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

Facts:

  • Kapilaben & Ors were Appellants (Defendants Nos. 1-5) Including Naranbhai Ramdas Patel (Defendant No. 1, now deceased) and his relatives (Defendants Nos. 2-5) original owner of the land.
  • Gopal Bhai was the Respondent Nos. 1 (Plaintiff), he filed four suits for specific performance.
  • Original Vendees (Respondent Nos. 3-11/Defendants Nos. 6-9) entered into agreements with the original owner.
  • Naran bhai Patel along with other relatives had agreed to sell in 1986 with several parties against which earnest money was paid by original vendees. However, a registered sale deed was yet to be executed.
  • Later, Gopal Bhai (Respondent no. 1) asserted that the original vendees based on the 1986 agreement to sell, entered into 4 different agreements to further sell different portions of the property in 1987.
  • Moreover, vide the said agreement of 1987, Respondent no. 1 has got the possessory rights to make preparations for the construction of a housing scheme over the suit property and to issue advertisements for the same.
  • Accordingly, the layout plan was prepared and the same was signed by Late Mr. Naran bhai Patel.
  • Consequently, the original vendees filed suit SCS No. 194/1988 for specific performance of the 1986 agreement. Respondent No. 1 also filed 4 suits (SCS Nos. 657-660/1988) for specific performance of the 1987 agreements.
  • Hence, the present appeal involves two sets of suits, one initiated by Respondent No. 1 and another initiated by the original vendees.
  • The suit SCS No. 194/1988, filed by the original vendees doesn’t concern the present suit as the same was allowed to be withdrawn on the request of the original vendees by the Honourable High Court of Gujarat.
  • The Appellants and original vendees jointly executed a Power of Attorney on 11th November 2001, relinquishing their rights in the suit property to Dhananjay Vallabhbhai Patel. The document facilitated the execution of a sale deed in favour of Kantilal Ambalal Patel.
  • The trial court had dismissed all four suits, finding the original vendees had no right to assign obligations without written consent and the 1987 agreements were void and unenforceable.
  • The Additional District Judge had affirmed the trial court's findings, emphasising the original vendees could not assign obligations without consent and had waived rights by withdrawing SCS No. 194/1988.
  • The High Court had reversed the lower courts' decisions, finding a valid assignment of rights to Respondents under Section 15(b) of the Specific Relief Act, with implied consent from appellants.
  • The High Court found Respondents entitled to specific performance of agreements, noting implied consent from appellants and valid assignment of rights under the 1987 agreements.
  • The case came before this Court on appeals challenging the High Court's findings and the validity of assignments under the 1987 agreements, seeking to overturn the decrees.


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 true 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)

  • Trial Court Decision: The trial court, by order dated 30.12.2011, dismissed all four suits, finding no written consent from the original owner for the 1986 agreement assignment.
  • The court found that the 1987 agreements were void, illegal, and unenforceable due to the lack of written consent from the original owner, Defendant No. 1 Naranbhai Patel.
  • 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:
  1. A party cannot assign contractual obligations without the other party’s consent. There was no evidence of consent from the Appellants for the assignment.
  2. 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:
  1. There was a linkage between the 1986 agreement and the 1987 agreements, 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.
  2. The consent of the Appellants for the assignment was implied through the evidence, such as the signature of Mr. Naranbhai Patel on planning permissions and his presence at the Bhoomi Pujan ceremony.
  3. The withdrawal of the original vendees’ suit (SCS No. 194/1988) did not preclude Respondent Nos. 1 from seeking specific performance independently. (Paragraph 4 )
  4. Actual tendering of money was not necessary to show readiness and willingness to perform the contract under Section 16(c) of the Specific Relief Act, and 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 pendency of the appeal, and no steps have been taken for the execution of the impugned judgment.



Main issue:

  1. Whether there was a valid assignment of rights by the original vendees in favour of Respondent Nos. 1 under the 1987 agreements?
  2. Whether the rights of Respondent Nos. 1 to seek specific performance survive after the cancellation of the 1986 agreement by the Appellants and withdrawal of suit in SCS No. 194/1988 by the original vendees?
  3. Whether relief may be granted to Respondent Nos. 1, and if so, of what nature? (Paragraph 5)