Date of the Judgment: October 4, 2019
Citation: [Not Available in Source]
Judges: Navin Sinha, J., Indira Banerjee, J.
Can a party seeking specific performance of a contract be denied relief if they fail to demonstrate continuous readiness and willingness to fulfill their obligations? The Supreme Court of India addressed this critical question in a case concerning a land sale agreement. The Court emphasized that merely being present at the Sub-Registrar’s office on the agreed date is not sufficient proof of readiness and willingness; the party must also show a continuous capacity and intention to complete the transaction. This judgment clarifies the requirements for obtaining specific performance and highlights the importance of conduct throughout the process. The judgment was authored by Justice Navin Sinha, with Justice Indira Banerjee concurring.
Case Background
The case involves a suit for specific performance of a sale agreement dated November 10, 1989, concerning 2/3rd of the land owned by Defendants 1 and 2. Defendant No. 3 did not sign the agreement. The plaintiff, Ravi Setia, paid Rs. 50,000 as earnest money, with the remaining Rs. 3,10,490 to be paid at the time of sale deed execution. The agreement stipulated that the sale deed should be executed on or before April 30, 1990.
The Trial Court initially ruled in favor of the plaintiff, stating that the plaintiff was present at the Sub-Registrar’s office on April 30, 1990, but Defendants 1 and 2 did not appear. During the legal proceedings, Defendants 1 and 2 sold the land to Defendants 4 to 7 through three separate sale deeds dated January 16, 1991. The First Appellate Court upheld the Trial Court’s decision, deeming the sale to Defendants 4 to 7 as not bonafide.
Timeline
| Date | Event |
|---|---|
| November 10, 1989 | Sale agreement between plaintiff and Defendants 1 and 2. |
| April 30, 1990 | Date fixed for execution of the sale deed. Plaintiff claims presence at Sub-Registrar’s office. |
| May 28, 1990 | Defendant Nos. 1 and 2 sent notice to plaintiff to execute the sale deed by June 25, 1990. |
| June 12, 1990 | Defendant Nos. 1 and 2 sent another notice to plaintiff to execute the sale deed by June 25, 1990. |
| January 16, 1991 | Defendants 1 and 2 sell the land to Defendants 4 to 7. |
| June 1, 1994 | Trial Court decrees the suit, granting two months for deposit of balance amount. |
| August 2, 1994 | Plaintiff applies for extension of time to deposit balance amount. Time extended till disposal of First Appeal. |
| October 4, 2019 | Supreme Court dismisses the appeal. |
Course of Proceedings
The Trial Court initially decreed the suit for specific performance in favor of the plaintiff, finding that the plaintiff was present at the Sub-Registrar’s office on the agreed date, while the defendants failed to appear. The First Appellate Court upheld this decision, also ruling that the subsequent sale to Defendants 4 to 7 was not a bonafide transaction. However, the High Court, in a second appeal, overturned these concurrent findings, leading to the present appeal before the Supreme Court.
Legal Framework
The Supreme Court referred to Section 16 of the Specific Relief Act, 1963, which outlines the personal bars to relief in specific performance cases. Specifically, Section 16(c) states:
“16. Personal bars to relief.—Specific performance of a contract cannot be enforced in favour of a person—
(c) who fails to aver and prove that he has performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him, other than terms the performance of which has been prevented or waived by the defendant.”
This section mandates that a plaintiff seeking specific performance must demonstrate continuous readiness and willingness to fulfill their contractual obligations.
Arguments
Appellant (Plaintiff)’s Arguments:
- The High Court should not have interfered with the concurrent finding of fact that the plaintiff was ready and willing to perform his part of the agreement.
- The plaintiff was present at the Sub-Registrar’s office on April 30, 1990, while Defendants 1 and 2 failed to appear.
- The plaintiff never received the notices from Defendants 1 and 2 dated May 28, 1990, and June 12, 1990, requiring him to execute the sale deed on June 25, 1990.
- The subsequent sale to Defendants 4 to 7 was not bonafide.
- The Trial Court granted an extension of time for depositing the balance consideration until the disposal of the first appeal, and the balance was deposited after the decision in the First Appeal.
- In the alternative, if the appeal is not allowed, Defendants 1 and 2 should be directed to pay Rs. 1,00,000 to the plaintiff, comprising the earnest money plus damages.
Respondent (Defendants)’ Arguments:
- The plaintiff failed to prove readiness and willingness to perform his obligations under the agreement.
- The defendants were not notified of the plaintiff’s appearance at the Sub-Registrar’s office on April 30, 1990.
- The notices dated May 28, 1990, and June 12, 1990, were properly sent to the plaintiff’s correct address.
- The plaintiff did not respond to these notices, indicating his inability to perform his obligations.
- The plaintiff failed to deposit the balance consideration within the two-month period granted by the Trial Court on June 1, 1994.
- The application for extension of time after the prescribed period demonstrates the plaintiff’s lack of capacity to perform his obligations.
- The High Court was empowered to set aside concurrent findings of fact if they were perverse.
| Main Submission | Sub-Submissions |
|---|---|
| Plaintiff was ready and willing |
|
| Plaintiff was not ready and willing |
|
Issues Framed by the Supreme Court
The Supreme Court did not explicitly frame issues in a separate section. However, the core issue revolved around whether the plaintiff had demonstrated continuous readiness and willingness to perform his obligations under the agreement for sale, as required by Section 16(c) of the Specific Relief Act, 1963.
Treatment of the Issue by the Court
| Issue | Court’s Decision | Reason |
|---|---|---|
| Whether the plaintiff proved readiness and willingness to perform his obligations under the agreement for sale. | No. | The plaintiff failed to offer any explanation as to why the balance consideration was not deposited within the time granted. The application for extension of time was filed after the expiry of the prescribed period. The plaintiff’s conduct demonstrated a lack of continuous capacity and intention to complete the transaction. |
Authorities
The Court considered the following authorities:
| Authority | Court | How it was used |
|---|---|---|
| V.S. Palanichamy Chettiar Firm vs. C. Alagappan, (1999) 4 SCC 702 | Supreme Court of India | The Court cited this case to emphasize that merely filing a suit within the limitation period does not absolve the plaintiff from demonstrating readiness and willingness. The Court highlighted that equitable considerations come into play, and the court must assess the plaintiff’s conduct throughout the process. |
| Ramankutty Guptan vs. Avara, (1994) 2 SCC 642 | Supreme Court of India | The Court noted that if the plaintiff had deposited the amount after the expiry of the time but during the pendency of the appeal, different considerations might have arisen. However, the judgment was based on its own peculiar facts and circumstances. |
| Umabai and Another vs. Nilkanth Dhondiba Chavan (Dead) by Lrs. and Another, (2005) 6 SCC 243 | Supreme Court of India | The Court referred to this case to emphasize that the conduct of the parties must be considered to determine whether the plaintiff was ready and willing to perform their part of the contract. A bare averment in the plaint or a statement in the examination-in-chief is not sufficient. |
| Dilbagrai Punjabi vs. Sharad Chandra, 1988 Supp SCC 710 | Supreme Court of India | The Court cited this case to clarify that while the High Court does not have the jurisdiction to re-appreciate evidence in a second appeal, it can interfere with the findings if the lower appellate court fails to consider important evidence having a direct bearing on the disputed issue. |
Judgment
| Submission | Court’s Treatment |
|---|---|
| Plaintiff was ready and willing because of his presence at the Sub-Registrar’s office on April 30, 1990. | Rejected. The Court held that the certificate from the Sub-Registrar’s office cannot be construed as conclusive evidence. Further, the plaintiff did not provide any evidence to show that he had required the defendants to be present for registration on June 25, 1990. |
| Plaintiff did not receive the notices sent by the defendants. | Rejected. The Court noted that the notices were properly addressed and sent through registered post. If the plaintiff was not available at his home, the defendants were not required to do anything further. |
| The plaintiff was granted an extension of time to deposit the balance consideration. | The Court held that mere extension of time does not absolve the plaintiff of his obligation to demonstrate readiness and willingness. The plaintiff did not plead any special circumstances that prevented him from depositing the amount. |
| The High Court should not have interfered with the concurrent finding of fact. | Rejected. The Court held that the High Court was correct in interfering with the findings because the findings were perverse, based on complete misappreciation of evidence, and failure to consider relevant evidence. |
How each authority was viewed by the Court?
- V.S. Palanichamy Chettiar Firm vs. C. Alagappan, (1999) 4 SCC 702*: The Court used this case to emphasize that merely filing a suit within the limitation period does not absolve the plaintiff from demonstrating readiness and willingness.
- Ramankutty Guptan vs. Avara, (1994) 2 SCC 642*: The Court distinguished this case, noting that it was based on its own peculiar facts and circumstances.
- Umabai and Another vs. Nilkanth Dhondiba Chavan (Dead) by Lrs. and Another, (2005) 6 SCC 243*: The Court used this case to emphasize that the conduct of the parties must be considered to determine whether the plaintiff was ready and willing to perform their part of the contract.
- Dilbagrai Punjabi vs. Sharad Chandra, 1988 Supp SCC 710*: The Court cited this case to clarify that while the High Court does not have the jurisdiction to re-appreciate evidence in a second appeal, it can interfere with the findings if the lower appellate court fails to consider important evidence having a direct bearing on the disputed issue.
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the plaintiff’s failure to demonstrate continuous readiness and willingness to perform his obligations under the sale agreement, as required by Section 16(c) of the Specific Relief Act, 1963. The Court emphasized that the plaintiff’s conduct, including the failure to deposit the balance consideration within the initially granted time and the lack of a valid explanation for the delay, indicated a lack of genuine intent to complete the transaction. The Court also considered the fact that the plaintiff sought an extension of time only after the initial period had expired, further reinforcing the view that the plaintiff was not genuinely ready and willing to perform his obligations.
| Sentiment | Percentage |
|---|---|
| Plaintiff’s lack of continuous readiness and willingness | 40% |
| Failure to deposit balance consideration in time | 30% |
| Lack of valid explanation for the delay | 20% |
| Seeking extension of time after expiry | 10% |
| Analysis | Percentage |
|---|---|
| Fact | 40% |
| Law | 60% |
Logical Reasoning:
The Court reasoned that the plaintiff’s actions and inactions demonstrated a lack of continuous readiness and willingness. The Court observed that the plaintiff did not deposit the balance consideration within the time granted by the Trial Court and sought an extension only after the initial deadline had passed. The Court also noted that the plaintiff’s explanation for not depositing the amount was frivolous. The Court held that the mere extension of time for deposit does not absolve the plaintiff of his obligation to demonstrate readiness and willingness.
The Court considered the argument that the plaintiff was present at the Sub-Registrar’s office on April 30, 1990, but found that this was not sufficient to prove readiness and willingness. The Court also considered the argument that the plaintiff did not receive the notices sent by the defendants, but found that the notices were properly addressed and sent through registered post.
The Court’s decision was based on a comprehensive assessment of the facts and circumstances of the case, as well as the relevant legal principles. The Court emphasized that the grant of specific performance is a discretionary and equitable relief, and the plaintiff must demonstrate a genuine intent to complete the transaction.
The Supreme Court quoted from the judgment:
“The grant of relief for specific performance under Section 16 (1)(c) of the Act is a discretionary and equitable relief. Under Section 16 (1)(c), the plaintiff has to demonstrate readiness and willingness throughout to perform his obligations under the contract.”
“We are of the considered opinion, that in the facts and circumstances of the present case, the failure of the plaintiff to offer any explanation why the balance consideration was not deposited within the time granted, the filing of the application for extension of time after expiry of the prescribed period coupled with the frivolousness of the grounds taken in the application for extension that the money would lie in the bank without earning interest, are all but evidence of incapacity on part of the plaintiff to perform his obligations under the agreement and reflective of lack of readiness and willingness.”
“The plaintiff was required to plead sufficient, substantial and cogent grounds to seek extension of time for deposit because otherwise it becomes a question of his conduct along with all other attendant surrounding circumstances in the facts of the case. We therefore find no infirmity in the order of the High Court concluding that the plaintiff in the facts and circumstances was not ready and willing to perform his obligations.”
There was no minority opinion in this judgment.
Key Takeaways
- Merely being present at the Sub-Registrar’s office on the agreed date is not sufficient to prove readiness and willingness for specific performance.
- A plaintiff must demonstrate a continuous capacity and intention to fulfill their obligations under the contract.
- Failure to deposit the balance consideration within the time granted by the court, without a valid explanation, can be construed as a lack of readiness and willingness.
- Seeking an extension of time after the expiry of the prescribed period, without sufficient grounds, can also indicate a lack of readiness and willingness.
- The grant of specific performance is a discretionary and equitable relief, and the plaintiff’s conduct is a critical factor.
Directions
The Supreme Court directed that the earnest money paid by the plaintiff be refunded without interest within one month, failing which it would carry interest at 7%.
Development of Law
The ratio decidendi of this case is that the plaintiff seeking specific performance must demonstrate continuous readiness and willingness to perform their obligations under the contract, as per Section 16(c) of the Specific Relief Act, 1963. This judgment reinforces the principle that mere presence at the Sub-Registrar’s office or obtaining an extension of time is not sufficient proof of readiness and willingness; the plaintiff must show a continuous capacity and intention to complete the transaction. This case does not change the previous position of law but rather clarifies and reinforces it.
Conclusion
The Supreme Court dismissed the appeal, holding that the plaintiff failed to prove his readiness and willingness to perform his obligations under the agreement for sale. The Court emphasized that the plaintiff’s conduct, including the failure to deposit the balance consideration within the initially granted time and the lack of a valid explanation for the delay, indicated a lack of genuine intent to complete the transaction. The Court directed the refund of the earnest money to the plaintiff, without interest, within one month, failing which it would carry interest at 7%.
Category
Parent Category: Specific Relief Act, 1963
Child Category: Section 16, Specific Relief Act, 1963
Child Category: Specific Performance
Child Category: Readiness and Willingness
FAQ
Q: What does “readiness and willingness” mean in a specific performance suit?
A: “Readiness and willingness” means that the party seeking specific performance must show they have always been prepared and able to fulfill their obligations under the contract. This includes having the financial capacity and a genuine intention to complete the transaction.
Q: Is it enough to be present at the Sub-Registrar’s office on the agreed date to prove readiness and willingness?
A: No, being present at the Sub-Registrar’s office is not enough. You must also show that you have the financial capacity and genuine intention to complete the transaction. You must also prove that you had notified the other party to be present at the Sub-Registrar’s office.
Q: What happens if I fail to deposit the balance consideration within the time granted by the court?
A: Failing to deposit the balance consideration within the time granted by the court, without a valid explanation, can be seen as a lack of readiness and willingness. This could result in the court denying your request for specific performance.
Q: Can I get an extension of time to deposit the balance consideration?
A: Yes, you can seek an extension of time, but you must provide valid and substantial reasons for the delay. Seeking an extension after the original deadline has passed, without a good reason, may be viewed as a lack of readiness and willingness.
Q: What is the significance of this judgment?
A: This judgment clarifies that the plaintiff seeking specific performance must demonstrate continuous readiness and willingness to perform their obligations under the contract. It emphasizes that mere presence at the Sub-Registrar’s office or obtaining an extension of time is not sufficient proof of readiness and willingness; the plaintiff must show a continuous capacity and intention to complete the transaction.
Source: Ravi Setia vs. Madan Lal