SC orders house owner to pay Rs.15 lakh compensation for backing out of an agreement

NEW DELHI: The Supreme Court has asked a house owner to pay Rs 15 lakh as compensation to a buyer for backing out on the deal after signing an agreement while claiming that it was his only residential place. The court allowed him to retain the house but pay compensation to the buyer.

The owner had signed an agreement in 1999 to sell a house for Rs 1.6 lakh at a village in Tamil Nadu and the buyer had paid Rs 60,000 in advance. Rest of the amount was to be paid at the time of execution of the sale deed.

The owner, however, refused to honour the agreement, compelling the buyer to approach court. The trial court and Madras high court passed directions for execution of sale deed as per the agreement.

Failing to get relief, the owner, Jayakantham moved the apex court challenging the order. He contended that the residential house was the sole property owned by the family and he could not sell it. He argued that the agreement was merely a document executed by way of security for a loan transaction but agreed to pay compensation to the buyer to retain the property.

An SC bench of Justices Arun Mishra and D Y Chandrachud said the hardship of the seller had to be considered and the court was not bound to grant relief of “specific performance“ (contractual duty) merely because it is lawful to do so.

“The decree for specific performance shall accordingly stand set aside and shall stand substituted with a direction to the appellants (owners) to pay a sum of Rs 15 lakh to the respondent in lieu of specific performance. The amount shall be paid within two months from the date of receipt of a copy of this judgment,“ it said.

Credits ET Realty

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