Power to Award Compensation in Certain Cases – Section 21 | Specific Relief Act

Section 21 of the Specific Relief Act, 1963 Provides that:

1. Agreement of reconveyance:

Agreement of reconveyance found incapable of performance due to acquisition of land in question. Law per­mits plaintiff to seek amendment in relief clause of the plaint and claim damages. In the instant case. Supreme Court permitted plaintiff to amend relief and add relief of damages.

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2. Allowability of:

The amendment for compensation in lieu of spe­cific performance was allowed by the Supreme Court so that complete jus­tice be done.

3. Alternative relief:

The plaintiffs claim was in accord with the provi­sions of Section 21 of the Specific Relief Act, 1963. Merely, because the plaintiff claims damages in a suit for specific performance of contract as alternative relief, it cannot be said that he is not entitled to the main relief of specific performance of contract itself.

4. Amendment for compensation:

If the amendment relates to the relief of compensation in lieu of or in addition to specific performance where the plaintiff has not abandoned his relief of specific performance the Court will allow the amendment at any stage of the proceeding. That is a claim for compensation falling under Section 2 1 of the Specific Relief Act, 1963 and the amendment is one under the proviso to sub-section (5). But different and less liberal standards apply if what is sought by the amendment is the conversion of a suit for specific performance into one for damages for breach of contract in which case Section 73 of the Contract Act is invoked. This amendment is under the discipline of Rule 17, Order VI, C.F.C. The fact that sub-section (4), in turn, invokes Section 73 of the Contract Act for the prin­ciples of quantification and assessment of compensation does not obliter­ate this distinction.

5. Amendment:

Addition of the relief of compensation in addition to or in lieu of specific performance sought through the amendment to be allowed.

Amendment sought to incorporate relief of compensation in lieu of specific performance without abandoning the original relief of specific per­formance, is permissible.

6. Assessment of:

The quantum of the compensation is ascertainable with reference to the determination of the market value in the land acquisi­tion proceedings. The compensation awarded may safely be taken to be the measure of damages subject, of course, to the deduction there from of money value of the services, time and energy expended by the appellant in pursu­ing the claims of compensation and the expenditure incurred by him in the litigation culminating in the award.

7. Award of compensation:

In Indian Law the contract, for no fault of the plaintiff, becomes impossible of performance. Section 21 enables award of compensation in lieu and substitution of specific performance.

In the instant case, the property was acquired by the State under Land Acquisition Act and compensation in the sum of Rs. 4 lakhs besides solatium and statutory interest was awarded. It was held that the plaintiff was entitled to that compensation in lieu of specific performance.

8. Challenge:

The validity of a decree can be challenged in execution proceedings only on the ground that the Court which passed the decree was lacking in inherent jurisdiction in the sense that it could not have seisin of the case, because the subject-matter was wholly foreign to its jurisdic­tion or that the defendant was dead at the time the suit had been instituted or decree parsed, or some such other grounds, which could have the effect of rendering the Court entirely lacking in jurisdiction in respect of the subject-matter of the suit or over the parties to it.

Jurisdiction can be territorial or it can be with reference to the subject-matter of the suit or over the parties to the suit. An objection as to local jurisdiction or territorial jurisdic­tion of a Court does not stand on the same footing as an objection to the competence of a Court to try a case which goes to the very root of the jurisdiction. As regards the territorial jurisdiction or local jurisdiction or pecuniary jurisdiction of a Court, it can be waived. An objection as regards the place of suing or place of pecuniary jurisdiction or territorial jurisdic­tion has to be taken at the earliest possible opportunity as enjoined under Section 21 of the Code of Civil Procedure.

9. Claim for:

In a suit for specific performance of contract for sale of immovable property alternative prayer for damages also sought. Mere this fact cannot disentitle plaintiff from claiming main relief of specific perfor­mance of contract for sale of immovable property.

10. Claim of compensation:

It is no doubt true that under the law every co-owner of undivided property is entitled to enjoy the whole of the property and is not liable to pay compensation to other co-owners who have not chosen to enjoy the property. It is also true that liability to pay compensation arises against a co-owner who deliberately excludes the other co-owners from the enjoyment of the property.

It does not, however, follow that the liability to pay compensation arises only in such a case and no other Co-owners are legally competent to come to any kind of arrange­ment for the enjoyment of their undivided property and are free to lay down any terms concerning the enjoyment of the property.

There is no principle of law which would exclude them from providing in the agreement that those of them as are in actual occupation and enjoyment of the property shall pay to the other co-owners compensation. No authority was cited by learned Counsel in support of his contention that ouster of a co-owner is a sine qua non for enabling him to claim compensation from the co-owner who is in occupation and enjoyment of common property. Therefore, the contention was rejected.

11. Claim of:

In view of the fact that the respondent himself had claimed alternative decree for damages it appears that he Courts would have been well justified in granting alternative decree for damages instead of ordering specific performance which would be unrealistic and unfair.

12. Compensation:

In case of no fault of plaintiff, the plaintiff is en­titled to compensation in lieu and substitution of specific performance.

It is admitted position that in the original plaint the respondents did not claim compensation for the breach of agreement of sale either in addition to or in substitution of the performance of the agreement. Further the re­spondents did not amend their plaint and ask for compensation either in addition to or in substitution of the performance of the agreement of sale. Sub-section (5) of Section 21 emphatically provides that no compensation shall be awarded under Section 21 (5) unless the relief for compensation has been claimed either in the plaint or included later on by amending the plaint at any stage of the proceedings.

Where performance of the contract became impossible, plaintiff was held, entitled to compensation in lieu of the specific performance.

13. Considerations for:

In case of an agreement to sell immovable property, relief of specific performance is not automatic rise in price of property during pendency of proceedings is a relevant consideration. Dam­ages claimed by the plaintiff as alternate relief, allowed holding the decree of specific performance to be inequitable and unjust in the circumstances.

14. Construing decree:

In construing a decree an Executing Court can, in appropriate cases, take into consideration the pleadings as well as the proceedings up lo the decree to find out the true effect of the decree and the meaning of the words used in the decree. The Executing Court has to ascertain the circumstances under which those words came to be used. In other words, the Executing Court should not think that its jurisdiction begins and ends with merely looking into the decree as it was finally drafted and settled.

15. Determination of:

The quantum of the compensation is ascertainable with reference to the determination of the market value in the land acquisition proceedings. The compensation awarded may safely be taken to be the measure of damages subject, of course, to the deduction there from of money value of the services, time and energy expended by the appellant in pursuing the claims of compensation and the expenditure in­curred by him in the litigation culminating the award.

In substitution of the decree for specific performance, we make a de­cree for compensation, equivalent to the amount of the land acquisition compensation awarded for the suit lands together with solatium and ac­crued interest, less a sum of Rs. 1, 50,000/- (One lakh fifty thousand only) which, by a rough and ready estimate, we quantify as the amount to be paid to the appellant in respect of his services, time and money expended in pursuing the legal claims for compensation.

16. Effect of Amendment:

Sub-section (1) re-enacts the law as con­tained in Clause (I) of the repealed Section 19 with suitable variations. The words “any person suing” have been substituted by the words “in a suit”. The word “claim” has been substituted for the words “ask for” and the word “plaintiff has been inserted before the words “performance of a contract”. Sub-clause (2) reproduces verbatim the language of clause 2 of the repealed Section 19 with the alteration that the word “such” has been prefixed be­fore the word “compensation”. Sub-section (5) corresponds to Clause (3) of the Section 19 of the repealed Act.

There is no modification in this sub­section. Clause (4) of Section 19 of repealed Act has been substituted by the new sub-section (4) of Section 21. It provides the mode and manner of determining the amount of compensation under this Section. It lays down the principle which would govern the determination of the award of com­pensation and provides that the Court shall be guided by the principles specified in Section 73 of the Contract Act, 1872 while determining the amount of compensation.

Sub-section (5) of this Section is new. It provides that the compensation under this Section shall not be awarded unless the plaintiff has claimed it in the plaint. An important rider has been attached to this sub-clause which is to the effect that the Court shall, at any stage of the proceedings, permit the amendment of the plaint to enable the plaintiff to include his claim for compensation on such terms, as the Court may deem fit. Explanation to this sub-section re-enacts the language of the old expla­nation without any change. Illustrations under Section 19 have been de­leted.

17. Entitlement for:

Merely because the plaintiff claims damages in a suit for specific performance of contract as alternative relief, it cannot be said that he is not entitled to the main relief of specific performance of contract itself.

18. Grant of:

Of course, the plaintiff/respondents are entitled to re­cover the amount of cost which has been decreed in the main suit but the same cannot form part of compensation by way of additional relief to the specific performance of the agreement of sale.

Suit was field after long lapse of time so the decree for specific of contract may not be granted but alternative relief may be granted.

The relief was claimed under Section 28 and not under Section 21 of the Act. The High Court came to the conclusion that Section 28 would not be applicable to the facts of the case but granted the relief under Section 21 of the Act. The High Court has clearly erred in granting the compensa­tion under Section 21 in addition to the relief of specific performance in the absence of prayer made to that effect either in the plaint or amending the same at any later stage of the proceedings to include the relief of compen­sation in addition to the relief of specific performance. Grant of such a relief in -the teeth of express provisions of the statute to the contrary is not per­missible. On equitable consideration Court cannot ignore or overlook the provisions of the statute. Equity must yield to law.

While it is proper that the Court should have full discretion to award damages in any case it thinks fit, one cannot, on the other hand, overlook the question of unfairness and hardship to the defendant, if a decree is passed against him, without a proper pleading. The Commission accord­ingly recommended that in no case should compensation be decreed un­less it is claimed by a proper pleading.

However, it should be open to the plaintiff to have an amendment, at any stage of the proceeding, in order to introduce a prayer for compensation, whether in lieu of or in addition to specific performance. Legislature accepted the suggestions made by the Law Commission of India and accepted the view expressed by the High Court of Madras to the effect that the Court cannot award compensation in addition to specific performance in the absence of a specific claim for dam­ages and a proper pleading stating why the relief of specific performance would be insufficient to satisfy the justice of the case and the plaintiff would not be entitled to compensation.

19. Illegality:

The Supreme Court on plea of illegality observed in the following words:

“The correct position in law, in our opinion, is that what one has to see is whether the illegality goes so much to the root of the matter that the plaintiff cannot bring his action without relying upon the illegal transaction into which he had entered. If the illegality ‘ be trivial or venial, as stated by Williston and the plaintiff is not re­quired to rest his case upon that illegality, then public policy de­mands that the defendant should not be allowed to take advantage of the position, A strict view, of course, must be taken of the plaintiff’s conduct, and he should not be allowed to circumvent the illegality by resorting to some subterfuge or by misstating the facts. If, how­ever, the matter is clear and the illegality is not required to be pleaded or proved as part of the cause of action and the plaintiff recanted before the illegal purpose was achieved, then, unless it be of such a gross nature as to outrage the conscience of the Court, the plea of the defendant X should not prevail.”

20. Jurisdiction:

According to Lord Cairn’s Act, 1858 damages could not be awarded when the contract had, for whatever reason become inca­pable of specific performance. But under the Indian law, the explanation makes a specific departure and the jurisdiction to award damages remains unaffected by the fact that without any fault of the plaintiff, the contract becomes incapable of specific performance.

21. Jurisdiction—Effect:

When there is lack of inherent jurisdiction, it goes to the very root of jurisdiction affecting the competence of the Court which tried the case and a decree passed in such circumstances will be null and void. A contention that a decree is a nullity or non est can be set up whenever and wherever it is sought to be enforced or relied upon not only in execution proceedings but even in collateral proceedings.

22. Question of:

It is true that the rise in prices of the property during the pendency of the suit may not be the sold consideration for refusing to decree the suit for specific performance. But it is equally settled law that granting decree for specific performance of a contract of immovable prop­erty is on sound principles. When the Court gets into equity jurisdiction, it would be guided by justice, equity, good conscience and fairness to both the parties. Considered from this perspective, in view of the fact that the respondent himself had claimed alternative relief for damages, we think that the Courts would have been well justified in granting alternative decree for damages, instead of ordering specific performance which would be un­realistic and unfair.

23. Relief of compensation:

Petitioner always ready and willing to perform his part of agreement but respondent not abiding with agreement. Therefore, suit filed by petitioner against respondents and persons who purchased that land was rightly decreed refusing alternative relief of com­pensation.