v. Hori Lal, [1977] 2 S. C. R. 915. That was a case where in proceedings of consolidation the subject-matter of an agr~ement to sel~ was allotted tq a person other than the vendor, the relief of specific performance was held not to survive. The High Court rightly held that .... pronouncement was distinguishable and inapplicable to the present controversy.

As to the relief available to a plaintiff where the subject matter was acquired during the pendency of a suit for specific-performance the High Court said: "... The learned counsel for the respondent has vehemently urged that after the land has been acquired its corpus has ceased to f exist and no decree for specific performance can nowbe granted. In my opinion with the acquisition of the land plaintiffs right~ do not get extinguished in totality. The appellate court always suitably mould the relief which the circumstances of the case may require or permit. The power in this regard is ample and wide enough... ... However, in the present case the property has not been totally lost. What happens in the case of the acquisition is that \ for the property compensation payable in lieu there of is substituted... " The.

High Court issued these consequential directions: "If the decree for specific performance of contract in question is found incapable of being executed due to acquisition of subject land, the decree ~,;;tll stand suitably substituted by "' decree (er realisation: o. f cofu. pensation payable in lieu thereof as may·~~ 6r have been determined under the relevant Act and · the plaiiitiff shall have a right to recover such compensation together with solatium and interest due thereon. The plaintiff shall have a right to recover it from the defendant if the defendant has already realised these amounts and in that event ihe defendant shall be further liable to pay interest at the rate of twelve per cent from the date of realisation by him to the date of payment on the entire amount realised in respect of the disputed land.

" We are afraid the approach of the High Court is perhaps somewhat an over-simplification ofan otherwise difficult area of law as to the nature of relief available to a plaintiff where the contract becomes impossible of specific performance and where there is no alternative prayer for compensation in lieu or substitution of specific performance. While the solution that has commended itself to the High Court might appear essentially just or equitable, there are certain problems both of procedure and of substance in the administration of the law of specific relief particularly in the area of award of an alternative relief in lieu or substitute of specific performance that require and compel consideration, especially in view of some pronouncements of the High Courts which have not perceived with precision, the nice distinctions between this branch of the law as administered in England and in India. l0.

Section 21 of the Specific Relief Act, 1963 corresponding to Section 19 of 1877 Act enables the plaintiff in a suit for specific performance also to claim compensation for its breach either in addition to or in substitution of, such performance. Sub-sections (2), (4) and (5) of Section 21 are material and they provide : "(2). If, in any such suit, the Court decides that specific performance ought not to be granted, but that there is a contract between the parties which has been broken by the defendant, and that the plaintiff is entitled to compensation for that breach, it shall award his such compensation accordingly. -~ I (3) [Omitted as unnecessary. ] (4) In determining the amount of any compensation awarded under this section, the Court. shall be guided by the principles specified in Section 73 of the Indian Contract Act, 1872, 9 of 1872.

(5) No compensation shall be awarded under this section unless the plaintiffhas claimed such compensation in his plai~t: Provided that where the plaintiff has not claimed any such compensaion in the plaint, the Court shall, at any stage ofthe proceeding, allow him to amend the plaint on such tenns as may be just, for including a claim for such compensation. Explanation·The circumstance that· the contract has become incapable of specific performance does not preclude the C~urt :A from exercising the jurisdiction conferred by this section. " •. ' (emphasis added) So far as the proviso to sub-section (5) is concerned, two positions must be kept clearly distinguished. If the amendment relates to the relief ;B o~ compensation in lieu of or in addition to specific performance where tile plaintiff has not abandoned his relief of specific-performance the court Will allow the amendment at any stage of the proceeding.

That is a claim for compensation falling under Secion 21 of the Specific Relief Act, 1963 -\ and the amendment is one under the proviso to sub-section (5). But different and less liberal standards apply if what is sought by the amendment is IC the conversion of a suit for specific performance into one for damages for breach of contract in which case Section 73 of the Contract Act is invoked. This amendment is under the discipline of Rule 17 Order 6, C. P:c. The fact that sub-section (4), in tum, invokes Section 73 of the Indi. an Contract Act for the principles of quantification and assessment of compensation does not obliterate this distinction. D ' I .. ,__ The provisions of Section 21 seem to resolve certain divergencies of judicial opinion in the High Courts on some aspects of the jurisdiction· to award of compensation.

Sub-section (5) seeks to set at rest the divergence of judicial opinion between High Courts whether a specific claim in the plaint is necessary to grant the compensation. In England Lord Cairn's ~ , (Chancery Amendment) Act, 1858 sought to confer jurisdiction upon the Equity Courts to award damages in substitution or in addition to specific performance. This became necessary in view of the earlier dichotomy in -\' the jurisdiction between common law and Equity Courts in the matter· of choice of the nature of remedies for breach. In common law the remedy for breach of a contract was damages. The Equity Court innovated t~e 11 remedy ofspecific performance because the remedy ofdamages was found to be an inadequate remedy. Lord Cairn's Act, 1858 conferred jurisdictiqn upon the Equity Courts to award damages also so that both the reliefs could be administered by one court. Section 2 of the Act provided : "In all cases in which the Court of Chancery has jurisdiction ~oGr---_. l..

entertain an application for specific performance of any covenant, contract or agreement it shall be lawful for the SaJt'\e Court if it shall think fit to award damages to the party injured either in addition to or in substitution for such specific perfonnance and such damages may be assess~d as the Court shall ij direct. " This is the historical background to the provisions of Section 21 of the Specific Relief Act, 1963 and its predecessor in Section 19 of the 1877 Act. 11. In Mohamad Abdul Jabbar & Others v. Lalmia & Others.. A. I. R (34) I947 Nagpur 254 specific performance of an agreement of sale dated 16th January, 1934, was sought by the institution of a suit on 15th January, 1937. During the pendency of the suit, on 20th April, 1937, the provincial Government started land acquisition proceedings respecting the subject-matter of the suit and the same was acquired.

The High Court upheld the dismissal of the suit for specific performance and referred an amendment for award of damages. On the obvious impermissibility of specific performance the Nagpur High Court sarcf: "We accordingly conclude that specific performance is now . impossible and we cannot decree it for "equity like nature does nothing in vain. " We cannot hold the plaintiffs-appellants entitled to the compensation money into which the property was converted because they had no right or interest in that property.... " Refusing the amendment for the relief for payment of money the High Court held : "We would not allow amendment also because on the facts found by the trial Court (with which we see no reason, whatever, to differ) we would have refused specific performance, and the claim for damages on this account would also have been negatived because damages could have been awarded 'tonly if specific performance could rightly have been claimed.

The appeal, therefore, fails and is dismissed with costs. " Support for these conclusions was sought from the oft quoted, but perhaps a little misunderstood, case ofArdeshir H. Mama v. Flora Sassoon A. LR. 1928 Privy Council 208. The passage in Sassoon's case relied upon by the Nagpur High Court is this : · "In a series of decisions if was consistently held that just as its l.. ,. power to give damages additional was to be exercised in a suit fj in which the Court had granted specific performance, so the power to give damages as an alternative to specific perform- tr' ~ ance did not extend to a case in which the plaintiff had de- t \.. barred himself from claiming that form of relief, nor to a case in which that reliefhad become impossible. I l JAGDISH SINGH v. NATTHU SINGH [VENKATACHAI. IAH, J. ] 577 ' The case of 52 Bombay 597 fell within the first category of , -i cases described above under the alternative relief of damages.

This case falls within the second part where the reliefofspe- ~. cific performance has become impossible. " (emphasis supplied) The second part of the observation of the Nagpur High Court, with ,B great respect to the learned JUdges proceeds on a fallacy resulting from the non-perception of the specific departUre in the Indian law. In Lord Cairn's Act, 1858 damages could not be awarded when the contract had, for whatever reason, become incapable ofspecific perfonnance. But under ... \,, the Indian law the explanation makes a specific departure and the jurisdiction to award dam'ages remains unaffected by the fact that without any 'C fault ofthe plaintiff, the contract becomes incapable of specific performance. Indeed, Sassoon's case is not susceptible of the import attributed to it by the Nagpur High Co~. Sassoon's case itself indicated the departure made in Indian Law by the. Explanation in Section 19 of the 1877 Act, which is the same as the Explanation to Section 21 of the 1963 Act.

The Judicial Committee, no doubt, said that Section 19 of the 1877 Act "em- :0 bodies the same principle as Lord Cairn's Act and does not, any more tthan did the English Statute enable the court in a specific performance suit to award 'compensation for its breach' where at the hearing the plaintiff debarred himself by his own action from asking for a specific decree". But what was overlooked was this observation of Lord Blanesburgh : "except as the case provided for in the explanation-as to which there is introduced an express divergence . fi·om Lord Cairn's Act. as expanded in England" i ' formance. We, therefore, hold that the second contention of Sri Manoj Swarup is not substantial either. 12. Learned counsel were not specific on the point whether the Respondent had actually asked for compensation in lieu of specific performance. We may assume that it was not so specifically sought.

In order that formality in this behalf be completed, we permit the amendment here and now so that complete justice is done. 13. The measure of the compensation is by the standards of Section 73 ofthe Indian Contract. Here again the English Rule in Bain v. Fothergill, (i874) L. R. 7 House of Lords 158 that the purchaser, on breach of the . contract, cannot recover, for the loss of his bargain is not applicable. In Pollock & Mulla on Contract (10th E - •. 1lOL am tnsmaoit