LEGAL ISSUE: Whether a suit for specific performance of a contract for the sale of immovable property can be decreed when there has been a delay in filing the suit, and whether the plaintiff has sufficiently demonstrated readiness and willingness to perform their part of the contract.
CASE TYPE: Civil (Contract Law, Specific Performance)
Case Name: P. Daivasigamani vs. S. Sambandan
Judgment Date: 12 October 2022
Date of the Judgment: 12 October 2022
Citation: [Not Available in Source]
Judges: Sanjiv Khanna, J. and Bela M. Trivedi, J.
Can a party be denied specific performance of a contract for the sale of land simply because they did not file the suit immediately after the breach? The Supreme Court of India recently addressed this question in a case concerning an agreement for the sale of land. The court examined whether the plaintiff had demonstrated continuous readiness and willingness to fulfill their obligations under the contract, despite a delay in initiating legal proceedings. This judgment clarifies the requirements for obtaining specific performance and underscores the importance of timely action while also considering the nuances of real estate transactions.
Case Background
Mr. P. Daivasigamani (the appellant) owned a piece of land in Ayanambakkam. On 05 October 1989, he entered into an agreement to sell 1 acre of his land to Mr. S. Sambandan (the respondent) for Rs. 6,50,000. The respondent paid Rs. 50,000 as earnest money, and the sale was to be completed within six months. The respondent claimed that he contacted the appellant multiple times to execute the sale deed, but the appellant did not respond. On 17 March 1990, the respondent sent a letter to the appellant requesting the execution of a power of attorney and the completion of the transaction. This letter was followed by a lawyer’s notice on 26 March 1990, which was returned with the endorsement “refused.” Subsequently, the respondent issued public notices in newspapers on 02 May 1990 and 06 May 1990, cautioning against any transactions with the appellant regarding the land. Despite these efforts, the appellant did not fulfill his obligations, leading the respondent to file a suit for specific performance of the agreement.
Timeline
| Date | Event |
|---|---|
| 05 October 1989 | Agreement to sell land executed between P. Daivasigamani and S. Sambandan. |
| 05 October 1989 | S. Sambandan paid Rs. 50,000 as earnest money to P. Daivasigamani. |
| Within 6 months from 05 October 1989 | Time stipulated for completion of sale transaction. |
| 17 March 1990 | S. Sambandan sent a letter to P. Daivasigamani requesting execution of power of attorney. |
| 26 March 1990 | S. Sambandan sent a lawyer’s notice to P. Daivasigamani, which was returned as “refused.” |
| 02 May 1990 | Public notice published in “Dhina Thanthi” by S. Sambandan. |
| 06 May 1990 | Public notice published in “Indian Express” by S. Sambandan. |
| 26 March 1993 | S. Sambandan filed suit for specific performance. |
| 28 June 2002 | Trial Court partly decreed the suit, ordering refund of earnest money with interest. |
| 15 June 2010 | High Court allowed the appeal and decreed specific performance. |
Course of Proceedings
The Trial Court partly decreed the suit, ordering the appellant to refund the earnest money of Rs. 50,000 with 12% interest. The Trial Court held that the respondent had failed to prove his readiness and willingness to perform his part of the contract, as he had not deposited the balance sale consideration in court at the time of filing the suit, nor had he demonstrated adequate financial capacity to pay the balance amount within the stipulated time. The High Court, however, reversed this decision, holding that the respondent had made clear averments of readiness and willingness to pay the balance consideration and that the Trial Court’s finding was perverse. The High Court thus decreed the suit for specific performance.
Legal Framework
The Supreme Court examined the provisions of the Specific Relief Act, 1963, particularly Sections 10, 16, and 20, as they stood before the 2018 amendments.
Section 10 of the Specific Relief Act, 1963, states:
“Except as otherwise provided in this Chapter, the specific performance of any contract may, in the discretion of the court, be enforced – (a) when there exists no standard for ascertaining actual damage caused by the non-performance of the act agreed to be done; or (b) when the act agreed to be done is such that compensation in money for its non-performance would not afford adequate relief.”
Section 16 of the Specific Relief Act, 1963, outlines personal bars to relief, stating:
“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.”
It further explains,
“(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.”
Section 20 of the Specific Relief Act, 1963, discusses the court’s discretion in decreeing specific performance:
“(1) The jurisdiction to decree specific performance is discretionary, and the court is not bound to grant such relief merely because it is lawful to do so; but the discretion of the court is not arbitrary but sound and reasonable, guided by judicial principles and capable of correction by a court of appeal.”
These provisions indicate that specific performance is a discretionary remedy, and the plaintiff must demonstrate continuous readiness and willingness to perform their part of the contract.
Arguments
The appellant argued that the suit was barred by limitation since it was filed after three years of the agreement. They also contended that time was of the essence of the contract, and the respondent had failed to perform his obligations within the stipulated time. Further, the appellant argued that the respondent had failed to prove his financial capacity to pay the balance amount and had not deposited the remaining amount in court at the time of filing the suit.
The respondent argued that time is not of the essence in contracts for immovable property. He contended that he had shown readiness and willingness by issuing multiple notices to the appellant within the stipulated time, calling upon him to execute the power of attorney and complete the sale. He also argued that there was no legal requirement to deposit the balance of the sale consideration at the time of filing the suit.
| Appellant’s Submissions | Respondent’s Submissions |
|---|---|
| Suit was barred by limitation. | Suit was filed within the prescribed limitation period. |
| Time was of the essence of the contract. | Time is not of the essence in contracts for immovable property. |
| Respondent failed to perform obligations within stipulated time. | Respondent showed readiness and willingness by issuing notices. |
| Respondent failed to prove financial capacity to pay balance amount. | No legal requirement to deposit balance amount at time of filing suit. |
| Respondent did not deposit the remaining amount of sale consideration in court at the time of filing the suit. | Respondent was ready and willing to perform his part of the contract. |
Issues Framed by the Supreme Court
✓ Whether the suit for specific performance was barred by limitation.
✓ Whether the High Court was justified in granting the relief of specific performance in favor of the respondent.
Treatment of the Issue by the Court
| Issue | Court’s Decision |
|---|---|
| Whether the suit for specific performance was barred by limitation. | The Court held that the suit was not barred by limitation as it was filed within three years from the date when the respondent noticed that the performance was refused by the appellant. |
| Whether the High Court was justified in granting the relief of specific performance in favor of the respondent. | The Court upheld the High Court’s decision, stating that the respondent had demonstrated readiness and willingness to perform his part of the contract and that the appellant had failed to fulfill his obligations. |
Authorities
The Supreme Court considered several authorities in its judgment:
✓ Mademsetty Satyanarayana vs. G. Yelloji Rao, AIR 1965 SC 1405 (Supreme Court of India): The Court observed that in India, unlike in England, mere delay cannot be a ground to refuse specific performance if the suit is filed within the limitation period.
✓ R. Lakshmikantham v. Devaraji (2019) 8 SCC 62 (Supreme Court of India): The Court reiterated that mere delay alone in filing a suit for specific performance could not be a ground for refusing relief if the suit was filed within the statutory time limit.
✓ Syed Dastagir vs. T.R. Gopalakrishna Setty (1999) 6 SCC 337 (Supreme Court of India): The Court clarified that the compliance of “readiness and willingness” has to be in spirit and substance and not in letter and form. It also stated that 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.
✓ Sukhbir Singh v. Brij Pal Singh (1997) 2 SCC 200 (Supreme Court of India): The Court held that it is sufficient for the plaintiff to establish that they had the capacity to pay the sale consideration and it is not necessary that they should always carry the money with them from the date of the suit till the date of the decree.
✓ A. Kanthamani v. Nasreen Ahmed (2017) 4 SCC 654 (Supreme Court of India): The Court followed the principle laid down in Sukhbir Singh v. Brij Pal Singh.
✓ C.S. Venkatesh v. A.S.C. Murthy (2020) 3 SCC 280 (Supreme Court of India): The Court followed the principle laid down in Sukhbir Singh v. Brij Pal Singh.
✓ Kamal Kumar v. Premlata Joshi and Others (2019) 3 SCC 704 (Supreme Court of India): The Court summarized the material questions required to be gone into for grant of the relief of specific performance.
✓ K.S. Vidyanadam and Others v. Vairavan, (1997) 3 SCC 1 (Supreme Court of India): The Court discussed the status of the parties, and whether the plaintiff is a speculator in the property.
✓ Saeadamani Kandappan v. S. Rajalakshmi and Others (2011) 12 SCC 18 (Supreme Court of India): The Court discussed the importance of time in contracts for immovable properties.
| Authority | How it was Considered |
|---|---|
| Mademsetty Satyanarayana vs. G. Yelloji Rao, AIR 1965 SC 1405 (Supreme Court of India) | Followed to establish that mere delay is not a ground to refuse specific performance if the suit is within the limitation period. |
| R. Lakshmikantham v. Devaraji (2019) 8 SCC 62 (Supreme Court of India) | Followed to reiterate that mere delay cannot be a ground to refuse relief if the suit is within the statutory time limit. |
| Syed Dastagir vs. T.R. Gopalakrishna Setty (1999) 6 SCC 337 (Supreme Court of India) | Followed to interpret “readiness and willingness” in spirit and substance, not just in letter and form. |
| Sukhbir Singh v. Brij Pal Singh (1997) 2 SCC 200 (Supreme Court of India) | Followed to state that it is sufficient for the plaintiff to establish capacity to pay, not necessarily having cash in hand. |
| A. Kanthamani v. Nasreen Ahmed (2017) 4 SCC 654 (Supreme Court of India) | Followed the principle laid down in Sukhbir Singh v. Brij Pal Singh. |
| C.S. Venkatesh v. A.S.C. Murthy (2020) 3 SCC 280 (Supreme Court of India) | Followed the principle laid down in Sukhbir Singh v. Brij Pal Singh. |
| Kamal Kumar v. Premlata Joshi and Others (2019) 3 SCC 704 (Supreme Court of India) | Referred to for the material questions to be considered for specific performance. |
| K.S. Vidyanadam and Others v. Vairavan, (1997) 3 SCC 1 (Supreme Court of India) | Referred to for the status of the parties, and whether the plaintiff is a speculator in the property. |
| Saeadamani Kandappan v. S. Rajalakshmi and Others (2011) 12 SCC 18 (Supreme Court of India) | Referred to for the importance of time in contracts for immovable properties. |
Judgment
| Submission by Parties | Court’s Treatment |
|---|---|
| Appellant: Suit was barred by limitation. | Rejected. The Court held that the suit was filed within the prescribed limitation period. |
| Appellant: Time was of the essence of the contract. | Rejected. The Court reiterated that time is not of the essence in contracts for immovable property unless specified. |
| Appellant: Respondent failed to prove financial capacity. | Rejected. The Court held that the respondent was not required to deposit the balance amount at the time of filing the suit, and that readiness and willingness were demonstrated. |
| Respondent: Showed readiness and willingness by issuing notices. | Accepted. The Court held that the respondent had demonstrated readiness and willingness by issuing notices and showing intention to perform the contract. |
How each authority was viewed by the Court?
✓ Mademsetty Satyanarayana vs. G. Yelloji Rao, AIR 1965 SC 1405 (Supreme Court of India):* The Court relied on this case to support the view that in India, unlike in England, mere delay cannot be a ground to refuse specific performance if the suit is filed within the limitation period.
✓ R. Lakshmikantham v. Devaraji (2019) 8 SCC 62 (Supreme Court of India):* The Court followed this case to reiterate that mere delay alone in filing a suit for specific performance could not be a ground for refusing relief if the suit was filed within the statutory time limit.
✓ Syed Dastagir vs. T.R. Gopalakrishna Setty (1999) 6 SCC 337 (Supreme Court of India):* The Court used this case to clarify that the compliance of “readiness and willingness” has to be in spirit and substance and not in letter and form.
✓ Sukhbir Singh v. Brij Pal Singh (1997) 2 SCC 200 (Supreme Court of India):* The Court followed this case to hold that it is sufficient for the plaintiff to establish that they had the capacity to pay the sale consideration and it is not necessary that they should always carry the money with them from the date of the suit till the date of the decree.
✓ A. Kanthamani v. Nasreen Ahmed (2017) 4 SCC 654 (Supreme Court of India):* The Court followed the principle laid down in Sukhbir Singh v. Brij Pal Singh.
✓ C.S. Venkatesh v. A.S.C. Murthy (2020) 3 SCC 280 (Supreme Court of India):* The Court followed the principle laid down in Sukhbir Singh v. Brij Pal Singh.
✓ Kamal Kumar v. Premlata Joshi and Others (2019) 3 SCC 704 (Supreme Court of India):* The Court referred to this case to summarize the material questions to be considered for specific performance.
✓ K.S. Vidyanadam and Others v. Vairavan, (1997) 3 SCC 1 (Supreme Court of India):* The Court referred to this case to discuss the status of the parties, and whether the plaintiff is a speculator in the property.
✓ Saeadamani Kandappan v. S. Rajalakshmi and Others (2011) 12 SCC 18 (Supreme Court of India):* The Court referred to this case to discuss the importance of time in contracts for immovable properties.
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the respondent’s consistent actions demonstrating readiness and willingness to perform the contract, as well as the appellant’s failure to respond to the respondent’s notices. The Court also considered the principle that time is not of the essence in contracts for immovable property unless explicitly stated, and that the respondent had filed the suit within the limitation period. The Court emphasized that the respondent had fulfilled the requirements under Section 16(c) of the Specific Relief Act, 1963 by demonstrating a continuous intention to complete the sale transaction.
| Sentiment | Percentage |
|---|---|
| Respondent’s readiness and willingness | 40% |
| Appellant’s failure to respond | 30% |
| Time not of the essence | 20% |
| Suit filed within limitation | 10% |
| Ratio | Percentage |
|---|---|
| Fact | 60% |
| Law | 40% |
The Court’s reasoning was based on a combination of factual considerations (the respondent’s actions and the appellant’s inaction) and legal principles (the interpretation of Section 16(c) of the Specific Relief Act and the concept of time being of the essence).
The Court considered the argument that the respondent had not deposited the balance amount in court at the time of filing the suit but clarified that Explanation (i) to Section 16(c) of the Specific Relief Act, 1963, does not mandate such a deposit. The Court also emphasized that the respondent had demonstrated a continuous intention to complete the sale transaction, which was sufficient to establish readiness and willingness. The Court held that the respondent had complied with the requirements of Section 16(c) by making specific pleadings and proving them with reliable evidence.
The Court also noted the steep rise in the price of immovable properties since the agreement was made in 1989. To balance the equities, the Court directed the respondent to deposit an additional sum of Rupees One Crore in the Trial Court towards the sale consideration, over and above any amount already deposited.
The court quoted from the judgment:
“the compliance of “readiness and willingness” has to be in spirit and substance and not in letter and form”
The court further quoted:
“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”
The court further quoted:
“the plaintiff must aver performance of, or readiness and willingness to perform, the contract according to its true construction.”
Key Takeaways
- ✓ In contracts for the sale of immovable property, time is not considered to be of the essence unless explicitly specified in the agreement.
- ✓ A plaintiff seeking specific performance must demonstrate continuous readiness and willingness to perform their part of the contract, but they are not required to deposit the balance sale consideration in court at the time of filing the suit.
- ✓ Mere delay in filing a suit for specific performance is not a ground to deny relief if the suit is filed within the statutory limitation period.
- ✓ Courts have the discretion to grant specific performance, but this discretion must be exercised judiciously based on sound legal principles and the facts of the case.
- ✓ The conduct of both parties is crucial in determining whether specific performance should be granted.
Directions
The Supreme Court directed the respondent to deposit a sum of Rupees One Crore in the Trial Court towards the sale consideration, within a period of eight weeks. Upon such deposit, the appellant was directed to execute the sale deed in favor of the respondent.
Development of Law
The ratio decidendi of this case is that in contracts for the sale of immovable property, time is not of the essence unless explicitly specified, and that a plaintiff seeking specific performance must demonstrate continuous readiness and willingness to perform their part of the contract, without necessarily depositing the balance sale consideration in court at the time of filing the suit. This judgment reinforces the principle that mere delay in filing a suit does not bar relief if the suit is within the limitation period, and that the court’s discretion must be exercised judiciously. There is no change in the previous position of the law, but the court has reiterated the principles regarding the interpretation of Section 16(c) of the Specific Relief Act, 1963.
Conclusion
The Supreme Court dismissed the appeal, upholding the High Court’s decision to grant specific performance of the agreement. The Court emphasized that the respondent had demonstrated continuous readiness and willingness to perform his part of the contract, and that the appellant had failed to fulfill his obligations. The Court also directed the respondent to deposit an additional sum of Rupees One Crore to balance the equities given the steep rise in property prices.