Shenbagam vs KK Rathinavel - Supreme Court Judgement 2022

Shenbagam vs KK Rathinavel - Supreme Court Judgement 2022

Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
Civil Appeal No 150 of 2022
Shenbagam & Ors. … Appellants
Versus
KK Rathinavel …Respondent 
2
J U D G M E N T
Dr Dhananjaya Y Chandrachud, J
A Factual Background........................................................................................3
B Submissions....................................................................................................7
C Analysis...........................................................................................................9
D Conclusion ....................................................................................................26
PART A
3
A Factual Background
1 The appeal arises from a judgment and order dated 7 January 2019 of a
Single Judge of the High Court of Judicature at Madras. The High Court
dismissed the second appeal of the appellants, who are defendants to the suit for
specific performance. The High Court confirmed the decree for specific
performance, and affirmed the decision of the first appellate court against the
decree for specific performance.
2 The appellants are owners of a property located at Patta Nos. 147, 240,
217, Madukkarai Village, Coimbatore Taluk, Coimbatore measuring about 12.60
acres1
. The first appellant and her spouse entered into an agreement on 7
February 1990 with the respondent by which they agreed to sell the suit property
for a consideration of Rs. 1,25,000. The respondent paid a sum of Rs. 25,000 as
an advance and agreed to pay the balance within six months, with the stamp
duty. On the payment of the balance, the appellants were required to execute a
sale deed conveying the property, free from all encumbrances. The terms of the
agreement also stipulated that the advance amount would be forfeited in case the
appellants failed to complete the sale. Further, in the event the respondent was
ready and willing to complete the sale but the appellants delayed or refused, the
respondent could proceed before the court to get the sale completed and seek
possession of the suit property under the Specific Relief Act 19632
. The suit
property was also subject to a mortgage of Rs. 6,000 in favour of one Janaki
Amma. The respondent-plaintiff alleged that the appellants had received the

1
“suit property”
2
“Specific Relief Act”
PART A
4
advance sum to discharge the mortgage over the suit property. On the contrary,
the appellants alleged that the respondent was aware of the mortgage over the
suit property and had agreed to discharge the mortgage from the sale
consideration. On 8 March 1990, the appellants received a further sum of Rs.
10,000 from the respondent as an advance under the sale agreement.
3 On 19 December 1990, the appellants sent a legal notice to the
respondent calling upon him to pay the balance consideration and perform his
obligations under the agreement to sell. The appellants rescinded the contract on
the ground that the respondent was not ready and willing to perform his
obligations. In response, the respondent sent a reply dated 26 December 1990
calling upon the appellants to execute the sale free from encumbrance.
4 In 1991, the respondent instituted a suit3
before the Principal District
Munsif, Coimbatore seeking a permanent injunction restraining the appellants
from alienating or creating any encumbrance on the suit property. The
respondent obtained an ad interim injunction. In the meantime, the appellants
discharged the mortgage debt.
5 On 17 June 1993, the respondent instituted a suit4
for specific performance
before the Sub-Judge, Coimbatore seeking in the alternative, a refund of the
advance of Rs. 35,000 with interest at 24% per annum from the date of the suit till
realization.
6 By its judgment dated 11 October 1996, the trial court decreed the suit in
favour of the respondent and directed the respondent to deposit the balance

3 O.S No. 615 of 1991
4 O.S No. 850 of 1993
PART A
5
consideration of Rs. 90,000 within a month. The appellants were directed to
receive this amount and execute the sale deed in favour of the respondent within
a period of three months. The trial court held that:
(i) The appellants had discharged the mortgage debt only on 17 June 1992,
after which the respondent-plaintiff could get the sale deed executed; and
(ii) The suit was filed within three years from the date of discharge of the
mortgage and was not barred by limitation.
7 The appellant preferred an appeal5
against the order of the trial court
before the Principal District Judge, Coimbatore, which was dismissed by a
judgment dated 24 February 1998. Following this, the appellant filed a second
appeal6
before the Madras High Court. While the appeal was pending, the
respondent moved an application to withdraw the balance consideration of Rs.
90,000 which was deposited before the trial court. The application was allowed
by the High Court on 24 July 2001. In the meantime, the spouse of the appellant
passed away and his legal heirs were substituted on record.
8 The Single Judge of the High Court dismissed the second appeal and
upheld the judgment of the trial court and the first appellate court. The High Court
held that:
(i) The agreement to sell provides that the discharge of the mortgage by the
appellants was a condition precedent for the completion of the sale
transaction. Since the appellants took no steps to discharge the mortgage,

5
A.S No. 67 of 1997
6
Second Appeal No. 1438 of 1999
PART A
6
it cannot be accepted that the respondent-plaintiff was not ready and
willing to perform his part of the contract;
(ii) There is no clause in the agreement to sell that indicates that time was of
the essence to the contract. If time was of the essence, then the appellants
would have discharged the mortgage before the expiry of the term
mentioned in the agreement;
(iii) The trial court did consider the bank passbook and income tax returns of
the respondent-plaintiff and rightly concluded that he was ready and willing
to perform the agreement and had sufficient resources to purchase the
property;
(iv) The plea that the suit was barred by Order II Rule 2 of the Code of Civil
Procedure 19087
had not been raised in the written statement and could
not be taken for the first time in the second appeal; and
(v) The withdrawal of the balance of the sale consideration by the respondent
cannot disentitle him to the reliefs sought as it was pursuant to an order of
the High Court, after taking into account that the amount in deposit was not
earning any interest.
9 Against the judgment and order of the High Court, the appellants filed a
Special Leave Petition before this Court under Article 136 of the Constitution.

7
“CPC”
PART B
7
B Submissions
10 Ms V Mohana, Senior counsel appearing on behalf of the appellants urged
the following submissions:
(i) The trial court failed to frame an issue on whether the respondent-plaintiff
was ready and willing to perform his part of the agreement to sell;
(ii) The trial court failed to consider any evidence or reach any finding as to
whether the respondent was ready to perform the contract and merely
noted that he had sufficient means to purchase the suit property;
(iii) After the legal notice was served on the respondent by the appellant, the
respondent filed a suit for permanent injunction and not a suit for specific
performance. This indicates that he was not ready to perform the contract;
(iv) The finding that the respondent was ready to perform the contract as he
had sufficient means to purchase the property is erroneous as the
passbooks produced by the respondent were for the accounts opened on
11 March 1992 and 22 July 1994. Thus, the accounts were not
contemporary to the period of the contract;
(v) Merely because the respondent was paying income tax since 1988 does
not indicate his willingness to perform the contract;
(vi) The respondent filed the suit for specific performance on 17 June 1993
and the remaining consideration of Rs. 90,000 was deposited on 15
November 1996. This amount was then withdrawn in 2001. Thus, the
conduct of the respondent does not indicate that he was ready and willing
to perform the contract;
PART B
8
(vii) Until the appellants issued a notice to the respondent informing him about
the rescission of the contract, there was no communication from the
respondent to seek performance of the agreement by the appellants. Thus,
merely filing a suit three years after the agreement does not prove the
readiness and willingness of the respondent;
(viii) The jurisdiction of courts under Section 20 of the Specific Relief Act is
discretionary and should not be exercised in the present case as the
appellants would be dispossessed of the suit property for a meagre sum
that was arrived at thirty years ago;
(ix) Clearing the mortgage over the property was not a condition precedent of
the agreement. In fact, the clause in the agreement stipulates that it was
only on receipt of the balance consideration that the appellants would be
required to execute the sale deed free from all encumbrances;
(x) The agreement clearly notes that the balance consideration is to be paid
within a period of six months. Thus, time was of essence of the
agreement; and
(xi) The respondent‟s suit for specific performance is barred by Order II Rule 2
of the CPC as he had filed a suit for permanent injunction in 1991 and
relinquished his right to seek the relief of specific performance.
11 Opposing these submissions, Mr Siddharth Naidu, counsel appearing on
behalf of the respondents, submitted that:
(i) The respondent-plaintiff in his reply dated 26 December 1990 specifically
stated that he was ready and willing to pay the balance consideration and
get the sale deed executed, provided the mortgage is discharged; 
PART C
9
(ii) The terms of the contract and the conduct of the parties made it clear that
time was not of the essence of the contract;
(iii) Under the agreement, it was the obligation of the appellants to discharge
the mortgage, after which the respondent was to pay the balance
consideration. The appellants discharged the mortgage on 17 June 1992,
and thereafter, the respondent filed a suit for specific performance of
contract;
(iv) The respondent deposited the balance consideration before the trial court
which was withdrawn in 2001 pursuant to order of the High Court dated 24
July 2001; and
(v) The respondent had sufficient means to purchase the suit property and
was ready and willing to perform his part of the contract.
12 We shall now consider the rival submissions.
C Analysis
13 The present appeal involves a suit for specific performance of an
agreement to sell the suit property between the appellants and respondent. The
core of the dispute arising from the suit seeking the relief of specific performance
under the Specific Relief Act is whether the respondent-plaintiff has performed or
has always been „ready and willing‟ to perform his obligations under the contract.
14 Section 168
of the Specific Relief Act provides certain bars to the relief of
specific performance. These include, inter alia, a person who fails to aver and

8
“16. Personal bars to relief.- Specific performance of a contract cannot be enforced in favour of a person—
[(a) who has obtained substituted performance of contract under section 20; or] 
PART C
10
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 and waived by the
defendant. In JP Builders v. A Ramadas Rao9
, a two-judge Bench of this Court
observed that Section 16(c) mandates „readiness and willingness‟ of the plaintiff
and is a condition precedent to obtain the relief of specific performance. The
Court held:
“25. Section 16(c) of the Specific Relief Act, 1963 mandates
“readiness and willingness” on the part of the plaintiff and it is
a condition precedent for obtaining relief of grant of specific
performance. It is also clear that in a suit for specific
performance, the plaintiff must allege and prove a
continuous “readiness and willingness” to perform the
contract on his part from the date of the contract. The
onus is on the plaintiff.
[…]
27. It is settled law that even in the absence of specific plea
by the opposite party, it is the mandate of the statute that
the plaintiff has to comply with Section 16(c) of the
Specific Relief Act and when there is non-compliance
with this statutory mandate, the court is not bound to
grant specific performance and is left with no other
alternative but to dismiss the suit. It is also clear that
readiness to perform must be established throughout the
relevant points of time. “Readiness and willingness” to
perform the part of the contract has to be
determined/ascertained from the conduct of the parties.”
(emphasis supplied)

(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 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 purposes 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 prove] performance of, or readiness and willingness to perform, the contract according to its
true construction.”
9
(2011) 1 SCC 429
PART C
11
The Court further observed that „readiness‟ refers to the financial capacity and
„willingness‟ refers to the conduct of the plaintiff wanting the performance.
15 Similarly, in His Holiness Acharya Swami Ganesh Dassji v. Sita Ram
Thapar10, a two-judge Bench of this Court observed that „readiness‟ means the
capacity of the plaintiff to perform the contract which would include the financial
position to pay the purchase price. To ascertain „willingness‟, the conduct of the
plaintiff has to be properly scrutinised. The Court noted:
“2. There is a distinction between readiness to perform the
contract and willingness to perform the contract. By readiness
may be meant the capacity of the plaintiff to perform the
contract which includes his financial position to pay the
purchase price. For determining his willingness to perform his
part of the contract, the conduct has to be properly
scrutinised. […] The factum of readiness and willingness
to perform the plaintiff's part of the contract is to be
adjudged with reference to the conduct of the party and
the attending circumstances. The court may infer from
the facts and circumstances whether the plaintiff was
ready and was always ready and willing to perform his
part of the contract. The facts of this case would amply
demonstrate that the petitioner/plaintiff was not ready nor had
the capacity to perform his part of the contract as he had no
financial capacity to pay the consideration in cash as
contracted and intended to bide for the time which disentitles
him as time is of the essence of the contract.”
(emphasis supplied)
16 The precedents of this Court indicate that the plaintiff must establish that
he was „ready and willing‟ to perform the contract. In this regard, the conduct of
the plaintiff must be consistent.
17 In another decision in Atma Ram v. Charanjit Singh11, a two-judge Bench
of this Court dealt with a case where an agreement for sale of immovable
property was entered into between the petitioner and respondent. The date for

10 (1996) 4 SCC 526
11 (2020) 3 SCC 311
PART C
12
performance of the contract was fixed as 7 October 1996. A legal notice was
issued by the petitioner on 12 November 1996 seeking performance of the
contract by the respondent, and thereafter a suit was filed. The plaintiff sought a
mandatory injunction to direct the respondent to execute documents for transfer
of the property. However, the trial court chose to treat it as a suit for specific
performance of the contract. In declining the relief of specific performance, the
Court observed:
“9. Coming to the second aspect revolving around Section
16(c), a look at the judgment of the trial court would show
that no issue was framed on the question of readiness
and willingness on the part of the petitioner-plaintiff in
terms of Section 16(c) of the Specific Relief Act, 1963.
The fact that the petitioner chose to issue a legal notice dated
12-11-1996 and the fact that the petitioner created an alibi in
the form of an affidavit executed before the Sub-Registrar on
7-10-1996 (marked as Ext. P-2) to show that he was present
before the Sub-Registrar for the purpose of completion of the
transaction, within the time stipulated for its performance, was
not sufficient to conclude that the petitioner continued to be
ready and willing even after three years, on 13-10-1999 when
the plaint was presented. No explanation was forthcoming
from the petitioner for the long delay of three years, in
filing the suit (on 13-10-1999) after issuing a legal notice
on 12-11-1996. The conduct of a plaintiff is very crucial in
a suit for specific performance. A person who issues a
legal notice on 12-11-1996 claiming readiness and
willingness, but who institutes a suit only on 13-10-1999
and that too only with a prayer for a mandatory injunction
carrying a fixed court fee relatable only to the said relief,
will not be entitled to the discretionary relief of specific
performance.”
(emphasis supplied)
In assessing the conduct of the plaintiff, the Court in Atma Ram (supra) observed
that the delay in filing a suit, specifically one for mandatory injunction, indicates
the inconsistent behaviour of the plaintiff. The failure of the trial court to frame an
issue relating to the readiness and willingness of the plaintiff to perform the
contract is also critical in declining the remedy of specific performance.
PART C
13
18 This Court in P Meenakshisundaram v. P Vijayakumar12, dealt with a suit
for specific performance of a contract for sale of an immovable property, which
had a mortgage over it. In evaluating whether the respondent-plaintiff had
established that he was „ready and willing‟ to perform the contract, the two-judge
Bench, held:
“8. As regards suit for specific performance, the law is
very clear that the plaintiff must plead and prove his
readiness and willingness to perform his part of the
contract all through i.e. right from the date of the contract
till the date of hearing of the suit. If Respondent 1 was
well aware about the encumbrance and the parties had
chosen that the balance consideration be paid to the
appellant before 20-3-2001 so that the sale deed could be
registered without any encumbrance, it was for
Respondent 1 to have taken appropriate steps in that
behalf for completion of transaction. The facts on record
disclose that the first step taken by Respondent 1 after the
suit agreement was well after four months, when further
amount of Rs 2 lakhs was paid on 21-1-2001. Thereafter
nothing was done till 20-3-2001 by which the transaction had
to be completed. The record is completely silent about any
communication sent around 20-3-2001 towards
completion of transaction. As a matter of fact the first step
thereafter was six months after the deadline, namely, on 22-
9-2001 when the communication (Ext. A-6) was sent along
with amount of Rs 10 lakhs. The written submissions filed on
behalf of Respondent 1 also do not indicate any steps till this
time so as to say that he was all the while ready and willing to
complete the transaction.
9. The assertion made by Respondent 1 in Para 7 of the
plaint is a mere assertion without any relevant details as to
what exactly he had done towards fulfilment of his obligations
and completion of the transaction.”
(emphasis supplied)
In P. Meenakshisundaram (supra), the Court dealt with a similar case in which
the suit property was encumbered and the sale deed, free from encumbrances,
had to be executed after payment of the consideration. The Court noted that

12 (2018) 15 SCC 80
PART C
14
there was no communication of the plaintiff with the defendant till the date on
which the transaction was to be completed, showing his lack of willingness to
perform the contract.
19 In the present case, the respondent and the appellants entered into an
agreement to sell the suit property on 7 February 1990. The relevant terms of the
agreement are reproduced below:
“Whereas the SELLERS agreed to sell the property to the
PURCHASER for a sale consideration of Rs. 1,25,000/-
(Rupees One lakh and twenty five thousand only) and the
PURCHASER also agreed to purchase the same.
Now this agreement witnesseth as follows:
The PURCHASER has paid a sum of Rs. 25,000/- as
advance, the receipt of which sum the SELLERS
acknowledge
The PURCHASER agreed to pay the remaining sale
consideration within a period of six months from this day of
agreement to the SELLERS and to bear the cost of stamp
duty. On receipt of the balance sale consideration, the
SELLERS agreed to execute sale deed pertaining to the
property free from all encumbrances to the PURCHASER or
to his nominee.
If the SELLERS fail to complete the Sale, the advance
amount shall be forfeited.
If the PURCHASER is ready and willing to complete the Sale
and the SELLERS refuse or delay to execute Sale, the
PURCHASER is at liberty to proceed before the Court of law
and to get the sale completed and to get possession of the
property through Court under the Specific Relief Act., holding
the SELLERS liable for the loss.”
Further, on 8 March 1990, the appellants issued a receipt for an additional sum of
Rs. 10,000 as advance from the respondent:
“On this day of 8th March 1990 we received a sum of Rs.
10,000/- (Rupees Ten thousand only) from you in the 
PART C
15
presence of the witnesses for our urgent family expenses in
addition to the advance amount received under the sale
agreement dated 07.02.1990.”
20 The terms of the agreement indicate that the suit property was to be sold
for a total consideration of Rs. 1,25,000, out of which the appellants had received
Rs. 25,000 as advance. On 8 March 1990, a further sum of Rs. 10,000 was given
as advance to the appellants “for [their] urgent family expenses”. The agreement
stipulated that the respondent shall pay the balance consideration within a period
of six months, that is, by 7 August 1990 and shall bear the cost of stamp duty. On
receipt of the balance sale consideration, the appellants were required to execute
the sale deed free from all encumbrances.
21 By 19 December 1990, the respondent did not pay the balance
consideration to the appellant and thus, the appellant rescinded the contract and
forfeited the advance money. The respondent sent a reply dated 26 December
1990 demanding that the appellants execute the sale deed free from
encumbrances. The appellants alleged that there was a mortgage of Rs. 6,000
on the suit property that the respondent agreed to discharge from the sale
consideration. However, the respondent did not show any interest in getting the
sale deed executed. In 1991, the respondent filed a suit for mandatory injunction.
On 17 June 1992, the appellant discharged the mortgage debt, and a year after
that the respondent instituted a suit for specific performance.
22 In the plaint, the respondent claimed that it was agreed between the
parties that the appellants should clear the title to the suit property and execute
the sale deed. The respondent further alleged that for this reason he had paid an 
PART C
16
additional amount of Rs. 10,000 on 8 March 1990. In order to demonstrate his
readiness and willingness to perform the contract, the respondent alleged that:
(i) He was waiting with the balance consideration and believed that the
appellants would clear the encumbrance and produce all necessary
documents;
(ii) He replied to their legal notice demanding the discharge of the mortgage
over the suit property;
(iii) After filing a suit for mandatory injunction, the respondent approached the
appellants and requested them to perform their obligations under the
contract; and
(iv) He instituted a suit for specific performance when he became aware of the
discharge of mortgage by the appellants.
23 The trial court decreed the suit for specific performance in favour of the
respondent. The trial court only framed the following two issues:
“1. Whether the plaintiff [is entitled] for the relief of specific
performance?
2. To what other reliefs?”
24 No issue on readiness and willingness was framed by the trial court. The
trial court analysed the notice issued by the appellants and held that the
appellants made no demand from the respondent to discharge the mortgage
liability. Thus, the appellants‟ plea that the respondent-plaintiff had to pay the
loan and only thereafter, could the appellants execute the sale deed was
rejected. The court also accepted the respondent‟s argument that the advance 
PART C
17
amount of Rs. 10,000 was paid to discharge the mortgage. Further, the trial court
observed that the documents submitted by the respondent indicate that he had
sufficient means to purchase the suit property. The judgment of the trial court was
upheld by the first appellate court and, in a second appeal, by the High Court.
25 All the three courts, including the High Court, grossly erred in the manner
in which they have adjudicated upon this dispute in a suit for specific
performance. In the first instance, the trial court failed to frame an issue on
whether the respondent-plaintiff was ready and willing to perform his obligations
under the contract and instead assessed whether he is entitled to the relief of
specific performance. In doing so, the trial court viewed the legal issue from an
incorrect lens. The foundation of a suit for specific performance lies in
ascertaining whether the plaintiff has come to the court with clean hands and has,
through his conduct, demonstrated that he has always been willing to perform the
contract. There is a conspicuous absence in judgment of the trial court of any
reference to evidence led by the respondent to indicate his willingness to perform
the contract. The trial court merely adverted to “document produced on behalf of
the plaintiff” and concluded that he had sufficient means to purchase the suit
property. Apart from this observation, the judgment fails to analyse the terms of
the agreement, the obligations of the parties and the conduct of the respondent
or the appellant.
26 In evaluating whether the respondent was ready and willing to perform his
obligations under the contract, it is not only necessary to view whether he had the
financial capacity to pay the balance consideration, but also assess his conduct
throughout the transaction. 
PART C
18
27 The respondent has alleged that he did not pay the balance consideration
as the appellants failed to remove the encumbrance on the suit property. First of
all, we note that the agreement to sell the suit property did not specifically record
the mortgage over the suit property. However, neither has the appellant denied
the existence of the mortgage nor has the respondent claimed that he was
unaware of the encumbrance over the suit property at the time of entering into
the agreement. The agreement did not expressly detail whose liability it is to
discharge the mortgage.
28 Having said that, the terms of the agreement stipulated that the respondent
was to pay the balance consideration within a period of six months and “on
receipt of the balance consideration”, the appellants were to execute the sale
deed “pertaining to the property free from all encumbrances”. It is evident from
the agreement that the liability to deliver the property free from any encumbrance
was on the appellants. However, this obligation is prefaced by the condition that
the appellants would be required to execute the sale deed free from
encumbrance on the receipt of the balance consideration. Thus, the agreement
did not specify when the appellants should discharge their mortgage- before the
expiry of six months, after receipt of the advance amount, or after receipt of the
balance consideration. It only obligated them to ensure that after the balance
consideration is received, the sale deed executed should be free from
encumbrances. Based on a plain reading of the agreement, we are unable to
accept the respondent‟s plea that he was willing to perform his obligations under
the contract. It is evident that he was required to pay the remaining consideration
(or indicate his willingness to pay) and only then could have sought specific 
PART C
19
performance of the contract. The respondent has also urged that the additional
amount of Rs. 10,000 was paid to the appellants to discharge the mortgage. The
acknowledgment signed by the appellants indicates that the money was to meet
urgent family expenses. Since no further details have been provided and no
evidence has been adduced by the respondent-plaintiff, we cannot conclude that
the money was for discharge of the mortgage. Even assuming that the
respondent is correct, the agreement still required the respondent to pay the
balance consideration. In this regard, the High Court, while holding in favour of
the respondent, has noted that the appellants were free to demand a further
amount for discharging the mortgage. This finding ignores the plain terms of the
contract. The agreement clearly provided that the balance consideration would be
paid and then the sale deed would be executed. How the appellants chose to
discharge the mortgage was for them to decide. The respondent had to prove his
readiness and willingness to perform the contract.
29 We shall now advert to the respondent‟s conduct throughout the sale
transaction. The respondent has failed to provide any documents or
communication which would indicate that he called upon the appellants to
perform their obligations or discharge the mortgage within the time period
stipulated in the contract. Even after the expiry of the six months, the respondent
did not reach out to the appellants. It is only in response to the appellants‟ legal
notice that the respondent demanded performance of their obligations. Merely
averring that he was waiting with the balance consideration and believed that the
appellants would clear the encumbrance is insufficient to prove that the
respondent-plaintiff was willing to perform his obligations under the contract. 
PART C
20
30 Further, in 1991 the respondent instituted a suit for mandatory injunction
for restraining the appellants from alienating the suit property. He did not
however, institute a suit for specific performance of the contract until 17 June
1993. The respondent has taken the plea that he was waiting for the appellants to
discharge the mortgage to file a suit for specific performance. We are unable to
accept this submission. By extending the respondent‟s argument, if the
appellants had failed to discharge the mortgage, the respondent would not have
filed a suit for specific performance of the contract at all. We also note that the
respondent has withdrawn the balance consideration deposited by him before the
trial court in 2001. The inconsistency in the respondent‟s conduct, the lack of
communication with the appellants urging them to discharge the mortgage and
showing his willingness to pay the balance consideration, and the delay of about
three years from the date fixed for performance of the contract in filing a suit, are
all indicative of the respondent‟s lack of will to perform the contract.
31 The „readiness‟ of the respondent to perform his obligations refers to
whether he was financially capable of paying the balance consideration. Both the
trial court and the first appellate court have observed that the respondent was
ready to pay the balance consideration as (i) he was paying income tax since
1988 and (ii) his bank passbooks indicate that he had sufficient funds. The
payment of income tax by itself does not show that the respondent had sufficient
resources to pay for the suit property. Moreover, the bank passbooks submitted
in evidence by the respondent were for accounts opened on 11 March 1992 and
22 July 1994, that is, after the expiry of the period written in the contract. The first
appellate court despite noting this, has chosen to hold that the respondent was 
PART C
21
ready and willing to perform the agreement. The respondent however did not lead
any evidence to indicate that in the year 1990 he had the money to pay the
balance consideration. The first appellate court shifted the burden on the
appellants to prove that the respondent-plaintiff was incapable of paying the
balance consideration. It is an established principle of law that the plaintiff must
prove that he is ready and willing to perform the contract. The burden lies on the
plaintiff. The respondent has not led any evidence that he was ready or willing to
perform his obligations under the agreement.
32 Even assuming that the respondent was willing to perform his obligations
under the contract, we must decide whether it would be appropriate to direct the
specific performance of the contract in this case. In Zarina Siddiqui v. A.
Ramalingam13, a two-judge Bench of this Court while dealing with a suit for
specific performance of a contract regarding the sale of immovable property
observed that the remedy for specific performance is an equitable remedy and
Section 20 of the Specific Relief Act confers a discretion on the Court. The Court
held:
“24. It is well settled that remedy for specific performance is
an equitable remedy. The court while granting decree of
specific performance exercises its discretionary jurisdiction.
Section 20 of the Specific Relief Act specifically provides that
the Court's discretion to grant decree of specific performance
is discretionary but not arbitrary. Discretion must be exercised
in accordance with sound and reasonable judicial principles.”
33 In the context of the discretion under Section 20 of the Specific Relief Act,
several decisions of this Court have considered whether it is appropriate to direct
specific performance of a contract relating to the transfer of immovable property,

13 (2015) 1 SCC 705
PART C
22
especially given the efflux of time and the escalation of prices of property. In
Satya Jain v. Anis Ahmed Rushdie14, this Court held:
“39. The long efflux of time (over 40 years) that has
occurred and the galloping value of real estate in the
meantime are the twin inhibiting factors in this regard. The
same, however, have to be balanced with the fact that the
plaintiffs are in no way responsible for the delay that has
occurred and their keen participation in the proceedings till
date show the live interest on the part of the plaintiffs to have
the agreement enforced in law.
40. The discretion to direct specific performance of an
agreement and that too after elapse of a long period of
time, undoubtedly, has to be exercised on sound,
reasonable, rational and acceptable principles. The
parameters for the exercise of discretion vested by
Section 20 of the Specific Relief Act, 1963 cannot be
entrapped within any precise expression of language and
the contours thereof will always depend on the facts and
circumstances of each case. The ultimate guiding test would
be the principles of fairness and reasonableness as may be
dictated by the peculiar facts of any given case, which features
the experienced judicial mind can perceive without any real
difficulty. It must however be emphasised that efflux of time
and escalation of price of property, by itself, cannot be a valid
ground to deny the relief of specific performance. […]
41. The twin inhibiting factors identified above if are to be read
as a bar to the grant of a decree of specific performance would
amount to penalising the plaintiffs for no fault on their part; to
deny them the real fruits of a protracted litigation wherein the
issues arising are being answered in their favour.”
(emphasis supplied)
In directing specific performance of the agreement, this Court in Satya Jain
(supra) held that sale deed must be executed for the current market price of the
suit property.
34 In Nirmala Anand v. Advent Corporation (P.) Ltd. and Others15, a threejudge Bench of this Court observed that in case of a phenomenal increase in the

14 (2013) 8 SCC 131 
PART C
23
price of the land, the Court may impose a reasonable condition in the decree
such as payment of an additional amount by the purchaser. In decreeing the suit
for specific performance, the Court observed:
“6. It is true that grant of decree of specific performance lies in
the discretion of the court and it is also well settled that it is
not always necessary to grant specific performance simply for
the reason that it is legal to do so. It is further well settled that
the court in its discretion can impose any reasonable
condition including payment of an additional amount by one
party to the other while granting or refusing decree of specific
performance. Whether the purchaser shall be directed to pay
an additional amount to the seller or converse would depend
upon the facts and circumstances of a case. Ordinarily, the
plaintiff is not to be denied the relief of specific performance
only on account of the phenomenal increase of price during
the pendency of litigation. That may be, in a given case, one
of the considerations besides many others to be taken into
consideration for refusing the decree of specific performance.
As a general rule, it cannot be held that ordinarily the plaintiff
cannot be allowed to have, for her alone, the entire benefit of
phenomenal increase of the value of the property during the
pendency of the litigation. While balancing the equities, one
of the considerations to be kept in view is as to who is
the defaulting party. It is also to be borne in mind
whether a party is trying to take undue advantage over
the other as also the hardship that may be caused to the
defendant by directing specific performance. There may
be other circumstances on which parties may not have
any control. The totality of the circumstances is required
to be seen.”
(emphasis supplied)
35 In KS Vidyanadam and others v. Vairavan16
, an agreement to sell
immovable property was entered into between the plaintiff-buyer and the
defendant-seller for a consideration of Rs. 60,000, where earnest money of Rs.
5,000 had been paid in advance. The agreement stipulated that the plaintiff had
to purchase stamp papers and pay the balance amount within six months and call

15 (2002) 8 SCC 146
16 (1997) 3 SCC 1
PART C
24
upon the defendants to execute the sale deed. The plaintiff filed a suit for specific
performance after a lapse of two and a half years seeking performance of the
contract. The Court held:
“10. It has been consistently held by the courts in India,
following certain early English decisions, that in the case of
agreement of sale relating to immovable property, time is not
of the essence of the contract unless specifically provided to
that effect. The period of limitation prescribed by the
Limitation Act for filing a suit is three years. From these two
circumstances, it does not follow that any and every suit
for specific performance of the agreement (which does
not provide specifically that time is of the essence of the
contract) should be decreed provided it is filed within the
period of limitation notwithstanding the time-limits
stipulated in the agreement for doing one or the other
thing by one or the other party. That would amount to
saying that the time-limits prescribed by the parties in the
agreement have no significance or value and that they mean
nothing.
[…]
In this case, the suit property is the house property situated in
Madurai, which is one of the major cities of Tamil Nadu. The
suit agreement was in December 1978 and the six months'
period specified therein for completing the sale expired with
15-6-1979. The suit notice was issued by the plaintiff only on
11-7-1981, i.e., more than two years after the expiry of six
months' period. The question is what was the plaintiff doing in
this interval of more than two years? […] There is not a
single letter or notice from the plaintiff to the defendants
calling upon them to get the tenant vacated and get the
sale deed executed until he issued the suit notice on 11-
7-1981. It is not the plaintiff's case that within six months', he
purchased the stamp papers and offered to pay the balance
consideration.
[…]
PART C
25
13. In the case before us, it is not mere delay. It is a case
of total inaction on the part of the plaintiff for 2 1/2 years
in clear violation of the terms of agreement which
required him to pay the balance, purchase the stamp
papers and then ask for execution of sale deed within six
months. Further, the delay is coupled with substantial
rise in prices — according to the defendants, three times
— between the date of agreement and the date of suit
notice. The delay has brought about a situation where it
would be inequitable to give the relief of specific
performance to the plaintiff.”
(emphasis supplied)
36 True enough, generally speaking, time is not of the essence in an
agreement for the sale of immoveable property. In deciding whether to grant the
remedy of specific performance, specifically in suits relating to sale of immovable
property, the courts must be cognizant of the conduct of the parties, the
escalation of the price of the suit property, and whether one party will unfairly
benefit from the decree. The remedy provided must not cause injustice to a party,
specifically when they are not at fault. In the present case, three decades have
passed since the agreement to sell was entered into between the parties. The
price of the suit property would undoubtedly have escalated. Given the blemished
conduct of the respondent-plaintiff in indicating his willingness to perform the
contract, we decline in any event to grant the remedy of specific performance of
the contract. However, we order a refund of the consideration together with
interest at 6% per annum. 
PART D
26
D Conclusion
37 For the above reasons, we allow the appeal and set aside the judgment
dated 7 January 2019 of the High Court of Judicature at Madras. The appellants
are directed to refund the advance amount of Rs. 35,000/- received from the
respondent with interest at the rate of 6% per annum from the date of the filing of
the suit for specific performance by the respondent, till the payment of the refund.
38 Pending applications, if any, shall stand disposed of.
……….….....................................................J.
 [Dr Dhananjaya Y Chandrachud]
…..….….....................................................J.
 [AS Bopanna]
New Delhi;
January 20, 2022

Landmark Cases of India / सुप्रीम कोर्ट के ऐतिहासिक फैसले

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