2010 (11) TMI 858 - SC - Indian Laws

Supreme Court affirms plaintiff's contract readiness, clarifies property debt satisfaction.

The Supreme Court upheld the High Court's judgment, confirming the plaintiff's readiness and willingness to perform the contract under Section 16(c) of ... Decree for specific performance granted by the Principal District Court, Chengalpet confirmed - Held that:- Appeal dismissed. The factual findings rendered by the trial Court and the Appellate Court-High Court in respect of grant of decree for specific performance and application of principle of marshalling under Section 56 of the Transfer of Property Act, we are in entire agreement with the conclusion arrived by the High Court. We have also gone through the elaborate order of the High Court in review petitions filed by the appellants. As a matter of fact, after highlighting the jurisdiction under review, the Division Bench of the High Court had taken pains to discuss once again and rendered a finding on all aspects with which we fully agree. Inasmuch as we are confirming the impugned judgment of the High Court in toto, there is no need to refer the affidavit of undertaking filed by the first respondent herein and the objection raised by the appellants as to the contents of the same. Since we confirm the conclusion and ultimate decision of the High Court, we grant further time of three months from today for deposit of the balance amount as directed by the High Court in paragraph 85. In case defendant Nos. 1 and 2 fail to comply with the said directions in executing the sale deed, the trial Court is directed to execute the sale deed incorporating all the directions and observations made in the judgment of the High Court. Consequently, all the appeals are dismissed as devoid of any merit with no order as to costs. Issues Involved:1. Readiness and willingness under Section 16(c) of the Specific Relief Act, 1963.2. Nature of the contract as a contingent contract under Sections 31 and 32 of the Indian Contract Act, 1872.3. Application of the principle of marshalling under Section 56 of the Transfer of Property Act, 1882.4. Justification of the High Court in hearing a writ petition along with a regular first appeal.5. Directions issued by the High Court to the Bank contrary to orders passed by the Debts Recovery Tribunal (DRT).6. Justification of the High Court in granting costs in favor of the plaintiff.Detailed Analysis:1. Readiness and Willingness:The Supreme Court analyzed Section 16(c) of the Specific Relief Act, 1963, which mandates that the plaintiff must prove continuous readiness and willingness to perform the contract. The Court highlighted that 'readiness' refers to financial capacity, while 'willingness' pertains to the conduct of the plaintiff. The Court noted that the plaintiff had made substantial payments and demonstrated his financial capability through bank statements and fixed deposits, thus proving his readiness and willingness. The concurrent findings of the trial court and the High Court on this issue were upheld.2. Contingent Contracts:The appellants argued that the contract was contingent upon uncertain events, such as the Indian Bank agreeing to a One Time Settlement (OTS). The Court referred to Sections 31 and 32 of the Indian Contract Act, 1872, which define and govern contingent contracts. The Court found that the agreement for sale (Ex. A-3) was a fresh agreement and not contingent on the acceptance of the OTS by the Bank. The Court concluded that the conditions in the MoU (Ex. A-2) were not impossible to fulfill and upheld the High Court's finding that the contract was not a contingent contract.3. Marshalling:The Court examined the principle of marshalling under Section 56 of the Transfer of Property Act, 1882. The High Court had applied this principle to direct the Bank to satisfy its debt from other properties of the defendants before proceeding against the suit property. The Supreme Court upheld this application, noting that the plaintiff had paid substantial amounts and secured a decree for specific performance. The Court also observed that the Bank did not challenge the High Court's order, and the principle of marshalling was applied to ensure substantial justice without prejudicing the Bank's rights.4. Hearing of Writ Petition with Regular First Appeal:The Court addressed the objection to the High Court hearing a writ petition along with a regular first appeal. It noted that the parties and the subject matter in both proceedings were the same and that the High Court had jurisdiction to hear both matters together. The Supreme Court found no error in the High Court's approach, especially since the parties had not raised serious objections during the proceedings.5. Directions to the Bank:The appellants contended that the High Court's directions to the Bank were contrary to the orders of the DRT. The Supreme Court observed that the High Court's directions did not modify or erode the DRT's orders but safeguarded the interests of all parties, including the Bank. The Bank's acceptance of the High Court's verdict without filing an appeal further supported this conclusion.6. Award of Costs:The Supreme Court upheld the High Court's decision to award costs to the plaintiff. It noted that the plaintiff had paid a substantial court fee and secured a major relief in the form of a decree for specific performance. The award of costs was deemed justified in light of the substantial relief granted.Conclusion:The Supreme Court confirmed the High Court's judgment in its entirety, including the application of the principle of marshalling, the directions to the Bank, and the award of costs. The Court granted the plaintiff further time to deposit the balance amount and directed the trial court to execute the sale deed if the defendants failed to comply. The appeals were dismissed as devoid of merit.