CASE SUMMARY:
In T.D. Vivek Kumar Vs Ranbir Choudhary [CDJ 2023 SC 406/2023 (3) CTC 194], the Supreme Court has held that the purchaser is not entitled to relief of specific performance when the sale agreement consists of a clause for payment of double the earnest money paid if the seller fails to perform his part of the contract.
FACTS IN BRIEF:
The Respondent as the purchaser and the Appellant as the seller enter into an agreement of sale. The Respondent made a part payment and promised to pay the balance within 6 months. The Appellant promised to effectuate sale within 6 months from the date of sale agreement, on payment of balance sale consideration. The sale agreement had a clause according to which if the Respondent failed to pay the balance sale consideration within the stipulated time, he would forfeit the advance (Earnest money) paid; and if the Appellant failed to effectuate Sale within the stipulated time, he will be liable to make payment of double the earnest sum to the Respondent. At the end of the time stipulated for effectuating sale, the Respondent filed a suit for specific performance. The suit was defended by the Appellant that the Respondent was only entitled to double the earnest money paid in view of the relevant clause in the sale agreement. The Trial Court refused to decree specific relief, however decreed the suit for recovery of twice the earnest money paid by the Respondent. Aggrieved, Respondent preferred Appeal, which was also dismissed confirming the original decree passed by the Trial Court. Aggrieved, the Respondent preferred second appeal before the High Court. Since, both the lower Courts had given concurrent finding that the Respondent was always ready and willing to fulfil his part of the contract, the Appellant had filed cross objection before the High Court.
The High Court allowed the appeal filed by the Respondent and reversed the concurrent judgments of both the lower Courts. Aggrieved, the Appellant preferred an appeal before the Supreme Court. Since the High Court had not discussed the relevant clause in the sale agreement, the appellant was relegated to prefer a review before the High Court. However, the review filed by the Appellant was dismissed by the High Court on the ground that there was “no error apparent” in the order passed by the Court. Aggrieved, the present appeal.
CONTENTIONS:
The Appellant contended that in view of the relevant clause entitling the Respondent/Plaintiff for twice the earnest money in case of failure on the part of the Appellant, the lower Courts were right in refusing the relief of specific performance.
The Respondent contended that in view of the concurrent findings given by the lower Courts that the Respondent/Plaintiff was always ready and willing to perform his part of the contract, he was entitled to the relief of specific performance.
CONCLUSION:
The Appeal was allowed and concurrent judgments of the Trial Court & First Appellate Court restored on the ground that the Respondent/Plaintiff was bound by the clause in the sale agreement that provided for payment of double the earnest money paid in cause of failure on the part of the Appellant/Defendant.
OBSERVATIONS:
- The High Court had not framed substantial question of law while overturning concurrent judgments passed by the Trial Court and First Appellate Court.
- Plaintiff was bound by the clause in the sale agreement that provided for payment of double the earnest money paid in cause of failure on the part of the Defendant. Therefore, relief of specific performance could not have been granted.
PRECEDENTS CITED:
P.D’SOUZA Vs SHONDRILO NAIDU [2004 (6) SCC 649]
(This is a case summary and not an opinion piece.)
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