Friday, September 26, 2014

Bankers Down played the IMpact

Day after SC coal verdict, bankers and firms assess impact
An SC bench headed by Chief Justice R. M. Lodha cancelled the allocation of all but four coal blocks awarded between 1993 and 2010, having a month earlier ruled that the process was illegal, arbitrary and had resulted in the “unfair distribution of national wealth”. Photo: Mint
Day after SC coal verdict, bankers and firms assess impact

Order too dent profitability of metal and mining companies and power producers, put their credit ratings under pressure, say analysts


Mint  :Joel Rebello |  Aman Malik 26 Sep 2014


Mumbai/New Delhi: The Supreme Court (SC) order de-allocating 214 coal blocks will dent the profitability of metal and mining companies and power producers, put their credit ratings under pressure and possibly lead to an increase in funding costs, analysts said on Thursday.
The full fallout of Wednesday’s ruling, which will also hit banks that have exposure to the users of the captive mines, was still being measured in the boardrooms of companies that have trillions of rupees in investment locked up in the mines and their end-use plants.
Stock indices tumbled to a one-month low as the ruling weighed heavily on investors in power, metal and bank stocks.
An SC bench headed by Chief Justice R. M. Lodha cancelled the allocation of all but four coal blocks awarded between 1993 and 2010, having a month earlier ruled that the process was illegal, arbitrary and had resulted in the “unfair distribution of national wealth”.
The 214 blocks will now have to be re-auctioned in a fresh process that will commence in the next financial year.
The ruling also set in motion the attendant problem of unwinding investments and loans already made in the projects.
According to credit rating agencies, metal and mining firms may see their operating margins get squeezed and face higher funding costs. Companies whose mines were operational will be the worst hit.
Crisil Research, an arm of rating agency Crisil Ltd, listed 23 companies including Jindal Steel and Power LtdHindalco Industries LtdGVK Power and Infrastructure Ltd and Essar Power Ltd that will lose operational mines.
Crisil expects these companies to witness “a sharp decline in profitability post 2014-15, as they would have to substitute captive coal with imported coal which is about four times more expensive”.
“In 2015-16, impacted players in the sponge iron and aluminium sectors are expected to witness a 900-1,000 basis points (bps) and 300-400 bps decline respectively, in operating profitability,” Crisil said. One basis point is one-hundredth of a percentage point.
The ruling threatens to disrupt the power sector in a chronically energy-short country where captive power makes up a tenth of the generation capacity.
The SC ruling may lead to a spike in coal prices, which in turn would squeeze margins, said Rajesh Mokashi, deputy managing director at Care Ratings Ltd.
“For metal companies whose mines stand de-allocated, the SC ruling has increased the uncertainty regarding the coal supplies and pricing...an unwarranted spike in the price of coal in India (due to the ensuing demand-supply mismatch following the SC ruling) would hurt the operating margins of metal companies as the higher production cost would largely have to be absorbed,” Mokashi said.
He added: “The difference between the cost of thermal grade coal produced from captive mines and procured from the market is almost four times and the entities which operate on cost-plus basis (mostly state utilities) would ultimately pass on the hike to offtakers thereby restricting impact on their credit profile,” Mokashi said.
Uncertainty stemming from the SC ruling may also hurt the fund-raising plans of some companies that had been hoping to raise funds either via non-convertible debentures (NCDs) or raising equity capital through a qualified institutional placement (QIP).
State-owned NTPC Ltd, for example, has approvals to raise up to Rs.13,000 crore by selling bonds, while Tata Power Co. Ltd has the go-ahead to raiseRs.7,000 crore by selling NCDs. Tata Steel LtdJSW Energy LtdJSW Steel LtdHindalco Industries, Jindal Steel and Power and GVK Power and Infrastructure have also taken approvals from shareholders to raise funds.
Reacting to the order, Hindalco Industries said only one of its four cancelled coal blocks is operational, adding that the company was evaluating the implications of the ruling, which imposed a fine of Rs.295 per tonne of coal extracted on 42 functional mines that were allowed to continue operating until the end of March 2015.
The company said the penalty would lead to a one-time hit of Rs.500 crore to it.
“The only incremental impact because of the cancellation of coal blocks would be on the cost of production at Hirakud smelter starting April 2015, which is not expected to be significant,” the company said.
Jindal Steel and Power, in a stock exchange filing, said it was evaluating the material impact and its consequences, if any, of the SC order.
The company, which had eight coal blocks cancelled, is also seeking legal and administrative remedies on the Rs.295 per tonne levy imposed by the top court, Bloomberg reported on Thursday, citing a call with Ravi Uppal, managing director and group chief executive officer. According to the report, Uppal also said the company would look at importing coal and buying more from the domestic market to replace the production from one of the mines—Gare Palma IV—that was in production and will now have to close in March 2015. Jindal Steel and Power is India’s fifth-largest steelmaker.
According to a submission by the Coal Producers Association to the apex court, industry has invested in excess of Rs.2.57 trillion in 157 blocks and Rs.4 trillion in end-use plants. Out of this, banks and financial institutions have lent about Rs.2.5 trillion and State Bank of India (SBI) alone has lent more thanRs.78,000 crore.
SBI, however, contested these figures in a statement on Thursday, saying, “the exposure of the bank to the affected companies is substantially lower. State Bank of India does not apprehend any major problem/difficulty in recovery of the above dues”.
Other lenders, too, downplayed the impact.
“If fresh bidding is invited for the coal blocks, the existing companies will again re-bid and secure some of the blocks. If a new investor comes, he will have to buy the assets, along with the debt, from the existing companies. It’s not that everything is lost,” said M.S. Raghavan, chairman and managing director, IDBI Bank Ltd.
Stock indices tumbled.
The 30-share Sensex ended lower by 1%, or 276.33 points, at 26,468.36 points, while the National Stock Exchange’s 50-share Nifty shed 1.1%, or 90.55 points, to close at 7,911.85 points. Both indices closed at their lowest level since 26 August.
Shares of Jindal Steel and Power fell 7.83% on the BSE to close at Rs.174.85 while Hindalco shares were down by 4.32% and closed at Rs.149.55 per share. The broader BSE metal index fell 3%.
SBI lost 4.38% to Rs.2,378.35 and ICICI Bank Ltd fell 3.28% to Rs.1,466.85.Allahabad Bank declined 12.3% to Rs.96.95, Union Bank of India fell 7.38% toRs.190 and IDBI Bank gave up 11.03% to end at Rs.60.10. The BSE Bankex ended 2.69% lower at 17,525.09.
Anup Roy and Ruchira Singh in Mumbai and Bloomberg contributed to this story.

Bankers Got a BIG Blow by SC verdict on coal blocks

Banking stocks plunge after SC verdict on coal blocks
The fears of increased asset quality stress come at a time when the banking system is already grappling with a pile-up of bad loans as a consequence of the slowdown in the economy. Photo: Reuters
Mint 25 Sep 14
Mumbai: Banking stocks fell on Thursday on fears that loans given to several power and steel firms could turn sticky after the Supreme Court cancelled the allocation of 214 coal blocks on Wednesday.
Shares of Allahabad Bank fell 12.20% on the National Stock Exchange (NSE), Union Bank of India 6.94%, IDBI Bank Ltd 11.19%, Oriental Bank of Commerce 7.60%, Punjab National Bank 5.89%, Andhra Bank 11.83%,Syndicate Bank Ltd 7.89%, Bank of India 7.28%, Canara Bank Ltd 4.07%,Bank of Baroda 1.5%, Axis Bank Ltd 4.18%, State Bank of India (SBI) 3.95% and ICICI Bank Ltd 2.63%.
NSE’s CNX PSU Bank Index fell 5.09%, while the Bank Nifty Index fell 2.8%.
According to analyst estimates, the top banks, on average, have extended 13% of their loans to mining, coal, iron and steel and infrastructure companies.
 SBI, India’s largest lender, has lent 13.7% of its total loans to the above mentioned sectors, ICICI Bank 16%, 
Punjab National Bank 15.7%,
 Bank of Baroda 7.4%,
 Union Bank of India 14.5%, 
Bank of India 10.4%, 
Axis Bank 11.5% and
 HDFC Bank Ltd about 8%.
According to a report by Karvy Stock Broking Ltd on Thursday, the banking sector has an exposure of Rs.5.01 trillion to the power sector alone, and the exposure has grown from 4.3% of non-food credit in March 2008 to 8.83% in June 2014. Banks had financed many new power projects in the period, which may be negatively impacted by the court verdict.
The brokerage said that cancellation of allotted coal blocks to these projects will adversely impact the chances of recovering these loans. Banks which lent to these power producers will also find many more accounts turning bad.
According to Karvy analyst Asutosh Kumar Mishra, if these projects fail to take off, banks will have to either write off or classify them as non-performing assets (NPAs), adding that as the court has asked the government to re-auction these coal blocks, it would mean substantial delays in projects and result into slippages and restructuring of loans to these projects.
“Hence, we expect part of this exposure to turn into NPAs over the next 18 months as many of these projects will become unviable,” Mishra said in the note, reiterating the brokerage’s stance in the 26 August note.
“...It is difficult to calculate the exact impact on each bank as banks do not provide project-wise lending details. However, as a thumb rule, bank with higher power exposure should have a relatively higher impact,” he added.
Fears of increased asset quality stress come at a time when the banking system is already grappling with a pile-up of bad loans as a consequence of the slowdown in the economy.
The gross NPAs of 40 listed banks in the June quarter stood at Rs.2.52 trillion from Rs.2.08 trillion in the year earlier. 
While gross NPAs in the system are at 4% of total loans,
 total stressed assets (including restructured assets) are estimated at close to 10%
 by the Reserve Bank of India (RBI).

Thursday, September 25, 2014

Specific Performance sec.16 (c) – failure to discharge Bank Loan as per the agreement of sale


Specific Performance sec.16 (c) – failure to discharge Bank Loan as per the agreement of sale – filing suit after 7 years for specific performance after filing a suit for recovery of possession by owner –

 Both lower courts found that the appellant is at fault – Apex court held that there is concurrent finding of fact and the same is evident from the record that the plaintiff (present appellant) has failed to perform his part of contract, as such, in our opinion, above case law is of little help to the plaintiff/appellant, and the courts below have not erred in law in not granting the relief of specific performance of contract to the plaintiff in OS.No.37 of 1985.


 For the reasons as discussed above, we find no illegality in the judgment and orders challenged before us. 


Accordingly, both the appeals are dismissed with costs.= CIVIL APPEAL NOs.6071-6072 OF 2007 TELIKICHERLA SESIBHUSHAN (DEAD) BY LRS ……………APPELLANTS VERSUS KALLI RAJA RAO (DEAD) BY LRS & ORS. ……………RESPONDENTS =2014 – Sept. Month – http://judis.nic.in/supremecourt/filename=41892

Specific Performance sec.16 (c) – failure to discharge Bank Loan as per the agreement of sale – filing suit after 7 years for specific performance after filing a suit for recovery of possession by owner – Both lower courts found that the appellant is at fault – Apex court held that there is concurrent finding  of  fact  and the same is evident from the record that the plaintiff  (present  appellant) has failed to perform his part of contract, as such, in our  opinion,  above
case law is of little help  to  the  plaintiff/appellant,  and   the  courts below have not erred  in  law  in  not  granting   the  relief  of  specific performance of contract to the plaintiff in OS.No.37 of 1985. For the reasons as discussed above,  we  find  no  illegality  in  the judgment and orders challenged before us. Accordingly, both the appeals  are dismissed with costs.=
respondent-  Kalli  Raja  Rao
(since dead) agreed to sell the  property  measuring  an  area  of  Ac.19.96
cents situated at Pulla village of Eluru Taluk  for an amount of Rs.80,000/-
(Rupees eighty thousand only) under the agreement of sale (  Ex.A/1)  dated
10th May, 1980.
The said agreement discloses  that  respondent-  Kalli  Raja
Rao had taken a loan of Rs.20,000/- (Rupees twenty thousand only)  from  the
State Bank of India, Eluru Branch, in the year 1969 and he could  not  repay
the loan, as such,  he intended to sell his land, and the present appellant-
Telikicherla Sesibhushan  agreed to repay the  loan  amount  with  interest
due from Kalli Raja Rao, to the Bank.
It appears that the appellant  though
made certain payments but failed  to  repay  the  entire  loan  amount  with
interest.
Consequently, the Bank instituted a suit being O.S.No.208 of  1981
against the debtor for recovery of the amount before the Subordinate  Judge,
Eluru.
Later, in the said suit the present appellant got  himself  impleaded
as a party. The suit filed by the Bank  for  recovery  of  Rs.46,408.85  was
decreed  with  interest  on  31st  December,  1986  and  the  same  attained
finality.
Since the commitment made by the appellant was  not  fulfilled  by
him regarding the repayment of the loan amount,  as  such,  Kalli  Raja  Rao
filed  suit being O.S. No.28 of 1985 before  the  Subordinate  Judge,  Eluru
against the appellant for recovery  of  possession  of  land  which  he  had
delivered to him at the time of aforesaid agreement of sale.
On  this,  the
appellant appears to have filed O.S.No.37 of 1985 after a  period  of  seven
years of agreement against  Kalli  Raja  Rao  for  specific  performance  of
contract,  before  the  Subordinate  Judge,  Eluru.  
Both  the  suits   i.e.
O.S.No.28 of 1985 and  O.S.No.37  of  1985  were  disposed  of  vide  common
judgment and order dated 12th June, 1996
The concluding part  of  the  said
judgment and order of the trial court reads as under:
“ 26.  In the result, O.S.No.28/85 is dismissed. The court  fee  payable  on
the plaint in O.S.No.28/85 shall be collected from  out  of  the  estate  of
late Rajarao which will come into the hands of his legal  heirs,  Plaintiffs
2 to 10 . O.S.No.37/85 is partly allowed with the following conditions:-
The Defendants 2 to 10 shall deposit an amount of Rs.71,552-45 paise in  the
court within three months from today,  and  the  plaintiff  is  entitled  to
withdraw the above amount to be deposited in the court.
The  plaintiff  shall  surrender  the  possession  of  the  plaint  schedule
properties of the Defendants 2 to 10 within  one  month  from  the  date  of
deposit of Rs.71,552-45 paise to be made by the Defendants 2 to  10  in  the
Court.
In view of the relationship between the parties and in view of  the  present
facts of the case, I am not inclined to make any order as to costs  in  both
the suits.”
From the above quoted para it is clear that the suit filed by Kali Raja  Rao
was dismissed, and the suit filed by the appellant for specific  performance
of contract was not decreed but the amount paid by him towards repayment  of
loan was directed to be paid back to him.=
High court
 51.   In the result, A.S. 2052 of 1996 is dismissed confirming the  decree
and judgment in O.S. 37 of 1985 of the trial  Court.  A.S.2652  of  1996  is
allowed, and consequently O.S.28 of 1985 is decreed  subject  to  fulfilling
of conditions  imposed in the decree in  O.S.37  of  1985  the  vendors  are
entitled to possession on deposit of amount as directed by the trial  Court
=
It is clear from the record  that  there is  concurrent  finding  of
fact  against the present  appellant  by both the  courts  below  that   the
appellant failed to prove that he had been ready and willing to perform  his
part  of  the contract. 
Having gone through the papers on record,  we   find
that since the present appellant failed to repay the entire loan  amount  in
terms of the agreement, and the  suit   filed   by   the  Bank  against  the
debtor    for    recovery    of    remaining    amount    of    loan     was
decreed, as such, there was ample  evidence  on  record  to  hold  that  the
appellant failed to perform his part of contract,  as  such,  it  cannot  be
said that he is entitled to the relief of specific performance of  contract.
It is pertinent to mention here that the suit for  specific  performance  of
contract was filed by  the  plaintiff/appellant  after  a  period  of  seven
years, and it is not proved on  the  record  that  the  plaintiff  had  been
always ready and willing to perform his part of contract.=
In the case of Aniglase Yohannan vs. Ramlatha & Ors. (2005) 7 SCC  534
in which reliance has been placed on behalf of the appellant,  it  has  been
held that where from the pleadings   and  evidence  of  the  parties  it  is
manifest that the plaintiff was ready and willing to  perform  his  part  of
the contract, the relief of specific performance may not be denied  to  him.
Relevant parts of paragraph 9 and 12 of the said judgment read as under:
“9.    The requirements to be fulfilled  for  bringing  in  compliance  with
Section 16(c) of the Act have been  delineated  by  this  Court  in  several
judgments. Before dealing with the various judgments it is necessary to  set
out the factual position. The agreement for sale was executed  on  15-2-1978
and the period during which the sale was to be completed  was  indicated  to
be [pic]six months. Undisputedly, immediately after the expiry of  the  six-
months’  period,  lawyer’s  notice  was  given  calling  upon  the   present
appellant to execute the sale deed. It is also averred in  the  plaint  that
the plaintiff met the defendant several times and requested him  to  execute
the sale deed. On finding inaction on  his  part,  the  suit  was  filed  in
September 1978. This factual position has been  highlighted  in  the  plaint
itself. The learned Single Judge after  noticing  the  factual  position  as
reflected in the averments in the  plaint  came  to  hold  that  the  plaint
contains  essential  facts  which  lead  to  inference  to  the  plaintiff’s
readiness  and  willingness.  Para  3  of  the  plaint  indicates  that  the
plaintiff was always ready to  get  the  sale  deed  prepared  after  paying
necessary consideration. In para 4 of the plaint, reference  has  been  made
to the lawyer’s notice calling upon the defendant to execute the sale  deed.
In the said paragraph it has  also  been  described  as  to  how  after  the
lawyer’s notice was issued the plaintiff met the defendant. In para 5 it  is
averred that the defendant is bound to execute the sale  deed  on  receiving
the balance amount and the  plaintiff  was  entitled  to  get  the  document
executed by the defendant. It is  also  not  in  dispute  that  the  balance
amount of the agreed consideration was deposited in court simultaneously  to
the filing of the suit.
Xx         xx          xx
12. The basic principle behind Section 16(c) read with Explanation  (ii)  is
that any person seeking benefit of  the  specific  performance  of  contract
must manifest that his conduct has  been  blemishless  throughout  entitling
him to the specific relief. The provision imposes a personal bar. The  Court
is to grant relief on the  basis  of  the  conduct  of  the  person  seeking
relief. If  the  pleadings  manifest  that  the  conduct  of  the  plaintiff
entitles him to get the relief on perusal of the plaint  he  should  not  be
denied the relief.”
7.       But in the present case, there is concurrent finding  of  fact  and
the same is evident from the record that the plaintiff  (present  appellant)
has failed to perform his part of contract, as such, in our  opinion,  above
case law is of little help  to  the  plaintiff/appellant,  and   the  courts
below have not erred  in  law  in  not  granting   the  relief  of  specific
performance of contract to the plaintiff in OS.No.37 of 1985.
8.    For the reasons as discussed above,  we  find  no  illegality  in  the
judgment and orders challenged before us. Accordingly, both the appeals  are
dismissed with costs.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOs.6071-6072 OF 2007
TELIKICHERLA SESIBHUSHAN
(DEAD) BY LRS ……………APPELLANTS
VERSUS
KALLI RAJA RAO
(DEAD) BY LRS & ORS. ……………RESPONDENTS
J U D G M E N T
PRAFULLA C.PANT,J.
1. These two appeals are directed against the common judgment and order
dated 15th June, 2007 passed by the High Court of Andhra Pradesh in Appeal
Suit Nos.2652 and 2052 of 1996.
2. We have heard learned counsel for the parties and perused the papers
on record.
3. The factual matrix of the case is that respondent- Kalli Raja Rao
(since dead) agreed to sell the property measuring an area of Ac.19.96
cents situated at Pulla village of Eluru Taluk for an amount of Rs.80,000/-
(Rupees eighty thousand only) under the agreement of sale ( Ex.A/1) dated
10th May, 1980. The said agreement discloses that respondent- Kalli Raja
Rao had taken a loan of Rs.20,000/- (Rupees twenty thousand only) from the
State Bank of India, Eluru Branch, in the year 1969 and he could not repay
the loan, as such, he intended to sell his land, and the present appellant-
Telikicherla Sesibhushan agreed to repay the loan amount with interest
due from Kalli Raja Rao, to the Bank. It appears that the appellant though
made certain payments but failed to repay the entire loan amount with
interest. Consequently, the Bank instituted a suit being O.S.No.208 of 1981
against the debtor for recovery of the amount before the Subordinate Judge,
Eluru. Later, in the said suit the present appellant got himself impleaded
as a party. The suit filed by the Bank for recovery of Rs.46,408.85 was
decreed with interest on 31st December, 1986 and the same attained
finality. Since the commitment made by the appellant was not fulfilled by
him regarding the repayment of the loan amount, as such, Kalli Raja Rao
filed suit being O.S. No.28 of 1985 before the Subordinate Judge, Eluru
against the appellant for recovery of possession of land which he had
delivered to him at the time of aforesaid agreement of sale. On this, the
appellant appears to have filed O.S.No.37 of 1985 after a period of seven
years of agreement against Kalli Raja Rao for specific performance of
contract, before the Subordinate Judge, Eluru. Both the suits i.e.
O.S.No.28 of 1985 and O.S.No.37 of 1985 were disposed of vide common
judgment and order dated 12th June, 1996. The concluding part of the said
judgment and order of the trial court reads as under:
“ 26. In the result, O.S.No.28/85 is dismissed. The court fee payable on
the plaint in O.S.No.28/85 shall be collected from out of the estate of
late Rajarao which will come into the hands of his legal heirs, Plaintiffs
2 to 10 . O.S.No.37/85 is partly allowed with the following conditions:-
The Defendants 2 to 10 shall deposit an amount of Rs.71,552-45 paise in the
court within three months from today, and the plaintiff is entitled to
withdraw the above amount to be deposited in the court.
The plaintiff shall surrender the possession of the plaint schedule
properties of the Defendants 2 to 10 within one month from the date of
deposit of Rs.71,552-45 paise to be made by the Defendants 2 to 10 in the
Court.
In view of the relationship between the parties and in view of the present
facts of the case, I am not inclined to make any order as to costs in both
the suits.”
From the above quoted para it is clear that the suit filed by Kali Raja Rao
was dismissed, and the suit filed by the appellant for specific performance
of contract was not decreed but the amount paid by him towards repayment of
loan was directed to be paid back to him. It appears that both the parties
preferred appeals against the aforesaid judgment and decree passed by the
trial court, and the same were disposed of together by the High Court with
the following concluding paragraph:
“ 51. In the result, A.S. 2052 of 1996 is dismissed confirming the decree
and judgment in O.S. 37 of 1985 of the trial Court. A.S.2652 of 1996 is
allowed, and consequently O.S.28 of 1985 is decreed subject to fulfilling
of conditions imposed in the decree in O.S.37 of 1985 the vendors are
entitled to possession on deposit of amount as directed by the trial Court.
The vendors are entitled to mesne profits to be determined on a separate
application to be filed before the trial Court. The vendors are entitled
to mesne profits to be determined on a separate application to be filed
before the trial Court from the date of suit O.S.28 of 1985 till the date
of possession. However, while evaluating mesne profits the amounts
deposited by virtue of this Court’s order namely Rs.50,000/- per year
should be given effect to. The vendors are entitled to withdraw the amounts
deposited by the vendee pursuant to the orders of this Court.”
4. It is clear from the record that there is concurrent finding of
fact against the present appellant by both the courts below that the
appellant failed to prove that he had been ready and willing to perform his
part of the contract. Having gone through the papers on record, we find
that since the present appellant failed to repay the entire loan amount in
terms of the agreement, and the suit filed by the Bank against the
debtor for recovery of remaining amount of loan was
decreed, as such, there was ample evidence on record to hold that the
appellant failed to perform his part of contract, as such, it cannot be
said that he is entitled to the relief of specific performance of contract.
It is pertinent to mention here that the suit for specific performance of
contract was filed by the plaintiff/appellant after a period of seven
years, and it is not proved on the record that the plaintiff had been
always ready and willing to perform his part of contract.
5. Clause (c) of the Specific Relief Act, 1963 provides that specific
performance of contract cannot be enforced in favour of a person who fails
to aver and prove that he has performed or has always been ready and
willing to perform the essential terms of the contract which are to be
performed by him, other than terms the performance of which he has been
prevented or waived by the defendant. In the present case, as discussed
above, due to the failure on the part of the appellant to repay the loan in
terms of the agreement dated 10th May, 1980 (Ex.A.1) and further
considering the fact that not only the suit being O.S.No.208 of 1981 filed
by the creditor Bank was decreed against the debtor but it attained
finality, the Courts below have committed no error of law in refusing to
decree the suit of the appellant for specific performance of contract.
6. In the case of Aniglase Yohannan vs. Ramlatha & Ors. (2005) 7 SCC 534
in which reliance has been placed on behalf of the appellant, it has been
held that where from the pleadings and evidence of the parties it is
manifest that the plaintiff was ready and willing to perform his part of
the contract, the relief of specific performance may not be denied to him.
Relevant parts of paragraph 9 and 12 of the said judgment read as under:
“9. The requirements to be fulfilled for bringing in compliance with
Section 16(c) of the Act have been delineated by this Court in several
judgments. Before dealing with the various judgments it is necessary to set
out the factual position. The agreement for sale was executed on 15-2-1978
and the period during which the sale was to be completed was indicated to
be [pic]six months. Undisputedly, immediately after the expiry of the six-
months’ period, lawyer’s notice was given calling upon the present
appellant to execute the sale deed. It is also averred in the plaint that
the plaintiff met the defendant several times and requested him to execute
the sale deed. On finding inaction on his part, the suit was filed in
September 1978. This factual position has been highlighted in the plaint
itself. The learned Single Judge after noticing the factual position as
reflected in the averments in the plaint came to hold that the plaint
contains essential facts which lead to inference to the plaintiff’s
readiness and willingness. Para 3 of the plaint indicates that the
plaintiff was always ready to get the sale deed prepared after paying
necessary consideration. In para 4 of the plaint, reference has been made
to the lawyer’s notice calling upon the defendant to execute the sale deed.
In the said paragraph it has also been described as to how after the
lawyer’s notice was issued the plaintiff met the defendant. In para 5 it is
averred that the defendant is bound to execute the sale deed on receiving
the balance amount and the plaintiff was entitled to get the document
executed by the defendant. It is also not in dispute that the balance
amount of the agreed consideration was deposited in court simultaneously to
the filing of the suit.
Xx xx xx
12. The basic principle behind Section 16(c) read with Explanation (ii) is
that any person seeking benefit of the specific performance of contract
must manifest that his conduct has been blemishless throughout entitling
him to the specific relief. The provision imposes a personal bar. The Court
is to grant relief on the basis of the conduct of the person seeking
relief. If the pleadings manifest that the conduct of the plaintiff
entitles him to get the relief on perusal of the plaint he should not be
denied the relief.”
7. But in the present case, there is concurrent finding of fact and
the same is evident from the record that the plaintiff (present appellant)
has failed to perform his part of contract, as such, in our opinion, above
case law is of little help to the plaintiff/appellant, and the courts
below have not erred in law in not granting the relief of specific
performance of contract to the plaintiff in OS.No.37 of 1985.
8. For the reasons as discussed above, we find no illegality in the
judgment and orders challenged before us. Accordingly, both the appeals are
dismissed with costs.
….…………………………………………..J
(SUDHANSU JYOTI MUKHOPADHAYA)
………………………………………………J
(PRAFULLA C. PANT)
NEW DELHI,
SEPTEMBER 8, 2014.