SC: Mere delay by itself, without more, cannot be the sole factor to deny specific performance.

The Hon’ble Supreme Court, on 12th October 2020, in the matter of  Ferrodous Estates (Pvt.) Ltd. v. P. Gopirathnam (Dead) &  Ors.  pronounced that mere delay by itself, without more, cannot be the sole factor to deny specific performance. A suit for specific performance filed within limitation cannot be dismissed on the sole ground of delay or laches

The Hon’ble Supreme Court observed that:

An appeal is a continuation of a suit, as a result of which a change in law will become applicable on the date of the appellate decree, provided that no vested right is taken away thereby.  (Para 24)

Section 20 of the Specific Relief Act, 1963, prior to its substitution by the Specific Relief (Amendment) Act, 2018, makes it clear that the jurisdiction to decree specific performance is discretionary; but that this discretion is not arbitrary but has to be exercised soundly and reasonably, guided by judicial principles, and capable of correction by a court of appeal – see section 20(1). Section 20(2) speaks of cases in which the court may properly exercise discretion not to decree specific performance. Significantly, under clause (a) of sub-section (2), what is to be seen is the terms of the contract or the conduct of the parties at the time of entering into the contract. Even “other circumstances under which the contract was entered into” refers only to circumstances that prevailed at the time of entering into the contract. It is only then that this exception kicks in – and this is when the plaintiff gets an unfair advantage over the defendant. Equally, under clause (b) of sub- section (2), the hardship involved is again at the time of entering into the contract which is clear from the expression “which he did not foresee”. This is made clear beyond doubt by Explanation II of section 20 which states that the only exception to the hardship principle contained in clause (b) of sub-section (2) is where hardship results from an act of the plaintiff subsequent to the contract. In this case also, the act cannot be an act of a third party or of the court – the act must only be the act of the plaintiff. Clause (c) of sub-section (2) again refers to the defendant entering into the contract under circumstances which makes it inequitable to enforce specific performance. Here again, the point of time at which this is to be judged is the time of entering into the contract. (Para 28)

Mere delay by itself, without more, cannot be the sole factor to deny specific performance. (Para 30)

A suit for specific performance filed within limitation cannot be dismissed on the sole ground of delay or laches. However, an exception to this rule is where immovable property is to be sold within a certain period, time being of the essence, and it is found that owing to some default on the part of the plaintiff, the sale could not take place within the stipulated time. Once a suit for specific performance has been filed, any delay as a result of the court process cannot be put against the plaintiff as a matter of law in decreeing specific performance. However, it is within the discretion of the Court, regard being had to the facts of each case, as to whether some additional amount ought or ought not to be paid by the plaintiff once a decree of specific performance is passed in its favour, even at the appellate stage. (Para 31)

Copy of judgement: Judgement_12-Oct-2020

-Adv. Tushar Kaushik

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