Relinquishment Of Claims Under S.12(3) of Specific Relief Act For Part Performance Can Be Made At Any Stage Of Litigation including at appellate stage

1. We have heard Mr. S. Nagamuthu, the learned Senior counsel

appearing for the petitioner (original plaintiff) and Mr. Balaji

Srinivasan, the learned counsel appearing for the respondents

(original defendants).

2. This petition arises from the judgment and order passed by the

High Court of Judicature at Madras dated 24.03.2023 in Appeal Suit

No. 211 of 2013 by which the High Court dismissed the appeal and

thereby affirmed the judgment and decree passed by the District

Judge of Nilgiris at Udhagamandalam dated 18.02.2010 in Original

Suit No. 45 of 2008. It appears from the materials on record that

the petitioner herein (original plaintiff) instituted Original Suit

No. 45 of 2008 seeking specific performance of the agreement dated

07.11.2005 and for delivery of possession of the suit property. In

the alternative, he prayed for Rs. 60,00,000/- with interest at 12

per cent per annum towards the damages from the date of filing of

the suit.

3. The Trial Court rejected the prayer for specific performance and

directed that the amount of Rs. 20,00,000/- paid by the plaintiff

to the defendants towards the earnest money be refunded with

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interest at 12 per cent per annum.

4. The Trial Court framed the following issues:

“1. Whether the plaintiff is entitled to the relief of

specific performance of sale agreement dated

07.11.2005 with modifications as prayed by him?

2. Whether the plaintiff is entitled to possession of

the suit property described in the plaint schedule

excluding the portion in the possession of the

tenants?

3. In the alternative, whether the plaintiff is

entitled to refund of the advance amount of

Rs.20,00,000/- and for damages to a tune of

Rs.40,00,000/- from the defendants?

4. Whether the plaintiff is entitled to claim interest

at the rate of 12% p.a. on the above amounts? (end of

the 6th page in original)

5. Whether the plaintiff is entitled to charge over

the suit property for the above amounts as claimed by

him?

6. To what other reliefs the plaintiff is entitled?”

5. The Trial Court recorded a finding that the plaintiff was not

ready and willing to perform his part of the contract. Besides, the

plaintiff had failed to plead and prove that he has suffered

damages.

6. The High Court while deciding the appeals framed the following

points for its determination:

“(1) Whether the plaintiff was ready and willing

to perform his part of the agreement of sale dated

07.11.2005?

(2) Whether the plaintiff can seek to invoke Sec.12

of the Specific Relief Act, 1963?

(3) Whether the plaintiff is entitled to the

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discretionary and equitable relief of specific

performance?

(4) Whether the plaintiff, in the event of not

being entitled to the relief of specific

performance, would be alternatively entitled to the

relief of damages and refund of advance to the tune

Rs.40,00,000/- and Rs.20,00,000/- respectively?”

7. The High Court in Para 35 while discussing Section 12 of the

Specific Relief Act (for short, “the Act”) has observed as under:-

“35. Thus, when the plaintiff has chosen to waive only

one of the obligations that remained unfulfilled at the

end of the defendants, it is not open to the plaintiff

to seek shelter U/s.12 and claim specific performance

of the part of the agreement of sale in his favour.

Interestingly, it is also seen that apart from seeking

relief of specific performance, the plaintiff has also

made a claim for damages besides refund of advance.

Thus, the plaintiff does not qualify to invoke clause

(ii) of Sub-Section (3) to Sec.12, when admittedly, he

has not relinquished “all claims” and when he

approaches the Court seeking damages. This Court also

holds that Sec.12(3) is only a discretionary relief,

which can be granted to the plaintiff, depending on

peculiar facts and circumstances of the case. In the

opinion of this Court, Sec.12(3) cannot be invoked

where the terms of the contract are not capable of

being segregated. In the instant case, we do not find

that the agreement of sale can be compartmentalised in

order to grant specific performance of only a part of

the agreement of sale. It is also seen that A.S.Nos.211

and 355 of 2013 mandate of Sec.12 is very clear in so

far as payment of the whole of the consideration.

Admittedly, in the instant case, the plaintiff has paid

only a sum of Rs.20,00,000/- and a sum of

Rs.64,00,000/- was still outstanding. Unless the

plaintiff’s pay or has paid the sum of Rs.64,00,000/-

he was not even justified in invoking the part

performance of the agreement of sale by resorting to

Sec.12 of the Act.”

8. The learned Senior counsel appearing for the petitioner

(plaintiff) reiterated that his client is entitled to the benefit

of the provisions of Section 12(3) of the Specific Relief Act (for

short, “the Act”) and the High Court has not appreciated this

aspect of the matter in its true perspective.

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9. Section 12 of the Act:

“12. Specific performance of part of contract.—(1)

Except as otherwise hereinafter provided in this

section, the court shall not direct the specific

performance of a part of a contract.

(2) Where a party to a contract is unable to perform

the whole of his part of it, but the part which must

be left unperformed by only a small proportion to the

whole in value and admits of compensation in money,

the court may, at the suit of either party, direct the

specific performance of so much of the contract as can

be performed, and award compensation in money for the

deficiency.

(3) Where a party to a contract is unable to perform

the whole of his part of it, and the part which must

be left unperformed either—

(a) forms a considerable part of the whole, though

admitting of compensation in money; or

(b) does not admit of compensation in money;

he is not entitled to obtain a decree for specific

performance; but the court may, at the suit of other

party, direct the party in default to perform

specifically so much of his part of the contract as

he can perform, if the other party—

(i) in a case falling under clause (a), pays or has

paid the agreed consideration for the whole of the

contract reduced by the consideration for the part

which must be left unperformed and in a case

falling under clause (b), pays or has paid the

consideration for the whole of the contract without

any abatement; and

(ii) in either case, relinquishes all claims to the

performance of the remaining part of the contract

and all right to compensation, either for the

deficiency or for the loss or damage sustained by

him through the default of the defendant.

(4) When a part of a contract which, taken by itself,

can and ought to be specifically performed, stands on

a separate and independent footing from another part

of the same contract which cannot or ought not to be

specifically performed, the court may direct specific

performance of the former part.

Explanation.—For the purposes of this section, a party

to a contract shall be deemed to be unable to perform

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the whole of his part of it if a portion of its

subject-matter existing at the date of the contract

has ceased to exist at the time of its performance.”

10. A bare perusal of the aforesaid provision contained in Section

12 of the Act makes it clear that it is not open to the High Court

to direct specific performance of a part of contract except

otherwise provided in the section in absence of any of the

exigencies available under the provisions of sub-sections (2), (3)

and (4) of Section 12 so as to decree the suit.

11. The words ‘unable to perform’ suggest that the sub-section is

applicable only when the party cannot for any reason perform the

whole of what he has promised. The inability may arise by any

cause whatsoever including any statutory limitations. The

inability to perform may arise by—

(i) deficiency in quantity of the subject-matter, or

(ii) variance in quality, or

(iii) defect in title; or

(iv) some legal prohibition; or

(v) other causes.

12. The expression ‘considerable part’ implies that the part which

will be left unperformed is either large as regards quantity or as

regards quality. In other words, it is material and not

insignificant, so that a reasonable objection can be taken by the

promisee to accept performance. The phrase ‘does not admit of

compensation’ implies that there is no data for ascertaining a

fair and reasonable amount as the money value of the difference

between what can be performed and the express subject-matter of

the contract. The amount need not be mathematically accurate. If a

reasonable estimate of the amount as the money value can be made,

it will not be a case where the compensation is unascertainable.

13. The power to grant partial relief, from the very language of

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Section 12(3) of the Act is discretionary with the court to be

exercised keeping in view the facts and circumstances of each case

and the rights and interests of the parties involved. Section

12(3) of the Act can be invoked only where the terms of contract

permit segregation of rights and interests of parties in the

property.

14. In view of the specific finding recorded by the courts below

that the plaintiff was not ready and willing to perform his part

of the contract and the plaintiff being in default he could not be

said to be entitled to invoke Section 12(3) of the Act also.

15. In the aforesaid context, we may refer to a decision of this

Court in Jaswinder Kaur (Now Deceased) through her Legal

Representatives and Others v. Gurmeet Singh and Others reported in

(2017) 12 SCC 810, wherein this Court observed in paras 19, 20 and

21 respectively as under:

“19. In Abdul Haq v. Mohd. Yehia Khan reported in AIR

1924 Pat 81, the Court observed that the Court will

not as a general rule compel specific performance of

a contract unless it can execute the whole contract.

It is not a case where the entire contract is not

capable of performance. Section 12 encompasses

provisions in respect of a claim for specific

performance of part of a contract. Sections 14 and 17

of the old Act have been amalgamated with

modifications and the explanation based on Section 13

of the repealed Act together, the law is stated with

clarity under Section 12 of the Act.

20. Section 12(1) of the Act provides that specific

performance can be granted on part of a contract only

in the circumstances mentioned in the section.

Section 12(2) of the Act deals with breach the

contract if a party is unable to perform the whole of

its part and such part bears a small proportion to

the whole in value and admits compensation in money.

The expression “unable to perform” in Section 12(2)

of the Act for instance would mean that a part of the

property destroyed after contract or act of God or an

act by which it would cease to exist. In such a case

party to a contract shall be deemed to be unable to

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perform the whole or its part of the contract. Such a

person would come within the words “party in

default”. The inability to perform may arise by

deficiency in quantity of subject-matter or

deficiencies or some legal prohibition or such other

causes. None of such causes is present in the instant

case.

21. Section 12 of the Act does not apply where the

inability to perform specific performance on part of

contract arises because of the plaintiff’s own

conduct as held in Abdul Rahim v. Maidhar

Gazi reported in AIR 1928 Cal 584.

In Graham v. Krishna Chunder Dey reported in AIR 1925

PC 45, it has been laid down that the Explanation in

the section exhaust all the circumstances in which

part-performance can be granted. Section 12(2) of the

Act deals with the situation where a party is unable

to perform and such part is only a small proportion

in value and capable of compensation in form of

money. It was not a case covered in Section 12(2) of

the Act at all. Under Section 12(3) of the Act party

in default is entitled to specific performance on

payment of whole consideration or for the part left

unperformed but here in the instant case the

plaintiff being in default could not be said to be

entitled to invoke Section 12(3) of the Act also.”

16. There is one another issue, we must look into and clarify. In

para 29, the High Court has observed as under:

“29. Learned Senior counsel for the plaintiff relied

on Sec.12 of the Act and vehemently contended that

the plaintiff would be entitled to a decree when the

plaintiff was willing to relinquish his claims to the

performance by the defendants, of the remaining part

of the agreement of sale. This Court at the very

outset notices that such a plea was never raised

before the Trial Court and no grounds have also been

raised in the memorandum of First Appeal in this

regard. However, this Court is inclined to deal with

the elaborate submissions made by the learned Senior

counsel for the plaintiff touching Sec.12 of the

Act.”

(Emphasis supplied)

17. Thus, the High Court expressed doubt whether the plea as

regards Section 12 of the Act if not raised before the Trial Court

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could have been raised for the first time before the High Court in

first appeal.

18. In the aforesaid context, we may only say that the

relinquishment of claim to further performance of the remaining

part of the contract and all rights to compensation can be made at

any stage of litigation. This was held in Kalyanpur Lime

Works v. State of Bihar reported in AIR 1954 SC 165. This Court

referred with approval to a Division Bench decision of the Lahore

High Court in Waryam Singh v. Gopi Chand, (AIR 1930 Lah 34).

19. In the case of Kalyanpur Lime Works (supra) the plaintiff had

sued the State of Bihar for specific performance of a contract for

lease. It was found that an earlier lease in favour of another

company was in force and could not be forfeited and, therefore,

the Government was not in a position to grant lease of the

property to the Lime company. The Lime Company made an application at the appellate stage claiming benefit of the provisions of old Section 15 and prayed for grant of lease for a period of five

years which remained after the expiry of the period of lease of

the other company. This Court observed:

“Relinquishment of the claim to further performance

can be made at any stage of the litigation.”

Thus, Waryam Singh’s case was referred to with approval. However,

the benefit of old Section 15 was not allowed on other

considerations.

20. In Waryam Singh’s case the defendant Nos. 1 and 2 respectively

had agreed to sell 200 Kanals of specified land, but later on it

was found that they were owners of only two-third of that land. In

the Trial Court the plaintiff insisted on specific performance of

the whole contract and prayed that the defendants be asked to make

good the deficiency from the other land belonging to them. At the

time of the arguments the plaintiff had moved an application

claiming benefit of the old Section 15 in case it was held that

the defendants were incompetent to sell the whole of the land. The

Division Bench held:

“It is open to the plaintiff to relinquish his claim to

any part of the property in suit on the conditions

specified in Section 15 at any time before the suit is

finally decided by the Court of appeal.”

21. Thus, the position of law is that relinquishment could be made at any stage of the litigation including the appellate stage. The claim of the plaintiff appellant for grant of benefit under

Section 12(3) of the Act was, therefore, rightly not rejected by

the High Court on the simple ground that it was not made at the

trial stage and had been made for the first time at the appellate

stage. In our view the claim can also not be rejected on the short

ground that it was not incorporated in the plaint or was not set

forth in writing before the Trial Court. [See: Ram Niwas v. Smt.

Omkari and another : AIR 1983 All 310]

22. We are of the view that no error not to speak of any error of

law could be said to have been committed by the High Court in

passing the impugned order.

23. In such circumstances, referred to above, the Special Leave

Petition fails and is hereby dismissed.

24. The amount of Rs.20,00,000/- which came to be deposited by the

defendants in the Trial Court in the form of refund of the earnest

money to the original plaintiff must have been invested by the

Court concerned with any bank by way of fixed deposit receipt, the

said amount shall be refunded to the petitioner – herein (original

plaintiff) within a period of four weeks from today with the

accumulated interest as awarded by the Court below.

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25. Pending applications, if any, also stand disposed of.

………………………………………………………J.

(J.B. PARDIWALA)

………………………………………………………J.

(R. MAHADEVAN)

New Delhi.

8th January, 2025.

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