Section 12(3) of Specific Relief Act Cannot Be Invoked If The Party Seeking Relief Is In Default: Supreme Court

This case arose from a dispute over a real estate agreement between Vijay Prabhu (the plaintiff) and S.T. Lajapathie & Ors. (the defendants/appeallant). Vijay Prabhu filed a suit seeking specific performance of an agreement dated 07.11.2005, where he wanted the court to force the defendants to fulfill the sale and transfer of the property. In the alternative, he requested damages of Rs. 60,00,000 with interest. The plaintiff had paid an advance of Rs. 20,00,000.

The Trial Court dismissed plaintiff's action for specific performance on the ground that he was not ready and willing to perform his part of the contract. However, the Trial Court ordered the refund of the advance of Rs. 20,00,000 with interest at the rate of 12% per annum. On an assessment of damages, the Trial Court also held that the plaintiff was unable to prove damages. Whether plaintiff was entitled for decree for specific performance, possession over property and refund of advance amount with interest and damages as well as charge over the property are the issues framed by Trial Court.

The High Court dismissed the appeal filed by the appellant herein, Vijay Prabhu. The High Court framed points for determination, such as whether the plaintiff was ready and willing to perform the agreement; whether the plaintiff could invoke Section 12 of the Specific Relief Act; and whether the plaintiff was entitled to specific performance or damages. On the first point, the High Court has observed thus: "Section 12 of the Specific Relief Act cannot be invoked in this case.

It was pointed out that the plaintiff was seeking not only specific performance but also damages and had not paid the entire consideration of Rs. 64,00,000. The High Court noticed that partial performance under Section 12(3) is discretionary relief and cannot be invoked when the contract consists of reciprocal promises, none of which could, in their nature, be divisible. The High Court also recorded a finding that the plaintiff has not satisfied the requirement as to readiness and willingness to perform the contract.

The Supreme Court heard the appeal of Vijay Prabhu against the High Court order and the Apex Court pointed out the highlights of Section 12 of the Specific Relief Act and observed as under:

-Section 12 generally does not allow specific performance of a part of a contract, except under specific conditions.

-Part performance is, however allowed by Section 12(3) where a party is unable to perform the whole contract, provided the party seeking performance is ready to pay the full consideration or such consideration as has been reduced in terms of an agreement between the parties and abandons all other claims.

-The inability may be due to deficiencies, legal prohibitions, or otherwise.

-The unperformed part must be substantial and its compensation impossible.

-The discretion to give partial relief is included in the discretion to give relief, which, in turn, depends on the facts of the particular case.

-Section 12(3) cannot be invoked if the party seeking relief is in default however, the relinquishment of a claim can be made at any stage of litigation.

The Supreme Court, therefore, held that the High Court was justified in declining relief under Section 12(3) as the plaintiff was not ready and willing to perform his part of the contract.

The Supreme Court held that no error had been committed by the High Court and dismissed the appeal filed by Vijay Prabhu. The court ordered refund of the deposited amount of Rs. 20,00,000 along with accrued interest to the plaintiff.

The Apex Court further reitrateds that the readiness and willingness to perform a contract are basic for moving specific performance, and partial performance under section 12 of the Specific Relief Act has implicit requirements and cannot be invoked if the party is not ready to perform his part of the promise or if he is seeking compensation, in addition to specific performance.

The discretion of the court for giving partial relief, especially under section 12(3), is not taken away, and the relinquishment of a claim to further performance can be done at any stage of litigation and, therefore, even at the appellate stage itself.

Coram: Justice J.B. Pardiwala and Justice R. Mahadevan Between: Vijay Prabhu vs S. T. Lajapathie & Ors Date of Judgment: 08-01-2025