CLEAR DISPLAY OF READINESS & WILLINGNESS BY THE POTENTIAL FLAT BUYER; SPECIFIC PERFORMANCE SUIT- BOMBAY HIGH COURT 2023

INTRODUCTION

In the Bombay High Court case of 2023[1] titled as “Shri Girish Vinodchandra Dhruva & Ors v Smt. Neena Paresh”, the Hon’ble HC gave a ruling which upheld the principle of equity, in favour of the seller and against the specific relief as claimed by the potential flat buyer (“Original plaintiff/Purchaser”). The intention to purchase and willingness when set out in words, shall have adequate evidence adducing the same.

BACKGROUND

In the original suit of this Appeal, The Original plaintiff/Purchaser filed a civil suit for specific performance directing Vilasben Dhruva(“Appellant/Seller”) in the matter to execute/close the sale deed in trial court. The Plaintiffs were residents of USA, thereby appointed their brother as authorized attorney to close the deal with Appellant. They were interested in purchasing the flat in Mumbai (“suit flat”).? The plaintiff visited the suit flat and finalized the deal at total sale consideration of Rs 41, 75,000/-. As the plaintiffs were the residents of USA, the constituted attorney was to take care of the remaining formalities and perform all the necessary acts to complete the sale transaction.

The parties entered in an MOU dated 06.03.2005 for the suit flat, for which the amount of Rs 2, 51,000/- was paid by the original plaintiff to the Appellant as earnest money of the suit flat. It was decided as per the terms and conditions of the suit that the remaining consideration was to be paid on or before 31.05.2005. The terms of MOU laid out that the NOC was to be obtained by the defendant from the housing society, balance payment was to be received and then the possession shall be given to the plaintiff.

The plaintiff stated that they were financially ready as they had already applied housing loan and were willing to pay off the balance amount, however, as the Appellant herein failed to obtain the certificates from the society, and failed to comply with the obligations as laid out for the completion of the deal. It was claimed by the plaintiff that they had sent all the required documents to the advocate of the Appellant for the completion of the sale and vide letter 29.10.2005, they had informed that they were also ready to pay the balance amount of Rs 39, 24, 000/- so that they could take peaceful possession of the suit flat.

The reciprocal failure of the Appellant herein displays the attempt to back off from the agreement in the view of rise of price of the property after the MOU, however the plaintiff claimed that the MOU is valid and should be binding over the Appellant.

The appeal was filed by the seller as the trial court granted the specific relief to the purchaser on the grounds that there had been a clear display of intent of purchasing. The trial court held that the termination of the contract by the Appellant/original defendant was wrong as the plaintiff had sanctioned housing loan of Rs 15,00,000/-, sufficient amount in the bank account which shows readiness and willingness, however the defendant failed to prove that they were in a position to vacate the suit flat and handover the possession. The penalty was levied of Rs 2,000/- per day till the date of possession and it was directed by court to the plaintiff to retain the interest on the remaining amount which was to be paid.

The Appellant died during the suit and the LRs contested that the Appellant had the urgency of the money and due to the paucity of time as she was residing with 14 members at the house, the money was a dire urgency of the Appellant.

The payment was not made due to the obstruction caused by RBI norms which was stated by the purchaser to justify the failure to complete the transaction within the stipulated time frame, thereby the same was extended to 31.10.2005 and not because the Appellant failed to obtain NOC as they had already received the same. The purchaser had the ulterior motive to withhold the amount, there were no communications or documentation which was forwarded by them as claimed by the Appellant. The Appellant stated that they were compelled to cancel the agreement as they were not performing their part, even after the willingness as they stated herein.

The willingness and readiness to pay is a personal state of affair, which is personal to plaintiffs alone, thereby it was questioned if the power of attorney was competent or not. However, as he was aware of the transaction’s whereabouts, he was competent to complete the sale deed and testify.

The contract laid that penalty as well as forfeiture clause, which indicated that time was of the essence of the contract and the plaintiff was required to pay the balance within the stipulated time period 31.10.2005. The pleadings of the defendant were that merely saying that the plaintiff was ready and willing does not state that they had sufficient funds to complete their part of contract. The trial court has relied that the finding is based on no evidence which is apparent error of law. It is also submitted in the view of escalation of process, it would not be equitable to grant to specific performance after lapse of the period.

STEP INTO THE WITNESS BOX TO PROVE YOUR FINANCIAL STANCE

Additionally, it was stated by the court that the purchaser was bound by Section 16 (c ) of the Act to prove readiness and willingness, to obtain grant of specific performance. The conduct of the purchaser is scrutinized by checking the readiness and willingness which is dependent upon the financial capacity which displays readiness and willingness is shown by consistent display of intention to close the deal. However, the purchaser in the instant case failed to prove that they were financially capable to pay. The major contention of the defendant was that the purchaser did not step into the witness to prove financial capacity, they deposed that their aggregate salary amounted to 120,000 USD, however bare assertion without evidence such as appointment letter, income certificate, tax records etc., shall not be sufficient. The court thereby rejected their claim of them being financially capable.

RISE IN PRICES OF THE PROPERTY CANNOT BE IGNORED

The Court specifically laid emphasis on the fact that the suit for specific performances is discretionary when the seller clearly is facing hardship, also to note the pertinent rise in the prices of the property, however it may not be stated that all the cases to be considered from the point of view of increase in prices, which reject the suit of plaintiff for specific performance, it is clearly due to the reason that the plaintiff failed to perform its own obligation to claim their relief. Thereby, the appeal by the seller/original defendant was allowed, the original suit was dismissed along with the refund of interest @6 % P.a. was given to the original plaintiff/purchaser.

CONCLUSION

This case shifts the perspective by considering the equitable circumstances for the Appellant/seller, and dismissing the trial court’s order granting the specific relief to the original plaintiff. Quite apparently, the economy and the subsequent impact on both the sellers and buyers cannot be clearly negated. The steep rise of property in urban areas is the reality for which the courts may aim for discretional remedies as laid out in this case.

-ADVOCATE SHIVANGI GHOSH

[1] Shri Girish Vinodchandra Dhruva V. Smt. Neena Paresh Shah |2023|Bombay High Court, 1252 of 2013