Case: – Girish Vinodchandra Dhruva and Ors. v/s Neena Paresh Shah and Anr.; First Appeal No. 1252 of 2013
In a recent decision, the Bombay High Court overturned a decree of the Trial Court for specific performance regarding a 2005 contract for the sale of a flat in Santacruz, Mumbai. This decision stemmed from a case wherein the decree’s enforcement would have displaced several members of the seller’s family, who were residing in the flat.
The Hon’ble Court’s decision was founded on multiple critical observations. Firstly, it highlighted the considerable increase in the flat’s price since 2005. The buyers’ failure to fulfil their payment obligations by October 31, 2005, was deemed as a frustrating factor that defeated the purpose of the sale.
The legal dispute arose from an MoU between US residents Neeta and Paresh Shah, represented by Mukesh Shah, and Vilasben Dhruva, the original defendant, for the purchase of her flat. Despite earnest money being paid and promises of full payment by specified dates, disputes arose concerning readiness, willingness, and completion of the transaction within the agreed-upon timeline.
The High Court’s decision was grounded in legal provisions such as Section 55 of the Indian Contract Act, which deemed contracts voidable for failing to perform within stipulated timeframes when time was fundamental. Additionally, the court also referred to Section 16(c) of the Specific Relief Act, stressing the plaintiff’s obligation to prove readiness and willingness to execute their part of the contract before seeking specific performance.
The Hon’ble Court held that the Plaintiffs hadn’t adequately demonstrated their capability to fulfil the contract terms. This was due to their failure to substantiate their financial capacity to complete the purchase, as there was a lack of documentary evidence supporting their claimed financial position. Furthermore, they had taken insufficient steps towards securing the required funds.
Moreover, the timing of the plaintiffs’ communication regarding their readiness to complete the transaction was called into question. The Hon’ble Court found that the plaintiffs’ letter dated October 29, 2005, to be strategically timed and lacking genuineness, suggesting it was an attempt to create an appearance of compliance within the stipulated time.
Consequently, the Bombay High Court allowed the appeal, rescinded the specific performance decree, and instructed the defendants to return the earnest money with interest. Additionally, the Court also permitted the plaintiffs to withdraw the deposited balance sale consideration, along with accrued interest.
Author of this article:
Adv. Ravish Bhatt,
Partner, R&D Law Chambers,
Dual Qualified Lawyer Solicitor | International Tax Affiliate
Connect with Mr. Bhatt on Linkedin: https://www.linkedin.com/in/adit-ravishbhatt/
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