Source: Supreme Court 

Why in News? 

A bench of Justice JB Pardiwala and Justice R Mahadevan held that the plea regarding relinquishment of claims under Section 12 (3) of Specific Relief Act, 1963 can be raised at any stage of litigation.                   

• The Supreme Court held this in the case of Vijay Prabhu v. ST Lajapathie & Ors (2024). 

What was the Background of Vijay Prabhu v. ST Lajapathie & Ors Case?  

• The petitioner in this case is the original plaintiff who filed a suit for specific performance of agreement to sell and for delivery of possession of suit property. In the alternative a prayer was made for Rs. 60,00,000 with interest of 12% per anum towards damages from the date of filing of suit.  
• The Trial Court rejected the prayer for specific performance and directed the refund of earnest money to the tune of Rs. 20,00,000 with interest at 12%. 
• It was also recorded by the Trial Court that the plaintiff was not ready and willing to perform his part of the contract. 
• Further, the matter went to the High Court where the Court held that the plaintiff does not qualify to invoke the provisions contained in Section 12 (3) of Specific Relief Act, 1963 (SRA) as he has not relinquished all the claims. Hence, the appeal of the plaintiff was dismissed. 
• The present Special Leave Petition was filed before the Supreme Court against the judgment and order passed by the High Court. 

What were the Court’s Observations?  

• The Court took into consideration Section 12 (3) of SRA which applies to the facts at hand. 
• The Court held that the words ‘unable to perform’ used in Section 12 (3) of SRA is applicable only when the party cannot for any reason perform the whole of what he has promised. 
• The inability may arise by any cause whatsoever including any statutory limitations. The inability to perform may arise by— 
  • deficiency in quantity of the subject-matter, or  
  • variance in quality, or  
  • defect in title; or 
  • some legal prohibition; or  
  • other causes. 
• The power to grant relief in terms of Section 12 (3) of SRA is discretionary in nature and also the same can be invoked only when there is segregation of rights and interests of parties in the property. 
• The Court observed that relinquishment of claim to further performance of the remaining part of the contract and all rights to compensation can be made at any stage of litigation. 
• Hence, the Court concluded that The plaintiff-appellant’s request for the benefit under Section 12(3) of the Act was rightly not dismissed by the High Court solely because it was raised for the first time at the appellate stage. 
• The Court held that it cannot be said that any error of law cannot be said to have been committed by the High Court in passing the impugned order. 
• Hence, the Court dismissed the Special Leave Petition. 

What is Part Performance under SRA? 

• Section 12 of SRA lays down the law on part performance of contracts. 
• Section 12 (1) of SRA provides that: 
  • Except as otherwise hereinafter provided in this section, the court shall not direct the specific performance of a part of the contract. 
• Section 12 (2) of SRA provides that: 
  • Part Performance of contract can be allowed if the following requirements are fulfilled: 
    • If one party cannot fully complete their obligations under a contract, the court can still enforce the part that can be completed. 
    • The uncompleted part must be small compared to the whole agreement. 
    • The court may order money compensation for the uncompleted portion. 
    • This ensures fairness to both parties while addressing the deficiency. 
• Section 12 (3) of SRA provides that: 
  • Part Performance of the contract can be allowed if the following requirements are fulfilled: 
    • If one party cannot fully perform their obligations under a contract, specific performance may not be granted if: 
      • The unperformed part is a significant portion, even if it can be compensated with money. 
      • The unperformed part cannot be compensated with money. 
  • In such cases, the court can order the defaulting party to complete the part of the contract they can perform, if the other party agrees. 
  • The other party must: 
    • For clause (a): Pay the agreed amount minus the value of the unperformed part. 
    • For clause (b): Pay the full agreed amount without any deduction. 
  • The other party must also give up any claims for performance of the remaining part of the contract and any compensation for the default. 
• Section 12 (4) of SRA provides that when a part of a contract which, taken by itself, can and ought to be specifically performed, stands on a separate and independent footing from another part of the same contract which cannot or ought not to be specifically performed, the court may direct specific performance of the former part. 

What are the Important Cases on this Issue? 

• Waryam Singh v. Gopi Chand (1930) 
  • In Waryam Singh's case, Defendant Nos. 1 and 2 agreed to sell 200 Kanals of specified land but were later found to own only two-thirds of that land. 
  • In the Trial Court, the plaintiff insisted on specific performance of the entire contract and requested that the defendants make up the deficiency from their other land. 
  • During arguments, the plaintiff filed an application invoking old Section 15, seeking its benefit if the defendants were deemed incompetent to sell the entire land. 
  • The Division Bench held that the plaintiff could relinquish their claim to any part of the property under the conditions of Section 15 at any time before the appellate court's final decision. 
• Kalyanpur Lime Works v. State of Bihar (1954) 
  • The plaintiff in this case sued the State of Bihar for specific performance of a lease contract. 
  • The Court found that an existing lease with another company could not be forfeited, preventing the government from granting the lease to the plaintiff. 
  • At the appellate stage, the plaintiff invoked old Section 15, requesting a five-year lease for the remaining period after the existing lease expired. 
  • The Court observed that a party could relinquish a claim to further performance at any stage of litigation. 
• Ram Niwas v. Smt. Omkari and Another (1983) 
  • The Court clarified that such a claim for part performance cannot be rejected merely because it was not included in the plaint. 
  • It was also held that the claim’s validity does not depend on being presented in writing before the Trial Court.