KALAWATI (D) THROUGH LRS. & ORS. versus RAKESH KUMAR & ORS.

Citation: [2018] 1 S.C.R. 482 · Decided: 16-02-2018 · Supreme Court of India · Bench: MADAN B. LOKUR · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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SUPREME COURT REPORTS
[2018] 1 S.C.R.
KALAWATI (D) THROUGH LRS. & ORS.
v.
RAKESH KUMAR & ORS.
(Civil Appeal No. 2244 of 2018)
FEBRUARY 16, 2018
[MADAN B. LOKUR AND DEEPAK GUPTA, JJ.]
Specific Performance – Specific performance of contract –
Agreement to sell land between the appellant-vendor and
respondent-vendee – Part payment towards the sale price paid by
respondent but appellant failed to carry out their obligations of
obtaining ‘no objection certificate’ from the appropriate authority
– Suit for specific performance of the agreement by the respondent
– Application also filed for injunction against alienation of the land
in dispute – Grant of interim injunction subject to deposit of the
balance sale consideration – However, balance sale consideration
not deposited by the respondent – During pendency of the suit,
appellant transferred the land to defendant – Thereafter, dismissal
of the suit since respondent not ready and willing to perform his
part of the contract – However, the High Court passed the decree
for specific performance in favour of the respondent – On appeal,
held: Material on record indicates that the respondent did not have
the necessary funds to pay the balance consideration – Though
respondent took loan but that was for his business and not for
payment of balance consideration – Respondent could not pay the
loan amount as also the balance consideration – Trial court rightly
held that by necessary implication respondent was neither ready
nor willing to perform his part of the agreement – Further, the nature
and the purpose of no objection certificate that vendors were
required to obtain and the authorities from whom it was to be obtained
not clear – Also not clear about the nature of income tax clearance
certificate required and for what purpose – Thus, the judgment and
decree passed by the High Court is set aside.
Allowing the appeal, the Court
HELD: 1.1 In the instant appeal, the material on record
clearly indicates that the respondent did not have the necessary
funds available with him to pay the balance consideration. His
[2018] 1 S.C.R. 482
482
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low income and low bank balance indicated his incapacity to make
the balance payment. As far as his capacity to arrange for funds is
concerned, it has come on record that the respondent did take a
loan from his cousin but that was only for his business and not for
paying the balance consideration for the land in dispute. There is
nothing on record to indicate that the respondent could have not
only repaid the loan taken from his cousin, but additionally, could
have arranged sufficient funds to pay the balance consideration.
It is very doubtful, and it is easy and reasonable to infer this, that
the respondent was incapable of meeting both liabilities. [Para
21][489-D-E]
1.2 On the facts the trial judge was right in coming to the
conclusion that the respondent was not in a position to pay the
balance consideration to the appellant and the other vendors,
and by necessary implication, it must be held that he was neither
ready nor willing to perform his part of the agreement. [Para
22][489-F]
1.3 The agreement to sell is seen and the relevant clause
of the contract is remarkably vague, that the vendors would obtain
the no objection certificate from the authorities concerned and
would inform the vendee by registered post after getting the
income tax clearance certificate. There is nothing to indicate the
nature of the “no objection certificate” that the vendors were
required to obtain and who were the authorities from whom the
“no objection certificate” was required, nor is there any indication
of the purpose for which the “no objection certificate” was
required. Similarly, there is no indication about the nature of the
income tax clearance certificate required and for what purpose.
This clause appears to have been inserted in the agreement to
sell without any application of mind and it is quite possible, as
alleged by the vendors that the agreement to sell was ante-dated
after the introduction of Section 260-UC in the Income Tax Act,
1961. However, it is not possibile in view of the vague nature of
the clause. [Paras 23, 24][489-G-H; 490-B-C]
1.4 On an overall consideration of the facts and in the
circumstances of the case, the High Court was in error in setting
aside the judgment and decree of the trial judge. Thus, the
judgment and decree passed by the High Court is set aside. [Para
25][490-D]
KALAWATI (D) THROUGH L

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