When a Contract Becomes Void: Supreme Court Explains the Limits of Specific Performance
The Supreme Court held that an agreement to sell flats, which was contingent upon construction violating building bye-laws and the master plan, was unlawful and void under Section 23 of the Indian Contract Act. The Court ruled that specific performance cannot be granted for an illegal contract, and courts cannot rewrite or sever its essential, unlawful terms to make it enforceable.
Facts Of The Case:
In December 1984, Canara Bank entered into an agreement with K.L. Rajgarhia to purchase residential flats to be constructed on his plot in East of Kailash, Delhi, for ₹32,07,500. The bank paid approximately 90% of the consideration upfront. The agreement specified the construction and sale of eight flats and a basement, with completion required within 18 months. When the defendant failed to ...