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PETITIONER: N.   L. DEVENDER SINGH & ORS.

       Vs.

RESPONDENT: SYED KHAJA

DATE OF JUDGMENT03/08/1973

BENCH: BEG, M. HAMEEDULLAH BENCH: BEG, M. HAMEEDULLAH MATHEW, KUTTYIL KURIEN

CITATION:  1973 AIR 2457            1974 SCR  (1) 312  1973 SCC  (2) 515

ACT: Specific  Relief  Act  1877,  s.  12-Presumption  under-When rebutted-Bar in S.  21-When operates.

HEADNOTE: The  plaintiff (respondent herein) executed an agreement  on 9-10-1962 with defendant no.  1 whereby the latter agreed to sell  to the former his house in Hyderabad for a sum of  Rs. 60,000.   The plaintiff paid a sum of Rs. 2,000  as  earnest money.   However,  dependent  no.  1 sold  the  property  in question on 19-10-1962 to defendants 2 to 7 for a sum of Rs. 70  ,  000.   The plaintiff consequently filed  a  suit  for specific  performance  of  the  agreement.   The  suit   was resisted by defendant no. 1 on the ground that the plaintiff had  obtained the agreement dated 9-10-1962 as a  result  of misrepresentation  and  fraud.  The trial  court  held  that misrepresentation  and  fraud had not been  proved  but  the plaintiff had obtained an "unfair advantage’.  On this  view the trial Court dismissed the suit for specific performance. It  ordered  the repayment to the plaintiff of  the  earnest money paid by him.  Inter alia the trial court also  ordered the  payment  of Rs. 20,000 to the plaintiff  as  liquidated damages  or penalty as stipulated in the agreement of  9-10- 1962.  In appeal the High Court decreed the plaintiff’s suit disagreeing  with  the  view of the  trial  Court  that  the plaintiff had obtained an unfair advantage.  The High  Court granted the defendants a certificate of fitness to appeal to this  Court.  It was contended on behalf of the  defendants- appellants that the parties themselves having stipulated for Rs. 20,000 as liquidated damages in the event of a breach by the  first  defendant,  the  presumption  contained  in  the explanation  to a. 12 of the Specific Relief Act 1877  stood rebutted.   It  was also contended that once  the  aforesaid presumption was rebutted the bar contained in section 21  of the Act would ipso facto become operative. Dismissing the appeal, HELD  :  (1)  A  reference  to s. 22  of  the  Act  of  1877 (corresponding  to  a. 20 of the Specific Relief  Act  1965) would  show  that the jurisdiction of the  Court  to  decree specific  relief is discretionary and must be  exercised  on sound and reasonable grounds "guided by judicial  principles and  capable  of correction by the Court of  appeal".   This

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jurisdiction  cannot  be curtailed or taken away  by  merely fixing  a  sum  even as liquidated damages.   This  is  made perfectly  clear by the provisions of s. 20 of the  old  Act (corresponding  to  a. 23 of the Act of 1963)  so  that  the Court  has to determine, on the facts and  circumstances  of each  case  before  it, whether specific  performance  of  a contract to convey a property ought to be granted. [319G-H] The  fact  that the parties themselves specified  a  sum  of money to be paid in the event of its breach is, no doubt,  a piece  of evidence to be considered in deciding whether  the presumption  has been repelled or not.  But, it  is  nothing more  than  a Piece of evidence.  It is  not  conclusive  or decisive. [32OA-B] (ii) The  contention that once the presumption contained  in explanation to s.   12  of the old Act is removed,  the  bar contained  S.  21  of  the  old  Act  against  the  specific enforcement of a contract for which compensation in money is an  adequate relief, automatically operates, overlooks  that the condition for the imposition of the bar is actual  proof that  compensation  in money is adequate on  the  facts  and circumstances  of a particular case before the  Court.   The effect  of the presumption is that the party coming  to  the court  for the specific performance of a contract  for  sale of-  immovable  property need not prove anything  until  the other side has removed the presumption.  After the  evidence is led to remove the presumption, the plaintiff may still be in a position to prove, by other evidence in the case,  that payment of money does not compensate him adequately.  [320G- E] In the present case, although, evidence was led by  parties, yet  there  was no evidence to show the extent  of  loss  of prospective  gains  to the plaintiff-respondent  or  to  the appellants. [320E-F] 313 (iii)     Since  the presumption under s. 12 of the old  Act had  not  been rebutted the High Court rightly  decreed  the suit for specific performance of the contract.  It could not be said that the High Court had lightly interfered with  the exercise  of its discretion by the trial court to  grant  or not   to  grant  specific  performance  on  the  facts   and circumstances of the case. [321C-D]

JUDGMENT: CIVIL  APPELLATE  JURISDICTION : Civil Appeal  No.  2517  of 1969. From  the Judgment and Order dated 31st March, 1969  of  the Andhra Pradesh High Court at Hyderabad, in City Civil  Court Appeal No. 71 of 1964. P.   Keshva Pillai, for appeallants Nos. 1 & 3. M.   C.   Chagla,  Aziz  Ahmad  and  P.  C.  Bharatri,   for appellants Nos. 2, 4-7. C.   K.  Daphtary, Y. S. Sahni, S. M. Aqil and U. P.  Singh, for the respondent. The Judgment of the Court was delivered by BEG,  J. This appeal has come before us on a Certificate  of fitness  granted by the High Court of Andhra  Pradesh  under Articles 132 and 133 of the Constitution of India. The   Plaintiff-Respondent  had   sued   Defendant-Appellant Devender  Singh  (hereinafter  referred  to  as  the  "First Defendant") for specific performance of a contract to sell a house  facing the Secunderabad Junction Railway  Station  in Hyderabad  for a sum of Rs. 60,000/- concluded on  9-10-1962 at New Delhi where the first Defendant resides.  It  appears

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that   there   was  a  previous   agreement   on   27-9-1962 (hereinafter  referred to as the " first agreement)  between the  Plaintiff,  who  resides at Hyderabad,  and  the  first Defendant, through an agent, Laxmanaswamy, D.W. 2, with  the help of Sambamurthy, D.W. 3, a nephew of Laxmanaswamy and an Income-tax  ’practitioner residing at Secunderabad, for  the sale  of  this very property for Rs. 55,0001- the  terms  of which  were embodied in a document Ex.  B. 15.   The  First Defendant   denies  the  binding  character  of  the   first agreement of 27-9-1962 under which a cheque for Rs. 10,000/- was drawn up by the Plaintiff in favour of the first  Defen- dant  and  handed over to his agent by the  Plaintiff.   The exact  reason  for  a cancellation of this  cheque  for  Rs. 10,000/-  in favour of the 1st Defendant is not clear,  but, according  to  Sambamurthy,  D.W. 3, the  reason  was  that, actually,  Rs. 20,000/- was being demanded on behalf of  the first Defendant as earnest money to which the plaintiff  had consented  so that a new cheque was, for some  unknown  reas on,  to  be issued and not another cheque for  Rs.  10,000/. The  evidence of Sainbamurthy also show that  the  Plaintiff had become aware of want of written authority on the part of either Laxmanaswamy or Sambamurthy to conclude the  contract on  behalf  of the 1st Defendant so that be must  have  felt uncertain   about  the  effect  of  the   first   agreement. Evidently, attempts to show the Plaintiff that his  position was shaky under the first agreement and higgling were  going on  despite the agreement of 27-9-1962 Evidence in the  case and findings recorded thereon by the Trial Court as well  as the High Court show that, although the first Dedendant,  who was keen to dis- 314 post  of  his property at Secunderabad, may have  had  other offers,  yet, upto 27-9-1962, when the first  agreement  was concluded,  he  had no better offer  than  the  plaintiff’s. Evidence  is conflicting on the question whether  the  first Defendant  had  autborised  Sambaniurthy  by  telephone   to conclude the contract on his behalf for the sale of property of  Rs.  55,000/-, but this was unimportant in view  of  the subsequent  agreement of 9-10-1962.  The Plaintiff, who  was evidently very anxious to obtain the property, had flown  to Delhi  with  his  lawyer and had managed,  by  offering  Rs. 60,000,/-  as  the price of the property, out of  which  Rs. 20,000/-  was paid is earnest money (Rs. 10,000,/-  in  cash and  Rs.  10,0100/-  by a cheque dated  9-10-1962)  and  the balance  at  the time of registration, to induce  the  first Defendant   himself  to  conclude  and  execute  the   fresh agreement of 9-10-1962. The deed of agreement of 9-10-1962 Ex.  Al was not  executed in  a  hurry by the first Defendant.  He had ample  time  to consider  any other offers the-re, might be till  then  for’ sale  of  his property and to take legal advice, if  he  had wanted  to have it, before executing the deed of  9-10-1962. The Trial Court as well as the High Court had found that the first  Defendant  was fully aware of all the facts  and  had entered  into the agreement of 9th October, 1962, with  open eyes  because it was the most advantageous transaction  open to  the first Defendant at that time and not as a result  of any  pressure or misrepresentation or fraud  practised  upon the  first Defendant, a middle aged hard headed  and  astute businessman who deposed that he was a Director of  Blackwood Hodge (Pvt.) Ltd., and was connected with a number of  other business concerns.  He had himself stated in his evidence in Court  that  he  entered into  the  agreement  of  9-10-1962 because he considered that "a bird in hand was worth two  in the  bush"  and had thus given out the real reason  for  the

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agreement of 9-10-1962. The  first Defendant bad, however, ignoring the contract  of 9-10-1962, actually sold the property under a deed dated 19- 10-1962  Ex. B. 22 for a sum of Rs. 70,000-/- received  from Gulam Hussain Jowkar (2nd Defendant), Rajab (3rd Defendant), Safar   Jowkar   (4th  Defendant),  Hussain   Jowkar’   (5th Defendant), Wali Husstin Nasab (6th Defendant), all partners in the firm carrying on the business of running Alpha  Hotel (7th Defendant), situated in front of the Railway Station at Secunderabad  Apparently, the offer of Rs. 70,000/- had come too late and proved too tempting for the first Defendant to resist it. The  first  Defendant  had, in answer to  the  suit  of  the PlaintiffResponsent,  pleased  that the’ contract  of  9-10- 1.962  was the result of mis-representation and fraud.   All he  could urge in support of such a plea was that the  first Defendant  had been so completely overawed by the  Plaintiff and  his  lawyer  mis-representing to  him  that  the  first agreement was still binding and that the Plaintiff could sue upon it. that he executed the agreement of 9-10-1962.   Both the  Trial Court and the High  Court had found the  plea  of fraud and mis-representation taken by the first Defendant to be baseless.  Nevertheless, the 315 Trial  Court  had relied upon the facts leading  up  to  the agreement  of  9-10-1962 and the allegation that  the  first Defendant was overawed as sufficient to justify the  finding that the plaintiff had obtained an " unfair advantage"  over the  1st Defendant while concluding the agreement  of  9-10- 1962.  Therefore, the Trial Court thought that the plaintiff was not entitled to specific performance of the agreement of 9-10-1962,  but  awarded  a decree for  the  return  of  Rs. 20,000/-  to the plaintiff, which he had paid to  the  first Defendant as earliest money, and for damages of Rs. 20,000/- , which had been stipulated for by way of liquidated damages or penalty in the agreement of 9-10-1962 and for  additional damages  to  the extent of Rs. 2,300/.  Interest at  6%  per annum  and the costs of the suit were also. awarded  to  the Plaintiff by the Trial Court. The  High  Court  had rightly found, after  a  thorough  re- exammation of. evidence in the case, that it was  impossible to hold that the plaintiff had obtained any unfair advantage over  the  first Defendant in concluding  the  agreement  of 9-10-1962.   It found the stand of the 1st Defendant  to  be disingenuous and his plea as to why or how he found  himself compelled  to  execute  the agreement  of  9-10-1962  to  be utterly  incredible.  The High Court had rightly  held  that the  first  Defendant concluded the agreement  of  9-10-1962 because  he obtained not only an enhancement of Rs.  5,000/- in  the sale consideration but Rs. 20,000/-  immediately  as earnest  money  and a stipulation of a further  sum  of  Rs. 20,000  /- as liquidated damages or as penalty in the  event of the plaintiff resiling from the contract.’ Actually,  the first  Defendant-Appellant  was, owing to the fact  that  be could  put forward want of the alleged agent’s authority  to sell, for whatever such an excuse may be worth, and the fact that he had still to execute a sale deed and give possession of the property, placed in a more favorable and advantageous bargaining  position.   And, bargaining  had  evidently  not stopped despite the first agreement. The only point which could be and which was seriously  urged before us by Mr. Chagla, appearing for the Defendants-Appel- lants,  was that, the parties themselves  having  stipulated for  Rs.  20,000/- as liquidated damages in the event  of  a breach by first Defendant, the presumption contained in  the

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Explanation  to Section 12 of the Specific Relief  Act  1877 (hereinafter  called  ’the old Act")  was  rebutted.   Here, Section 12 of the old Act may be reproduced in toto :-               "  12.  Except as otherwise. provide  in  this               Chapter,  the  specific  performance  of   any               contract of any contract may in the discretion               of the Court be enforced-               (a)   when the act agreed to be done is in the               performance, wholly or partly, of a trust;               (b)   when   there  exists  no  standard   for               ascertaining  the actual damage caused by  the               non-performance of the act agreed to be done;               (c)   when  the act agreed to be done is  such               that  pecuniary  compensation  for  its   non-               performance would not afford adequate  relief;               or               316               (d)   when  it  is  probable  that   pecuniary               compensation  cannot  be  got  for  the   non-               performance of the act agreed to be done.               Explanation.-Unless and until the contrary  is               proved,  the  Court  shall  presume  that  the               breach  of  a contract to  transfer  immovable               property  cannot  be  adequately  relieved  by               compensation in money, and that the breach  of               a contract to transfer movable property can be               thus relieved". The  principles embodied in Section 12 of the old  Act  have been  incorporated in Section 10 of the Specific Relief  Act of 1963 (hereinafter referred to as the Act of 1963")  which runs as follows :               "10.   Except  as otherwise provided  in  this               Chapter,  the  specific  performance  of   any               contract may, in the discretion of the  court,               be enforced-               (a)   when   there  exists  no  standard   for               ascertaining  the actual damage caused by  the               non-performance of the act agreed to be  done;               or               (b)   when  the act agreed to be done is  such               that  compensation  in  money  for  its   non-               performance would not afford adequate relief.               Explanation.-Unless and until the contrary  is               proved, the court shall presume-               (i)   that   the  breach  of  a  contract   to               transfer   immovable   property   cannot    be               adequately relieved by compensation in  money;               and               (ii)  that   the  breach  of  a  contract   to               transfer  movable property can be so  relieved               except in the following cases :-               (a)   Where  the Property is not  an  ordinary               article of commerce, or is of special value or               interest  to  the plaintiff,  or  consists  of               goods  which are not easily obtainable in  the               market;               (b)   where  the  property  is  held  by   the               defendant  as  the  agent or  trustee  of  the               plaintiff". The term of the contract of 9-10-62 which, according to  Mr. Chagla,  attracts the explanation of Section 12 of  the  old Act reads as follows :               "It  is  agreed that should I fail  to  comply               with  the terms of this agreement, I shall  be               liable not only for the refund of the advance,

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             of Rs. 20,O00/- (Rupees twenty thousand  only)               received  by me but I shall also be liable  to               pay  a similar amount of Rs. 20,000/-  (Rupees               twenty  thousand only) as damages to the  said               Syed Khaja". There is no mention anywhere in the contract that a party to it will have the option to either fulfil the contract to buy or sell or 317 to  pay  the liquidated damages or penalty of  Rs.  20,000/- stipulated   for  a  breach,  as  an  alternative   to   the performance of the contract to buy or to sell. Section 21 of the old Act, to which Section 14 of the Act of 1963  corresponds, enacts, inter alia, that "a contract  for the  nonperformance-  of which a compensation  of  money  is adequate relief’ cannot be specifically enforced.  Hence, it is  contended  that,  once  the  presumption  contained   in Explanation  to Section 12 is rebutted, by proof  that  the, parties   themselves  contemplated  a  certain   amount   as liquidated  damages for a breach of contract, the bar  under Section  21 of the old Act must be, given effect to  because it  must  be deemed to be proved  that  the  non-performance complained of can be adequately compensated by money. The  assumptions  underlying  the  superficially  attractive arguments  an behalf of the Defendants-appellants are two  : firstly,  that the mere existence of a clause in a  contract providing  for liquidated damages or a penalty for a  breach is  sufficient  to  rebut  the  presumption  raised  by  the explanation  to  Section  12; and, secondly,  that,  if  the presumption is rebutted, the bar contained in Section 21  of the  old-Act  will  ipso facto  become  operative.   We  now proceed  to deal with each of the two assumptions  mentioned above. The  answer to the 1st assumption is provided by Section  20 of the old Act.  It reads :               "20.   A  contract,  otherwise  proper  to  be               specifically  forced,  may be  thus  enforced,               though  a sum be named in it as the amount  to               be paid, in case of its breach, and the  party               in default is willing to pay the same". If the Legislative intent was that the mere proof that a sum is  specified as liquidated damages or penalty for a  breach should  be enough to prove that a contract for the  transfer of immovable property could be adequately compensated by the specified damages or penalty Section 20 of the old Act  will certainly become meaningless.  It is true that Section 20 of the old Act does not mention the case of an express contract giving  an  option  to a promiser to either  carry  out  the contract  to convey, or, in the alternative, to pay the  sum specified, in which case the enforcement of the  undertaking far  g to make the payment would. be an enforcement  of  the contract   itself   and  no  occasion  for   rebutting   the presumption  in the explanation to Section 21  would  arise. In  such cases the contract itself is specifically  enforced when  payment  is directed in lieu of the conveyance  to  be made. It  may be mentioned here that the Principles  contained  in Section 20 of the old Act are reenacted in Section 23 of the Act  of  1963 in language which makes it dear  that  a  case where an option is given by a contract to a party either  to pay  or to carry out the other terms of the  contract  falls outside the purview of Section 20 of the old Act, but,  mere specification  of a sum of money to be paid for a breach  in order to compel the 318

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formance  of the contract to transfer property will not  do. Section  23 of the Act of 1963 may be  advantageously  cited here.  It runs as follows :               "23(1)  A  contract, otherwise, proper  to  be               specifically  enforced, may be  so_  enforced,               though  a sum be named in it as the amount  to               be paid in case of its breach and the party in               default  is  willing to pay the  same,  if-the               court,  having  regard  to the  terms  of  the               contract and other attending circumstances, is               satisfied that the sum was named only for, the               purpose   of  securing  performance   of   the               contract and not for the purpose of  giving               to  the  party in default adoption  of  paying               money in lieu of specific performance.               (2)   When  enforcing   specific   performance               under thissection,  the court shall not  also               decree  payment  of the sum so named  in  the,               contract". We  think  that  Section 23 of the Act of  1963  contains  a comprehensive  statement  of the principles on  which,  even before the Act of 1963, the presence of a term in a contract specifying  a sum of money to be paid for a breach  of  the, contract has to be construed Where payment is an alternative to  carrying out the other terms of the contract, it  would exclude,  by  the  terms of the  contract  itself,  specific performance of the contract to convey a property. The  position  stated  above  is  in  conformity  with   the principles found stated in Sir Edward Fry’s "Treatise on the Specific  Performance of Contracts" (Sixth Edn. at  p.  65). It was said there:               "The question always is : What is the contract               ?  Is it that one certain act shall  be  done,               with a, sum annexed, whether by way of penalty               or damages, to secure the performance of  this               very  act  ?  Or, is it that one  of  the  two               things  shall be done at the election  of  the               party who has to perform the contract, namely,               the  performance of the act or the payment  of               the sum of money?  If the former, the fact  of               the penal or other like sum being annexed will               not prevent the court’s enforcing  performance               of  the  very  act,  and  thus  carrying  into               execution  the intention of the parties  :  if               the  latter, the contract is satisfied by  the               payment  of  a sum of money, and there  is  no               ground for proceeding against the party having               the election to compel the performance of  the               other alternative.               From  what has been said it will  be  gathered               that   contracts   of  the  kind   now   under               discussion are divisible into three classes :-               (i)   Where  the sum mentioned is  strictly  a               penalty-a  sum  named by way of  securing  the               performance of the contract, as the penalty is               a bond :               (ii)  Where  the  sum named is to be  paid  as               liquidated   damages  for  a  breach  of   the               contract               319               (iii) Where  the  sum named is an  amount  the               payment  of which may be substituted  for  the               performance of the act at the election of  the               person by whom the money is to be paid or  the               act done.

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             Where  the stipulated payment comes under               either  of the two first-mentioned heads,  the               Court  will enforce the contract, if in  other               respects it can and ought to be enforced, just               in  the  same way as a contract not  to  do  a               particular act, with a penalty added to secure               its  performance or a sum named as  liquidated               damages, may be specifically enforced by means               of an injunction against breaking it.  On  the               other hand, where the contract comes under the               third head, it is satisfied by the payment  of               the  money,  and there is no  ground  for  the               Court  to compel the specific  performance  of               the other alternative of the contract". Sir  Edward Fry pointed out that the distinction  between  a strict  penalty  and  liquidated damages  for  a  breach  of contract  was  important  in  common  law  where  liquidated damages were considered sufficient compensation for,  breach of contract, but, sums stipulated by way of penalty stood on a different footing.  He then said               "But  as  regards  the  equitable  remedy  the               distinction is unimportant : for the fact that               the sum named is the amount agreed to be  paid               as  liquidated  damages  is,  equally  with  a               penalty  strictly  so called,  ineffectual  to               prevent the Court from enforcing the  contract               in specie". The  equitable  principles  which regulated-  the  grant  of specific  performance by the separate Court of Equity  which existed  in  England at one time have been  given  statutory form  in  India.   It is,  therefore,  immaterial  that  the stipulated  payment under the, terms of the  contract  under consideration  before us could be viewed as one for  payment of  liquidated  damages.  The question  would  still  remain whether the Courts are relieved by the agreement between the parties  of  the  duty  to determine,  on  the  facts  of  a particular   else,  whether  damages,  specified   or   left unspecified,  would really afford adequate  compensation  to the party which wants a conveyance of immovable property  as agreed upon. A   reference   to  Section  22  of  the  _old   Act,   (the corresponding provision is Section 20 of the Act of  (1963), would  show  that the jurisdiction of the  Court  to  decree specific  relief is discretionary and must be  exercised  on sound and reasonable grounds "guided by judicial  principles and  capable  of  correction by a Court  of  appeal".   This jurisdiction  cannot  be curtailed or taken away  by  merely fixing a sum even as liquidated damages.  We think that this is  made perfectly clear by the provisions of Section 20  of the  old  Act  (corresponding to Section 23 of  the Act of (1963) so that the Court has to determine, on the facts, and circumstances  of  each  case before  it,  whether  specific performance  of a contract to convey a property ought to  be granted. 320 The fact that the parties themselves have provided a sum  to be  paid  by the party breaking the contract  does  not,  by itself,  remove the strong presumption contemplated  by  the use of the words "unless and until the contrary is  proved". The  sufficiency or insufficiency of any evidence to  remove such  a presumption is a matter of evidence.  The fact  that the  parties themselves specified a sum of money to be  paid in the event of its breach is, no doubt, a piece of evidence to  be  considered in deciding whether the  presumption  has been  repelled or not.  But, in our opinion, it  is  nothing

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more  than  a piece of evidence.  It is  not  conclusive  or decisive. The  second assumption underlying the contentions on  behalf of the Defendants-appellants is that, once the  presumption, contained  in explanation to Section 12 of the old  Act,  is removed,  the, bar contained in Section 21 of the  old  Act, against  the  specific enforcement of a contract  for  which compensation  in money is an adequate relief,  automatically operates,  over-looks that the condition for the  imposition of  the  bar is actual proof that compensation in  money  is adequate on the facts and circumstances of a particular case before the Court.  The effect of the presumption is that the party  coming  to Court for the specific  performance  of  a contract  for  sale  of unmovable property  need  not  prove anything  until the other side has removed the  presumption. After  evidence  is  led  to  remove  the  presumption,  the plaintiff  may  still be in a position to  prove,  by  other evidence  in  the  case,  that payment  of  money  does  not compensate him adequately. In  the  instant case, both sides have led  evidence.   But, there is no evidence as to the extent of loss of prospective gains  to the plaintiff-Respondent, who carries on a  Bakery business, from the depreciation of a site so valuable as one in  front of the Secundrabad Junction Railway  Station.   In fact, there is no standard for judging the loss from such  a depreciation  either to the Plaintiff-Respondent or  to  the partners  of  the Alpha Hotel who are  the  real  contending parties.   No  attempt was even made to gauge the  value  of future  prospects  of  such a site  to  businessmen  in  the position  of  Plaintiff  Respondent  and  those  Defendants- Appellants who are partners of the Alpha Hotel.  It is clear that  the property has got no such value for the  first  De- fendant.  who is a businessman fully occupied with a  number of  businesses  at Delhi where he had been residing  for  19 years in 1963. it is evident that he could not  conveniently look after the property situated in Secunderabad. The  Defendants-Appellants  had miserably  failed  to  prove their   cases.   The  attempt  to  prove  either  fraud   or misrepresentation  or " an unfair advantage" over the  first Defendant,  so as to bring his case within Section 22(1)  of the old Act, was totally unsuccessful.  The courts commented adversely   on  incorrect  assertions  made  by  the   first Defendant who could not show anything beyond the penalty  or damages clause in the contract for sale dated 9-10-1962.  It is  strange that the first Defendant, while willing  to  pay Rs.  20,000/  as damages to the  Plaintiff-Respondent,  will only  get Rs. 10,000/more in price over Rs. 60,000/- if  his contract of sale to the partners 321 of  the Alpha Hotel were to stand. It is,  therefore,  clear that  the first Defendant must have some ulterior motive  in being prepared to suffer an ostensible loss of Rs.  10,000/- even  if  his  sale of 16-10-1962 for Rs.  70,000/-  to  the partners of the Alpha Hotel could be upheld.  The  plaintiff himself  had  stated that financial  considerations  do  not really  determine his stand.  We are unable to  accept  this profession of unconcern for financial gain on the part of an astute  businessman  like the first Defendant.  It  is  more likely that there, is some undisclosed understanding between him  and  the  partners  of Alpha Hotel  who  are  also  co- appellants with him before us. The  result in that we think that the presumption  contained in  the  explanation to Section 12 of the old  Act  was  not rebutted here.  In such cases Equity helps honest plaintiffs against  defendants who break solemnly  given  undertakings.

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The  High  Court had rightly decreed the suit  for  specific performance of the contract.  Lastly  it was urged before us that the High  Court  should not  have  lightly  interfered  with  the  exercise  of  its discretion  by  the  Trial Court to grant or  not  to  grant specific  performance on the facts and circumstance of  this case.   It  is clear that the discretion, as  laid  down  in Section  22 of the old Act (corresponding to Section  20  of the Act of 1963), is not to be exercised arbitrarily but  on sound and reasonable grounds "guided by judicial principles- so  that it is capable of correction by a court of  appeal". It appeared, quite rightly, to the High Court That the Trial Court  had  gone completely astray in the  exercise  of  its discretion  on  the footing that  the  Plaintiff  Respondent enjoyed  an  "unfair advantage" over the  first  Defendants, whereas, on the facts and circumstances of the case, it  was the first Defendant who was placed in a position to  exploit the  need  of  the plaintiff and  the  plaintiffs  allegedly insecure  position under the first agreement.  It  is  clear that  the  Plaintiff-Respondent had dealt  very  fairly  and squarely  with  the first  Defendant-Appellant.   The  Trial Court’s  error  in  the exercise of  its  discretion  on  an utterly  untenable, fanciful and unsound ground was  rightly corrected by the High Court. We, therefore, dismiss this appeal with costs. K.B.M.                              Appeal dismissed. 322