The Supreme Court recently observed that for seeking relief of specific performance, the plaintiff has to prove that all along from the date of execution of the agreement till date of decree, he was ready and willing to perform his part of the contract [UN Krishnamurthy (since deceased) through LRs v. AM Krishnamurthy].
A division bench of Justices Indira Banerjee and Hrishikesh Roy was of the view that for determining whether the plaintiff was ready and willing to perform his part of the agreement, it is necessary for the Court to consider the conduct of the plaintiff prior and subsequent to filing the suit for specific performance.
“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,” the Court held.
The Court was hearing an appeal challenging a decision of the Madras High Court which had passed an order for specific performance of an agreement for sale of the suit property in favor of the respondents and against the appellants.
As per the facts of the case, on May 9, 1984 the father of the deceased-appellant had executed a will bequeathing the suit property to the defendant. After the death of his father, defendant became the absolute owner of the suit property.
On November 11, 2002, while the appellant was getting the suit property whitewashed, a real estate agent N Anjappa approached the appellant with an offer to arrange the sale of the suit property at a good price. The appellant agreed to sell the suit property to the respondents, in the presence of witnesses including N Anjappa.
The proposed sale was for a consideration of ₹15,10,000, out of which sum of ₹10,001 was paid by the respondent to the appellant in advance.
It was further agreed between the parties that the respondent would get the sale deed registered on or before March 15, 2003, upon payment of the full sale consideration.
Subsequently, though the respondent approached the appellant with the balance consideration several times and requested him to execute the sale deed in his favor, but the deceased appellant kept postponing execution of the sale deed on one pretext or the other.
A notice was also issued by the respondent to the appellant on February 13, 2003, stating that the respondent is ready and willing to perform his part of the contract and called upon the appellant to execute the sale deed in his favor.
However, the appellant denied having entered into any oral sale agreement for sale of the suit property.
Subsequently, in October 2005, the respondent filed the suit. In the written statement, the appellant denied the execution of any agreement for sale of the suit property for consideration of ₹15,10,000 as alleged. It was also stated that the respondent was never ready or willing to perform his part of the contract.
The trial court found that the respondent was ready and willing to perform his part of the contract, and thus entitled to the relief of specific performance.
Aggrieved, the appellant approached the High Court which upheld the trial court verdict. The appellant then filed the present appeal before the Supreme Court.
Senior Advocate Krishnan Venugopal, appearing for the appellant, argued that the respondent had not adduced any evidence to demonstrate continuous “readiness and willingness”, which he was required to show. It was also contended that the lower court should have taken judicial notice of the steep rise in the price of real estate, before granting the discretionary relief of specific performance to the respondent.
Advocate NDB Raju, appearing for the respondent, argued that the respondent was always ready and willing to perform his part of the contract and it was only the appellant who had been delaying the execution of the sale deed.
The question before the Supreme Court was whether or not the respondent had proved his readiness and willingness to perform his part of the contract?
To answer this, the Court analysed Section 16 (c) of the Specific Relief Act 1963 that bars the relief of specific performance of a contract in favour of a person, who fails to aver and prove his readiness and willingness to perform his part of contract.
It further noted that 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.
The Court noted that in the instant case, there was certainly an averment that the respondent was all along ready and willing to perform his obligations under the contract. Therefore, the issue was whether he had proved his readiness and willingness to perform his obligations under the contract.
Placing reliance on its decision in NP Thirugnanam v. Dr R Jagan Mohan Rao and Others (1995), the Court noted that for determining whether the respondent was ready and willing to perform his part of the agreement, it is necessary to consider the conduct of the respondent prior and subsequent to filing the suit for specific performance.
In this context, the Court note of the phenomenal rise in price of real estate in the place where the suit property was located. Moreover, it also took note of the fact that the respondent had only paid an amount of ₹10,001 as advance when the consideration was ₹15,10,000.
The Court, therefore, held that since only an insignificant amount was paid as advance, the respondent was not entitled to discretionary equitable relief of specific performance.
The Court also noted that the fact that the suit was filed after 3 years, just before expiry of the period of limitation, was also a ground to decline the respondent the relief of specific performance for purchase of immovable property.
“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 said.
It, therefore, set aside the decision of the trial court and the High Court.