Adcon Electronics Pvt. Ltd. v. Daulat

Buyers in Bombay sued for specific performance (a court order to carry out the contract) of an agreement to sell a house in Indore. The Supreme Court held that a suit for specific performance alone, without a prayer for possession, is not a suit for land under clause 12 of the Bombay Letters Patent.

Quick Revision

Read the full judgment: Indian Kanoon (unofficial copy)

Parties

Adcon Electronics Pvt. Ltd. — appellant; the defendant in the suit. It agreed to sell the suit property.

Daulat and Anr. — respondents; the plaintiffs in the suit and the intending buyers. They stopped appearing, so the Court appointed an amicus curiae.

A.S. Bhasme, Advocate — amicus curiae appointed by the Court to argue for the plaintiffs.

Procedural History

1. The plaintiffs filed Suit No. 1088 of 1989 in the High Court of Judicature at Bombay.
2. A learned Single Judge granted leave under clause 12 of the Letters Patent on 4 April 1989.
3. The defendant took out Chamber Summons No. 862 of 1989 to revoke the leave. The Single Judge dismissed it on 22 January 1990.
4. The defendant appealed in L.P.A. No. 697 of 1990. A Division Bench dismissed it on 30 July 1990.
5. The defendant appealed to the Supreme Court by special leave against the Division Bench order.
6. Counsel for the plaintiffs withdrew because her clients asked her not to appear. The Court appointed an amicus curiae.

Facts

1. By an agreement of 12 July 1986 the defendant agreed to sell land and a building called Vithal Bhavan, No. 6/5 (Block No. 24), South Tukoganj, Indore, M.P., to the plaintiffs. The price was Rs 53,75,000. The land and building are called the suit property.
2. On 1 August 1987 the parties signed a memorandum about the suit property.
3. Disputes arose about performance of the agreement.
4. The plaintiffs sued the defendant for a declaration that the agreement of 12 July 1986 and the memorandum of 1 August 1987 were subsisting and binding on the defendant. They also asked for specific performance of both.
5. The suit was filed with leave of the court under clause 12 of the Letters Patent of the High Court of Bombay.
6. The Court records that the facts lie in a narrow compass and are not in dispute. The parties are called by their positions in the trial court.

Issues Raised

1. Is a suit simpliciter for specific performance of a contract for sale of immovable property a suit for land within clause 12 of the Letters Patent of the High Court of Judicature at Bombay?
2. If the agreement says possession will be handed over on execution of the sale deed, does that make the suit one for land?
3. Does a suit for acquisition of title to immovable property fall within the meaning of a suit for land?

Arguments Contended

For the appellant (defendant), by A.K. Chitale, senior counsel:

• The agreement says the defendant will hand over possession on execution of the sale deed, so a suit for specific performance is a suit for land within clause 12.
• In any event, acquisition of title to immovable property also falls within a suit for land, so the High Court erred in not revoking the leave.

For the respondents (plaintiffs), by A.S. Bhasme, amicus curiae:

• Section 22(2) of the Specific Relief Act, 1963 says relief of possession in addition to specific performance must not be granted unless specifically claimed.
• So a suit for specific performance simpliciter, without an explicit prayer for delivery of possession, cannot be treated as a suit for land.

Ms. Manik Karanjawala, who first appeared for the plaintiffs, asked to withdraw because her clients asked her not to appear. The Court allowed this.

Court's Reasoning

The judgment has no numbered paragraphs and one opinion, delivered by Syed Shah Mohammed Quadri, J. Both Judges are named on the bench. Steps follow the order of the judgment and are not cited by paragraph.

Syed Shah Mohammed Quadri, J. (judgment of the Bench)

1. Noted: The appeal raises whether a suit simpliciter for specific performance of a contract for sale of immovable property is a suit for land within clause 12 of the Letters Patent of the Bombay High Court.
2. Noted: The appellant is the defendant and the respondents are the plaintiffs. The Court sets out the agreement of 12 July 1986, the memorandum of 1 August 1987, the suit and the orders of the Single Judge and the Division Bench.
3. Noted: The Court records the arguments of counsel for the defendant and the amicus curiae for the plaintiffs, and the withdrawal of the plaintiffs' counsel.
4. Noted: The Court sets out clause 12 of the Letters Patent. It gives the High Court's ordinary original civil jurisdiction over suits of every description, subject to conditions based on where land is, where the cause of action arose, and where the defendant lives or works.
5. Noted: The Court reads clause 12 as giving the High Court power over two groups of cases:
   • Group 1: suits for land or other immovable property, if the property lies within the local limits of the High Court's original jurisdiction.
   • Group 2: all other cases, in three situations:
     • (a) The cause of action arose wholly within those limits.
     • (b) It arose in part within those limits and prior leave of the court was obtained.
     • (c) The defendant dwells, carries on business or personally works for gain within those limits.
6. Noted: The Single Judge dismissed the chamber summons because the law in Bombay was settled that suits for specific performance, even if they relate to land, are not suits for land. The Division Bench agreed.
7. Noted: The question is what is meant by a suit for land. Different High Courts and the Federal Court have interpreted the expression.
8. Noted: In His Highness Shrimant Maharaj Yashvantrav Holkar of Indore v. Dada Bhai Cursetji Ashburner a Division Bench of the Bombay High Court held that a suit for specific performance of an agreement to mortgage immovable property is not a suit for land. It referred to Yenkoba Balset Kasar v. Rambhaji, which said a suit for land asks for delivery of land to the plaintiff.
9. Noted: That Bench also referred to The Delhi and London Bank v. Wordie, where the Calcutta High Court read the phrase as a suit substantially for land, that is, to acquire title to or control over land. It noticed Sreenath Roy v. Cally Doss Ghose, where a Calcutta Judge held the court had no jurisdiction to decree specific performance. The Bench held the suit within jurisdiction, whether seen as specific performance or as enforcement of an equitable mortgage by deposit of title deeds.
10. Noted: In Moolji Jaitha and Co. v. Khandesh Spinning and Weaving Mills Co. Ltd. the five Judges of the Federal Court differed on the meaning of a suit for land.
11. Noted: Kania, C.J. said one must ask whether the suit as a whole is to obtain a direction for possession or a decision on title to land, or has a different object that only indirectly involves title.
12. Noted: Fazl Ali, J. described three classes of suits for land: suits to determine title, suits for possession, and other suits whose reliefs, if granted, would directly affect title or possession.
13. Noted: Patanjali Sastri, J. said the words cover claims for recovery of possession or control and also suits that primarily and substantially seek adjudication on title or a right or interest in immovable property.
14. Noted: Mahajan, J. said a suit is for land where it involves a controversy about land, the Court must decide conflicting claims, and a decree is prayed for that will change title. He said a suit whose main purpose is different, with incidental relief about land not in real dispute, is not one.
15. Noted: Mahajan, J. added that a suit for specific performance with a claim for decree for possession would be a suit for land. A suit simpliciter for specific performance, for enforcement of the contract and execution of a conveyance, is not one for determination of title. He agreed with the Madras Full Bench in Velliappa Chettiar v. Govinda Doss.
16. Noted: Mukherjea, J. said the expression means a suit instituted to establish claims regarding title or possession. If title is to be directly affected by the decision, it is a suit for land, whether or not possession is claimed.
17. Noted: In Debendra Nath Chowdhury v. Southern Bank Ltd. a Division Bench of the Calcutta High Court held that a suit for specific performance of a contract to execute and register a lease, with alternative claims for damages, is not a suit for land.
18. Held: From this discussion, "a suit for land is a suit in which the relief claimed relates to title to or delivery of possession of land". Whether a suit is for land is decided on the averments in the plaint, with reference to the reliefs claimed.
19. Held: Where the relief relates to adjudication of title or delivery of possession of land or immovable property, it is a suit for land. The Court respectfully agreed with the view of Mahajan, J. in Moolji Jaitha.
20. Noted: In a suit for specific performance of a sale contract that says possession will be handed over on execution of the sale deed, delivery of possession is implied as part of the decree.
21. Noted: Section 22 of the Specific Relief Act, 1963 lets a plaintiff suing for specific performance of a contract to transfer immovable property ask, in an appropriate case, for possession or partition and separate possession in addition. He may also ask for any other relief, including refund of earnest money if specific performance is refused.
22. Noted: Section 22(2) says no relief under clause (a) or (b) of Section 22(1) is granted unless specifically claimed. The proviso lets the court allow the plaintiff to amend the plaint at any stage to include such a claim on just terms.
23. Held: Section 22(1) is an enabling provision. Section 22(2) means that "no court can grant the relief of possession of land or other immovable property" subject to the agreement unless possession is specifically prayed for.
24. Held: Here the suit is for specific performance of an agreement for sale, and delivery of the suit property was not specifically claimed. So it cannot be treated as a suit for land.
25. Held: The Court did not accept that the suit is one for acquisition of title to land. In its true sense a suit simpliciter for specific performance is "a suit for enforcement of terms of contract". The title to the land is not the subject matter of the suit.
26. Held: There is no illegality in the Division Bench order. The appeal is dismissed without costs.
27. Noted: The Court recorded its appreciation of the assistance given by A.S. Bhasme, the amicus curiae.

Authorities

• His Highness Shrimant Maharaj Yashvantrav Holkar of Indore v. Dada Bhai Cursetji Ashburner, 1890 (14) I.L.R. Bombay 353. Discussed. A suit for specific performance of an agreement to mortgage is not a suit for land.
• Yenkoba Balset Kasar v. Rambhaji, 9 Bombay H.C. Rep. 13. Referred to there. A suit for land asks for delivery of land to the plaintiff.
• The Delhi and London Bank v. Wordie, I.L.R. 1 Calcutta 249 at p. 263. Referred to. A suit substantially for land is for acquiring title to or control over land.
• Sreenath Roy v. Cally Doss Ghose, I.L.R. (5) Calcutta 82. Noticed. A learned Single Judge held the court had no jurisdiction to decree specific performance.
• M/s. Moolji Jaitha and Co. v. The Khandesh Spinning and Weaving Mills Co. Ltd., A.I.R. (37) 1950 Federal Court 83 (five Judges). The opinion of Mahajan, J. was agreed with. The other four opinions are set out.
• Velliappa Chettiar v. Govinda Doss, A.I.R. (16) 1929 Madras 721 (Full Bench). Mahajan, J. agreed with it.
• Debendra Nath Chowdhury v. Southern Bank Ltd., A.I.R. 1960 Calcutta 626. Noted. A suit to execute and register a lease, with alternative damages, is not a suit for land.

Also cited in footnotes: the judgment has no footnotes.

Provisions

• Clause 12, Letters Patent of the High Court of Judicature at Bombay: original jurisdiction over suits. Suits for land go to the court where the land lies. Other cases go to the court where the cause of action arose in whole, or in part with leave, or where the defendant dwells or works.
• Section 22(1), Specific Relief Act, 1963: a person suing for specific performance of a contract to transfer immovable property may ask for possession, or partition and separate possession, and for refund of earnest money or any other relief.
• Section 22(2), Specific Relief Act, 1963: no such relief is granted unless specifically claimed. The proviso allows amendment of the plaint at any stage on just terms.

Judgement

1. The appeal is dismissed.
2. The Court finds no illegality in the order of the Division Bench of the Bombay High Court, which dismissed the challenge to the leave granted under clause 12.
3. The parties bear their own costs.
4. Noted: the Court recorded its appreciation of the amicus curiae.

Legal Principle / Ratio

Whether a suit is a suit for land is decided from the plaint's averments and reliefs. A suit for specific performance of a contract of sale that does not specifically claim possession is not a suit for land. Key holding: "a suit for land is a suit in which the relief claimed relates to title to or delivery of possession of land".

Critical Analysis

Analysis based on the judgment text.

• The Court adopts the view of one Judge of a five-Judge Federal Court that gave separate opinions. It relies on the reasoning of that Judge.
• The Court says possession is implied in a decree for specific performance where the agreement promises it, and then says Section 22(2) bars a decree for possession unless specifically claimed. The judgment does not say what happens when a plaintiff later amends to claim possession.
• The facts of the contract are not in dispute, so the judgment decides only a point of jurisdiction. It does not examine whether the agreement can be enforced.

Significance

• The case settles that a suit for specific performance alone is not a suit for land for clause 12 of the Bombay Letters Patent.
• It makes the plaint's reliefs the test of the nature of the suit.
• It links Section 22 of the Specific Relief Act to the question of jurisdiction.

Exam-Important Points

• Rule first: a suit for land is one where the relief relates to title to or delivery of possession of land.
• A suit simpliciter for specific performance is a suit for enforcement of the contract and not for determination of title.
• Section 22(2): relief of possession must be specifically claimed. A plaintiff may amend the plaint at any stage on just terms.
• Trap: a stipulation in the agreement to hand over possession does not make the suit one for land if the plaint does not claim possession.
• The nature of the suit is decided on the averments in the plaint with reference to the reliefs claimed.
• Result: the appeal was dismissed without costs and the Court thanked the amicus curiae.

Prepared from the full text of the judgment. Paragraph numbers follow the official Supreme Court judgment text; law reports may number the same paragraph differently.