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Manak Chand Vs. Puran and anr. - Court Judgment

LegalCrystal Citation
SubjectProperty;Contract
CourtMadhya Pradesh High Court
Decided On
Case NumberSecond Appeal No. 80 of 1957
Judge
Reported inAIR1960MP235
ActsSpecific Relief Act, 1877 - Sections 22 and 28
AppellantManak Chand
RespondentPuran and anr.
Appellant AdvocateHimayatullah, Adv.
Respondent AdvocateG.P. Patankar, Adv.
DispositionAppeal dismissed
Cases ReferredBhimbhat v. Yeshwantrao
Excerpt:
.....involvement - letter of threat allegedly written by appellant to father of victim was concocted piece of evidence held, though presumption against appellant can be raised, it cannot be said that onus shifts exclusively and heavily on him to prove his innocence. conviction of appellant is liable to be set aside. - 'where the performance of the contract would involve some hardship on the defendant which he did not foresee, whereas its non-performance would involve no such hardship on the plaintiff'.6. a contract may be perfectly valid in law yet there may be want of fairness about it. it has (been well said that a court of equity does not effect to weigh the actual value, nor to insist upon an equivalent in contracts, where each party had equal competence. but it cannot listen to..........holding on the basis of an agreement dated 21-5-1948. the trial judge passed a decree for specific performance, but in appeal that decree has been reversed and, in its stead, a decree for return of the price and interest thereon has been passed against the defendants. the plaintiff in this second appeal claims a decree for specific performance.2. shri himayatullah contends that the first appellate court has erred in finding that the price was grossly inadequate and, secondly, inadequacy of price is no ground for refusing specific performance.3. the price fixed in the agreement is rs. 900/-and the same was paid in advance at the time of the execution of the agreement. the first appellate court has relied on keshav, d. w. 4, who stated that a price of rs. 5,000/- was offered for.....
Judgment:

Shiv Dayal, J.

1. The appellant brought a suit against the respondents for specific performance of a contract of sale of an agricultural holding on the basis of an agreement dated 21-5-1948. The trial Judge passed a decree for specific performance, but in appeal that decree has been reversed and, in its stead, a decree for return of the price and interest thereon has been passed against the defendants. The plaintiff in this second appeal claims a decree for specific performance.

2. Shri Himayatullah contends that the first appellate court has erred in finding that the price was grossly inadequate and, secondly, inadequacy of price is no ground for refusing specific performance.

3. The price fixed in the agreement is Rs. 900/-and the same was paid in advance at the time of the execution of the agreement. The first appellate court has relied on Keshav, D. W. 4, who stated that a price of Rs. 5,000/- was offered for the same holding by Chauthmal, The learned counsel for the appellant argues that he cannot be relied on as his was hearsay evidence. In my opinion, leaving aside the oral evidence of Keshav and Asgaraii, there are several other facts which are remarkable. Admittedly, the area of the holding is 130 bighas, and its annual rent payable to the Government was Rs. 204/-. Moreover, according to Puran's statement its net income, after payment of rent, was Rs. 300/- per year.

This was elicited in his cross examination and it was left unassailed. I do not see any reason, nor is any stated by the learned counsel, to disbelieve him. The plaintiff adduced no evidence to rebut it. Considering the area, the annual rent and the net annual profit, the price really shocks the conscience. I, therefore, see no reason to interfere with the finding of fact arrived at by the first appellate court that the agreed price was grossly inadequate.

4. To grant, or to refuse specific relief is discretionary but discretion is to be exercised judicially and not arbitrarily. The Specific Relief Act embodies certain guiding rules for the exercise of the discretion. Ought 1 then to use my discretion in favour of the plaintiff? The serious fact that operates on my mind is the price which is too low and unconscionable. Now the question is whethersuch inadequacy of price can be a ground for refusing specific performance.

5. The effect of inadequacy of price has been considered in a number of cases under Sections 22(1), 22(11) and 28(a) of the Specific Relief Act. Section 22 provides that the court is not bound to grant such relief merely because it is lawful to do so; but the discretion of the court is not arbitrary but sound and reasonable; guided by judicial principles and capable of correction by a court of appeal. Three guiding rules are provided in the section when the court may properly exercise a discretion not to decree Specific performance. Here, the first two only are to be considered:

I. 'Where the circumstances under which the contract is made are such as to give the plaintiff an unfair advantage over the defendant, though there may be no fraud or misrepresentation on the plaintiff's part'.

II. 'Where the performance of the contract would involve some hardship on the defendant which he did not foresee, whereas its non-performance would involve no such hardship on the plaintiff'.

6. A contract may be perfectly valid in law yet there may be want of fairness about it. In order to apply equitable principles laid down in the first clause of Section 22 it is not necessary that fraud or misrepresentation by the plaintiff must be made out. It is enough if there is inequality and unfairness due to any cause whatsoever. If there are surrounding extrinsic circumstances such as duress, intimidation, or 'when the plaintiff obtained the agreement by short unscrupulous practices, by overreaching, by non-disclosure of important facts, by trickery, by taking undue advantage of his position or by any means which are unconscientious,' the court has to he very cautious.

It is not necessary to show that the plaintiff was guilty of intentional unfairness. Rut the mere fact that a bargain is onerous cannot avail of as a defence to a suit for specific performance unless it is also established that the plaintiff took an undue advantage of his position or of the adversity of the defendant. In some cases, e.g., Jamshedji v. Kashi-nath, ILR 26 Rom 326, it is held that inadequacy of consideration may be a piece of evidence as regards unfair advantage. It is held in some other cases that a court of Equity will not be entitled to interpose its aid on the ground of mere inadequacy o price, where a contract of sale is entered into by the vendor with full knowledge of facts.

7. The doctrine of hardship 'must be applied with caution; it has (been well said that a court of Equity does not effect to weigh the actual value, nor to insist upon an equivalent in contracts, where each party had equal competence. When an undue advantage is taken, it will not enforce the contract; but it cannot listen to one party saying that another man would have given him more money or better terms than he agreed to take. It may be an improvident contract; but improvidence or inadequacy does not determine a court ot Equity against decreeing soecific nerformance'. (Sudgen's V. and P pages 211, 212 (14th Edition); Dart, V and P pages 1057, 1060, 1061 (7th Edition); quoted in Colletts Specific Relief Act at page 207).

8. In Stromdale and Rail v. Rurden (1952) 1 All ER 59 the defendant agreed to give to the plaintiff for sale her freehold interest in the whole house No. 40 Remford Road for a price of 1250, which was nearly what she was getting as rent for the ' ground floor area. In the plaintiff's suit for specific performance the defendant pleaded hardship. Specific performance was decreed holding that financial disadvantage to the defendant was no ground to refuse relief as prayed for.

9. Then, Section 28(a) of our Specific Relief Act lays down:

'Specific performance of a contract cannot be enforced against a party thereto ..... (a) if the consideration to be received by him is so grossly inadequate, with reference to the state of things existing at the date of the contract, as to be either by itself or coupled with other circumstances evidence of fraud or of undue advantage taken by the plaintiff.'

Commenting on the section it is stated in Banerjee on the Law of Specific Relief (T. LL.)

'Theoretically considered inadequacy in the price or of the subject matter is as pointed out by professor Pomeroy species of inequality and unfairness and may be an instance of hardship and oppression. But in no individual instance it is for a court to determine the numerous and different considerations and modes which enter into and affect the question. The modern tendency, therefore, is to regard inadequacy as evidence of fraud and not as a hardship. But it may be doubted if the difficulty has been really simplified by the altered mode of treatment. The present doctrine, however, is that fraud in the purchaser is of the essence of the objection to the contract on the ground ot inadequacy. The artful, importunate and the cunning unhappily abound in the world and they may have victimized a person so situated that the just result of his judgment was misled, confused or disturbed'.

10. After anxious consideration I have formed the view that mere inadequacy of price is no ground for refusing specific performance although it is a circumstance which will arouse the 'sixth sense of equity'. Where (1) the price is so inadequate as shocks the court's conscience and (2) either by itself or in conjunction with any other circumstance, such as illiteracy, oppression, etc. it evidences fraud or that undue advantage was taken by the other side, the court will refuse specific performance. This seems to be the reasonable position of the law in face of the scathing criticism by Pollock and Mulla. Even if Section 28 is an after thought interpolated to the original design, and even if it overlaps Section 22(I and II) to an undefined extent, so long as the section exists, relief can be given in fit cases,

11. In this case, the defendants are admittedly illiterate agriculturists and were indebted to the plaintiff for a long time. Having regard to all the circumstances or the case I am of the opinion that this is a case where the provisions of Section 28(a) are well attracted. The price is so low that it is evincive of an undue advantage taken by the plaintiff. Here the case of Bhimbhat v. Yeshwantrao, ILR 25 Bom 126 becomes apposite where specific performance was refused on the ground of inadequacy of consideration coupled with the circumstance of ignorance of the vendor who was an illiterate agriculturist and was heavily indebted to the plaintiffs.

12. For these reasons the discretion exercised by the first appellate court in dismissing plaintiff's suit for specific performance is sound and must be upheld. The appeal is dismissed with costs.


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