Understanding Section 12(3)
Sub-section (3) of Section 12 of the Specific Relief Act, 1963 was enacted with a view to meet such eventualities when the whole of the contract cannot be performed, by the vendor.
It reads as under:
(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 the 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 a case falling under clause (b), [pays or had 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.”
The said provision has been enacted for the benefit of the purchaser and, thus, cannot operate to his detriment. Under the old Specific Relief Act, the Plaintiff was not only required to relinquish his claim of specific contract as regard that part of the contract which cannot be performed but also was required to pay the entire amount of consideration; whereas in terms of Section 12(3) of the new Specific Relief Act, 1963 he is now required to pay the amount of consideration proportionately.
Cases
In Sardar Singh vs Krishna Devi (Smt.) and Another [(1994) 4 SCC 18], it was held:
” The house being divisible and the appellant being not a consenting party to the contract, equity and justice demand partial enforcement of the contract, instead of refusing specific performance in its entirety, which would meet the ends of justice “
In Rachakonda Narayana vs. Ponthala Parvathamma and Another [(2001) 8 SCC 173], Khare, J., the learned Chief Justice as he then was, observed:
“Thus, the ingredients which would attract specific performance of the part of the contract, are:
(i) if a party to an agreement is unable to perform a part of the contract, he is to be treated as defaulting party to that extent, and
(ii) the other party to an agreement must, in a suit for such specific performance, either pay or has paid the whole of the agreed amount, for that part of the contract which is capable of being performed by the defaulting party and also relinquish his claim in respect of the other part of the contract which the defaulting party is not capable to perform and relinquishes the claim of compensation in respect of loss sustained by him.
If such ingredients are satisfied, the discretionary relief of specific performance is ordinarily granted unless there is delay or laches or any other disability on the part of the other party.”
In Surinder Singh vs. Kapoor Singh (Dead) through LRs. and Others [(2005) 5 SCC 1`42], a three- Judge Bench of Supreme Court on a reference made on the purported conflict in Kartar Singh vs. Harjinder Singh [(1990) 3 SCC 517] and Rachakonda Narayana (supra), opined:
“In this case, the Division Bench of the High Court passed a decree of specific performance of contract relying on or on the basis of a decision of this Court in Kartar Singh.”.
In HPA International etc. vs. Bhagwandas Fatehchand Daswani amd Others etc. [(2004) 6 SCC 537]. Therein, Dharmadhikari, J. in the facts and circumstances of the case held:
“70. There was one integrated and indivisible contract by the vendor to convey full interest in the property i.e. his own life interest and the interest of the reversioners with sanction of the Court. As the Court had not granted the sanction, the contract could not be specifically enforced. The lesser relief of transfer of life interest was not claimed within a reasonable time after the vendor had intimated that the contract, as agreed for full interest, was not possible of performance. We find that neither equity nor law is in favour of the plaintiff vendee.”
Therein, in the agreement not only the interest of the vendor in presenti but also the interest of the remaindermen or reversioners after his death was the subject matter of contract. The agreement was furthermore subject to the passing of the vendor’s title to the property and of the vendor’s right to sell the entire interest, present and future in the property by the purchaser’s advocate.
We may also notice that in that case one of the terms contained in the agreement for sale was: “6. In case sanction of the Court is not accorded as aforesaid, this agreement shall forthwith stand cancelled and the vendor shall forthwith return the advance amount of rupees twenty-five thousand to the purchaser.”
A perusal of the said decision clearly shows that conduct of the plaintiff therein was such which precluded him from obtaining a decree for specific performance of contract. In the aforementioned facts and circumstances of the case, it was held that recession of contract due to non- grant of sanction by the court within the stipulated period was not an act of breach of contract on the part of the vendor. The said decision has no application in the facts and circumstances of this case.
Reference
P.C. Varghese vs Devaki Amma Balambika Devi & Ors, (2005)