A.R. MADANA GOPAL VS. M/S. RAMNATH PUBLICATIONS Pvt. Ltd.

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CITATION	Civil Appeal Nos.3523-3526 of 2010
DATE OF JUDGMENT	April 09, 2021
COURT	Supreme Court of India
APPELLANT	A.R. MADANA GOPAL ETC.ETC.
RESPONDENT	M/S RAMNATH PUBLICATIONS PVT. LTD. AND ANR.
BENCH	S. Ravindra Bhat, L. Nageswara Rao

INTRODUCTION

In April 2021, the Supreme Court delivered its judgment in A.R. Madana Gopal v. Ramnath Publications Pvt. Ltd. (2021), addressing the criteria for refusing specific performance. Despite the 2018 amendment to the Specific Relief Act, 1963, which mandates the enforcement of specific performance of contracts, the Supreme Court identified conditions under which specific performance can be denied. This article aims to examine these conditions as highlighted in the case and reviews several other Supreme Court rulings on the matter.

FACTS OF THE CASE

The case involves the sale of four properties by the respondents to the appellants, with the sale deeds set to be executed within four months. To facilitate this, the respondents requested a clearance certificate from the Income Tax authority.
However, the authority ordered the compulsory acquisition of the property, prompting the respondents to challenge this decision in court by filing writ petitions. Meanwhile, the parties entered into four Memorandums of Understanding (MoUs).
Subsequently, when the appellants requested the execution of the sale deed, the respondents replied that it could only occur after the resolution of the cases.
After a while, the appellants learned that the property was already encumbered, prompting them to file a suit for specific performance. The Single Judge of the High Court ruled in their favour. However, the respondents challenged this decision before the Division Bench, which overturned the Single Judge’s order.
Consequently, an appeal was filed in the Supreme Court, leading to the current case.

ISSUES RAISED

Is the Division Bench of the High Court justified in denying specific relief to the appellants based on their failure to pay the remaining amount immediately after the writ petitions were resolved?
What are the potential grounds for denying specific performance?

CONTENTIONS OF APPEALENT

The appellants contended that they had already paid 90 percent of the amount to the respondents in August 1994, for which they received possession of part of the property. They were informed that the agreements would be executed only after the writ appeal was resolved.
Regarding the agreements and the MoU, they argued that both should be interpreted together. They highlighted the recital section, which stated that “the payment should be made at the time of registration of sale deeds immediately after the disposal of writ petitions.” They believed the High Court overly focused on the word “immediately” while overlooking the phrase “at the time of registration of sale deeds.”
Therefore, upon learning that the property was encumbered, they promptly filed a suit for specific performance. Hence, it cannot be said that the appellants delayed in filing the suit, as they were consistently prepared to fulfil their part of the agreement and pay the remaining amount.
Additionally, they argued that they did not proceed with executing the agreements because the Income Tax authority had filed an appeal.
The suit for specific performance was not barred by the statute of limitations, entitling them to specific relief.
Also, they referred to the amended Section 10 of the Specific Relief Act, 1963, which states that specific performance is no longer at the court’s discretion and must be enforced mandatorily.

CONTENTIONS OF REPONDENT

The respondents contended that timely adherence is crucial under the agreements and MoUs between the parties.
They believed that despite the petitions being resolved in favour of the respondents, the appellants did not file suits for specific performance for two years and three months, which they considered critical given the urgency of the situation.
Additionally, they argued that the increase in prices is a pertinent factor, especially considering the property’s location in Chennai.
Finally, they contended that the MoUs did not include a clause granting possession to the appellants, yet they took possession of a portion of the property. They not only failed to prove this possession but also attempted to disrupt Indian Bank’s possession.

JUDGEMENT

The Hon’ble Court concurred with the appellants’ view that the High Court’s decision was flawed because it failed to consider the phrase “at the time of registration of sale deeds.” The Court interpreted this clause to mean that the balance amount would be payable at the time of registration, which should occur immediately after the disposal of the petitions.

Additionally, the Court agreed with the appellants that the delay in filing the suit was due to the appeal filed by the Income Tax authority, affirming that this delay was justified. The Court held that non-payment of the balance amount cannot be the sole ground for denying specific relief.

Furthermore, the Court stated that the appellants’ failure to plead the manner in which they received possession cannot be a ground to deny relief. Specific relief cannot be denied based on the appellants’ alleged trespass and disturbance, as Indian Bank was neither a tenant nor a mere creditor. The Court emphasized that frivolous complaints, non-pleading the manner of possession, and claims of trespass are not valid grounds for denying equitable relief.

The Court also noted that the escalation of property prices cannot be considered the sole factor for denying relief. A suit for specific performance cannot be denied solely on the grounds of delay or laches, except in cases involving immovable property where time is of the essence. In the present case, the delay was not due to the appellants’ default, and therefore, they could not be denied relief.

Finally, the Court mentioned that the decision to provide an additional amount depends on the circumstances of each case. In this instance, since ninety percent of the amount had already been paid before 1994, the respondents were not entitled to any additional amount.

ANALYSIS

In the case of A.R. Madana Gopal v. M/S. Ramnath Publications Pvt. Ltd. (2021), the Supreme Court of India addressed the criteria for denying specific performance in light of the 2018 amendment to the Specific Relief Act, 1963. The case involved the sale of four properties, with the appellants having paid 90 percent of the amount and awaiting the disposal of writ petitions for the execution of sale deeds. The respondents argued that the appellants delayed filing the suit for specific performance and that price escalation and lack of adherence to the agreement’s timelines were grounds for denial. The Supreme Court found the High Court’s decision flawed for not considering the clause that stipulated payment at the time of registration, which should occur immediately after the writ petitions’ resolution. The Court held that non-payment of the balance amount, the manner of obtaining possession, and allegations of trespass could not solely justify denying specific performance. The Court emphasized that the appellants’ delay was justified due to the Income Tax authority’s appeal and ruled that price escalation alone cannot be a factor for denying relief. As the appellants had already paid most of the amount by 1994, the respondents were not entitled to any additional payment. This judgment underscores the Supreme Court’s commitment to enforcing specific performance unless substantial and justified reasons for denial are presented.

CONCLUSION

The case of A.R. Mardana Gopal marks another milestone where the Supreme Court clarified the criteria for granting or denying specific performance. Factors such as price escalation, failure to specify how possession was obtained, and incomplete payment of the balance cannot justify denying specific performance and thus rejecting equitable relief.

REFERENCES

This Article is written by Ayushi Sinha student of Lloyd School of Law, Greater Noida; Intern at Legal Vidhiya.

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