When the contract has become impossible for no fault of the plaintiff and land has been acquired by the acquiring body, they are eligible for compensation instead and in substitution of specific performance under section 21 of the Specific Relief Act. This judgment was passed in the case of Sukhbir vs. Ajit Singh [C.A.No.- 1653/2021] by a Double Bench consisting of Hon’ble Shri Justice Dr. D.Y. Chandrachud and Hon’ble Justice M.R. Shah.

An agreement to sell was executed by the appellant in favor of the respondent with respect to land for a consideration of Rs. 32 lakhs, out of which the respondent paid to the appellant Rs. 31,50,000/- to the appellant. Upon the failure of the appellant to execute the sale deed, the respondent served a legal notice to be present at the sub-registrar to register the same. when the appellant refused to remain present, the respondent filed a suit for specific performance of the agreement to sell and hand over the possession of the land. It was also alternatively prayed for the recovery of Rs.31,50,000/- @ 24% per annum from 9.3.2010 till the date of payment. Further before passing the final decree, the land was acquired by the acquiring body under section 6 of the land acquisition act. However, this information was not brought to the attention of the trial court. The trial court passed the judgment in favor of the respondent with all the remedies prayed.

The High Court reaffirmed the decision of the Trial Court based on the case of Jagdish Singh vs. Nattu Singh [1992 1 SCC 647] where after the land in question was acquired by way of section 21 of the Specific Relief Act, it was held that the plaintiff is entitled to take all benefits of compensation along with solatium and interest, etc. due to the acquisition of land.

The counsel for the appellant argued that as under section 21 (1) of the specific relief act when the contract is broken by the defendant (here appellant) the compensation may be granted. However, under section 21(5) of the Act, when the same has not been prayed for by the other party no compensation shall be awarded. Therefore the Respondent is eligible only for Rs. 31,50,000 along with interest which amounts to approximately Rs. 80 lakhs. The counsel for respondent relying on another case of Urmila Devi vs. Deity, Mandir Shree Chamunda Devi [2018 2 SCC 284] argued that under section 21 of the specific relief act they are eligible for compensation when the contract was impossible for no fault of the plaintiff (here respondent).

The Hon’ble Supreme court opined that as held in the case of Jagdish Singh and Urmila Devi, the question specifically was whether the plaintiff (here respondent) was entitled to the amount of compensation received in the land acquisition proceedings or was entitled only to the refund of the earnest money. The Supreme court held that under section 21 it would be an award of compensation instead of and substitution of the specific performance. For calculation of the same, the compensation under the Land Acquisition Act to be damages subject to the deduction of the money value of service, time, etc. put in by the original landowner. Therefore making it clear that the decree for compensation holds good since it was passed as an alternate decree instead of the decree of the specific performance.

As far as the amount of compensation was concerned the Hon’ble Supreme Court held that while the respondent is eligible for the compensation with solatium and interest the amount of time, energy, and other expenses spent by the original owner of the land that is the appellant shall be deducted. The Supreme Court thus held, “the appellant- defendant shall be entitled to Rs. 3,00,000/- from the amount of compensation deposited with the acquiring body and the balance amount of compensation together with interest and solatium to be paid to the original plaintiff.”

Click here for the Judgment.