The Supreme Court of India has ruled that a plaintiff seeking specific performance of a contract must prove their financial readiness during the relevant period of the transaction, and cannot rely on funds generated years later. A division bench comprising Justice Prashant Kumar Mishra and Justice N.V. Anjaria dismissed an appeal filed by the legal heirs of a purchaser, upholding the Karnataka High Court’s decision to deny the equitable relief of specific performance due to a lack of continuous readiness, willingness, and an unexplained delay in approaching the court.
Background of the Case
The dispute originated from an agreement to sell executed on December 20, 1990, between the original plaintiff, Mohammed Khaleel, and the defendant, Jayamma. The agreement involved a vacant site for a total consideration of Rs. 3,00,000. Khaleel paid Rs. 25,000 as earnest money, with the balance to be paid within four months at the time of registration. The defendant handed over the original title documents to the plaintiff upon signing.
Relations deteriorated when the plaintiff insisted on the formation of an approach road and proper demarcation, claiming the defendant’s siblings had agreed to it. The defendant denied this, asserting an approach road already existed and no extra land was available to carve one out. Following an exchange of legal notices in early 1991, the defendant rescinded the agreement and forfeited the earnest money, citing the plaintiff’s failure to obtain necessary permissions under the Urban Land (Ceiling and Regulation) Act, 1976 (ULCRA) and the expiration of the four-month time limit.
Two years and nine months later, on December 20, 1993, the plaintiff filed a suit for specific performance. While the Trial Court decreed the suit in favor of the plaintiff, the High Court reversed the decision, prompting the present appeal.
Arguments by the Parties
Before the Supreme Court, the appellants argued that they possessed financial capacity, pointing to four Fixed Deposit Receipts (FDRs) totaling Rs. 2,80,000. They contended that requesting property demarcation was a natural step to facilitate the transaction, not a sign of unwillingness. Furthermore, they argued that the primary obligation to secure ULCRA permission lay with the seller, and the lawsuit was filed well within the legal limitation period.
Conversely, the respondent countered that the FDRs produced were dated 1999 and 2001—nine years after the initial agreement—failing to prove financial readiness during the crucial 1990-1993 period. The respondent also highlighted the plaintiff’s failure to cooperate in obtaining ULCRA clearance and argued that the delayed initiation of the lawsuit disentitled the plaintiff to equitable relief.
The Court’s Analysis
The Supreme Court examined the statutory mandate of Section 16(c) of the Specific Relief Act, 1963, distinguishing between ‘readiness’ (financial capacity) and ‘willingness’ (conduct and intention). Reviewing the financial evidence, the Court agreed with the High Court that the FDRs created years after the institution of the suit did not establish financial readiness at the relevant time.
The Court observed: “In the present case, there is no material whatsoever to show that the appellant/plaintiff had the balance sale consideration available either at the time of execution of the agreement, within the stipulated period of four months for performance of the contract, or even at the time of filing of the suit in the year 1993.”
Addressing the ULCRA permission, the bench noted that both parties were required to act. The plaintiff’s failure to furnish the necessary affidavits and his passive stance further demonstrated a lack of continuous readiness and willingness.
The Court also scrutinized the delay in seeking relief. Citing precedents such as N.P. Thirugnanam v. Dr. R. Jagan Mohan Rao, the bench emphasized that for equitable relief, simply filing within the limitation period is insufficient; the plaintiff must approach the court promptly. The Court noted that the plaintiff waited two years and nine months after the defendant’s clear refusal before filing the suit.
Highlighting the impact of this delay, the Court stated: “This conduct of the appellant/plaintiff, in our view, reflects lack of continuous readiness and willingness to perform his part of the contract, which is a sine qua non for the grant of relief of specific performance.”
Decision
Concluding that the appellants failed to demonstrate their readiness and willingness and did not approach the court with promptitude, the Supreme Court held that the discretionary relief of specific performance could not be granted. The appeal was dismissed.
Case Title: Mohammed Khaleel (D) Through LRs & Ors. v. Jayamma
Case No.: Civil Appeal No. 2187 of 2011
Bench: Justice Prashant Kumar Mishra, Justice N.V. Anjaria
Date: June 23, 2026
