Supreme Court Upholds High Court Decision on Specific Performance: R. Shama Naik vs. G. Srinivasiah (2024)

Introduction

Date of the Judgment: 28 November 2024
Citation: 2024 INSC 927
Judges: Justice J.B. Pardiwala and Justice R. Mahadevan
Can a court order the specific performance of a contract if the plaintiff fails to prove they were ready and willing to fulfill their obligations? The Supreme Court of India recently addressed this critical question in a case concerning a sale agreement, ultimately upholding the High Court’s decision that denied specific performance due to the plaintiff’s lack of demonstrated readiness and willingness. This judgment underscores the importance of fulfilling contractual obligations and the legal requirements for seeking specific performance. The bench comprised Justice J.B. Pardiwala and Justice R. Mahadevan.

Case Background

The case revolves around a suit for specific performance of a contract based on a sale agreement dated 3rd March 2005. R. Shama Naik (the petitioner and original plaintiff) entered into an agreement with G. Srinivasiah (the respondent and original defendant) for the sale of a property. The total sale consideration was fixed at Rs. 30,00,000, out of which Rs. 12,50,000 was paid as earnest money by the plaintiff at the time of the agreement. The plaintiff claimed that they were always ready and willing to perform their part of the contract, but the defendant failed to execute the sale deed. Consequently, the plaintiff filed a suit seeking specific performance of the contract or, alternatively, a refund of the earnest money.

Timeline

Course of Proceedings

The trial court initially ruled in favor of the plaintiff, granting a decree for specific performance. However, the defendant appealed this decision to the High Court of Karnataka at Bengaluru. The High Court, upon reviewing the evidence, overturned the trial court’s judgment. The High Court’s decision was based on the finding that the plaintiff had failed to adequately demonstrate their readiness and willingness to perform their part of the contract. This finding led to the High Court allowing the defendant’s appeal and setting aside the decree for specific performance.

Legal Framework

The Supreme Court considered Section 16(c) of the Specific Relief Act, 1963, which, prior to its amendment effective from 1st October 2018, states that:

“Section 16(c) of the Specific Relief Act, 1963 (prior to amendment w.e.f. 1.10.2018) bars the relief of the specific performance of a contract in favour of a person who fails to aver readiness and willingness to perform his part of the contract.”

This provision mandates that a plaintiff seeking specific performance must demonstrate both readiness (financial capacity) and willingness (conduct) to fulfill their contractual obligations. This section is crucial in determining whether a party is entitled to the equitable relief of specific performance.

Arguments

The petitioner argued that they had always been ready and willing to perform their part of the contract. They contended that they had paid a substantial amount as earnest money and were prepared to pay the remaining amount. The petitioner submitted that the High Court erred in reversing the trial court’s decision, which had correctly appreciated the evidence on record.

The respondent, on the other hand, argued that the plaintiff had failed to establish their readiness and willingness. They contended that the plaintiff did not provide sufficient evidence to prove their financial capacity to pay the remaining sale consideration. The respondent supported the High Court’s finding that the plaintiff’s conduct did not demonstrate a genuine willingness to perform the contract.

Issues Framed by the Supreme Court

The primary issue before the Supreme Court was whether the High Court was correct in reversing the trial court’s decree for specific performance based on the finding that the plaintiff failed to prove readiness and willingness to perform their part of the contract.

Treatment of the Issue by the Court

Authorities

The Supreme Court reiterated the well-settled legal position regarding readiness and willingness, stating that:

“The plaintiff is obliged not only to make specific statement and averments in the plaint but is also obliged to adduce necessary oral and documentary evidence to show the availability of funds to make payment in terms of the contract in time.”

The Court emphasized the distinction between readiness and willingness, clarifying that:

“There is a fine distinction between readiness and willingness to perform the contract. Both the ingredients are necessary for the relief of specific performance. While readiness means the capacity of the plaintiff to perform the contract which would include his financial position, willingness relates to the conduct of the plaintiff.”

Judgment

The Supreme Court upheld the High Court’s decision, emphasizing that the High Court had correctly appreciated the evidence on record. The Court found no reason to interfere with the High Court’s finding of fact that the plaintiff had failed to establish readiness and willingness. The Court stated that the High Court’s finding was not perverse, and therefore, no intervention was warranted.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the factual finding of the High Court that the plaintiff had failed to demonstrate readiness and willingness. The Court emphasized that the plaintiff must not only state their readiness and willingness but also provide evidence to support their claim. The Court’s reasoning was based on the established legal position that both readiness (financial capacity) and willingness (conduct) are essential for obtaining a decree of specific performance.

Key Takeaways

• A plaintiff seeking specific performance must prove both readiness (financial capacity) and willingness (conduct) to fulfill their contractual obligations.
• Mere statements of readiness and willingness are not sufficient; they must be supported by concrete evidence.
• Appellate courts are generally hesitant to interfere with factual findings of lower courts unless such findings are perverse.
• The judgment underscores the importance of fulfilling contractual obligations and the legal requirements for seeking specific performance.

Directions

No specific directions were given by the Supreme Court in this case.

Development of Law

The Supreme Court’s decision reinforces the established legal principle that a plaintiff seeking specific performance must demonstrate both readiness and willingness. This judgment does not introduce any new legal principles but reaffirms the existing law on specific performance.

Conclusion

The Supreme Court dismissed the special leave petition, upholding the High Court’s decision. The Court emphasized that the plaintiff failed to provide sufficient evidence to demonstrate their readiness and willingness to perform their part of the contract. This case serves as a reminder of the importance of fulfilling contractual obligations and the legal requirements for seeking specific performance.