Examine the entire material on record for the purpose of satisfying itself, whether a prima facie case is made out against the accused or not: Supreme Court

Once a suit for specific performance has been filed, any delay as a result of the Court process cannot be put against the plaintiff in decreeing specific performance. However, it is within the discretion of the Court based on the facts of each case, as to whether some additional amount ought or ought not to be paid once a decree of specific performance is passed. This auspicious judgment was recently passed by the Supreme Court of India in the matter of A.R. MADANA GOPAL V M/S RAMNATH PUBLICATIONS PVT. LTD. AND ANR. [Civil Appeal Nos.3523-3526 of 2010] by Honourable Justice L. Nageswara Rao and Justice S. Ravindra Bhat.

These Appeals are filed against the judgment of the Division Bench of the Madras High Court by which a decree for specific performance passed by the learned Single Judge was reversed. Appellant filed four suits for specific performance of the agreements of sale dated 20.03.1991 and Memoranda of Understanding (MOU) dated 24.01.1994 and also prayed for a direction to deliver vacant possession of the schedule property at the dispense of the respondent and a decree of permanent injunction restraining the Respondents from alienating or encumbering the suit property and a decree of mandatory injunction to deposit the title deeds with the Court.

It was alleged that the Respondent entered into separate agreements and the sale was to be concluded within a period of four months. The Respondents would produce the encumbrance certificate much before the execution and registration of the sale deeds and obtain the income tax. To comply with these terms the Respondent applied to the Income Tax authorities for permission to alienate the property and an order for compulsory acquisition of property was passed.

This order of the Income Tax authority was challenged in a writ petition in Madras High Court and the authorities were directed to reconsider the matter afresh. Another order directing the purchase of the property was passed and an interim order of injunction was given by the HC.

The parties were directed to not change the nature of the property and henceforth Appellants and Respondents entered into four separate MOUs and these were in addition and not in substitution. It was agreed that the Respondents shall continue to keep the original title deeds until completion of the sale by registration of the sale deeds. Certain amounts were paid by the Appellants and the balance of the sale price shall be paid to the Respondents at the time of registration of the sale deeds immediately after the disposal of the Writ Petitions in their favour.

The Writ Petitions filed against the compulsory acquisition by the Income Tax authorities were disposed and the judgment of the learned Single Judge of the High Court allowing the Writ Petitions was challenged by the Income Tax department by way of filing an appeal. When the Appellants made a demand for execution of sale deeds, the Respondents informed them that it can be done only after disposal of the Writ Appeal. Indian Bank filed a suit for recovery of its dues from the Respondents as the Respondents were not executing the sale deeds in spite of repeated requests, the Appellants filed separate suits for specific performance.

It was observed that “The Appellants were always ready and willing to perform their part of the agreement. The Appellants asserted that the interpretation of the MOU is contrary to the well-settled law of this Court. The Division Bench of the High Court placed undue emphasis on the word “immediately” to conclude that the Appellants failed to pay the balance consideration immediately after the disposal of the Writ Petition.”

It was also added, “The High Court lost sight of the words “at the time of registration of sale” in clause 3 of MOUs. A plain reading of clause 3 in the MOU’s would show that the Appellants were required to pay the balance sale consideration at the time of the registration of the sale deeds immediately when the Writ Petition is disposed of upholding the sale agreement. The High Court further found fault with the Appellants in waiting for 2 years and 3 months after the disposal of the Writ Petition for filing the suits. The finding of the Division Bench of the High Court that the Appellants were not ready and willing to perform their part of the contract by not paying the balance consideration immediately after disposal of the Writ Petition is erroneous.”

Thus, the court said that “Escalation of prices cannot be the sole ground to deny specific performance”. Thus, the judgment of the High Court was set aside and the judgment and decree passed by the learned Single Judge are restored.

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