Crux:
The Plaintiff Shall Be Entitled To Claim Compensation With Solatium And Interest On Land Acquisition Under Specific Relief Act.
Date of Judgement:
30 April, 2021
Bench:
Hon’ble Dr. Chandrachud, M.R. Shah
Parties:
Appellant : Sukhbir
Respondent :Ajit Singh
Subject
This case dealt with whether compensation can be demanded by the plaintiff as a result of non-performance of contract on the part of defendant. When the contract has become impossible to enforce as a result of acquisition of land, the plaintiff who has paid consideration and showed his willingness to pay the balance amount shall be entitled to receive compensation, interest and solatium as a rightful owner would have received in such a circumstance.
Legal Provisions
- Section 21 of the Specific Relief Actstates that the plaintiff for specific performance of contract shall be entitled to claim compensation, if the defendant commits a breach of contract.
- Section 6 of Land Acquisition Act, 1984 states that land may be acquired by government for public purpose after paying compensation and solatium to land owner.
Overview
- An agreement to sell was executed in favour of respondent Mr Ajit Singh, by the appellant for a sum of Rupees 32 lakhs. The respondent had paid Rupees 31,50,000 as consideration to the appellant.
- The appellant (original defendant) had failed to execute sale deed due to which the respondent (original plaintiff) had served legal notice to be present at the Sub - Registrar’s office.
- The appellant refused to execute the sale deed due to which the respondent instituted a Civil Suit in Haryana for specific performance of agreement and to transfer the possession of land in favour of appellant.
- In the suit, respondent prayed for recovery of Rupees 31,50,000/- along with an interest of 24% per annum from 9.03.2010 till the date of payment.
- The said land came to be acquired under Section 6 of Land Acquisition Act under notification dated 6.7.2012 before passing of the final decree. However, the acquisition of land in question was not brought to the knowledge of the court.
- The Trial Court passed the decree dated 19.12.2012 for specific performance and held in favour of the plaintiff. Further, the court directed the defendant to execute the sale deed and accept the balance consideration amounting to Rupees 50,000/- and transfer the possession of the property to the plaintiff.
- The appellant (original defendant) was aggrieved by judgement of Trial Court and the similar judgement passed by the First Appellate Court, and preferred second appeal before the High Court.
- It was contended by the appellant that since the land was acquired under Land Acquisition Act, he had no saleable right and interest in the property and therefore the agreement to sell cannot be executed.
- The counsel for the plaintiff cited the case of Jagdish Singh v. Natthu Singh, and stated that the where the land was acquired during pendency of suit , the court had held that the plaintiff shall be entitled to compensation along with interest and solatium, deducting any litigation expenses incurred by original land owner
- The High Court, accepting the contention of the plaintiff, stated that the plaintiff shall be entitled to all compensation and benefits received by the defendant.
- The defendant further appealed the judgement of the High Court and contended that:
(i) The land was acquired under Land Acquisition Act during pendency of the suit, and the defendant had no saleable right and interest in the suit property and therefore the provisions for the specific performance of the agreement could not apply.
(ii) Further, under Section 21 of the Specific Relief Act r/w Section 73 of the Indian Contract Act, the plaintiff shall be entitled only to the refund of the amount of consideration along with interest.
(iii) Section 21(5) states that no such compensation can be granted unless the plaintiff has claimed such compensation in the suit. The plaintiff therefore shall be able to recover Rupees 31,50,000/- along with interest and it was stated that the High Court has fallen into error by awarding compensation with solatium and interest.
- The counsel for the plaintiff citing the judgement of Jagdish Singh and Urmila Devi v. Deity, stated that the court had held that the original plaintiff shall be entitled to amount awarded under the Land Acquisition Act excludingthe expenses incurred by the original owner (defendant).
- The counsel for the plaintiff further contended that in the case of Jagdish Singh and Urmila Devi, with regard to Section 21 of the Specific Relief Act, when the contract becomes impossible to perform with no fault of the plaintiff, the Court can award compensation in lieu and substitution of the specific performance.
Issues
- Is the respondent entitled to claim compensation for the non-performance of the agreement to sell on the part of the appellant?
- Whether the High Court is justified in modifying the decree and judgement passed by the lower courts for specific performance?
Judgement Analysis
- The court, relying on the judgement of Jagdish Singh and Urmila Devi, stated that the plaintiff shall be entitled to the entire compensation including interest and compensation received through the Land Acquisition Act and solatium received by the defendant.
- The court, referring to Section 21 of Specific Relief Act further added that, where the contract becomes impossible to perform due to no fault of plaintiff, the compensation in lieu and substitution of specific performance may be received as award.
- The High Court observed that the respondent (plaintiff) shall be entitled to entire amount of compensation awarded under Land Acquisition Act along with interest and solatium. Further, the original land owner (appellant) shall be entitled to deduct litigation expenses and other related expenses incurred, if any.
- The Supreme Court, affirming the decision of the High Court, stated that respondent was willing and ready to perform the contract and therefore shall be entitled to the entire compensation. Further, rejecting the contention of the appellant, the court added that the High Court had not acted erroneously in modifying the decree for specific performance.
- The court remarked that the compensation not being claimed by the plaintiff in the suit can be no ground for claiming relief by the defendant under the Specific Relief Act.
- The Supreme Court, whilst dismissing the present appeal and relying heavily on the judgements of Jagdish Singh (supra) and Urmila Devi (supra) held that the plaintiff (respondent) shall be entitled to claim the entire compensation, along with interest and solatium, excluding the amount to be received by the defendant. The defendant shall be entitled to claim expenses incurred in pursuing claims and litigation expenses incurred amounting to Rupees 300,000/-
Conclusion
The Hon’ble Supreme Court, while rejecting the contention of the appellant, held that the respondent shall be entitled to the entire compensation, along with interest and solatium received by the appellant on land acquisition. Further, the court also allowed the defendant to claim compensation for litigation and other expenses incurred for pursuing the suit.
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