Satish Kumar v. Karan Singh & Anr.
Background
The respondent-plaintiff claimed that the appellant's late father had agreed in 1995 to sell his rights in a DDA (Delhi Development Authority) alternative plot recommendation for Rs. 4,60,000, evidenced by a short receipt-cum-agreement acknowledging part payment of Rs. 2,30,000. Both the trial court and the High Court had decreed specific performance of this agreement in the plaintiff's favour, treating the document as a valid, enforceable contract for sale.
Decision Breakdown
The Supreme Court held that both lower courts had failed to properly apply the Specific Relief Act and settled precedent governing when a decree for specific performance may be granted: courts must first determine whether a genuinely valid and enforceable contract exists before ordering performance. It pointed to several facts the lower courts had overlooked: the mismatch between the agreed price and the much higher amount the defendant had actually deposited with the DDA for the plot, the suit being valued far above the agreed sale price, and critically, that the DDA's eventual lease to the defendant's family expressly made the plot non-transferable for ten years. Given this non-transferability condition alone, a decree for specific performance could never lawfully have been passed. The Court therefore allowed the appeal, set aside both lower court judgments, and directed the appellant to refund the Rs. 4,30,000 already paid by the respondent (with 6% annual interest) within two months.
Lesson Learnt
A court cannot order specific performance of a sale agreement if the property itself is legally barred from being transferred (such as a government-imposed non-transferability clause): the underlying legal restriction on the property defeats the contract regardless of what the parties privately agreed.