The Supreme Court, in this case, clarified the applicability of Section 12(3) of the Specific Relief Act, 1963 (SRA). The bench, comprising Justice J.B. Pardiwala and Justice R. Mahadevan, ruled that part performance of a contract cannot be claimed when the unperformed portion is substantial, non-segregable, and the plaintiff neither relinquishes claims for the unperformed part nor demonstrates readiness to perform the contract.

Facts

The case arose from an agreement to sell a property for Rs 84 Lakhs. The Plaintiff paid Rs 20 Lakhs as an advance but failed to pay the remaining Rs 64 Lakhs, which constituted a substantial portion of the contract. The Plaintiff filed a suit seeking specific performance of the contract or, alternatively, a refund of the advance payment along with damages. The trial court dismissed the suit for specific performance, holding that the Plaintiff was not ready and willing to perform his part of the contract. The Madras High Court upheld this decision, leading the Plaintiff to approach the Supreme Court, invoking Section 12(3) of the Specific Relief Act, 1963, to claim partial performance of the contract.

Contentions of the Petitioner

The Plaintiff contended that he was entitled to specific performance for the portion of the contract he had performed, under Section 12(3) of the SRA. He sought a refund of the advance payment of Rs 20 Lakhs and damages for breach of contract by the defendant. Further argued that his partial payment demonstrated his willingness to perform his part of the contract.

Contentions of the Respondent

The Respondent argued that the Plaintiff neither relinquished claims for the unperformed portion nor demonstrated readiness to complete the contract by paying the remaining amount. They emphasized that the Plaintiff's failure to pay Rs 64 Lakhs constituted a breach of the contract. Also highlighted that the unperformed portion was significant and could not be segregated from the rest of the contract, barring relief under Section 12(3).

Analysis by the Court

The Court reiterated that granting partial relief under Section 12(3) is discretionary and depends on the terms of the contract, facts, and interests of the parties. The Court noted that Section 12(3) requires the plaintiff to either relinquish claims for the unperformed portion or demonstrate readiness to perform the entire contract by paying the full consideration. The Court emphasized that the unperformed portion of Rs 64 Lakhs formed a significant and inseparable part of the contract. Since the Plaintiff neither relinquished claims nor showed readiness, and was in default of his obligations, the Court held that Section 12(3) could not be invoked.

Section 12(3) of the Specific Relief Act, 1963 deals with the enforceability of partial performance of contracts. It states: "Where a part of the contract, taken by itself, can and ought to be specifically performed, and the other party is willing to relinquish all claims to the performance of the remaining part of the contract and all rights to compensation, either for the deficiency or for the loss or damage sustained by him through the default of the defendant, the court may direct the specific performance of so much of the contract as can be performed."

In conclusion, the Supreme Court dismissed the appeal, affirming the lower courts' decisions. It held that the Plaintiff could not claim partial performance under Section 12(3) due to:

1. His failure to relinquish claims for the unperformed part.

2. His inability to demonstrate readiness to perform the contract by making the full payment.

The Court reiterated that relief under Section 12(3) requires strict compliance with its conditions, and discretionary powers must be exercised judiciously.