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2024 SCC OnLine SC 3377

In the Supreme Court of India

(BEFORE DIPANKAR DATTA AND SANJAY KAROL, JJ.)

Civil Appeal No. 3015 of 2013

R. Kandasamy (Since Dead) and Others …
Appellants;
Versus
T.R.K. Sarawathy and Another … Respondents.
With
Civil Appeal No. 3016 of 2013
Abt Limited … Appellant;
Versus
T.R.K. Sarawathy and Others … Respondents.
Civil Appeal No. 3015 of 2013 and Civil Appeal No. 3016 of 2013
Decided on November 21, 2024
Advocates who appeared in this case :
For Appellant(s) Mr. Rana Mukerjee, Sr. Adv.
Mr. B Ragunath, Adv.
Mrs. N.C. Kavitha, Adv.
Mr. Vijay Kumar, AOR
Mrs. V. Mohana, Sr. Adv.
Mr. N Sridhar, Adv.
Mrs. Bhavya Pandey, Adv.
Mr. Gokul Athiya, Adv.
Mr. Sriram P., AOR
For Respondent(s) Mr. E.R. Kumar, Adv.
Ms. Swati Bhardwaj, Adv.
Ms. Pratyusha Priyadarshini, Adv.
Ms. Aadya Malik, Adv.
M/s. Parekh & Co., AOR
Ms. Movita, AOR
Mr. B Ragunath, Adv.
Mrs. Nc Kavitha, Adv.
Mr. Vijay Kumar, AOR
The Judgment of the Court was delivered by
DIPANKAR DATTA, J.:—
THE APPEALS
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1
1. The appellants in Civil Appeal No. 3015/2013 were the
defendants in a suit for specific performance of an agreement for sale3
2

4
instituted by the first respondent as the plaintiff , in respect of land
together with a tenanted building5. The suit was dismissed by the Trial
th
Court vide judgment and decree dated 17 December, 2007. Upon a
6
first appeal being carried under section 96 of the Civil Procedure Code,
7 8
1908 by the buyer before the High Court of Judicature at Madras , the
same succeeded vide judgment and decree dated 21st October, 20119.
The High Court reversed the judgment and decree of dismissal of the
suit and granted decree for specific performance. The sellers have taken
exception to the first appellate judgment and decree in this appeal by
th
special leave, granted on 5 April, 2013.
2. Civil Appeal No. 3016/2013 is also an appeal against the
th
impugned judgment, special leave wherefor was also granted on 5
April, 2013. It is at the instance of a company10 who had purchased the
property, forming the subject of the Agreement, from the sellers when
the first appeal was pending before the High Court without any order
restraining the sellers to alienate the same. Upon such purchase, the
subsequent purchaser derived knowledge of pendency of the first
appeal; thus, it applied for and was impleaded as the eight respondent
therein.
RESUME OF FACTS
3. Although the facts leading to institution of the suit by the buyer
and the defence raised by the sellers are captured in the decisions of
the Trial Court as well as the High Court, for the sake of completeness,
we consider it appropriate to briefly refer to the same hereunder:
a. The parties, on mutually agreed terms, executed the Agreement
th
dated 20 January, 2005 for sale of the property. Towards
consideration, the buyer agreed to pay Rs. 2.3 crore to the sellers.
Other noticeable features of the Agreement are:
i. A sum of Rs. 10 lakh was paid by the buyer as an advance.
ii. The buyer had to pay the balance sale consideration within four
months from the date of the Agreement (the period ending on
th
19 May, 2005).
iii. On the date of the Agreement, the property was occupied by
tenants and the sellers agreed that they will have the tenants
vacate the property and deliver vacant possession thereof to
the buyer at the time of sale.
iv. Time shall be of the essence.
b. The buyer started effecting payments in instalments. She paid Rs.
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5 lakh, Rs. 4 lakh, Rs. 1 lakh and Rs. 5 lakh on 2nd February, 24th
th th
February, 5 June, and 24 July, 2005, respectively, totalling to
Rs. 15 lakh. Taking into consideration Rs. 10 lakh paid in advance,
the buyer paid in all Rs. 19 lakh prior to 19th May, 2005 and Rs. 6
lakh beyond that date.
c. The sellers vide letter dated 23rd February, 2006 cancelled the
Agreement and returned the sum of Rs. 25 lakh claiming that the
said period of 4 (four) months had expired and that the buyer had
not shown interest to complete the deal. However, the buyer vide
th
reply letter dated 24 February, 2006 refuted the contents of the
letter and emphasized that the sellers were bound to have the
property vacated and the sale deed had to be executed only after
all the tenants had vacated the property. It is noted that the last
of the tenants vacated the property on 2nd February, 2006.
d. The sellers vide letter dated 2nd March, 2006 asserted that the
buyer has no right to claim purchase of the property as the
Agreement had already been cancelled. The sellers reiterated that
time is not the essence of the contract; the said period of 4 (four)
months had expired; the fact of vacation of property by tenants
was duly conveyed to the buyer multiple times; and despite
multiple requests, the buyer did not come forward to execute the
sale deed. For these reasons, the Agreement was cancelled vide
rd
letter dated 23 February, 2006 and the pay order of Rs. 25 lakh
was returned.
e. Despite the letter dated 23rd February, 2006 whereby the sellers
nd
cancelled the Agreement (reiterated vide letter dated 2 March,
th
2006), the sellers vide a telegram dated 11 March, 2006 again
expressed interest to sell the property and conveyed that they
were ready to sell it; consequently, the buyer was called upon to
th
complete the sale before 24 March, 2006.
f. The buyer, claiming that she was out of station, sent a letter on
th
18 March, 2006. She asserted that as per the Agreement, she
had four months’ time from the date of vacating of the property
by all the tenants. A request was made calling upon the sellers to
bring the original documents and ‘encumbrance certificate for 30
years' to enable her advocate prepare the sale deed.
rd
g. The sellers then sent a letter dated 23 March, 2006 asserting
therein that the period of four months is to be counted from the
date of the Agreement, and the demand for encumbrance
certificate was not tenable as the buyer had already obtained
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encumbrance certificate from the sellers prior to entering into the

Agreement and had also assured that she herself would verify the
said certificate from the date of Agreement till date of sale. The
sellers further stated that irrespective of the above, they have
applied for encumbrance certificate and requested the buyer to
execute the sale deed within a week from receipt of encumbrance
certificate, failing which, the Agreement would stand cancelled.
h. On 25th March, 2006, the sellers called upon the buyer to pay the
sale consideration of Rs. 2.3 crore within 7 (seven) days. The
th
buyer responded vide reply notice dated 29 March, 2006 and
enclosed with it a draft sale deed and also demanded the sellers
to hand over the encumbrance certificate.
th
i. The sellers responded vide letter dated 6 April, 2006 and
reiterated that photostat copies of the title deeds and
encumbrance certificate up to the date of Agreement was already
furnished to, and verified by the buyer before entering into the
Agreement and that although it was not possible for them to
deliver the original documents, they were ready to let the buyer
verify the original documents. They also made a request to the
buyer to pay the sale consideration within 5 (five) days from
receipt of the letter.
j. The sellers had not handed over the “original parent documents”
for perusal of the buyer; hence, the buyer directly spoke to one of
the sellers (the fourth defendant) asking him to bring the “original
parent documents” for inspection. The buyer also sent a notice
nd
dated 22 April, 2006 to the counsel of the sellers requesting him
to advise the sellers to bring the documents for the buyer's
verification.
k. Vide letter dated 26th April 2006, the sellers deplored the buyer's
dilatory tactic of conjuring new demands at the eleventh hour.
Despite this, the sellers said, that they attempted their best to
satisfy the buyer's demand and offered the buyer the chance to
th
inspect the original parent documents (vide letter dated 6 April,
2006), which offer the buyer showed no interest in availing. In
view of the buyer's failure to perform her part of the bargain
despite multiple opportunities being given, the sellers declared
that the Agreement finally stood cancelled,.
th
l. Thereafter, vide letter dated 10 August, 2006, the buyer called
upon the sellers to collect the pay order dated 11th February,
2006 for Rs. 25 lakh from the buyer's office, but the sellers did
not collect the same. The buyer then enclosed the pay order with
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th
her letter dated 10 August, 2006 and sent it to the sellers who,
th
vide letter dated 14 August, 2006 replied that the Agreement
had already been cancelled and that the buyer, who earlier was
not ready and willing, is now trying to grab the property as the
value of the property has gone up multiple times.
4. It is in this factual background that litigation between the buyer
and the seller commenced with institution of the suit by the buyer
before the Court of the District Judge of Coimbatore. The suit was later
transferred by the District Judge to the Court of the Additional District
Judge (Fast Track Court I)11. Based on the averments in the plaint,
which refer to more or less what we have narrated above in paragraph
3, relief was claimed in the following terms:
a. To pass a decree for specific performance of the Agreement dated
20th January, 2005 or in the alternate a decree for refund of
advance amount of Rs. 25 lakh with 18% interest p.a. from the
date of Agreement till realization.
b. For permanent injunction restraining the sellers from alienating or
encumbering the property.
c. To direct the sellers to pay the costs of the suit.
d. Any other relief that the court deems fit.
5. The sellers in their written statement refuted all the contentions
raised in the plaint and pleaded that the buyer was never ready and
willing to purchase the property and alleged that the buyer filed the
suit with the intention to take benefit of the increase in price of the
property by projecting a theory that time is not of the essence.
VERDICTS OF THE TRIAL COURT AND THE HIGH COURT
6. The Trial Court framed and answered the issues as follows:
th
6.1 Whether the agreement for sale dated 20 January, 2005, is
true, valid and legally enforceable? Answered in the affirmative.
6.2 Whether as per the agreement for sale, the plaintiff was ready
and willing to pay the balance sale consideration and get the sale
deed executed? Answered in the negative.
6.3 Whether the plaintiff is entitled for a decree directing the
defendants to receive the balance sale consideration and execute the
sale deed? Answered in the negative.
6.4 Whether the plaintiff is entitled to the alternative relief of
refund of Rs. 25,00,000 with 18% interest p.a. from the defendants?
Answered in the negative.
7. As has been noticed above, the fortune of the parties changed
before the Trial Court and the High Court. High Court, in appeal,
decreed the suit of the buyer. High Court observed that time was not of
essence as the sellers had received payments, without protest, even
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after the final date fixed for the performance of the Agreement. After
analysing the documents on record, the High Court observed that the
buyer was ready and willing and found no reason which disentitled her
from the discretionary relief of specific performance.
ARGUMENTS
8. Mr. Dwivedi, learned senior counsel for the sellers, argued that the
impugned judgment is completely flawed and hence, the appeal
deserves interference.
8.1 Firstly, Mr. Dwivedi contended that the terms of the
Agreement clearly provided that leaving aside the sum paid as
advance, the time period for making payment of the balance sale
consideration would be four months commencing from the date of
th
such Agreement, i.e., 20 January, 2005. Admittedly, the buyer did
not make the payment as agreed by and between the parties and
time being the essence of the contract, the Trial Court was justified
in dismissing the suit (although on the point of time being the
essence of the contract, it had held otherwise).
8.2 Secondly, Mr. Dwivedi invited our attention to the letter dated
rd
23 February, 2006 sent by the sellers to the buyer whereby the
sellers cancelled the Agreement and refunded the advance amount.
The relevant part of the said letter is reproduced below:
“…….You failed to pay the balance sale consideration within the
period of 4 months and get the sale deed executed.”
th
In reply to the above, the buyer sent a letter dated 24 February,
2006 to the sellers. Nowhere in this reply letter did the buyer
expressly mention that the period of four months is to be counted
from the date of vacation of the property by the tenants. Hence, the
assertion that the period of four months was to be counted from the
date of vacation is merely an afterthought.
th
8.3 Thirdly, Mr. Dwivedi asserted that vide telegram dated 11
March, 2006, the sellers gave one last opportunity to the buyer to
pay the balance amount and register the sale deed before 24th
March, 2006. It has come on record that the buyer, despite being
th
present in Coimbatore, falsely represented in her reply dated 18
March, 2006 that she was out of station and, hence, was disabled to
respond immediately. The conduct of the buyer, therefore, does not
inspire confidence and certainly such conduct was sufficient to deny
her equitable relief.
8.4 Fourthly, Mr. Dwivedi contended that the buyer was never
ready and willing to perform her part of the bargain and hence she
was not entitled to the relief of specific performance. To show the
reluctance of the buyer to go ahead with the transaction, various
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communications by and between the parties were referred to. The

reply dated 24th February, 2006 was first referred wherefrom it
would be evident that the buyer was aware of the fact of vacation of
th
the property by the last remaining tenant. Vide telegram dated 11
March, 2006, the sellers called upon the buyer to hand over the pay
order and gave time till 24th March, 2006 to pay the balance sale
amount and register the sale deed. Despite this, the buyer did not
initiate any positive action as evidence of her readiness and
rd
willingness. Again, vide letter dated 23 March, 2006, the sellers
informed the buyer that they had applied for the encumbrance
certificate, even though provision of such certificate was not a term
of the Agreement. The sellers again called upon the buyer to execute
the sale deed within 7 (seven) days from the date of receipt of the
certificate. Even then, the buyer did not take steps to complete the
sale. The sellers sent the encumbrance certificate as requested vide
letter dated 06th April, 2006, and asked the buyer to execute the
sale deed within 5 (five) days; however, even then, the buyer did
not do the needful. Ultimately, having no other option, the sellers
th
finally had to cancel the Agreement vide letter dated 26 April,
2006. Thereafter, the buyer maintained silence for four months.
There is no reasonable justification for such silence.
8.5 Fifthly, Mr. Dwivedi submitted that the buyer has nowhere
pleaded that she had purchased the stamp papers for execution of
the sale deed. This further suggests that the buyer was not ready
and willing to perform her part of the obligations under the
Agreement.
8.6 Sixthly, Mr. Dwivedi argued that the buyer had taken
prevaricating stands and, therefore, is not entitled to the
discretionary relief of specific performance. He drew our attention to
the letter dated 24th February, 2006 wherein the buyer stated:
“It appears that only few days ago, the tenant has vacated and
the portion is kept under lock and key.”
This shows that the buyer was aware of the fact of vacation of the
property by the last tenant days prior to 24th February, 2006.
th
However, in her letter dated 18 March, 2006, she stated that:
“You have vacated all the tenants only on 02.02.2006 and it
has been officially intimated to me only on 04.03.2006 by your
letter dated 02.03.2006”.
To show the alleged wrongful conduct of the buyer, our attention
was drawn to another instance. In her reply dated 18th March 2006
to the telegram, the buyer stated:
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“…………………I am in receipt of your telegram dated 11.03.2006

which has been received by my office and due to my non-
availability in the town I could not take immediate action in
this……………….”
However, when the buyer was confronted with Exs. B1 and B2
being news items appearing in Tamil dailies dated 15th March and
th
16 March, 2006 (wherein the buyer was seen receiving an award at
Coimbatore), she admitted that between 11th March and 18th March,
2006 she was coming to and going out of Coimbatore. This fact was
neither mentioned in her plaint nor in her sworn affidavit before the
High Court. Having come with unclean hands by suppressing such
material facts, the buyer disentitled herself to the relief of specific
performance.
8.7 Seventhly, Mr. Dwivedi urged that the Agreement having
stood cancelled at the instance of the sellers, not once but twice, it
was necessary for the buyer to seek declaration that the cancellation
was bad and not operative and binding qua her and in the absence
of such a prayer, the suit itself was not maintainable in law.
However, Mr. Dwivedi fairly pointed out that no such point having
been raised by the sellers in their written statement, the Trial Court
did not frame an issue on such aspect. Nevertheless, it was argued
that this was a substantial point of law concerning the Court's very
jurisdiction, which ought to weigh in the mind of the Court while
considering whether, at all, the relief of specific performance could
be granted in favour of the buyer on the face of her omission/neglect
to claim appropriate relief.
8.8 Eighthly, while inviting our attention to several documents on
record, more particularly the cross-examination of the buyer wherein
she admitted that she did not have enough money in either of her
bank accounts to pay the balance sale price and asserted that she
had the money in cash, Mr. Dwivedi contended that the buyer did
not have the capacity to go ahead with the sale transaction.
8.9 Ninthly, it was the submission of Mr. Dwivedi that the
property was sold by the sellers to the subsequent purchaser after
stay, prayed in connection with the first appeal of the buyer, was
refused by the High Court. A property which was being sold for Rs.
2.3 crore had fetched a price of Rs. 8 crore and that relief of specific
performance being an equitable relief, the facts and circumstances
were not such so as to decree the suit of the buyer particularly
having regard to her conduct.
8.10 Finally, Mr. Dwivedi appealed that it was a fit and proper
case where the impugned judgment of the High Court ought to be
reversed and that of the Trial Court restored.
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9. Mr. Rana Mukherjee, learned senior counsel for the subsequent

purchaser adopted the submissions of Mr. Dwivedi and submitted that
that the conduct of the buyer disentitles her from claiming the relief of
specific performance; therefore, the Trial Court rightly dismissed the
suit. That apart, the subsequent purchaser being a bona fide purchaser
of the property for value, this Court may not disturb the status quo.
10. Mr. Guru Krishna Kumar, learned senior counsel for the buyer,
argued that the view taken by the High Court is correct, well-reasoned,
not perverse and a plausible view; hence, it does not warrant
interference.
10.1 First, Mr. Kumar contended that both the Trial Court and
High Court have concurrently found that time is not the essence of
the contract. While inviting our attention to several documents on
record, Mr. Kumar contended that the following conduct of the sellers
itself evinced that for them, time was not of the essence:
i. the sellers received payments on 5th June 2004 and 24th July
2005, which is after the final date that they say was fixed for
th
performance of the Agreement, i.e. 19 May 2005;
ii. even though they purportedly cancelled the Agreement vide
th
telegram dated 11 March 2006, in their subsequent letters
dated 23 March 2006, 24th March 2006 and 6th April 2006,
rd

they have given extensions to the buyer in a piecemeal

manner;
iii. and the sale deed could not have been executed by the sellers
unless they evicted all tenants. Since such eviction is an
uncertain event, time could not have been of the essence.
10.2 Secondly, Mr. Kumar submitted that the sellers have
delineated a conduct full of blemishes, elaborated below, which
disentitles them from discretionary relief of specific performance:
rd
i. vide their letter dated 23 February 2006, sellers purportedly
cancelled the Agreement, then taking a volte face, vide letter
dated 11th March 2006, the sellers conveyed that they were
ready to sell the property;
ii. the sellers never furnished the original title deeds for inspection
by the buyer;
iii. though the sellers returned the pay order of Rs. 25 lakh vide
letter dated 11th February 2006, it was sent to a wrong
address;
iv. and the sellers never obtained and produced any document
from their bank, viz. M/s Vijaya Bank, showing the status of the
pay order issued by the buyer, even though the same could
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have been obtained by them and this they did deliberately, so

that the court can conclude that either the buyer has encashed
the same or that the buyer never returned the same to sellers.
Mr. Kumar cited the decision of this Court in Ferrodous Estates (P)
12
Ltd. v. P. Gopirathnam and relied on the following paragraph:
“54. …As has been found earlier in this judgment, the Sellers
were held to have taken up dishonest pleas and also held to have
been in breach of a solemn agreement in which they were to
obtain the Urban Land Ceiling permission which, if not obtained,
would, under the agreement itself, not stand in the way of the
specific performance of the agreement between the parties. He
who asks for equity must do equity. Given the conduct of the
defendants in this case, as contrasted with the conduct of the
appellant who is ready and willing throughout to perform its part
of the bargain. We think this is a fit case in which the Division
Bench judgment should be set aside. As a result, the decree
passed by the Single Judge is restored. Since the appellant itself
offered a sum of Rs. 1.25 crores to the Division Bench, it must be
made to pay this amount to the respondents within a period of
eight weeks from the date of this judgment.”
(emphasis supplied)
10.3 Thirdly, Mr. Kumar asserted that the buyer was always ready
and willing to perform her part of the bargain. In fact, the buyer's
obligation to pay the balance consideration was to be fulfilled only
after the sellers had performed their part of the bargain, which was
to be ready to hand over the vacant possession of the property by
evicting the tenants. Hence, without first performing their reciprocal
promises, the sellers could not have called upon the buyer to pay the
balance sale consideration. On the contrary, it was the sellers who
were not ready to perform their part. Vide letter dated 22nd April
2006, the buyer demanded the sellers to produce the original title
th
deeds which was refused by the sellers vide their letter dated 26
April 2006. Even though there was no express condition in the
Agreement for production of original title deeds, but such condition
is implied in the Agreement. Hence, without the sellers having first
complied with their promise, they could not have called upon the
buyer to perform her part and later claim that the buyer was not
ready and willing.
10.4 Taking the above into consideration, Mr. Kumar submitted,
that the High Court has rightly granted the discretionary relief of
specific performance in favour of the buyer.
QUESTION
11. The sole question that we are tasked to decide is, whether the
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impugned judgment of the High Court warrants any interdiction in

exercise of our appellate jurisdiction.
JUDICIAL PRECEDENTS
12. Before embarking on the aforesaid task, it would only be just
and proper to remind ourselves of certain well-settled principles that
have evolved through judicial precedents laid down by this Court on
certain points which invariably arise in specific performance suits and
which are relevant for the purpose of a decision on these appeals.
ON WHETHER TIME IS THE ESSENCE OF THE CONTRACT:
13
13. A Constitution Bench of this Court in Chand Rani v. Kamal Rani
surveyed previous decisions on the question as to whether or not time
is the essence of the contract in transactions of sale of immovable
properties and appears to have made a slight departure from earlier
principles by ruling as under:
“25. From an analysis of the above case-law it is clear that in the
case of sale of immovable property there is no presumption as to
time being the essence of the contract. Even if it is not of the
essence of the contract the Court may infer that it is to be performed
in a reasonable time if the conditions are:
1. from the express terms of the contract;
2. from the nature of the property; and
3. from the surrounding circumstances, for example : the object
of making the contract.”
14. An instructive discussion is found in Saradamani Kandappan v.
14
S. Rajalakshmi of how the principle of time not being the essence of
the contract in transactions relating to sale of immovable properties
took shape and how with changing times, the outlook of the courts in
pleas claiming specific performance should be. We consider it
appropriate to reproduce the same hereunder:
“36. The principle that time is not of the essence of contracts
relating to immovable properties took shape in an era when market
values of immovable properties were stable and did not undergo any
marked change even over a few years (followed mechanically, even
when value ceased to be stable)…..This principle made sense during
the first half of the twentieth century, when there was comparatively
very little inflation, in India. The third quarter of the twentieth
century saw a very slow but steady increase in prices. But a drastic
change occurred from the beginning of the last quarter of the
twentieth century. There has been a galloping inflation and prices of
immovable properties have increased steeply, by leaps and bounds.
Market values of properties are no longer stable or steady. We can
take judicial notice of the comparative purchase power of a rupee in
the year 1975 and now, as also the steep increase in the value of the
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immovable properties between then and now. It is no exaggeration

to say that properties in cities, worth a lakh or so in or about 1975 to
1980, may cost a crore or more now.
37. The reality arising from this economic change cannot continue
to be ignored in deciding cases relating to specific performance. The
steep increase in prices is a circumstance which makes it inequitable
to grant the relief of specific performance where the purchaser does
not take steps to complete the sale within the agreed period, and the
vendor has not been responsible for any delay or non-performance. A
purchaser can no longer take shelter under the principle that time is
not of essence in performance of contracts relating to immovable
property, to cover his delays, laches, breaches and ‘non-readiness’.
……………
***
42. Therefore there is an urgent need to revisit the principle that
time is not of the essence in contracts relating to immovable
properties and also explain the current position of law with regard to
contracts relating to immovable property made after 1975, in view of
the changed circumstances arising from inflation and steep increase
in prices. We do not propose to undertake that exercise in this case,
nor referring the matter to a larger Bench as we have held on facts in
this case that time is the essence of the contract, even with
reference to the principles in Chand Rani 2 and other cases. Be that
as it may.
43. Till the issue is considered in an appropriate case, we can only
reiterate what has been suggested in K.S. Vidyanadam:
(i) The courts, while exercising discretion in suits for specific
performance, should bear in mind that when the parties
prescribe a time/period, 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 the purchaser was ‘ready and willing’ to
perform his part of the contract.
(iii) Every suit for specific performance need not be decreed
merely because it is filed within the period of limitation by
ignoring the 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 1 or 2
years to file a suit and obtain specific performance. The three-
year period is intended to assist the purchasers in special
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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.”
(emphasis supplied)
CONSIDERATIONS IN GRANT OR REFUSAL:
15. A three-Judge Bench of this Court in Prakash Chandra v.
15
Angadlal held, the ordinary rule is that specific performance should be
granted. It ought to be denied only when equitable considerations point
to its refusal and the circumstances show that damages would
constitute an adequate relief.
16
16. This Court in N.P. Thirugnanam v. R. Jagan Mohan Rao (Dr)
while reiterating that the remedy of specific performance is equitable in
nature and that granting or refusing specific performance is within the
discretion of the court, had the occasion to observe:
“5. It is settled law that remedy for specific performance is an
equitable remedy and is in the discretion of the court, which
discretion requires to be exercised according to settled principles of
law and not arbitrarily as adumbrated under Section 20 of the
Specific Relief Act, 1963 (for short ‘the Act’). Under Section 20, the
court is not bound to grant the relief just because there was a valid
agreement of sale. Section 16(c) of the Act envisages that plaintiff
must plead and prove that he had performed or has always been
ready and willing to perform the essential terms of the contract
which are to be performed by him, other than those terms the
performance of which has been prevented or waived by the
defendant. The continuous readiness and willingness on the part of
the plaintiff is a condition precedent to grant the relief of specific
performance. This circumstance is material and relevant and is
required to be considered by the court while granting or refusing to
grant the relief. If the plaintiff fails to either aver or prove the same,
he must fail. To adjudge whether the plaintiff is ready and willing to
perform his part of the contract, the court must take into
consideration the conduct of the plaintiff prior and subsequent to the
filing of the suit along with other attending circumstances. The
amount of consideration which he has to pay to the defendant must
of necessity be proved to be available. Right from the date of the
execution till date of the decree he must prove that he is ready and
has always been willing to perform his part of the contract. As
stated, the factum of his readiness and willingness to perform his
part of the contract is to be adjudged with reference to the conduct
of the party and the attending circumstances. The court may infer
from the facts and circumstances whether the plaintiff was ready and
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was always ready and willing to perform his part of the contract.”
(emphasis supplied)
17. In Nirmala Anand v. Advent Corpn. (P) Ltd.17, a Bench of three
Judges of this Court discussed what are the considerations that need to
be kept in view while considering grant or refusal of a decree of specific
performance in the following words:
“6. It is true that grant of decree of specific performance lies in
the discretion of the court and it is also well settled that it is not
always necessary to grant specific performance simply for the reason
that it is legal to do so. It is further well settled that the court in its
discretion can impose any reasonable condition including payment of
an additional amount by one party to the other while granting or
refusing decree of specific performance. Whether the purchaser shall
be directed to pay an additional amount to the seller or converse
would depend upon the facts and circumstances of a case.
Ordinarily, the plaintiff is not to be denied the relief of specific
performance only on account of the phenomenal increase of price
during the pendency of litigation. That may be, in a given case, one
of the considerations besides many others to be taken into
consideration for refusing the decree of specific performance. As a
general rule, it cannot be held that ordinarily the plaintiff cannot be
allowed to have, for her alone, the entire benefit of phenomenal
increase of the value of the property during the pendency of the
litigation. While balancing the equities, one of the considerations to
be kept in view is as to who is the defaulting party. It is also to be
borne in mind whether a party is trying to take undue advantage
over the other as also the hardship that may be caused to the
defendant by directing specific performance. There may be other
circumstances on which parties may not have any control. The
totality of the circumstances is required to be seen.”
18
18. In Kamal Kumar v. Premlata Joshi , one finds the following
instructive passage:
“7. It is a settled principle of law that the grant of relief of specific
performance is a discretionary and equitable relief. The material
questions, which are required to be gone into for grant of the relief of
specific performance, are:
7.1. First, whether there exists a valid and concluded contract
between the parties for sale/purchase of the suit property.
7.2. Second, whether the plaintiff has been ready and willing to
perform his part of contract and whether he is still ready and
willing to perform his part as mentioned in the contract.
7.3. Third, whether the plaintiff has, in fact, performed his part
of the contract and, if so, how and to what extent and in what
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manner he has performed and whether such performance was in

conformity with the terms of the contract;
7.4. Fourth, whether it will be equitable to grant the relief of
specific performance to the plaintiff against the defendant in
relation to suit property or it will cause any kind of hardship to the
defendant and, if so, how and in what manner and the extent if
such relief is eventually granted to the plaintiff;
7.5. Lastly, whether the plaintiff is entitled for grant of any
other alternative relief, namely, refund of earnest money, etc.
and, if so, on what grounds.
8. In our opinion, the aforementioned questions are part of the
statutory requirements [See Sections 16(c), 20, 21, 22, 23 of the
Specific Relief Act, 1963 and Forms 47/48 of Appendices A to C of
the Code of Civil Procedure]. These requirements have to be properly
pleaded by the parties in their respective pleadings and proved with
the aid of evidence in accordance with law. It is only then the Court
is entitled to exercise its discretion and accordingly grant or refuse
the relief of specific performance depending upon the case made out
by the parties on facts.”
19. Quite recently, Kamal Kumar (supra) has been followed in P.
19
Daivasigamani v. S. Sambandan .
WHO CAN BE SAID TO BE ‘READY AND WILLING’?
20
20. In C.S. Venkatesh v. A.S.C. Murthy , this Court on
consideration of various decisions culled out what is implied by the
words “ready and willing”. It was held:
“16. The words ‘ready and willing’ imply that the plaintiff was
prepared to carry out those parts of the contract to their logical end
so far as they depend upon his performance. The continuous
readiness and willingness on the part of the plaintiff is a condition
precedent to grant the relief of performance. If the plaintiff fails to
either aver or prove the same, he must fail. To adjudge whether the
plaintiff is ready and willing to perform his part of contract, the court
must take into consideration the conduct of the plaintiff prior, and
subsequent to the filing of the suit along with other attending
circumstances. The amount which he has to pay the defendant must
be of necessity to be proved to be available. Right from the date of
the execution of the contract till the date of decree, he must prove
that he is ready and willing to perform his part of the contract. The
court may infer from the facts and circumstances whether the
plaintiff was ready and was always ready to perform his contract.
21. Requisite pleadings and proof that are required of a plaintiff to
succeed in a suit for specific performance are succinctly captured in this
Court's decision of recent origin in U.N. Krishnamurthy v. A.M.
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Krishnamurthy21. The relevant passage reads:

“24. 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 other words, the plaintiff would have to plead
that the plaintiff had sufficient funds or was in a position to raise
funds in time to discharge his obligation under the contract. If the
plaintiff does not have sufficient funds with him to discharge his
obligations in terms of a contract, which requires payment of money,
the plaintiff would have to specifically plead how the funds would be
available to him. To cite an example, the plaintiff may aver and
prove, by adducing evidence, an arrangement with a financier for
disbursement of adequate funds for timely compliance with the
terms and conditions of a contract involving payment of money.”
ABSENT A PRAYER FOR DECLARATORY RELIEF THAT TERMINATION OF
THE AGREEMENT IS BAD IN LAW, WHETHER A SUIT FOR SPECIFIC
PERFORMANCE IS MAINTAINABLE?
22. This question has been considered by this Court in I.S. Sikandar
22
v. K. Subramani and answered in the following words:
“37. As could be seen from the prayer sought for in the original
suit, the plaintiff has not sought for declaratory relief to declare the
termination of agreement of sale as bad in law. In the absence of
such prayer by the plaintiff the original suit filed by him before the
trial court for grant of decree for specific performance in respect of
the suit schedule property on the basis of agreement of sale and
consequential relief of decree for permanent injunction is not
maintainable in law.”
23. I.S. Sikandar (supra) was followed by this Court in Mohinder
23
Kaur v. Sant Paul Singh where, on facts, it was also held that the
relief of specific performance being discretionary in nature, the
respondent cannot be held to have established his case for grant of
such relief.
24. However, in the interregnum, I.S. Sikandar (supra) was also
24
considered by this Court in A. Kanthamani v. Nasreen Ahmed and it
was held that the former decision turns on the facts involved therein
and is, thus, distinguishable. In the latter decision, this Court also held
that it is a well-settled principle of law that the plea regarding the
maintainability of suit is required to be raised in the first instance in the
pleading (written statement) and then only such plea can be
adjudicated by the Trial Court on its merits as a preliminary issue under
Order 14 Rule 2 CPC. Once a finding is rendered on the plea, the same
can then be examined by the first or/and second appellate court. It is
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only in appropriate cases, where the court prima facie finds by mere
perusal of plaint allegations that the suit is barred by any express
provision of law or is not legally maintainable due to any legal
provision, a judicial notice can be taken to avoid abuse of judicial
process in prosecuting such suit. However, such was not the case
therein.
25. What follows from A. Kanthamani (supra) is that unless an issue
as to maintainability is framed by the Trial Court, the suit cannot be
held to be not maintainable at the appellate stage only because
appropriate declaratory relief has not been prayed.
ON INCONSISTENT CLAUSES IN AN AGREEMENT
26. It is not an infrequent happening that two or more clauses in a
contract could, in some measure, be inconsistent with each other, - the
inconsistency arising because the clauses cannot sensibly be read
together. Lord Wrenbury in Forbes v. Git25 applied the following
principle:
“The principle of law to be applied may be stated in a few words.
If in a deed an earlier clause is followed by a later clause which
destroys altogether the obligation created by the earlier clause, the
later clause is to be rejected as repugnant and the earlier clause
prevails. In this case the two clauses cannot be reconciled and the
earlier provision in the deed prevails over the later. Thus if A
covenants to pay … 100 and the deed subsequently provides that he
shall not be liable under this covenant, that later provision is to be
rejected as repugnant and void, for it altogether destroys the
covenant. But if the later clause does not destroy but only qualifies
the earlier, then the two are to be read together and effect is to be
given to the intention of the parties as disclosed by the deed as a
whole. Thus if A covenants to pay … 100 and the deed subsequently
provides that he shall be liable to pay only at a future named date or
in a future defined event or if at the due date of payment he holds a
defined office, then the absolute covenant to pay is controlled by the
words qualifying the obligation in manner described.”
27. The aforesaid principle of law was approved by this Court in
Radha Sundar Dutta v. Mohd. Jahadur Rahim26, where a bench of three
Judges held that it is a settled rule of interpretation that if there be
admissible two constructions of a document, one of which will give
effect to all the clauses therein while the other will render one or more
of them nugatory, it is the former that should be adopted on the
principle expressed in the maxim “ut res magis valeat quam pereat”.
Following it up, it was also observed that if, in fact, there is a conflict
between the earlier clause and the later clauses and it is not possible to
give effect to all of them, then the rule of construction is well
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established that it is the earlier clause that must override the later
clauses and not vice versa.
28. A decision of recent origin of this Court in Bharat Sher Singh
Kalsia v. State of Bihar27 having taken note of the aforesaid decisions,
proceeded to hold:
“32. We are of the considered opinion that all three clauses are
capable of being construed in such a manner that they operate in
their own fields and are not rendered nugatory. That apart, we are
mindful that even if we had perceived a conflict between Clauses 3
and 11, on the one hand, and Clause 15 on the other, we would have
to conclude that Clauses 3 and 11 would prevail over Clause 15 as
when the same cannot be reconciled, the earlier clause(s) would
prevail over the latter clause(s), when construing a deed or a
contract. Reference for such proposition is traceable to Forbes v. Git
as approvingly taken note of by a three-Judge Bench of this Court in
Radha Sundar Dutta v. Mohd. Jahadur Rahim. However, we have
been able, as noted above, to reconcile the three clauses in the
current scenario.”
ANALYSIS AND REASONS
29. A suit for specific performance of a contract for sale, normally, is
premised on a written agreement between the contracting parties,
signifying a meeting of minds of two persons or more. Terms of the
agreement, which are reasonably ascertainable from the written
document, assume extreme relevance. After all, compliance with other
requisites takes the shape of a concluded contract and should there be
no vitiating factor, the parties are bound thereby.
30. The first point that we need to examine is the effect of the two
clauses of the Agreement and to apply the law laid down by this Court
in Radha Sundar Dutta (supra) and Bharat Sher Singh Kalsia (supra).
The said clauses read as follows:
“The Second party will have to pay the balance sale price within
four months from today and obtain a sale deed either in his name or
in the name of persons nominated by him at his own expense.”
“There are tenants in the property described below at present. The
First Parties agree to vacate the tenants and hand over vacant
possession to the Second Party at the time of obtaining the sale.”
31. On a bare reading of the aforesaid clauses, we do not find that
the latter clause destroys the effect of the former clause altogether so
much so that it has to be discarded. On the contrary, in this case, both
the clauses were such that the same had to be read together and given
effect upon ascertaining the intention of the parties as disclosed by the
Agreement as a whole. The latter clause could not have been read
divorced from the former, having regard to the intent of the parties that
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is discernible. The latter qualified the former in the sense that although
it was obligatory for the buyer to pay the balance price within 19th May,
2005 and “obtain the sale deed”, this was on the assumption that the
property would be made free of tenants by the sellers by that time.
th
However, the situation therefor did not arise on 19 May, 2005 since
the tenant, who vacated the property last, did so sometime on 2nd
st
February, 2006. Going by the latter clause, the buyer had time till 1
June, 2006 to complete the deal (four months of vacating of the
property by all the tenants to enable the sellers to hand over vacant
possession to the buyer). In our understanding, the Trial Court and the
High Court were right in concluding that time was not the essence
though the Agreement provided that “time mentioned in this
agreement shall be of the essence.”
32. We now turn our attention to the next point, which should clinch
the issue between the parties. It is, whether or not the buyer
demonstrated readiness and willingness to perform her part of the
contract and even if she did, is she entitled to the discretionary and
equitable relief of specific performance on facts and in the
circumstances.
33. For tracing an answer, one would necessarily have to bear in
mind sections 10, 16 and (unamended) section 20 of the Act. Scanning
of the evidence on record unmistakably points to the conclusion that
the buyer was not ready and willing to have the terms agreed by and
between the parties to be performed.
34. First, the conduct of the buyer does not inspire confidence in
view of the fact that despite being aware in February, 2006 of the
property having been vacated by all the tenants, she started raising the
bogey of failure of the sellers to share with her the ‘encumbrance
certificate’. Importantly, the Agreement did not record that the sellers
were under any obligation to share such certificate. Thus, in the
absence of such obligation, one has to presume that the buyer was duly
satisfied with the sellers’ title to the property and as such did not,
consciously, insist on making such obligation a part of the Agreement
of sharing of the ‘encumbrance certificate’ prior to performance of the
agreed terms. It is common knowledge that none interested in buying
an expensive property would agree to terms leaving himself/herself at a
potential risk of facing litigation in future. Even in the absence of an
express term and if it were accepted that the obligation is an implied
requirement of the Agreement, the buyer would have done well to close
the deal if the sellers were taking advantage of the omission in the
Agreement, particularly when at the time she raised such objection the
entire money received in advance had been returned by the sellers to
her. This is one aspect of the matter.
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35. The other aspect is this. From the documents on record, it is

clear that there was no readiness and willingness on the buyer's part to
pay the balance sale consideration and get the sale deed executed. The
buyer, despite multiple reminders, did not come forward for execution
of the sale deed. Vide letters dated 11th March, 2006, 23rd March, 2006,
th
06 April, 2006, the buyer was given a deadline of 13 (thirteen), 7
(seven) (counted from the date of receipt of ‘encumbrance certificate’)
and 5 (five) days respectively; however, the buyer did not comply with
any of these. It is to be noted that the above communications are
subsequent to the reply letter dated 24th February, 2006 by the buyer
wherein she admitted her knowledge of the property having been
vacated by the last of the tenants. Hence, the conduct of the buyer in
not doing the needful, especially even after the property became free of
tenants, demonstrates her reluctance and diffidence to perform the
contract.
36. Moving further, a perusal of the buyer's cross-examination
reveals her admission of not having enough fund in either of her bank
accounts to pay the balance sale price. This, in our opinion, is sufficient
proof of her financial incapacity to perform her part of the contract. The
husband of the buyer could be a wealthy man having sufficient balance
in his bank account but having perused the credit and debit entries, we
have significant doubts in respect thereof which we need not dilate here
in the absence of him being a party to the proceedings. Suffice is to
observe, the transactions evident from the bank accounts of the buyer's
husband do little to impress us that the buyer had demonstrated her
financial capacity to make payment of the balance sale price and close
the deal.
37. Imperative and interesting it is to note, the buyer sought to
return the demand draft to the sellers on the last day of its validity. As
rd
discussed above, along with letter dated 23 February 2006 of the
sellers cancelling the Agreement, they returned the advance amount
received from the buyer vide demand draft dated 11th February 2006.
th
This draft was retained by the buyer and returned as late as 10
August, 2006 vide letter of even date (and not along with any of her
previous letters). However, the demand draft dated 11th February, 2006
th
being valid only for a period of 6 (six) months, i.e., 10 August 2006, it
has intrigued us as to why the buyer would hold on to the demand draft
and not return it earlier if she was genuinely interested in purchasing
the property.
38. Such conduct of the buyer, seen cumulatively, does not inspire
confidence in granting her the discretionary relief of specific
performance.
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39. The question posed for an answer is, thus, decided against the
buyer.
40. Having held thus, allowing the appeal is the inevitable result.
However, before we part, there seems to be a discordant note struck by
the decision in A. Kanthamani (supra) while distinguishing I.S.
Sikandar (supra), which could create uncertainty and confusion. It is,
therefore, considered worthwhile to attempt and clear the same.
41. A comprehensive reading of the two decisions reveals that in a
fact scenario where the vendor unliterally cancels an agreement for
sale, the vendee who is seeking specific performance of such
agreement ought to seek declaratory relief to the effect that the
cancellation is bad and not binding on the vendee. This is because an
agreement, which has been cancelled, would be rendered non-existent
in the eyes of law and such a non-existent agreement could not
possibly be enforced before a court of law. Both the decisions cited
above are unanimous in their approval of such legal principle. However,
as clarified in Kanthamani (supra), it is imperative that an issue be
framed with respect to maintainability of the suit on such ground,
before the court of first instance, as it is only when a finding on the
issue of maintainability is rendered by trial court that the same can be
examined by the first or/and second appellate court. In other words, if
maintainability were not an issue before the trial court or the appellate
court, a suit cannot be dismissed as not maintainable. This is what
Kanthamani (supra) holds.
42. The aforesaid two views of this Court, expressed by coordinate
benches, demand deference. However, it is noticed that this Court in
Kanthamani (supra) had not been addressed on the effect of
nonexistence of a jurisdictional fact (the existence whereof would clothe
the trial court with jurisdiction to try a suit and consider granting
relief), i.e., what would be its effect on the right to relief claimed by the
plaintiff in a suit for specific performance of contract.
43. In Shrisht Dhawan (Smt) v. Shaw Bros.28, an interesting
discussion on ‘jurisdictional fact’ is found in the concurring opinion of
Hon'ble R. M. Sahai, J. (as His Lordship then was). It reads:
“19. *** What, then, is an error in respect of jurisdictional fact? A
jurisdictional fact is one on existence or non-existence of which
depends assumption or refusal to assume jurisdiction by a court,
tribunal or an authority. In Black's Legal Dictionary it is explained as
a fact which must exist before a court can properly assume
jurisdiction of a particular case. Mistake of fact in relation to
jurisdiction is an error of jurisdictional fact. No statutory authority or
tribunal can assume jurisdiction in respect of subject matter which
the statute does not confer on it and if by deciding erroneously the
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fact on which jurisdiction depends the court or tribunal exercises the

jurisdiction then the order is vitiated. Error of jurisdictional fact
renders the order ultra vires and bad (Wade, Administrative Law. In
Raza Textiles [(1973) 1 SCC 633] it was held that a court or tribunal
cannot confer jurisdiction on itself by deciding a jurisdictional fact
wrongly. ***”
(emphasis supplied)
44. Borrowing wisdom from the aforesaid passage, our deduction is
this. An issue of maintainability of a suit strikes at the root of the
proceedings initiated by filing of the plaint as per requirements of Order
VII Rule 1, CPC. If a suit is barred by law, the trial court has absolutely
no jurisdiction to entertain and try it. However, even though a given
case might not attract the bar envisaged by section 9, CPC, it is
obligatory for a trial court seized of a suit to inquire and ascertain
whether the jurisdictional fact does, in fact, exist to enable it (the trial
court) to proceed to trial and consider granting relief to the plaintiff as
claimed. No higher court, much less the Supreme Court, should feel
constrained to interfere with a decree granting relief on the specious
ground that the parties were not put specifically on notice in respect of
a particular line of attack/defence on which success/failure of the suit
depends, more particularly an issue touching the authority of the trial
court to grant relief if the ‘jurisdictional fact’ imperative for granting
relief had not been satisfied. It is fundamental, as held in Shrisht
Dhawan (supra), that assumption of jurisdiction/refusal to assume
jurisdiction would depend on existence of the jurisdictional fact.
Irrespective of whether the parties have raised the contention, it is for
the trial court to satisfy itself that adequate evidence has been led and
all facts including the jurisdictional fact stand proved for relief to be
granted and the suit to succeed. This is a duty the trial court has to
discharge in its pursuit for rendering substantive justice to the parties,
irrespective of whether any party to the lis has raised or not. If the
jurisdictional fact does not exist, at the time of settling the issues,
notice of the parties must be invited to the trial court's prima facie
opinion of non-existent jurisdictional fact touching its jurisdiction.
However, failure to determine the jurisdictional fact, or erroneously
determining it leading to conferment of jurisdiction, would amount to
wrongful assumption of jurisdiction and the resultant order liable to be
branded as ultra vires and bad.
45. Should the trial court not satisfy itself that the jurisdictional fact
for grant of relief does exist, nothing prevents the court higher in the
hierarchy from so satisfying itself. It is true that the point of
maintainability of a suit has to looked only through the prism of section
9, CPC, and the court can rule on such point either upon framing of an
issue or even prior thereto if Order VII Rule 11 (d) thereof is applicable.
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In a fit and proper case, notwithstanding omission of the trial court to

frame an issue touching jurisdictional fact, the higher court would be
justified in pronouncing its verdict upon application of the test laid
down in Shrisht Dhawan (supra).
46. In this case, even though no issue as to maintainability of the
suit had been framed in course of proceedings before the Trial Court,
there was an issue as to whether the Agreement is true, valid and
enforceable which was answered against the sellers. Obviously, owing
to dismissal of the suit, the sellers did not appeal. Nevertheless, having
regard to our findings on the point as to whether the buyer was ‘ready
and willing’, we do not see the necessity of proceeding with any further
discussion on the point of jurisdictional fact here.
47. However, we clarify that any failure or omission on the part of
the trial court to frame an issue on maintainability of a suit touching
jurisdictional fact by itself cannot trim the powers of the higher court to
examine whether the jurisdictional fact did exist for grant of relief as
claimed, provided no new facts were required to be pleaded and no new
evidence led.
CONCLUSION
48. For the foregoing reasons, the appeals merit success and the
same are allowed. We set aside the first appellate judgment and decree
of the High Court and restore that of the Trial Court with the result that
the suit instituted by the buyer shall stand dismissed.
49. It is made clear that the buyer shall be entitled to return of the
advance sum of Rs. 25 lakh by the sellers. If not already returned, the
sellers shall take steps in this behalf within a month from date. If the
buyer has made any deposit pursuant to any order of court, the same
shall also be returned to her with accrued interest, if any.
———
1
sellers, hereafter

2
O.S. 420 of 2006

3
Agreement, hereafter

4
buyer, hereafter

5
property, hereafter

6
A.S. 811 of 2008

7
CPC, hereafter

8
High Court, hereafter
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9
impugned judgment, hereafter

10
subsequent purchaser, hereafter

11
Trial Court, hereafter

12
2020 SCC OnLine SC 825

13
(1993) 1 SCC 519

14
(2011) 12 SCC 18

15
(1979) 4 SCC 393

16
(1995) 5 SCC 115

17
(2002) 8 SCC 146

18
(2019) 3 SCC 704

19
(2022) 14 SCC 793

20
(2020) 3 SCC 280

21
(2023) 11 SCC 775

22
(2013) 15 SCC 27

23
(2019) 9 SCC 358

24
(2017) 4 SCC 654

25
[1922] 1 A.C. 256

26
AIR 1959 SC 24

27
(2024) 4 SCC 318

28
(1992) 1 SCC 534

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