Specific performance refused for inequitable delay and statutory impediments, but restitution and compensation were still allowed in substitution.

Specific performance of an agreement to sell may be refused where prolonged non-performance, failure to secure required approvals within a reasonable time, statutory restraints affecting the property, and later changes in character and value make enforcement inequitable. The Court treated those supervening circumstances as defeating discretionary relief under the Specific Relief Act, 1963. Even so, it held that monetary restitution could still be granted in substitution, including refund of consideration with interest and additional compensation. Because the respondents retained part of the property, they were also directed to restore possession of that portion to the appellant.

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Issues: (i) whether the agreement to sell could be specifically enforced in the circumstances of prolonged non-performance, statutory restraints, and change in the character and value of the property; (ii) whether, if specific performance was refused, compensation and restitutionary relief could nevertheless be granted, along with recovery of possession of the portion retained by the respondents.

Issue (i): Whether the agreement to sell could be specifically enforced in the circumstances of prolonged non-performance, statutory restraints, and change in the character and value of the property.

Analysis: The contractual setting showed that the parties contemplated performance within a reasonable time, since permissions and sanctions required for the project had to be secured promptly and the stipulated steps in the agreement pointed to completion within a few years. The respondents did not secure the necessary approvals within that reasonable period, while the property was also affected by urban land ceiling restrictions, partial acquisition, and repeated refusal of building sanction. The Court treated these supervening circumstances, together with the long delay and the sharp rise in land value, as making enforcement inequitable. It held that the discretion under the Specific Relief Act, 1963 could not be exercised in favour of enforcing the contract.

Conclusion: Specific performance was rightly refused and the decree in favour of the respondents could not stand.

Issue (ii): Whether, if specific performance was refused, compensation and restitutionary relief could nevertheless be granted, along with recovery of possession of the portion retained by the respondents.

Analysis: Even though the contract was not to be specifically enforced, the Court held that compensation could be awarded in substitution because the claim for such relief was expressly available under the Specific Relief Act, 1963. On the facts, refund of the consideration paid, with interest, and an additional compensatory amount were considered appropriate. Since the respondents had retained possession of a small part of the property, they were also directed to restore that portion to the appellant.

Conclusion: Compensation in lieu of specific performance was allowed, refund with interest was ordered, and the respondents were directed to deliver back the retained portion of the property.

Final Conclusion: The appeals succeeded in setting aside the decree for specific performance, but the respondents were granted monetary restitution and compensation, and the retained portion of the property was ordered to be restored to the appellant.

Ratio Decidendi: In a suit for specific performance of immovable property, the court must refuse enforcement where prolonged default, supervening statutory impediments, and subsequent circumstances make performance inequitable or impracticable, though compensation may still be awarded in substitution.

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