A agreed to sell two plots to B for Rs. 50,000. A cannot make title to one plot. B sues for specific performance of other plot for Rs. 25,000. Decide.

The Starting Point: The General Rule Against Part Performance

Section 12(1) of the Specific Relief Act, 1963 lays down an unambiguous general rule: a court shall not direct the specific performance of a part of a contract. The instinct behind this rule is straightforward — parties contract as a whole, and the law is reluctant to dismember a bargain that the parties intended to be treated as a single unit. The ordinary presumption, as courts have consistently held, is that a contract is entire, not to be dealt with piecemeal unless the contrary is clearly shown.

The Critical Question: Sub-section 2 or Sub-section 3?

The application of Section 12 turns on a single pivotal inquiry: is the unperformable part small in proportion to the whole, or is it considerable? The answer determines which sub-section governs and, with it, the conditions under which B can claim relief.

Here, A has contracted to sell two plots for Rs. 50,000. He cannot make title to one plot. B now sues for the other plot, tendering Rs. 25,000. The two plots appear to be valued equally — the suit is brought for exactly half the consideration, suggesting that each plot is worth Rs. 25,000. If that is so, the unperformiable portion — the plot A cannot convey — represents half the total value of the contract. Half is plainly not a small, inconsiderable proportion. It is a considerable part of the whole.

This means sub-section 2 does not apply. Sub-section 2 addresses cases where the deficiency is only a small proportion of the whole in value and admits of compensation. Where the deficient part is not small but considerable — as is the case here — the law takes a different and more demanding path: sub-section 3(a).

The Governing Rule: Section 12(3)(a) and What It Demands

Sub-section 3(a) of Section 12 deals precisely with a case where the vendor cannot perform the whole of his contract, and the unperformed part forms a considerable part of the whole though it admits of compensation in money. The law here makes an important structural choice: A, being the defaulting party, is not entitled to obtain a decree for specific performance. It is B — the innocent party, the purchaser — who has the option to invoke this sub-section.

However, the relief in B's favour is conditional. B can obtain specific performance of the performable portion — the one plot A can convey — but only upon satisfying two cumulative conditions prescribed in the section:

First, B must pay or agree to pay the agreed consideration for the whole, reduced by the consideration for the part which must be left unperformed. This is a vital departure from the position under the old Act of 1877, where the purchaser was required to pay the entire consideration even where the unperformed part was monetarily assessable. The 1963 Act, acting on the recommendation of the Law Commission, corrected this inequity. Since the contract is for Rs. 50,000 for two plots and the unperformable plot is valued at Rs. 25,000, B must pay Rs. 25,000 — that is, the consideration reduced proportionately for the deficiency. B's claim for specific performance at Rs. 25,000 thus corresponds precisely with this requirement.

Second, B must relinquish all claims to performance of the remaining part of the contract — that is, the plot A cannot convey — and also relinquish all right to compensation, either for the deficiency or for any loss or damage sustained through A's default. This relinquishment need not be contained in the original plaint. The Supreme Court has consistently held that such relinquishment can be made at any stage of the proceedings, even at the appellate stage, and even orally across the bar. In Rachakonda Narayana v. Ponthala Parvathamma (AIR 2001 SC 3353), the Supreme Court allowed an amendment to the plaint at the appellate stage specifically to enable the plaintiff to relinquish the unperformable part and claim part performance with proportionate abatement. The court confirmed that sub-section 3(a) permits this course, and that the vital departure from the old law is precisely the availability of proportionate reduction of consideration.

The Critical Issue: Are the Plots Separate and Independent?

There is, however, one further inquiry the court must make before reaching this conclusion, and it is a question of significant importance. Sub-section 4 of Section 12 provides that where a contract is divisible — where it consists of separate and independent covenants that stand on their own footing — the court may specifically enforce the independent portion that can and ought to be performed.

But the law has also firmly established that a contract for two plots of land is not automatically divisible simply because it covers two properties. The Judicial Committee of the Privy Council settled this in William Graham v. Krishna Chandra Dey (AIR 1925 PC 45), holding that where there was an agreement to sell two plots dealt with together as a whole, with nothing to separate them or place one on an independent footing from the other, specific performance of one plot could not be granted under the divisible contract exception — because the court would effectively be making a new contract that the parties had never made for themselves.

In the present problem, the contract is described as an agreement to sell "two plots" for a single consideration of Rs. 50,000, with both plots apparently valued equally. If there is nothing in the contract to treat the two plots as separate and independent transactions — if they are dealt with as a single unit — then sub-section 4 does not apply. However, this does not mean B loses his remedy. Sub-section 3(a), not sub-section 4, is the appropriate route — and under sub-section 3(a), B can obtain specific performance of the one plot he seeks, provided he meets the conditions of relinquishment and proportionate payment.

What B Must Do in Practice

In practical terms, B's suit should succeed if B:

• Clearly expresses in the plaint — or by amendment at any stage — that he relinquishes all claims to the second plot and all rights to compensation for A's failure to convey it;

• Is ready and willing to pay Rs. 25,000 (the consideration proportionately reduced for the performable plot);

• Has not by his own conduct disentitled himself to relief under Section 16 of the Act.

The Supreme Court confirmed in A.L. Parthasarathi Mudaliar v. Venkata Kondaiah Chettiar (AIR 1965 Mad 188) a case where the purchaser discovered the vendor had no title to the more valuable of two parcels, relinquished his right to compensation for that parcel, agreed to pay the whole amount, and was held entitled to a decree for the less valuable parcel. That case, applying the Privy Council's decision in Rutherford v. Acton-Adams (AIR 1915 PC 113), stands for the proposition that a purchaser who elects to take what the vendor can give — foregoing claims to what cannot be given — is entitled to equity's assistance.

Decision

The court should grant specific performance to B of the one plot for which A can make good title. B is entitled to this relief under Section 12(3)(a) of the Specific Relief Act, 1963, on condition that B pays Rs. 25,000 — the consideration proportionately reduced for the unperformed part — and formally relinquishes all claims to the second plot and to any compensation for A's inability to convey it. A, being the party in default, has no standing to resist this relief on the ground of his own failure of title. A's inability to make title to one plot is precisely the kind of partial incapacity that Section 12 was designed to address — and the law, in its wisdom, places the option firmly in the hands of the innocent purchaser.