Supreme Court overturns Specific Performance Decree due to lack of Readiness and Willingness: Mohinder Kaur vs. Sant Paul Singh (2019)

Date of the Judgment: October 1, 2019
Citation: Not Available
Judges: Navin Sinha, J. and Indira Banerjee, J.
Can a suit for specific performance be decreed if the plaintiff fails to demonstrate their readiness and willingness to fulfill their obligations under the agreement? The Supreme Court of India addressed this critical question in a recent case, overturning the concurrent findings of lower courts. The Court emphasized the necessity for a plaintiff seeking specific performance to not only assert their readiness and willingness but also to provide concrete evidence, including personal testimony, to substantiate their claim. This judgment highlights the importance of personal testimony and the consequences of failing to demonstrate the ability and intent to perform contractual obligations in specific performance suits.

Case Background

On March 16, 1988, Mohinder Kaur (the appellant/defendant) and Sant Paul Singh (the respondent/plaintiff) entered into an agreement for the sale of House No. 3343/3, located in Rupnagar Municipality, for a total consideration of Rs. 1,50,000. At the time of the agreement, the respondent paid an initial sum of Rs. 15,000.

A subsequent agreement was executed on June 20, 1988, because the property was mortgaged to the education department. This agreement stipulated that the sale deed would be executed within 115 days of the appellant obtaining the release of the property from the mortgage, and after duly informing the respondent. An additional sum of Rs. 53,000 and Rs. 2,000 in cash was paid to the appellant.

After redeeming the mortgage, the appellant informed the respondent on July 27, 1989, as per the agreement, requesting the balance payment and execution of the sale deed. The respondent disputed the redemption and asked for proof. Consequently, the appellant, after issuing a notice, cancelled the agreement on September 1, 1989, and forfeited the earnest money. Subsequently, the respondent filed a suit seeking specific performance of the agreement.

Timeline

Course of Proceedings

The trial court decreed the suit for specific performance in favor of the respondent. The first appeal by the appellant was dismissed. The second appeal by the appellant was also dismissed by the High Court. The appellant then appealed to the Supreme Court of India.

Legal Framework

The judgment primarily deals with the principles related to specific performance of contracts, particularly the requirement for the plaintiff to demonstrate readiness and willingness to perform their part of the contract. The court relies on previous judgments to interpret these principles.

Arguments

Appellant’s Arguments:

• The appellant’s counsel, Shri Neeraj Kumar Jain, argued that the appellant had duly informed the respondent about the mortgage redemption as required by the agreement.
• The respondent raised frivolous objections and failed to pay the balance amount or take steps to execute the sale deed.
• The appellant rightfully cancelled the agreement and forfeited the earnest money due to the respondent’s lapses.
• Relying on I.S. Sikandar (D) by L.Rs. vs. K. Subramani and Ors., (2013) 15 SCC 27, it was argued that a suit for specific performance is not maintainable without challenging the cancellation of the agreement and seeking a declaratory relief.
• The respondent did not enter the witness box to establish his readiness and willingness to perform his obligations under the agreement.
• PW-1, the power of attorney holder, was not competent to depose about events prior to the execution of the power of attorney, especially facts personal to the respondent’s knowledge. Reliance was placed on Janki Vashdeo Bhojwani and Ors. vs. Indusind Bank Ltd. and Ors., (2005) 2 SCC 217.
• Mere assertions in the plaint were insufficient without evidence to establish readiness and willingness. Reliance was placed on Vijay Kumar and Ors. vs. Om Parkash, 2018 (15) SCALE 65.

Respondent’s Arguments:

• The respondent’s counsel, Shri Vineet Bhagat, argued that the appellant did not provide proper intimation about the mortgage redemption.
• The respondent was always ready and willing to perform his obligations but was hindered by the appellant’s conduct in not providing correct information.

Issues Framed by the Supreme Court

• Whether the respondent had demonstrated their readiness and willingness to perform their part of the agreement?
• Whether the suit for specific performance was maintainable without challenging the cancellation of the agreement?

Treatment of the Issue by the Court

Authorities

Cases Relied Upon by the Court:

• Janki Vashdeo Bhojwani and Ors. vs. Indusind Bank Ltd. and Ors., (2005) 2 SCC 217: The Supreme Court of India held that a power of attorney holder cannot depose for the principal on matters of personal knowledge to the principal.
• Vidhyadhar v. Manikrao: The Supreme Court of India observed that if a party does not appear in the witness box, a presumption arises that the case set up by them is not correct.
• I.S. Sikandar (D) by L.Rs. vs. K. Subramani and Ors., (2013) 15 SCC 27: The Supreme Court of India held that a suit for specific performance is not maintainable without challenging the cancellation of the agreement and seeking a declaratory relief.
• Vijay Kumar and Ors. vs. Om Parkash, 2018 (15) SCALE 65: The Supreme Court of India held that mere assertions in the plaint were insufficient without evidence to establish readiness and willingness.

Judgment

How each authority was viewed by the Court?

• The court relied on Janki Vashdeo Bhojwani and Ors. vs. Indusind Bank Ltd. and Ors., (2005) 2 SCC 217* to determine that a power of attorney holder cannot depose for the principal on matters of personal knowledge.
• The court used Vidhyadhar v. Manikrao* to establish that an adverse presumption arises when a party does not appear in the witness box.
• The court followed I.S. Sikandar (D) by L.Rs. vs. K. Subramani and Ors., (2013) 15 SCC 27* to conclude that a suit for specific performance is not maintainable without challenging the cancellation of the agreement.
• The court relied on Vijay Kumar and Ors. vs. Om Parkash, 2018 (15) SCALE 65* to hold that mere assertions in the plaint were insufficient without evidence to establish readiness and willingness.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the respondent’s failure to demonstrate readiness and willingness to perform his obligations under the agreement. The Court emphasized the importance of the respondent’s personal testimony in proving his capacity and intention to fulfill the contract. The Court also considered the fact that the respondent did not challenge the cancellation of the agreement, which, according to established legal precedent, was a necessary condition for maintaining a suit for specific performance. The Court highlighted the principle that specific performance is a discretionary remedy and that the respondent had not established a case for the grant of such relief.

The Supreme Court highlighted that the respondent’s failure to appear in the witness box and offer himself for cross-examination created an adverse presumption against his case. The Court also noted that the respondent’s power of attorney holder was not competent to testify on matters that were personal to the respondent’s knowledge.

The Court observed that the respondent’s insistence on a no-dues certificate and denial of receipt of the release deed did not amount to readiness and willingness. The Court emphasized that the respondent had to prove his capacity to perform his obligations, which he failed to do.

The Court also noted that the respondent’s failure to challenge the cancellation of the agreement was a significant factor in its decision. The Court relied on I.S. Sikandar (D) by L.Rs. vs. K. Subramani and Ors., (2013) 15 SCC 27, to hold that a suit for specific performance is not maintainable without challenging the cancellation of the agreement.

The Court stated that the relief of specific performance is discretionary and that the respondent had not established a case for the grant of such relief. The Court found the conclusions of the High Court unsustainable.

The Supreme Court stated, “In our opinion, the failure of the respondent to appear in the witness box can well be considered to raise an adverse presumption against him…”

The Supreme Court also stated, “The respondent never challenged the communication of cancellation. In Sikandar (supra) it was observed as follows: ‘…the Plaintiff has not sought for declaratory relief to declare the termination of Agreement of Sale as bad in law. In the absence of such prayer by the Plaintiff the original suit filed by him before the trial court for grant of decree for specific performance…is not maintainable in law.’”

The Supreme Court further stated, “We are of the considered opinion that merely because the respondent may not have been satisfied by the intimation given by the appellant regarding release of the property from mortgage, it cannot be construed as readiness and willingness on part of the respondent and his capacity to perform his obligations under the agreement…”

The Supreme Court set aside the impugned orders and allowed the appeals.

Key Takeaways

• Personal Testimony is Crucial: In suits for specific performance, the plaintiff must personally testify to establish their readiness and willingness to perform their obligations. A power of attorney holder cannot substitute for the principal’s testimony on matters of personal knowledge.
• Challenge Cancellation of Agreement: If an agreement is cancelled, the plaintiff must challenge the cancellation in order to maintain a suit for specific performance.
• Burden of Proof: The plaintiff bears the burden of proving their readiness and willingness to perform their part of the contract. Mere assertions in the plaint are not sufficient.
• Specific Performance is Discretionary: The relief of specific performance is discretionary, and the plaintiff must establish a strong case for the grant of such relief.
• Adverse Presumption: Failure to appear in the witness box can lead to an adverse presumption against the plaintiff’s case.

Directions

The Supreme Court set aside the orders of the High Court and allowed the appeals.

Development of Law

This judgment reinforces the established principles of specific performance, particularly the need for the plaintiff to demonstrate readiness and willingness. It clarifies that mere assertions in the plaint are insufficient and that personal testimony is crucial. The judgment also reiterates the principle that a suit for specific performance is not maintainable without challenging the cancellation of the agreement. The ratio decidendi of the case is that a plaintiff seeking specific performance must prove their readiness and willingness to perform their obligations under the agreement, and must challenge any cancellation of the agreement. This case does not change the previous position of law but reinforces the existing legal principles.

Conclusion

The Supreme Court’s decision in Mohinder Kaur vs. Sant Paul Singh underscores the importance of a plaintiff’s personal testimony and the necessity of challenging the cancellation of an agreement in suits for specific performance. The Court’s emphasis on concrete evidence of readiness and willingness serves as a reminder that mere assertions are insufficient to secure such a discretionary remedy. This judgment reinforces existing legal principles and provides clarity on the requirements for successfully pursuing specific performance claims.