Relief Of Specific Performance Can Be Denied If Suit Was Not Immediately Filed After Breach; Rise In Real Estate Prices Also A Relevant Factor : Supreme Court

The Supreme Court observed that continuous readiness and willingness on the part of the Plaintiff is a condition precedent for grant of the relief of Specific Performance.

The court added that there is a distinction between readiness and willingness to perform the contract and both ingredients are necessary for the relief of Specific Performance.

While readiness means the capacity of the Plaintiff to perform the contract which would include his financial position, willingness relates to the conduct of the Plaintif, the bench comprising Justices Indira Banerjee and Hrishikesh Roy observed.

In this case, the Trial Court allowed a suit filed by the Plaintiff, for specific performance of an agreement for sale of the suit property. The Madras High Court dismissed the appeal filed by the defendant.

In appeal before the Apex Court, the appellant - defendant contended that the Plaintiff had not adduced any evidence to demonstrate continuous "readiness and willingness" which the Respondent Plaintiff was required to prove, regardless of any default by the original Defendant. It was also submitted that the Court should also take judicial notice of the steep rise in the price of real estate, before granting the discretionary relief of specific performance. On the other hand, the Plaintiff contended that he was ever ready and willing to perform his part of the contract and that the original Defendant had been delaying the execution of the sale deed. 

Thus the issue considered was whether the Plaintiff has proved his readiness and willingness to perform his part of the contract or not?

Bounden duty of the Plaintiff to prove his readiness and willingness by adducing evidence

Referring to Section 16 of the Specific Relief Act, 1963, as it stood at the material time (prior to amendment with effect from 1.10.2018), the bench observed to aver and prove readiness and willingness to perform an obligation to pay money, in terms of a contract, the plaintiff would have to make specific statements in the plaint and adduce evidence to show availability of funds to make payment in terms of the contract in time. 

"In a suit for Specific Performance of a contract, the Court is required to pose unto itself the following questions, namely:- (i) Whether there is a valid agreement of sale binding on both the vendor and the vendee and (ii) Whether the Plaintiff has all along been and still is ready and willing to perform his part of the contract as envisaged under Section 16(c) of the Specific Relief Act, 1963."

..It is settled law that for relief of specific performance, the Plaintiff has to prove that all along and till the final decision of the suit, he was ready and willing to perform his part of the contract. It is the bounden duty of the Plaintiff to prove his readiness and willingness by adducing evidence. This crucial facet has to be determined by considering all circumstances including availability of funds and mere statement or averment in plaint of readiness and willingness, would not suffice"

The court noted that the Plaintiff failed to discharge his duty to prove his readiness as well as willingness to perform his part of the contract, by adducing cogent evidence.

"Plaintiff's balance sheet that he did not have sufficient funds to discharge his part of contract in March 2003. Making subsequent deposit of balance consideration after lapse of seven years would not establish the Respondent Plaintiff's readiness to discharge his part of contract. Reliance may be placed on Umabai v. Nilkanth Dhondiba Chavan (supra) where this Court speaking through Justice SB Sinha held that deposit of amount in court is not enough to arrive at conclusion that Plaintiff was ready and willing to perform his part of contract. Deposit in court would not establish Plaintiff's readiness and willingness within meaning of section 16(c) of Specific Relief Act. "

Suit Filed Just Before Expiry Of Limitation Period

The court noted that the instant suit had been filed after three years, just before expiry of the period of limitation, and the same is also a ground to decline the Plaintiff the equitable relief of Specific Performance for purchase of immovable property. Referring to Saradamani Kandappan v. S. Rajalakshmi (2011) 12 SCC 18, the bench noted:

"(i) while exercising discretion in suits for Specific Performance, the Courts should bear in mind that when the parties prescribed a time for taking certain steps or for completion of the transaction, that must have some significance and therefore time/period prescribed cannot be ignored; (ii) the Courts will apply greater scrutiny and strictness when considering whether purchaser was ready and willing to perform his part of the contract and (iii) every suit for Specific Performance need not be decreed merely because it is filed within the period of limitation, by ignoring time limits stipulated in the agreement. The courts will also frown upon suits which are not filed immediately after the breach/refusal. The fact that limitation is three years does not mean that a purchaser can wait for one or two years to file a suit and obtain Specific Performance. The three year period is intended to assist the purchaser in special cases, as for example where the major part of the consideration has been paid to the vendor and possession has been delivered in part performance, where equity shifts in favour of the purchaser"

The Court als said that in some cases, it will have to take into account the "phenomenal rise in the price of real estate".

Case details

U N Krishnamurthy vs A M Krishnamurthy | 2022 LiveLaw (SC) 588 | CA 4703 OF 2022 | 12 July 2022

Coram: Justices Indira Banerjee and Hrishikesh Roy

Counsel: Sr. Adv Krishnan Venugopal and AOR Mahesh Thakur for appellant, Adv N.D.B Raju and AOR  M.A. Chinnasamy for respondent

Headnotes

Specific Relief Act, 1963 ; Section 16(c) - The continuous readiness and willingness on the part of the Plaintiff a condition precedent for grant of the relief of Specific Performance-It is the bounden duty of the Plaintiff to prove his readiness and willingness by adducing evidence. This crucial facet has to be determined by considering all circumstances including availability of funds and mere statement or averment in plaint of readiness and willingness, would not suffice -Deposit of amount in court is not enough to arrive at conclusion that Plaintiff was ready and willing to perform his part of contract (Para 24 - 46)

Specific Relief Act, 1963 ; Section 16(c) - Distinction between readiness and willingness to perform the contract - Both ingredients are necessary for the relief of Specific Performance - While readiness means the capacity of the Plaintiff to perform the contract which would include his financial position, willingness relates to the conduct of the Plaintiff. (Para 34)

Specific Relief Act, 1963 ; Section 16(c) - In a suit for Specific Performance of a contract, the Court is required to pose unto itself the following questions, namely:- (i) Whether there is a valid agreement of sale binding on both the vendor and the vendee and (ii) Whether the Plaintiff has all along been and still is ready and willing to perform his part of the contract as envisaged under Section 16(c) of the Specific Relief Act, 1963.Even in a first appeal, the first Appellate Court is duty bound to examine whether there was continuous readiness and willingness on the part of the Plaintiff to perform the contract. (Para 33-35)

Specific Relief Act, 1963 - The fact that the suit had been filed after three years, just before expiry of the period of limitation, is also a ground to decline the Plaintiff the equitable relief of Specific Performance for purchase of immovable property - The courts will also frown upon suits which are not filed immediately after the breach/refusal. The fact that limitation is three years does not mean that a purchaser can wait for one or two years to file a suit and obtain Specific Performance. The three year period is intended to assist the purchaser in special cases, as for example where the major part of the consideration has been paid to the vendor and possession has been delivered in part performance, where equity shifts in favour of the purchaser - Referred to Saradamani Kandappan v. S. Rajalakshmi (2011) 12 SCC 18.  (Para 43)

Specific Relief Act, 1963 - The Court is obliged to take judicial notice of the phenomenal rise in the price of real estate - Having paid an insignificant amount the Plaintiff was not entitled to discretionary equitable relief of Specific Performance. (Para 38-39)

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