The Supreme Court of India, comprising a Division Bench of Justice Prashant Kumar Mishra and Justice N.V. Anjaria, has ruled that continuous readiness and willingness to perform contractual obligations from the date of agreement till execution of decree is a condition precedent for granting the discretionary relief of specific performance under Section 16(c) of the Specific Relief Act, 1963. Setting aside a Division Bench judgment of the Madras High Court, the apex court restored the decree of the Trial Court which refused specific performance of an agreement to sell property in Udhagamandalam and directed only the refund of the advance amount paid along with interest.
Background of the Case
The suit property comprises land and building measuring 1 acre and 33 cents situated at Door No. 6, Church Hill Road, Udhagamandalam, Nilgiris District, owned by Shri V.N.A.S. Chandran (Appellant/Defendant No. 1). On April 1, 2004, Defendant No. 1 entered into an Agreement to Sell the property to Mrs. S. Venila (Plaintiff No. 1/Respondent No. 1) for a total consideration recorded as Rs. 2,25,00,000.
On the same date, Defendant No. 1 executed a General Power of Attorney in favour of Plaintiff No. 1’s husband, Shri V. Sowrirajan (Plaintiff No. 2), authorising him to sell the property, execute agreements, deliver physical possession, and clear occupants or tenants. Concurrently, Plaintiff No. 2 issued an irrevocable undertaking letter agreeing to pay all sale proceeds received to Defendant No. 1 until the balance consideration was discharged.
Prior to the agreement, Defendant No. 1’s daughter, C. Subashini (Defendant No. 2), had filed a partition suit (OS No. 403 of 2003) involving the property, wherein an ex-parte preliminary decree was passed on June 26, 2003. Defendant No. 1 filed an application (IA No. 117 of 2005) under Order IX Rule 13 of the Code of Civil Procedure, 1908 (CPC) to set aside the ex-parte decree, which was allowed on April 6, 2005. Clause 7 of the Agreement to Sell stipulated that the sale would be completed within 60 days from the date of passing orders setting aside the ex-parte preliminary decree, while Clause 13 expressly made time the essence of the contract.
During the transaction, initial cheques issued towards part-payment of the sale consideration were dishonoured due to insufficient funds, though subsequent cash payments and cheque clearances were made. The plaintiffs asserted a total advance payment of Rs. 85,00,000, while Defendant No. 1 claimed receiving only Rs. 60,00,000.
On April 16, 2004, Plaintiff No. 2, acting under the Power of Attorney, entered into a sub-agreement to sell the property to Shri R.P. Rajan (Defendant No. 5) for Rs. 1,50,00,000 and received an advance of Rs. 10,00,000. On May 4, 2005, Defendant No. 1 revoked the Power of Attorney on the ground of misuse and issued notice calling upon Plaintiff No. 1 to pay the balance consideration within 60 days. Subsequently, on June 24, 2005, Defendant No. 1 issued legal notices terminating the Agreement to Sell with effect from June 6, 2005.
Criminal proceedings followed between the parties. Defendant No. 1 filed a complaint against Plaintiff No. 2 before the Judicial Magistrate No. 2, Madurai on September 5, 2005. Thereafter, on December 27, 2005, Plaintiff No. 2 filed a criminal complaint before the Chief Metropolitan Magistrate, Egmore, Chennai, alleging cheating and criminal breach of trust against Defendant No. 1 and explicitly requesting the police to trace Defendant No. 1 and recover the Rs. 85,00,000 paid. FIR No. 11/2006 was registered under Sections 420, 406, and 506 of the Indian Penal Code, 1860. Both criminal complaints were eventually closed.
The Plaintiffs instituted OS No. 11 of 2006 before the District Judge, Nilgiris at Udhagamandalam seeking specific performance of the Agreement to Sell or, alternatively, refund of Rs. 2,00,00,000 with 24% interest per annum and a charge on the suit property.
Rulings of Trial Court and High Court
The Trial Court, by judgment dated November 22, 2007, refused specific performance and decreed the suit only to the extent of directing refund of Rs. 85,00,000 with interest at 15% per annum from the date of suit till realization, creating a charge on the suit property under Section 55(6)(b) of the Transfer of Property Act, 1882. The Trial Court held that while time was not strictly of the essence and no valid assignment of rights to Defendant No. 5 had occurred, the Plaintiffs were disentitled from seeking the discretionary relief of specific performance under Section 20 of the Specific Relief Act, 1963. The Trial Court reasoned that Plaintiff No. 2 had sought monetary recovery in his criminal complaint, Plaintiff No. 1 had not disowned her husband’s averments or entered the witness box, and the Plaintiffs could not blow hot and cold.
Aggrieved by the refusal of specific performance, the Plaintiffs appealed to the High Court of Judicature at Madras (AS No. 443 of 2008). The Division Bench of the High Court, vide judgment dated October 11, 2011, set aside the Trial Court’s refusal and decreed specific performance. The High Court admitted additional evidence under Order XLI Rule 27 CPC (a copy of Defendant No. 1’s criminal complaint marked as Ex. A-48) and concluded that Plaintiff No. 2’s criminal complaint was merely a counterblast. The High Court further held that Defendant No. 1 had not specifically pleaded lack of funds in his written statement and that the Plaintiffs demonstrated readiness by producing a demand draft for Rs. 1,40,00,000 during the appellate hearing. Defendant No. 1 challenged this decision before the Supreme Court.
Arguments of the Parties
Appellant (Defendant No. 1):
- The Plaintiffs failed to establish continuous readiness and willingness to perform their part of the contract as mandatory under Section 16(c) of the Specific Relief Act, 1963.
- Dishonour of cheques for insufficient funds demonstrated lack of financial capacity at material times.
- Plaintiff No. 2’s criminal complaint seeking recovery of money constituted repudiation/abandonment of the claim for specific performance.
- The Plaintiffs adopted contradictory positions regarding the assignment of rights to Defendant No. 5 across different judicial proceedings.
- Plaintiff No. 1 failed to step into the witness box to establish her readiness and willingness.
Respondents (Plaintiffs):
- The Agreement to Sell remained valid and binding, and the balance consideration had been arranged through property sales in Chennai as evidenced by a Memorandum of Understanding dated April 28, 2005.
- The criminal complaint filed by Plaintiff No. 2 was a retaliatory counterblast to Defendant No. 1’s complaint and did not amount to waiver under Section 63 of the Indian Contract Act, 1872.
- The deposit of Rs. 1,40,00,000 via demand draft before the High Court demonstrated ongoing readiness and willingness.
Court’s Analysis and Legal Precedents
The Supreme Court examined several legal issues and cited explicitly discussed precedents:
1. Maintainability and Unilateral Termination
Addressing Defendant No. 1’s contention that the suit was unmaintainable without seeking a declaration that the termination of the agreement was invalid, the Court referred to Annamalai v. Vasanthi and Others, which reconciled I.S. Sikandar (D) By LRs. & Ors v. K. Subramani & Ors., R. Kandasamy (Since Dead) & Ors. v. T.R.K. Sarawathy & Anr., and Mrs. A. Kanthamani v. Mrs. Nasreen Ahmed. The Court held that where an agreement does not confer a contractual right of unilateral termination, such termination amounts to repudiation, permitting the aggrieved party to sue for specific performance without seeking a separate declaratory relief.
2. Challenge to Findings Without Cross-Objections
Relying on S. Nazeer Ahmed v. State Bank of Mysore and Ors., the Court affirmed that a respondent supporting a decree may challenge adverse findings of the trial court before the appellate court without filing cross-objections under Order XLI Rule 22 CPC, provided no additional relief beyond the decree is sought.
3. Continuous Readiness and Willingness
The Bench observed that the High Court erred in holding that Defendant No. 1 could not raise the issue of readiness and willingness. Citing N.P. Thirugnanam (Dead) by LRs. v. Dr. R. Jagan Mohan Rao and Others, the Supreme Court reiterated:
“The continuous readiness and willingness on the part of the plaintiff is a condition precedent to grant the relief of specific performance.”
The Court noted that readiness and willingness must be established continuously from the date of execution of the agreement till the decree. Initial cheque dishonours due to insufficient funds and lack of evidence showing availability of funds on the date of filing the suit established that continuous readiness was absent. Reference was also made to Janardan Das and Others v. Durga Prasad Agarwalla and Others.
4. Equitable Discretion and Conduct of Parties
Examining the discretionary nature of specific performance under Section 20 of the Specific Relief Act, 1963, the Court referenced Nanjappan v. Ramasamy & Anr., Sardar Singh v. Smt. Krishna Devi & Anr., and Kamal Kumar v. Premlata Joshi & Ors.
On the requirement of equitable conduct by the plaintiff, the Court cited Major Gen. Darshan Singh (D) By LRs & Anr. v. Brij Bhushan Chaudhary (D) By LRs:
“A person who seeks equity must do equity.”
Furthermore, the Court cited Muddam Raju Yadav v. B. Raja Shanker (D) Through LRs & Ors.:
“In a suit for specific performance, the conduct of the parties is significant as it assists the Court in evaluating the evidence to find out the bona fides of the parties at the time of execution of the agreement. Even a slight doubt in the mind of the Court that the plaintiff was not acting bonafidely and that the material facts, having bearing on the agreement, have been withheld in the agreement itself and from the Court also, the equitable and discretionary relief has to be denied.”
Applying these principles, the Supreme Court held that Plaintiff No. 2’s explicit demand in his criminal FIR to trace Defendant No. 1 and recover Rs. 85,00,000, combined with Plaintiff No. 1’s failure to depose as a witness (referencing Janki Vashdeo Bhojwani and Anr. v. IndusInd Bank Ltd. and Ors. and Rajesh Kumar v. Anand Kumar & Ors.), showed that the Plaintiffs were blowing hot and cold.
Finally, citing Mrs. Saradamani Kandappan v. Mrs. S. Rajalakshmi & Ors., the Court observed that a lapse of over two decades since the contract, combined with the advanced age of Defendant No. 1 and the death of Plaintiff No. 2, made compelling specific performance inequitable due to hardship.
Decision
The Supreme Court allowed the Civil Appeals, set aside the judgment and decree of the Madras High Court, and restored the judgment and decree of the Trial Court.
The decree directing refund of Rs. 85,00,000 with interest at 15% per annum from the date of the suit till realization, along with a charge on the suit property under Section 55(6)(b) of the Transfer of Property Act, 1882, stands restored. The Plaintiffs were permitted to withdraw the sum of Rs. 1,40,00,000 previously deposited in bank pursuant to court orders, along with accrued interest. No order as to costs was made.
Case Details
Case Title: V.N.A.S. Chandran v. S. Venila and Others
Case No.: Civil Appeal Nos. 7825-7828 of 2013
Bench: Justice Prashant Kumar Mishra, Justice N.V. Anjaria
Date: July 31, 2026
