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Judgment
Sathish Ninan, J.
The decree for specific performance of an agreement for sale, is under challenge by the defendant.
Ext.A1 is the agreement dated 24.09.2012, between the parties. Ext.A1 relates to two items of properties, item-1 having an extent of 17.119 cents and item-2 having an extent of 22.250 cents, thus totaling to 39.369 cents. The agreed sale consideration was ₹ 1,31,000/- per cent. The period fixed for performance was six months. On the date of Ext.A1, an amount of ₹ 20 lakhs was paid towards advance sale consideration. Subsequently, on 25.01.2013 a further amount of ₹ 15 lakhs was also paid, and it was acknowledged on the reverse of Ext.A1. Alleging failure on the part of the defendant to perform the agreement the plaintiff sought its enforcement.
The trial court granted a decree for specific performance.
We have heard Sri.T.Krishnanunni, the learned Senior Counsel appearing on behalf of the appellant-defendant, and Sri.T. Sethumadhavan, the learned Senior Counsel appearing on behalf of the respondent-plaintiff.
Upon hearing the rival arguments, the points that arise for determination in this appeal are:-
Is the suit barred by virtue of Order 2 Rule 2 of the Code of Civil Procedure?
Is the suit maintainable for want of a prayer for declaration of subsistence of Ext.A1 agreement?
Has the plaintiff established his readiness and willingness to perform Ext.A1 agreement?
On the facts and circumstances, is the discretion under Section 20 of the Specific Relief Act to be exercised to grant a decree for specific performance?
Does the decree and judgment of the trial court warrant any interference?
Ext.A1 agreement is admitted. The first contention of the appellant-defendant is that the suit is barred under Order 2 Rule 2 of the Code of Civil Procedure. The rule reads thus :-
2.Suit to include the whole claim.—(1) Every suit shall include the whole of the claim which the plaintiff is entitled to make in respect of the cause of action; but a plaintiff may relinquish any portion of his claim in order to bring the suit within the jurisdiction of any Court.
(2)Relinquishment of part of claim.—Where a plaintiff omits to sue in respect of, or intentionally relinquishes, any portion of his claim, he shall not afterwards sue in respect of the portion so omitted or relinquished.
(3)Omission to sue for one of several reliefs.—A person entitled to more than one relief in respect of the same cause of action may sue for all or any of such reliefs; but if he omits, except with the leave of the Court, to sue for all such reliefs, he shall not afterwards sue for any relief so omitted.
Explanation.—For the purposes of this rule an obligation and a collateral security for its performance and successive claims arising under the same obligation shall be deemed respectively to constitute but one cause of action.”
The principle underlying Order 2 Rule 2 and its application has been laid down by a five Judges Bench of the Apex Court in Gurbux Singh v. Bhooralal (AIR 1964 SC 1810). The Rule prescribes that, if upon a cause of action more than one relief is available to the plaintiff, and if in the suit instituted he omits to sue for any such relief without obtaining the leave of the Court, then he will be precluded from instituting a fresh suit for the omitted relief. The principle has been reiterated by the Apex Court in a series of decisions, and has been elaborated and exhaustively considered recently in Cuddalore Powergen Corporation Ltd. v. M/s Chemplast Cuddalore Vinyls Limited (AIR 2025 SC 849). We do not deem it necessary to further elaborate upon the same.
Upon Ext.A1 agreement, on 25.05.2013, the plaintiff instituted a suit to restrain the defendant from alienating the property. It is pending the said suit that the present suit was instituted. The argument of the learned Senior Counsel is that, the cause of action alleged in the suit for injunction was an alleged attempt to alienate the subject property and that the relief for specific performance also springs up from the very same cause of action. While suing for injunction, leave as contemplated under Order 2 Rule 2(3) having not been obtained to file a separate suit for specific performance, the present suit is barred under Order 2 Rule 2, it is argued.
In Alka Gupta v. Narender Kumar Gupta (AIR 2011 SC 9), the Apex Court held:-
“Unless the defendant pleads the bar under O.2 R.2 of the Code and an issue is framed focusing the parties on that bar to the suit, obviously the court cannot examine or reject a suit on that ground..... In this case, the respondent did not contend that the suit was barred by O.2 R.2 of the Code. No issue was framed as to whether the suit was barred by O.2 R.2 of the Code. …..”
In Coffee Board v. Ramesh Exports Private Ltd. [(2014) 6 SCC 424], the Apex Court reiterated the necessity for a specific plea regarding the bar of suit under Order 2 Rule 2 and the framing of an issue in that regard. The Apex Court held,
“Furthermore, the bar under Order 2 Rule 2 must be specifically pleaded by the defendant in the suit and the trial court should specifically frame a specific issue in that regard...”
In the case at hand, we find that a plea regarding the bar under Order 2 Rule 2 CPC was not raised in the written statement. We do also find that no issue upon Order 2 Rule 2 was raised for trial. Though, as pointed out by the learned counsel for the appellant it appears from the judgment that the bar of suit under Order 2 Rule 2 was argued, there being no plea or issue regarding the same, in the light of the law as noticed above, we are not inclined to entertain the argument. Incidentally we do also notice that, the plea of Order 2 Rule 2 was negatived by the trial court.
Now we proceed to consider the argument that, the agreement having been rescinded by the defendant under Ext.A3 notice, without a prayer for declaration that Ext.A1 agreement still subsists, the suit could not be maintained. Ext.A2 is the notice dated 28.03.2013 issued by the plaintiff calling upon the defendant to perform Ext.A1. This was replied by the defendant as per Ext.B1 notice dated 04.04.2013. Therein the plaintiff was notified thus :-
“..... The sale agreement dated 24.09.2012 stand cancelled/rescinded due to the breach and default committed by your client and he is not entitled to initiate any action against my client on the basis of the said agreement.”
Ext.A1 agreement having been rescinded by the defendant, without seeking a declaration challenging the rescission, a mere suit for specific performance could not be maintained, is the contention. In support of the argument the learned Senior Counsel relied upon the judgments of the Apex Court in Sangita Sinha v. Bhawana Bhardwaj AIR 2025 SC 1806, Kandasamy R (Since Dead) v. T.R.K.Sarawathy (AIR 2025 SC 44). We find that the Apex Court has subsequently clarified the situations in which a prayer for declaration is necessary and that the present case does not fall therein.
In Annamalai v. Vasanthi AIR 2025 SC 5285, the Apex Court held that, a breach of the contract may be by its non-performance or by repudiation. Therefore, repudiation is also a form of breach of contract. Upon breach of a contract, the aggrieved party is entitled to sue for damages or in certain cases seek for specific performance. It was held that a prayer for declaration of subsistence of the contract is necessary where a doubt or cloud on the subsistence of the contract is created. It was explained that such a situation would arise only when the agreement confers a unilateral right on either of the parties to terminate the contract. In such an event it would be obligatory on the part of the plaintiff to seek for a declaration of the subsistence of the contract to enable him to seek for specific performance of the agreement. In Annamalai v. Vasanthi (supra) the Apex Court considered its earlier judgments in Sikandar L. S. (D) by Lrs. v. K. Subramani and Others [2013 (15) SCC 27], A. Kanthamani v. Nasreen Ahmed (2017) 4 SCC 654 on the issue.
The question was again considered exhaustively by the Apex Court in the recent judgment in Manjunath K.S. v. Moorasavirappa @ Muttanna Chennappa Batil, Since Deceased by his Lrs [2025 KHC 6927]. Therein it was held that where the contract does not confer a right on the party for unilateral termination, even if one party purports to terminate/repudiate the contract, the other party can seek for specific performance, without having to seek a declaration that the termination is invalid. It was held that unilateral termination of an agreement for sale is permissible only if the agreement itself provides for the same and that in its absence, the other party to the agreement is entitled to treat the agreement as subsisting and to sue for specific performance without any prayer for declaration. The following principles were laid down by the Apex Court.
“43.Thus, in view of the above discussion, the following principles of law are discernible:
(i).Unilateral termination of the agreement to sell by one party is impermissible in law except in cases where the agreement itself is determinable in nature in terms of S.14 of the Act of 1963;
(ii). If such unilateral termination of a non-determinable agreement to sell is permitted as a defence, then virtually every suit for specific performance can be frustrated by the defendant by placing an unfair burden on the plaintiff, who despite performing his part of the obligations and having showcased readiness and willingness, would require to also seek a separate declaration that the termination was bad in law. In such cases, the burden cannot be casted upon the plaintiff to challenge the alleged termination of agreement;
(iii).Where a party claims to have valid reasons to terminate or rescind a non-determinable agreement to sell, with a view to err on the side of caution, it should be such terminating party, if at all, who ideally should approach the court and obtain a declaration as to the validity of such termination or rescission, and not the non-terminating party. However, this must not mean that the defendant (the terminating party) in such cases would mandatorily be required to seek a declaration because S.27 and S.31 of the Act of 1963 respectively, while using the phrase “may sue” merely give an option to any person to have the contract rescinded or adjudged as void or voidable;
(iv).Once the alleged termination of a non-determinable agreement in question is found to be not for bona fide-reasons and being done in a unilateral manner on part of the defendant, it cannot be said that any declaration challenging the alleged termination was required on part of plaintiff;
(v).If a contract itself gives no right to unilaterally terminate the contract, or such right has been waived, and a party still terminates the contract unilaterally then that termination would amount to a breach by repudiation, and the nonterminating party can directly seek specific performance without first seeking a declaration; and
(vi).If a contract itself gives no right to unilaterally terminate the contract, or such right has been waived, and a party still terminates the contract unilaterally then that termination would amount to a breach by repudiation, and the nonterminating party can directly seek specific performance without first seeking a declaration; and
(vi).In the event it is found that the termination of agreement to sell by the defendant was not valid, then such an agreement to sell will remain subsisting and executable.”
In the case at hand, Ext.A1 agreement does not provide any right for unilateral termination by either of the parties. Therefore, in the light of the law as above, the contention of the appellant that the suit should fail for absence of a prayer for declaration, fails.
Now we proceed to consider the challenge on the readiness and willingness of the plaintiff to perform Ext.A1 agreement and for its entitlement for a decree for specific performance. The contention of the appellant is that, the readiness and willingness expressed by the plaintiff is only for a lesser extent of property with a proportionately reduced consideration and this is at variance with Ext.A1.
The plaint scheduled property in respect of which decree is sought is described in two items. The description regarding item No.1 reads thus :-
“Item 1. Extent : 17.119 cents in the document but actually 17.27 cents” Regarding item No.2, it is described as :-
“Item 2. Extent : 22.25 cents in the document actually 18.28 cents.” Noticeably, with regard to item No.2 it is stated that though the document mentions the extent as 22.250 cents, the actual extent of property is only 18.28 cents. At paragraph 4 of the plaint, the alleged deficit in extent and the same having been ascertained on measurement has been stated. According to the plaintiff, the total extent found available on measurement is only 35.55 cents while as per Ext.A1 agreement the total extent is 39.369 cents. At paragraph 13 of the plaint it is pleaded thus:-
“..... That the item 1 property has an extent of 17.27 cents (not 17.119 as shown in the deed) and the item 2 property has an extent of 18.28 cents (not 21.25 as shown in the deed) are known to the plaintiff later on from a sketch of the property. The sketch is produced herewith as Doc. No.7. The total extent of then two items is therefore only 35.55 cents. The plaintiff is ready with the funds and ready and willing to pay the same to the defendant when he would sign, execute and register the sale deed in plaintiff's or his nominees' favor.” Therefore, the plaintiff maintains that though as per document of title the extent of property is 17.119 + 22.250 = 39.369 cents, the extent found to be available is only 35.55 cents. The consideration for the agreement being fixed at ₹ 1,31,000/- per cent any difference in extent would have significance.
The defendant, at paragraph 10 of the written statement, has challenged the valuation of the plaint and the court fee paid thereon, contending that it is not in accord with the extent of the property. Thus, the extent of the property and the total consideration payable for the same remain disputed. If the extent was ascertained on measurement, when it was done is not pleaded. At paragraph 13 of the plaint it is pleaded that a sketch of the property is available and is stated to be produced along with the plaint. However, for some reason, undisclosed and best known exclusively to the plaintiff alone, the same is not marked in evidence. Who prepared the sketch and when it was prepared is not revealed. PW3 is a document writer who claims to have been entrusted with preparation of the proposed sale deed. He has deposed that he was entrusted with the money for purchase of stamp paper calculating the value based on the extent of property as stated in the tax receipt. The relevant portion reads thus :-
"മമുഹമ്മദമുദും അബബദമുൾ സലലീമമുദും കകൂടടി വനബ stamp paper വവാങവാൻ 35000/-രകൂപ എനടികബ തനമു . ഭകൂമടിയമുടട Fair Value ഓർമ്മയടില . നടികമുതടി ശലീടടിടല വടിസബതലീർണദും നനവാകടി Fair Value കണകവാകടി." Therefore, it is evident that, the plaintiff’s claim that the total extent of the property is only 35 cents and that he is bound to pay only an amount of ₹ 11,57,050/- towards the balance consideration, has no basis.
Ext.A1 mentions the extent as 39.369 cents. The value is on centage basis, at ₹ 1,31,000/- per cent. Therefore, the value of 4.369 cents cannot be said to be negligible. The readiness and willingness expressed by the plaintiff is to perform the agreement treating the extent as 35 cents and to pay the balance consideration for the same on pro rata basis. The plaintiff did not venture to take out a survey commission in the suit and demonstrate that the extent of the property covered under Ext.A1 is only 35 cents. In the circumstances, the readiness and willingness expressed by the plaintiff cannot be held to be, to perform Ext.A1 agreement as per its terms. Therefore, we are unable to find the readiness and willingness of the plaintiff to perform Ext.A1 as per its terms. A decree for specific performance is liable to be declined for the said reason.
The period stipulated in Ext.A1, for its performance was 4 months ie. upto 24.09.2012. Out of the balance consideration payable, the defendant paid a further amount of ₹ 15 lakhs but, only on 25.01.2013 that is, after the period fixed for performance. The plaintiff, though claimed that he had the entire balance consideration available with him, failed to produce any document to substantiate the same. In his cross-examination, PW1 initially deposed,
“കരവാറടിടല അവധടികബ/നശഷമവാണബ പപതടികബ 15 ലകദും ടകവാടമുത്തതബ . അനബ എടന്റെ കകയടിൽ മമുഴമുവൻ പണവമുദും ഉണബ . അതബ Bank ൽ ഉണബ. ബവാകടി പണദും എടന്റെ account ൽ മമുഴമുവനമുദും ഉണവായടിരമുനമു . 2-3 account ലവായടി. അതടിടന്റെ നരഖകൾ ഹവാജരവാകവാൻ പററദും .” However in further cross examination he deposed,
“ബവാകടി പപതടിഫലദും ടകവാടമുകവാനമുള്ള സദുംഖഖ്യ എടന്റെ account ലമുദും നവടറ കടിടവാനമുദും ഉണവായടിരമുനമു . എടന്റെ account ൽ മവാപതദും ആ പണദും ഉണവായടിരമു നനവാ എനബ ഓർമ്മയടില . എടന്റെ കകയടിലമുദും പണദും ഉണവായടിരമുനമു . 2-3 നപർ ഞവാൻ നചേർനവാണബ സ്ഥ ലദും എടമുത്തതബ .” Initially he claimed that the entire balance consideration was available with him in his various Bank accounts and that the records could be produced. In further cross-examination he deposed that he is not sure whether the entire amount was available in his accounts. Then he adds that the property was intended to be purchased along with 2-3 others, suggesting that he was not to bear the entire consideration and that part of the consideration was to be provided by them. This has to be considered along with the failure on his part to produce any document to show the availability of the entire balance consideration. This would tell upon his readiness to perform the agreement. Section 16 (c) makes it obligatory on the part of the plaintiff to plead and prove his readiness and willingness to perform the agreement.
The above apart, a mere finding that an agreement for sale is genuine does not entail a decree for specific performance. Under Section 20 of the Specific Relief Act, 1963, the Court is vested with a discretionary power to consider whether in a given case, having due regard to the circumstances involved therein a decree for specific performance is liable to be granted or not. However, the exercise of discretion cannot be whimsical and arbitrary but should be grounded on legal principles. In the case at hand, Ext.A1 agreement was dated 24.09.2012. The period fixed for performance was 4 months, which expired on 24.01.2013. However, the suit is filed only on 31.10.2015 that is, almost at the eve of limitation. There is no specific explanation for the delay.
The centage value agreed to in Ext.A1 indicates that the property in question is a valuable one. In the written statement, at paragraph 9 it is specifically pleaded that, by passage of time the value of the property has risen multiple times. It is of common knowledge that the prices of the property have been sky rocketing. Though that by itself could not be a reason to decline specific performance, in the circumstances noted above, especially when no explanation is forthcoming for the delay of almost 3 years to seek for enforcement, it definitely is a circumstance to be taken into consideration.
Under the circumstances as noticed above, we are of the opinion that this is not a fit case where discretion is to be exercised to grant a decree for specific performance. Therefore, for the said reason also the plaintiff is not entitled for a decree for specific performance.
The plaint contains an alternate prayer for return of the advance sale consideration paid. The receipt of ₹ 20 lakhs on the date of agreement (24.09.2012) and ₹ 15 lakhs on 25.01.2013 is not disputed. There is no proof of the defendant having sustained any damages consequent to the non-performance of the agreement. The defendant is bound to return the advance sale consideration received, with reasonable interest thereon. It has been brought out in the cross-examination of DW1 that the advance amount received was utilised by him for settlement of Bank liability. Considering the entire facts and circumstances, we are of the opinion that grant of interest at the rate of 12% on ₹ 20 lakhs and ₹ 15 lakhs from the dates of their respective payments till the date of suit, and thereafter at the rate of 9% per annum till the date of decree, and thereafter at 6% till realisation would be just and reasonable.
In the result, the appeal is allowed. Setting aside the decree and judgment of the trial court the suit will stand decreed allowing the plaintiff to realise an amount of ₹ 20 lakhs with interest at the rate of 12% per annum from 24.09.2012 till date of suit, and an amount of ₹ 15 lakhs with interest at the same rate from 25.01.2013 till date of suit, and thereafter at the rate of 9% per annum on the said amounts till date of decree, and at 6% thereon till realisation, from the defendant and his assets. The plaintiff shall be entitled for proportionate costs throughout.