DISCRETION OF THE COURT :
Sub-section (1) of Section 20 lays down that the jurisdiction to decree specific performance is discretionary, and the Court is not bound to grant such relief merely because it is lawful to do so, but the discretion of the Court is not arbitrary but based on sound and reasonable grounds guided by judicial principles and capable of correction by a Court of appeal. Sub-section (2) lays down that the following are cases in which the Court may properly exercise discretion not to decree specific performance – (a) where the terms of the contract or the conduct of the parties at the time of entering into the contract or the other circumstances under which the contract was entered into are such that the contract, though not voidable, gives the plaintiff an unfair advantage over the defendant; (b) where the performance of the contract would involve some hardship on the defendant which he did not foresee whereas its non-performance would involve no such hardship on the plaintiff; (c) where the defendant entered into the contract under circumstances which though not rendering the contract voidable, makes it inequitable to enforce specific performance. Explanation 1 appended to the Section states that mere inadequacy of consideration, or the mere fact that the contract is onerous to the defendant or improvident in its nature, shall not be deemed to constitute an unfair advantage within the meaning of clause (a) or hardship within the meaning of clause (b) Explanation 2 to the Section says that the question whether the performance of a contract would involve hardship on the defendant within the meaning of clause (b) shall, except in cases where the hardship has resulted from any act of the plaintiff subsequent to the contract, be determined with reference to the circumstances existing at the time of the contract.
Sub-section (3) lays down that Court may properly exercise discretion to decree specific performance in any case where the plaintiff has done substantial acts or suffered losses in consequences of a contract capable of specific performance. Sub-section (4) says that the court shall not refuse to any party specific performance of a contract merely on the ground that the contract is not enforceable at the instance of the other party. Specific performance is a discretionary remedy. The Court is not bound to decree specific performance merely because it is lawful to do so. Courts can take into consideration the conduct of the parties and the circumstances attending its execution and may exercise a discretion in granting or withholding a decree for specific performance (Jethalal v. Bachu, 47 Bom. 46). However, this discretion is not an arbitrary discretion but one governed by sound principles of equity. It has been held that the court is not bound to grant relief of specific performance even if it is lawful to do so. [Yellapa Sastri v. Gunda Shankara, AIR 2010 (NOC) 731 A.P. See also AIR 2008 SC 1786].
Illustration
In Dennev-light (1857) 8 D M & G 774, the Court refused specific performance against a buyer where the land contracted to be purchased was wholly surrounded by land belonging to others over which there was no right of way.
It is to be noted that the word ‘mere’ has to be given due weight. Specific performance may be refused where inadequacy of consideration is coupled with some other factor not necessarily amounting to fraud, e.g. mistake, or surprise, or unfair advantage taken by the plaintiff of his superior knowledge or bargaining position even though the circumstances do not justify rescission of the contract.
The hardship to be considered is at the time of the contract, unless the hardship has been brought on by the action of the plaintiff. Mere rise in price of the property agreed to be sold is not a ground for refusing a discretionary relief in favour of the purchaser. What has to be considered is the fairness of the contract at the time it was made and the subsequent rise in price is not a matter to be taken into consideration.