The Supreme Court of India ruled that plaintiffs seeking specific performance of a sale agreement must strictly prove financial readiness and willingness to perform the contract. The Court, in R. Shama Naik vs. G. Srinivasiah (SLP(C) No. 13933/2021), upheld the Karnataka High Court’s decision to deny specific performance, emphasizing the necessity of evidentiary compliance under Section 16(c) of the Specific Relief Act, 1963.
Background of the Case
The case revolved around an agreement of sale dated March 3, 2005, between petitioner R. Shama Naik and respondent G. Srinivasiah. The sale price for the property was fixed at ₹30,00,000, with ₹12,50,000 paid as earnest money by the petitioner. The petitioner alleged that the respondent failed to execute the sale deed despite the petitioner being ready and willing to fulfill his part of the agreement.
In 2008, Naik filed Original Suit No. 1101 of 2008, seeking specific performance of the agreement or, alternatively, a refund of the earnest money. While the trial court ruled in favor of the petitioner, the High Court reversed this decision on appeal, holding that Naik had failed to establish his financial readiness to fulfill the contract.
Legal Issues
The Supreme Court examined two critical legal issues in the case:
1. Readiness and Willingness: The Court reiterated that under Section 16(c) of the Specific Relief Act, plaintiffs must demonstrate both readiness (financial capacity) and willingness (intent and conduct) to perform the contractual obligations.
2. Burden of Proof: The petitioner must provide clear evidence, including oral testimony and documentary proof, to establish the availability of funds for paying the balance consideration.
Court’s Observations
The Supreme Court bench of Justice J.B. Pardiwala and Justice R. Mahadevan made the following key observations:
1. Dual Requirements of Readiness and Willingness: The Court distinguished between the two concepts:
– Readiness refers to the financial ability and logistical preparedness of the plaintiff to perform the contract.
– Willingness relates to the conduct and intent of the plaintiff to adhere to the terms of the agreement.
2. Statutory and Evidentiary Requirements:
“The law is well settled. A plaintiff must not only make specific averments in the plaint but also adduce oral and documentary evidence to show the availability of funds to fulfill the contractual terms.”
3. High Court’s Finding: The Court supported the Karnataka High Court’s conclusion that Naik failed to prove readiness and willingness, as he could not provide sufficient evidence to establish the availability of funds.
4. Scope of Review: The Court emphasized that findings of fact by the High Court cannot be interfered with unless they are perverse or erroneous.
“The High Court’s determination that the plaintiff failed to establish readiness and willingness is a finding of fact, which cannot be termed as perverse. There is no good reason for us to interfere.”
Decision
The Supreme Court upheld the Karnataka High Court’s decision and dismissed the petitioner’s appeal. The Court ruled that the plaintiff’s inability to substantiate readiness and willingness barred the relief of specific performance under Section 16(c) of the Specific Relief Act.
The bench stated that the trial court erred in granting specific performance without adequate proof of the petitioner’s financial capacity to pay the balance amount. Consequently, the High Court’s findings were affirmed, and the appeal was dismissed.
