Kapilaben & Ors. vs Ashok Kumar Jayantilal Sheth Through POA Gopalbhai Madhusudan Patel & Ors.
2019 SC OnLine 1512; (2020) 20 SCC 648
Coram: Hon’ble Justice Mohan M. Shantanagoudar & Hon’ble Justice Aniruddha Bose
Forum: Hon’ble Supreme Court of India
Case No.: Civil Appeal Nos. 10683-86 of 2014
Date of Decision: November 25, 2019
Conclusion

Facts:
- Kapilaben & Ors, the Appellants (Defendants Nos. 1-5), including Naranbhai Ramdas Patel (Defendant No. 1, now deceased) and his relatives (Defendants Nos. 2-5), were the original owners of the land.
- Gopal Bhai, Respondent Nos. 1 (Plaintiff), claimed to have rights over the suit property based on agreements to sell executed in 1987 by the original vendees. They had entered into an agreement in 1986 with the deceased original owner.
- On 11.03.1986, Naranbhai Ramdas Patel (Defendant No. 1) and his relatives (Defendants Nos. 2-5) executed an agreement to sell the suit property to the original vendees (Respondent Nos. 3-11) for a total sum of ₹1,54,251. The sale deed was contingent on the finalisation of the Town Planning Scheme (TPS) by the Vadodara Municipal Corporation.
- On 14.09.1987, the original vendees executed four separate agreements to sell (1987 agreements) in favour of Respondent Nos. 1, transferring their rights under the 1986 agreement. Respondent Nos. 1 paid earnest money of ₹5,000 under each agreement and took possession of the land for construction purposes.
- Respondent Nos. 1 obtained the layout plan and construction permission from the Vadodara Municipal Corporation at their own cost, with the signature of the original owner Mr. Naranbhai Patel on the layout plan.
- On 04.04.1988, the original vendees filed suit SCS No. 194/1988 in the Civil Court at Vadodara, seeking specific performance of the 1986 agreement against the Appellants. The original vendees alleged that the Appellants had refused to execute the sale deed notwithstanding the legal notice issued on 11.03.1988.
- On 25.03.1988, the Appellants responded that they had canceled the 1986 agreement because the original vendees had failed to pay the full consideration for the property as agreed.
- On 21.11.1988, Respondent Nos. 1 filed four separate suits (SCS Nos. 657-660/1988) for specific performance against the Appellants and the original vendees, claiming that the 1987 agreements were being frustrated by the Appellants and the original vendees who were conspiring to sell the land to a third party due to increased real estate price.
- During the pendency of these suits, the Appellants and the original vendees executed a Power-of-Attorney on 11.11.2001 in favour of Dhananjay Vallabhbhai Patel, allowing him to relinquish their rights over the property and facilitate a sale deed in favour of Kantilal Ambalal Patel, the uncle of Dhananjay Patel.
- On 31.07.2014, the High Court of Gujarat at Ahmedabad allowed the appeals filed by Respondent Nos. 1 and passed the decree against the Appellant for the suits for specific performance.
- The Appellants challenged the High Court's judgment and the specific performance decree favouring Respondent Nos. 1, which led to the current proceedings.
Background:
Original Vendees’ Suit - Proceedings in SCS No. 194/1988
- On 26.7.2002, the original vendees filed to withdraw SCS No. 194/1988, citing fraud in the 1986 agreement and lack of knowledge of the actual owners. Respondent No. 1 sought to join as co-plaintiffs on the same day.
- The trial court rejected the original vendees' withdrawal but allowed Respondent Nos. 1 to join as co-plaintiffs. The High Court later reversed this decision, allowing the original vendees to withdraw their suit without addressing Respondent Nos—1's claims.
- Hence, the withdrawal of the original vendees’ suit has attained finality.
Proceedings in SCS Nos. 657-660/1988 (Present suit - The 4 Suits)
- The trial court dismissed all four suits by order dated 30.12.2011, finding that the original owner did not give written consent to assign the 1986 agreement.
- The court found that the 1987 agreements were void, illegal, and unenforceable because the original owner, Defendant No. 1 Naranbhai Patel, had not provided written consent.
- The original vendees had not paid the remaining consideration to the Appellants thus, their rights under the 1986 agreement had not been fortified and passed to the Plaintiffs.
- The Plaintiffs had not demonstrated readiness and willingness to perform the contracts, failing to deposit the remaining consideration or pay the betterment tax as required.
- The court did not grant specific performance or damages but held that the Plaintiffs were entitled to a return of the earnest money paid with interest. (Paragraph 4 )
Additional District Judge, Vadodara:
- The Additional District Judge, by judgment dated 2.04.2013, affirmed the trial court’s findings, emphasising:
- A party cannot assign contractual obligations without the other party’s consent. There was no evidence of consent from the Appellants for the assignment.
- The original vendees had waived their rights by withdrawing SCS No. 194/1988, and thus, no right of specific performance could be claimed by Respondent Nos. 1 under the 1986 agreement. (Paragraph 4 )
Appeal to the High Court of Gujarat:
- The High Court of Gujarat, in its judgment dated 31.7.2014, reversed the lower courts' decisions and allowed the appeals, holding that:
- The 1986 and 1987 agreements were linked, implying a valid assignment of rights to Respondent Nos. 1, making them 'representatives-in-interest' under Section 15(b) of the Specific Relief Act, 1963.
- Evidence, such as Mr. Naranbhai Patel's signature on planning permissions and his presence at the Bhoomi Pujan ceremony, implied the appellants' consent for the assignment.
- The withdrawal of the original vendees’ suit (SCS No. 194/1988) did not preclude Respondent Nos. 1 from seeking specific performance independently. (Paragraph 4 )
- Actual tendering of money was not necessary to demonstrate readiness and willingness to perform the contract under Section 16(c) of the Specific Relief Act; specific averments in the pleadings were sufficient.
Appeal to the Supreme Court:
- The Appellants appealed to the Supreme Court of India, challenging the High Court's judgment.
- The Supreme Court maintained the status quo during the appeal's pendency, and no steps were taken to execute the impugned judgment.
Main issue:
- Whether there was a valid assignment of rights by the original vendees in favour of Respondent Nos. 1 under the 1987 agreements?
- Do the rights of Respondent Nos. 1 to seek specific performance survive after the Appellants' cancellation of the 1986 agreement and withdrawal of suit in SCS No. 194/1988 by the original vendees?
- Whether relief may be granted to Respondent Nos. 1, and if so, of what nature? (Paragraph 5)
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