Relinquishment of Claims of Part Performance of a Contract can be opted at ‘Any’ Stage of Litigation?

Vijay Prabhu v. S.T. Lajapathie & Ors. [SLP (C) No.25246/2023]

Applicable law in simple terms:

Part-performance of a contract is not allowed under the Specific Relief Act, 2018 (“SRA”) unless it falls under the exceptions provided under Section 12 of the SRA. Section 12(3) of the SRA provides that in the event a party to a contract is unable to perform whole of his part of the contract (without the fault of that party) then, upon fulfilling of the following conditions, the court may allow part performance of the contract at the suit of the other party:

Section	The part left unperformed:	The other party filing the suit:	The other party filing the suit:
12(3)(a)	forms a considerable part of contract and when the compensation amount equivalent to the part of the contract left unperformed can be ascertained (Condition 1)	has paid or has agreed to pay compensation for the whole of the contact minus the consideration for the part of the contract left unperformed (Condition 2)	relinquishes all claims to the performance of the remaining part of the contract and all right of compensation.   (Condition 3)
12(3)(b)	is such that equivalent compensation cannot be ascertained (Condition 1)	has paid or agreed to pay consideration  for the whole of the contract without any abatement (i.e. cost reduction) (Condition 2)

 

Facts before the Division Bench of the Hon’ble Supreme Court (SC)

Before the appellate High Court (HC) the appellant submitted that it (original plaintiff) was willing to relinquish his claims to the performance by the defendants, of the remaining part of the agreement of sale. The HC inter-alia noted that such a plea was never raised before the Trial Court and no grounds have also been raised in the memorandum of First Appeal in that regard and the claim for specific performance of contract was rejected by the HC. Hence, the issue before the Hon’ble SC was “whether the 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”?

SC Held:

In Kalyanpur Lime Works v. State of Bihar (AIR 1954 SC 165), the plaintiff had sued the State of Bihar for specific performance of a contract for lease. It was found that an earlier lease in favour of another company was in force and could not be forfeited and, therefore, the Government was not in a position to grant lease of the property to the plaintiff. The plaintiff made an application at the appellate stage claiming benefit of the provisions of old Section 15 and prayed for grant of lease for a period of five years which remained after the expiry of the period of lease of the other company. In that case, the SC clearly held that: “relinquishment of the claim to further performance can be made at any stage of the litigation.”

 

Therefore, applying the above-mentioned judgment, the SC re-iterated that (where all other conditions are met under  Section 12(3) of the SRA),  claim for part performance of the contract can also “not be rejected on the short ground that it was not incorporated in the plaint or was not set forth in writing before the Trial Court.” Hence, part-performance of the contract was allowed.