Supreme Court Upholds Specific Performance of Agreement to Sell: Sughar Singh vs. Hari Singh (2021)

Date of the Judgment: 26 October 2021
Citation: (2021) INSC 738
Judges: M.R. Shah, J., Aniruddha Bose, J.
Can a court deny specific performance of a contract for sale if the plaintiff has not used the exact words “ready and willing” in their pleadings? The Supreme Court of India recently addressed this question in a case concerning an agreement to sell land. The Court examined whether the plaintiff had sufficiently demonstrated their readiness and willingness to fulfill their obligations under the contract, even if the specific words were not used. The bench, comprising Justice M.R. Shah and Justice Aniruddha Bose, delivered the judgment, with Justice M.R. Shah authoring the opinion.

Case Background

The case revolves around an agreement to sell land executed on 10 October 1976, by Ram Singh in favor of Sughar Singh for a total consideration of Rs. 56,000. Sughar Singh paid Rs. 25,000 as part of the sale consideration at the time of the agreement. The agreement stipulated that the sale deed would be executed within two years. Subsequently, the time period was extended twice, on 30 September 1978 and 29 September 1981, with additional payments of Rs. 8,000 and Rs. 7,000 respectively, totaling Rs. 40,000 paid by Sughar Singh. Despite this, Ram Singh sold the land to defendant Nos. 2 to 5 on 23 June 1984.

Sughar Singh then filed a civil suit against Ram Singh and the subsequent purchasers (defendant Nos. 2 to 5), seeking specific performance of the agreement to sell. He alleged that defendant Nos. 2 to 5 were aware of the prior agreement and had fraudulently obtained the sale deed. Ram Singh denied the agreement and the payments. Defendant Nos. 2 to 5 claimed to be bona fide purchasers without knowledge of the prior agreement.

Timeline

Course of Proceedings

The Trial Court ruled in favor of Sughar Singh, holding that the agreement to sell was valid, the payments were made, and defendant Nos. 2 to 5 were aware of the agreement. The First Appellate Court upheld this decision. However, the High Court, in a second appeal, initially remanded the matter to the First Appellate Court to reconsider the issue of readiness and willingness and the effect of non-registration of the extension documents. After remand, the First Appellate Court again ruled in favor of Sughar Singh. Subsequently, in a second appeal, the High Court reversed the concurrent findings of the lower courts, dismissing the suit for specific performance, primarily on the ground that the plaint lacked specific averments of readiness and willingness as required by Section 16(c) of the Specific Relief Act, 1963.

Legal Framework

The core legal issue revolves around Section 16(c) of the Specific Relief Act, 1963, which 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 requires a plaintiff seeking specific performance to demonstrate that they have always been ready and willing to fulfill their part of the contract. The High Court emphasized the need for specific averments in the plaint to this effect. Additionally, the High Court considered Section 20 of the Specific Relief Act, 1963, which deals with the discretionary power of the court to grant specific performance.

Arguments

Appellant (Sughar Singh)’s Arguments:

• ✓ The High Court erred in setting aside the concurrent findings of the lower courts regarding readiness and willingness.
• ✓ The plaint, when read as a whole, demonstrates that the plaintiff was always ready and willing to perform his part of the contract. The plaintiff had specifically pleaded in paragraphs 1 to 4 and 11 of the plaint that he was always ready and willing to get the sale deed executed and registered and perform his part of the agreement, but the defendant No.1 refused and hence, he had to file the suit.
• ✓ The plaintiff had already paid a substantial portion of the sale consideration (Rs. 40,000 out of Rs. 56,000), and the balance was to be paid at the time of execution of the sale deed.
• ✓ The High Court’s interpretation of Section 16(c) was too technical, focusing on the form rather than the substance of the pleadings. The compliance of “readiness and willingness” has to be in spirit and substance and not in letter and form.
• ✓ The High Court erred in non-suiting the plaintiff on the applicability of proviso to Section 20 of the Act. The High Court has erred in observing that it is not mandatory but discretionary to grant specific relief.
• ✓ The conduct of defendant Nos. 2 to 5 in purchasing the land despite knowing about the prior agreement should not be a ground to deny the relief of specific performance.

Respondent (Defendant Nos. 2 to 5)’s Arguments:

• ✓ The High Court correctly dismissed the suit due to insufficient averments in the plaint as per Section 16(c) of the Act.
• ✓ There is a clear distinction between readiness and willingness, and the plaintiff failed to demonstrate both.
• ✓ The relief of specific performance is discretionary under Section 20 of the Act, and the High Court rightly exercised its discretion to deny the relief.
• ✓ The agreement to sell was executed long ago, and the defendants have been in possession of the land for many years. Granting specific performance would cause undue hardship to them.

Submissions of Parties

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a separate section, but the core issues addressed were:

1. Whether the High Court was correct in reversing the concurrent findings of the lower courts on readiness and willingness based on a technical interpretation of Section 16(c) of the Specific Relief Act, 1963.
2. Whether the High Court was correct in holding that the relief of specific performance is discretionary under Section 20 of the Specific Relief Act, 1963, and can be denied even if the agreement to sell is proved and the plaintiff is ready and willing to perform his part of the contract.

Treatment of the Issue by the Court

Authorities

The Supreme Court relied on the following authorities:

The Court also considered the following legal provisions:

• ✓ Section 16(c) of the Specific Relief Act, 1963: This section mandates that a plaintiff seeking specific performance must demonstrate their readiness and willingness to perform their part of the contract.
• ✓ Section 20 of the Specific Relief Act, 1963: This section deals with the discretionary power of the court to grant specific performance.

Judgment

The Supreme Court allowed the appeal, setting aside the High Court’s judgment and restoring the Trial Court’s decree for specific performance.

The Supreme Court also analyzed how the authorities were viewed:

• ✓ Syed Dastagir Vs. T.R. Gopalakrishna Setty [CITATION]: The Court followed this case, reiterating that pleadings should be construed in spirit and substance, not merely in form.
• ✓ C.S. Venkatesh Vs A.S.C. Murthy (Dead) By Lrs. and Ors. [CITATION]: The Court followed this case to emphasize that to adjudge whether the plaintiff is ready and willing to perform his part of contract, the Court must take into consideration the conduct of the plaintiff prior and subsequent to filing of the suit along with other attending circumstances in a particular case.

The Court directed the defendants to execute the sale deed in favor of the plaintiff within four weeks and hand over the peaceful and vacant possession of the suit land within the same period.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the following factors:

• ✓ Substantial Compliance with Section 16(c): The Court emphasized that the plaintiff had substantially complied with the requirements of Section 16(c) of the Specific Relief Act, 1963. While the plaint may not have used the exact words “ready and willing,” the overall pleadings and the plaintiff’s conduct demonstrated that he was indeed ready and willing to perform his part of the contract. The Court noted that the plaintiff had paid a significant portion of the sale consideration and was ready to pay the balance.
• ✓ Judicious Use of Discretion under Section 20: The Court held that the discretionary power under Section 20 of the Specific Relief Act, 1963, should be exercised judiciously. The Court noted that the High Court erred in exercising its discretion to deny the relief of specific performance when the plaintiff had proved the agreement to sell, paid a substantial part of the sale consideration, and was ready and willing to perform his part of the contract.
• ✓ Concurrent Findings of Lower Courts: The Court noted that both the Trial Court and the First Appellate Court had concurrently held that the plaintiff was ready and willing to perform his part of the contract. The High Court should not have interfered with these findings in a second appeal unless they were found to be perverse.
• ✓ Conduct of the Parties: The Court considered the conduct of the parties, particularly the fact that the defendant Nos. 2 to 5 had purchased the land despite knowing about the prior agreement to sell in favor of the plaintiff. The Court noted that the balance should tilt in favor of the plaintiff in such circumstances.
• ✓ Equity and Justice: The Court emphasized that denying specific performance in this case would encourage dishonesty and would not be in the interest of equity and justice.

The sentiment analysis of the reasons given by the Supreme Court is as follows:

The ratio of fact to law that influenced the court to decide is as follows:

Logical Reasoning

Key Takeaways

• ✓ Substance Over Form: Pleadings in a suit for specific performance should be interpreted in their substance, not just their form. The absence of specific words like “ready and willing” does not negate a claim if the overall pleading and conduct demonstrate the plaintiff’s readiness and willingness.
• ✓ Judicious Use of Discretion: The discretionary power of the court under Section 20 of the Specific Relief Act should be exercised judiciously, soundly, and reasonably. It should not be used to deny relief when the plaintiff has proven the agreement to sell, has paid a substantial part of the sale consideration, and is ready and willing to perform their part of the contract.
• ✓ Importance of Concurrent Findings: High Courts should be cautious in interfering with concurrent findings of fact by lower courts unless such findings are perverse or contrary to the evidence on record.
• ✓ Conduct of Parties: The conduct of the parties, especially the conduct of the defendants, should be considered when deciding on the relief of specific performance.

Directions

The Supreme Court directed the defendants to execute the sale deed in favor of the plaintiff within four weeks and hand over the peaceful and vacant possession of the suit land within the same period.

Development of Law

The ratio decidendi of this case is that the pleadings in a suit for specific performance should be interpreted in their substance, not just their form and that the discretionary power of the court under Section 20 of the Specific Relief Act should be exercised judiciously. This case clarifies that the absence of specific words like “ready and willing” does not negate a claim if the overall pleading and conduct demonstrate the plaintiff’s readiness and willingness. It also emphasizes that the discretionary power of the court should not be used to deny relief when the plaintiff has proven the agreement to sell, has paid a substantial part of the sale consideration, and is ready and willing to perform their part of the contract.

Conclusion

The Supreme Court’s decision in Sughar Singh vs. Hari Singh reaffirms the principle that courts should look at the substance of pleadings rather than just the form, especially in cases of specific performance. The Court emphasized that the discretion to grant or deny specific performance should be exercised judiciously and not in a manner that encourages dishonesty. This judgment provides clarity on the interpretation of Section 16(c) and Section 20 of the Specific Relief Act, 1963, and ensures that the relief of specific performance is granted when the plaintiff has demonstrated readiness and willingness and has fulfilled the essential terms of the contract.