Trial Court Can Grant Specific Performance Even Without Separate Prayer For Declaration Of Termination Of Contract: Kerala High Court
The Kerala High Court has recently answered the question of whether a trial court can grant a decree of specific performance when it has not made a declaration that termination of agreement was not binding on the defendant in the suit.
The Court has held that in suits for specific performance, if the defendant did not specifically terminate a sale agreement but went on to extend the time for performance, then there would not arise any need for a prayer to declare the agreement's termination as illegal. Therefore, just because such a prayer was not made by the plaintiff, the suit or the decree of the trial court would not fail.
The judgment was passed by Justice C. Pratheep Kumar while considering a Regular First Appeal (RFA) that challenged a decree of specific performance passed by the trial court.
Facts
The plaintiff and the defendants entered into a sale agreement (Exhibit A1) whereby the defendants agreed to sell a mortgaged property for a total consideration of Rs. 10.75 lakhs. As per the agreement, Rs. 2 lakhs was paid on the date of the agreement (15.1.2007) and Rs. 3 lakhs were to be paid within one month. The rest of the amount (Rs. 5.75 lakhs) were to be paid and the sale deed were to be executed within 3 months, i.e., 15.4.2007. The defendants also had to redeem the mortgage before the registration of sale deed.
The defendants redeemed the mortgage on 12.4.2007 and the release deed was registered on 25.4.2007. A total of 5.75 lakhs was paid by the plaintiff to the defendants by 27.3.2007 but the full amount agreed to was not paid before the expiry of the 3 months. However, the plaintiff had contacted the defendants many times to express his willingness to perform his part regarding payment and execution of sale deed.
When there was no response, the plaintiff issued a lawyer's notice (Exhibit A2) on 4.5.2007 calling upon the defendants to execute the sale deed. On 17.5.2007, defendants sent a reply (Exhibit A3) that the agreement expired due to the fault of the plaintiff but one more opportunity would be given to the plaintiff to come to the Registrar Office on 25.5.2007 with prepared sale deed and balance consideration. In the reply, it was further stated that unless a written reply is given within 48 hours of receipt of the same, there would no longer be any opportunity for amicable resolution.
The plaintiff sent a telegram to the defendants on 23.5.2007 intimating about his readiness and the same was served on the defendant on 24.5.2007, as per the evidence on record. Thereupon, the plaintiff purchased stamp paper worth Rs. 1,45,200/-, prepared the sale deed and waited for the defendants in the Sub-Registrar office on 25.5.2007 with the balance sale consideration. However, the defendants did not turn up. The plaintiff surrendered the unused stamp paper and got a refund.
The plaintiff filed a suit for specific performance against the defendants. The trial court decreed the suit and directed the defendants to execute a sale deed in performance of Exhibit A1 agreement. Aggrieved, the defendants have filed the appeal before the High Court.
Arguments of the appellants/defendants
The defendants argued that time was the essence of the contract and after the expiry of the period of the agreement, it was terminated. Therefore, without a declaration/prayer for declaration that the termination of the agreement is illegal or not binding on the defendants, a decree of specific performance cannot be granted. Reliance was also placed on Sikander L.S. (D) Lrs. v. K. Subramani (2013) to say the same.
They also relied on the Apex Court decision of Mohinder Kaur v. Sant Paul Singh to state that merely because there was no intimation regarding the release of mortgaged property, it cannot be construed that there was no readiness or willingness on the part of the defendants.
Arguments of the respondent/plaintiff
The plaintiff, on the other hand, urged that time was not of the essence since the time to comply with the agreement was extended by the conduct of the parties. Therefore, since there was no termination of the contract, there was no need for a prayer for declaration of termination of contract as illegal or non-binding.
The plaintiff relied on the decisions of the Supreme Court in A. Kanthamani v. Nasreen Ahmed (2017) and Kandasamy R. v. T.R.K. Saraswathy, which distinguished the decision relied by the defendants.
Finding
The main question considered by the Court was whether the trial court was justified in granting specific performance when there was no prayer for declaration that the termination of agreement was not binding on the defendants.
The Court accepted the decisions put forth by the plaintiff, which had clarified that unless an issue as to maintainability is framed by the trial court, a suit cannot be held to be not maintainable at the appellate stage only because appropriate declaratory relief had not been prayed for.
The Court also noted that in Kandasamy R. v. T.R.K. Saraswathy, it was held that failure to frame an issue on maintainability of suit touching jurisdictional fact at the trial stage would not by itself curtail the powers of appellate courts to examine whether the jurisdictional fact did exist for the grant of relief as claimed. However, no new facts or no new evidence could be brought in at the appellate stage.
The Court summarised the position of law as it exists now:
“Therefore, it is clear that in case the agreement was terminated by the seller, there should be a prayer for declaration that the termination of the agreement for sale is bad in law, or that it does not bind the plaintiff and in the absence of such a prayer, the suit filed for specific performance will not be maintainable.”
The Court further noted that the contract period of 3 months was extended by the conduct of the parties. Another opportunity was given as per Exhibit A3 to come to the Registrar Office with sale deed and balance sale consideration without specifically rescinding the contract. In such circumstances, it cannot be said that time was of the essence or that the period of the contract had expired.
The learned Single Judge examined the evidence on record to find that since, by the conduct of parties, the agreement was not terminated, there is no need for a declaration that the termination was bad in law. Therefore, the Court opined that the failure of the trial court to frame an issue regarding the maintainability of the suit was not fatal to the decision passed.
The Court also found that the plaintiff was ready and willing to perform his part of the contract whereas the defendants were not. The act of the plaintiff in purchasing stamp paper, getting the sale deed written, taking out the balance sale consideration and coming to the Sub-Registrar office, all showed that the plaintiff was ready and willing. On the other hand, the defendants did not show up at the Sub-Registrar office and stayed away on the agreed date of meeting to avoid performing the contract.
There was another argument by the defendants that the increase in the value of property after so long would give unjust enrichment to the plaintiff. Regarding the same, the Court held that since there was no delay or default on the plaintiff but only unwillingness on the part of the defendants, the latter cannot take advantage of their own fault.
Thus, the Court dismissed the appeal and upheld the decision of the trial court.
Case No: RFA No. 725 of 2008
Case Title: Vimala Sneham and Ors. v. Babu Joseph
Citation: 2025 LiveLaw (Ker) 379
Counsel for the Appellants: M.V. Bose, Vinod Madhavan, P.M. Mazna Mansoor, Nisha Bose
Counsel for the Respondent: T. Krishnanunni (Sr.), C. Dilip, Vinod Ravindranath, M.R. Mini, Ashwin Sathyanath, K.C.Kiran, Meena A., Anish Antony Anathazhath