Specific Relief Act | Supreme Court Reiterates Mandatory Requirement Of Direct And Specific Pleadings In Suit For Specific Performance

The Supreme Court recently reiterated that the plaintiff in a suit for specific performance of a contract must provide direct, specific, and accurate pleadings that he is willing and ready to perform his obligations in the contract and such pleadings must be proved with evidence.

“The pleadings in a suit for specific performance have to be very direct, specific and accurate. A suit for specific performance based on bald and vague pleadings must necessarily be rejected. Section 16(C) of the 1963 Act requires readiness and willingness to be pleaded and proved by the plaintiff in a suit for specific performance of contract. The said provision has been widely interpreted and held to be mandatory.”

A bench of Justice Vikram Nath and Justice Prashant Kumar Mishra highlighted that relief of specific performance is a discretionary relief and as such, courts need to be extra careful and cautious in dealing with the pleadings and the evidence led by the plaintiffs.

“The plaintiffs have to stand on their own legs to establish that they have made out case for grant of relief of specific performance of contract. The Act, 1963 provides certain checks and balances which must be fulfilled and established by the plaintiffs before they can become entitled for such a relief.”

The Court dismissed a suit under Specific Relief Act, 1963 for specific performance of an agreement for sale of property, which was decreed by the trial court and upheld by the High Court. The Apex Court observed that the plaintiffs did not provide sufficient pleadings and evidence to prove their case.

The Court observed that the plaintiffs' conduct suggested they lacked the funds and were more interested in profiting from the property as middlemen by blocking it rather than being genuine purchasers.

However, the Court decided to direct the defendants to compensate the plaintiffs in order to adjust equities. The Court noted that about 43 years have passed since the date of the agreement and as per the appellants, the value of the property is Rs. 4 Crores now. The Court directed the defendants to compensate the plaintiffs with Rs. 24 lakhs for the advance payment and Rs. 6 lakhs for litigation costs, totalling Rs. 30 lakhs to be paid within three months.

Plaintiffs Sasikala and K. Satyanarayana (original vendees) entered into an agreement to sell on May 24, 1981, with Defendants Muni Venkata Reddy and his four sons (original vendors) for the sale of a property in Kodihali Village, Bangalore measuring 5280 sq. feet.

The total sale consideration was Rs. 29,000, with an advance of Rs. 12,000 paid at the time of the agreement. The balance was to be paid at the time of registration of the sale deed. The sale was necessitated due to the vendors' need for funds. The agreement stipulated a three-month period for completion, but this was subject to government restrictions on the registration of similar revenue sites.

After the three-month period expired without the plaintiffs coming forward to execute the sale deed, the defendants on September 23, 1981, extended the period by another week and indicated that failure to respond would lead to the sale of the site to another party. Following another two months, a legal notice was sent on November 18, 1981, stating that the plaintiffs had failed to pay the balance amount of Rs. 17,000, resulting in the forfeiture of the earnest money and termination of the agreement.

In response, the plaintiffs claimed that they had paid an additional Rs. 2,000, making the total advance Rs. 14,000. They asserted that the agreement would remain valid until the government lifted the restrictions on registration.

The defendants replied on December 11, 1981, denying the additional payment and reiterating the urgency of their need for money. The plaintiffs did not reply to this communication. Subsequently, the defendants sold parts of the disputed property to other parties on April 22, 1983, and June 22, 1983.

The plaintiffs filed a suit for specific performance of the agreement and a permanent injunction against further alienation of the property on July 29, 1983.

The Trial Court on October 22, 2002, decreed the suit for specific performance and directed the defendants to execute the sale deed in favor of the plaintiffs after receiving the balance consideration within three months. However, it denied the relief of permanent injunction as the plaintiffs were not in possession of the property.

The High Court dismissed the defendants' appeal on December 17, 2015, prompting the present appeal to the Supreme Court.

The Supreme Court found that the plaintiffs failed to provide specific pleadings or evidence about the alleged restriction imposed by the State on the registration of sale deeds. Further, the plaintiffs did not demonstrate any effort to get the land's status changed or tender the balance amount to the defendants, the court said. Despite claims of a ban, there was no evidence provided that such a ban existed or was applicable to the land in question, the Court highlighted.

The Court noted that plaintiffs did not respond to multiple communications from the defendants requesting payment of the balance sale consideration and notifying the forfeiture of the advance amount. The plaintiffs also failed to show readiness and willingness before filing the suit, as they did not tender the balance consideration or provide a draft sale deed.

The Court disagreed with the lower courts' findings that the plaintiffs were always ready and willing to perform their contractual obligations.

Consequently, the Court concluded that the decree of specific performance was not warranted, and the suit should have been dismissed. The defendants' appeal was allowed, the impugned order set aside, and the suit dismissed.

Case no. – SLP (C) No. 2246 of 2017

Case Title – P. Ravindranath & Anr. v. Sasikala & Ors.

Citation : 2024 LiveLaw (SC) 491