Date of the Judgment: July 10, 2024
Citation: 2024 INSC 507
Judges: Pamidighantam Sri Narasimha, J. and Aravind Kumar, J.
Can a buyer who delays action for years still demand specific performance of a property sale agreement? The Supreme Court of India recently addressed this question, overturning a High Court decision. This case revolves around whether a plaintiff demonstrated continuous readiness and willingness to fulfill their contractual obligations in a property sale agreement. The judgment was delivered by a two-judge bench comprising Justice Pamidighantam Sri Narasimha and Justice Aravind Kumar, with the opinion authored by Justice Aravind Kumar.
Case Background
The respondent, Davarasetty Manmadha Rao, filed a suit seeking specific performance of a sale agreement dated June 7, 1993, against the appellant, Pydi Ramana. The agreement concerned the sale of land measuring Ac.1.38 cents, with a total consideration of Rs. 705 per cent. The plaintiff claimed to have paid an advance of Rs. 2,005 on the agreement date and an additional Rs. 17,000 on June 23, 1993. The agreement stipulated that the sale deed would be executed within one year after the property was surveyed. The plaintiff alleged that despite repeated demands, the defendant postponed the execution, leading to a legal notice on May 30, 1996, and subsequently, a suit for specific performance or refund of the advance with interest.
The defendant denied all claims, contending that the agreement was fabricated by a third party, Varahanarsimhan, using blank stamp papers signed by the defendant. The defendant claimed the plaintiff, being closely related to Varahanarsimhan, was attempting to gain illegal benefits.
Timeline
| Event | Date |
|---|---|
| Execution of Agreement to Sell | 07/06/1993 |
| Additional payment of Rs. 17,000 | 23/06/1993 |
| Last date to get the sale deed registered as per the Agreement | 06/06/1994 |
| Issuance of Legal Notice | 30/05/1996 |
| Filing of Suit | 09/06/1997 |
Course of Proceedings
The trial court rejected the specific performance claim, instead ordering a refund of Rs. 37,436.80 with 24% interest per annum. The appellate court reversed this, granting specific performance. In a second appeal, the High Court partly allowed the appeal, directing the plaintiff to pay twice the original sale consideration.
Legal Framework
The Supreme Court clarified that the 2018 amendment to the Specific Relief Act is not applicable to this case as the transaction occurred before the amendment. The Court referred to Section 16 of the Specific Relief Act, which outlines personal bars to relief, particularly clause (c) that requires the plaintiff to prove continuous readiness and willingness to perform their contractual obligations.
Section 16 of the Specific Relief Act states:
“16. Personal bars to relief. – Specific performance of a contract cannot be enforced in favour of a person –
(a) who would not be entitled to recover compensation for its breach; or
(b) who has become incapable of performing, or violates any essential term of, the contract that on his part remains to be performed, or acts in fraud of the contract, or wilfully acts at variance with, or in subversion of, the relation intended to be established by the contract; or
(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 of the performance of which has been prevented or waived by the defendant.
Explanation – For the purpose of clause (c), –
(i) where a contract involves the payment of money, it is not essential for the plaintiff to actually tender to the defendant or to deposit in court any money except when so directed by the court;
(ii) the plaintiff must aver performance of, or readiness and willingness to perform, the contract according to its true construction.”
Arguments
The appellant argued that the trial court correctly rejected specific performance because the plaintiff failed to demonstrate continuous readiness and willingness. The appellant highlighted the plaintiff’s silence for two years after the agreement’s one-year deadline and the lack of evidence that the plaintiff asked the defendant to survey the land.
The respondent contended that time was not of the essence, and the defendant failed to survey the land, which was a prerequisite for the plaintiff’s obligation to pay the balance. The respondent also argued that the defendant never questioned the plaintiff’s financial capacity or readiness and willingness.
| Main Submission | Sub-Submissions | Party |
|---|---|---|
| Plaintiff failed to prove readiness and willingness | Plaintiff kept quiet for 2 years after the expiry of the agreement and issued notice only after 2 years | Appellant |
| Plaintiff did not call upon the defendant to conduct the survey of the land | Appellant | |
| Plaintiff did not produce any evidence that he was ready and willing to perform his part of the contract. | Appellant | |
| Plaintiff did not take any steps to perform his part of the contract within a reasonable time. | Appellant | |
| Time was not of the essence of the contract | Defendant received further advance amount on 23.06.1993 | Respondent |
| Defendant was under obligation to get the suit land surveyed which was never done | Respondent | |
| Defendant never raised a plea with regard to the financial capacity of the plaintiff | Respondent |
Issues Framed by the Supreme Court
The Supreme Court framed the following issues for consideration:
- Whether the impugned order of the High Court requires to be affirmed or reversed?
- What order?
Treatment of the Issue by the Court
| Issue | Court’s Decision | Brief Reasons |
|---|---|---|
| Whether the High Court order should be affirmed or reversed? | Reversed | The plaintiff failed to prove continuous readiness and willingness to perform the contract. |
| What order? | Appeal allowed; Trial Court order restored | The High Court and First Appellate Court orders were set aside, and the Trial Court’s order was restored. |
Authorities
The Supreme Court considered the following authorities:
| Authority | Court | Legal Point | How it was used |
|---|---|---|---|
| Katta Sujatha Reddy v. Siddamsetty Infra Projects (P) Ltd & Ors [2023] 1 SCC 355 | Supreme Court of India | Applicability of 2018 Amendment to Specific Relief Act | Clarified that the 2018 amendment is prospective and not applicable to transactions before the amendment. |
| Man Kaur v. Hartar Singh Sangha [2010] 10 SCC 512 | Supreme Court of India | Requirements for specific performance | Established that the plaintiff must prove a valid agreement, breach by the defendant, and continuous readiness and willingness to perform. |
| His Holiness Acharya Swami Ganesh Dassji v Sit ram Thapar [1996] 4 SCC 526 | Supreme Court of India | Distinction between readiness and willingness | Explained that readiness refers to the capacity to perform, including financial position, while willingness refers to the conduct of the party. |
| Vijay Kumar and Ors V. Om Parkash (Civil Appeal No.10191 of 2018) | Supreme Court of India | Continuous readiness and willingness | Reiterated that continuous readiness and willingness is a condition precedent for specific performance. |
| U.N. KRISHNAMURTHY (SINCE DECEASED) THR. LRS. versus A.M. KRISHNAMURTHY | Supreme Court of India | Delay in seeking specific performance | Held that unexplained delay can disentitle a plaintiff to equitable relief. |
| Rajesh Kumar Vs. Anand Kumar and Ors 2024 SCC Online SC 981 | Supreme Court of India | Filing of suit on the verge of limitation | Held that filing a suit at the fag end of limitation does not automatically entitle the plaintiff to equitable relief. |
| Section 16 of the Specific Relief Act | N/A | Personal bars to relief | Cited to emphasize the necessity of proving readiness and willingness for specific performance. |
Judgment
| Submission by Parties | How the Court Treated the Submission |
|---|---|
| Plaintiff failed to prove readiness and willingness | Accepted. The Court held that the plaintiff did not provide sufficient evidence to demonstrate continuous readiness and willingness. |
| Time was not of the essence of the contract | Rejected. The Court emphasized the long unexplained delay by the plaintiff in taking steps to perform his part of the contract. |
| Defendant was under obligation to get the suit land surveyed | While the agreement required the defendant to survey the land, the court noted that the plaintiff did not make any demand for the survey, nor did he take any steps to ensure the survey was conducted. |
How each authority was viewed by the Court?
- The Supreme Court relied on Katta Sujatha Reddy v. Siddamsetty Infra Projects (P) Ltd & Ors [2023] 1 SCC 355 to clarify that the 2018 amendment to the Specific Relief Act does not apply to this case.
- The Court used Man Kaur v. Hartar Singh Sangha [2010] 10 SCC 512 to reinforce the requirement that a plaintiff must prove readiness and willingness to obtain specific performance.
- The distinction between readiness and willingness was explained with reference to His Holiness Acharya Swami Ganesh Dassji v Sit ram Thapar [1996] 4 SCC 526.
- The Court reiterated that continuous readiness and willingness is a condition precedent for specific performance by citing Vijay Kumar and Ors V. Om Parkash (Civil Appeal No.10191 of 2018).
- The Supreme Court also relied on U.N. KRISHNAMURTHY (SINCE DECEASED) THR. LRS. versus A.M. KRISHNAMURTHY to highlight that unexplained delay in seeking specific performance can disentitle a plaintiff to equitable relief.
- The Court used Rajesh Kumar Vs. Anand Kumar and Ors 2024 SCC Online SC 981 to emphasize that filing a suit at the fag end of limitation does not automatically entitle the plaintiff to equitable relief.
- The Court also used Section 16 of the Specific Relief Act to underscore that a plaintiff must prove readiness and willingness to obtain specific performance.
What weighed in the mind of the Court?
The Court was primarily influenced by the plaintiff’s conduct, particularly the long period of silence and inaction. The lack of evidence demonstrating the plaintiff’s readiness and willingness to perform his obligations weighed heavily against granting specific performance. The Court emphasized that the plaintiff did not make any effort to get the land surveyed, nor did he take any steps to finalize the deal within a reasonable time.
| Sentiment | Percentage |
|---|---|
| Plaintiff’s Inaction and Delay | 50% |
| Lack of Evidence of Readiness and Willingness | 30% |
| Failure to Demand Survey | 20% |
| Ratio | Percentage |
|---|---|
| Fact | 60% |
| Law | 40% |
The court’s reasoning followed a logical progression:
The court rejected the argument that time was not of the essence, emphasizing that the plaintiff’s inaction and delay were not consistent with the terms of the agreement. The court also noted that the plaintiff did not provide a reasonable explanation for the delay. The court concluded that the plaintiff’s conduct did not warrant the equitable relief of specific performance.
The Supreme Court quoted the trial court’s findings:
“The plaintiff vendee did nothing to act in furtherance of the agreement. Excepting a bald and vague assertion that he was contacting the vendors but they were dodging nothing more is brought on record to satisfy the court that the plaintiff was at all material times interested in finalizing the deal and showing his readiness and willingness to perform the essential terms of the agreement.”
The Court further observed:
“There was total inaction of the Plaintiff from 06/06/1994 (expiry of one year period) to 30/05/1996 (Date of issuance of legal notice)”
The Court also noted:
“The long unexplained delay in not taking any reasonable steps as is expected from a reasonable person is itself sufficient to disentitle the plaintiff to an equitable relief.”
There were no dissenting opinions.
Key Takeaways
- Timely Action: Parties seeking specific performance must act promptly and diligently to fulfill their contractual obligations.
- Continuous Readiness and Willingness: Plaintiffs must demonstrate continuous readiness and willingness to perform their part of the contract, not just at the time of filing the suit.
- Burden of Proof: The burden of proving readiness and willingness lies with the plaintiff, and mere assertions are not sufficient.
- Importance of Documentation: Plaintiffs should maintain records of their efforts to fulfill their obligations, such as demands for surveys or other necessary actions.
Directions
The Supreme Court set aside the judgment of the High Court and the First Appellate Court and restored the judgment of the Trial Court.
Development of Law
The ratio decidendi of this case is that a plaintiff seeking specific performance must demonstrate continuous readiness and willingness to perform their contractual obligations. This case reinforces the existing legal position that unexplained delay and inaction can disentitle a party to the equitable relief of specific performance. There is no change in the previous position of law.
Conclusion
In conclusion, the Supreme Court overturned the High Court’s decision, holding that the plaintiff failed to demonstrate continuous readiness and willingness to perform his part of the contract. The Court emphasized the importance of timely action and documentation in specific performance cases, reinforcing the principle that equitable relief is not granted to those who are silent and inactive.