Case Note & Summary
The litigation arose from an agreement for sale dated 08.01.2010, whereby the defendants agreed to sell two items of immovable property to the appellant for Rs.4,80,000. The appellant claimed to have paid Rs.4,70,000 as advance, with the balance of Rs.10,000 to be paid within six months, and possession handed over on the same day. Later, the defendants demanded an additional Rs.2,00,000; the appellant paid Rs.1,95,000 on 09.06.2010, with an endorsement made on the back of the agreement, raising the total consideration to Rs.6,75,000. The defendants terminated the contract vide notice dated 20.08.2010, alleging non-performance. The appellant responded demanding execution of the sale deed, claiming readiness and willingness. It was then discovered that the defendants had sold one of the items to a third party (respondent Vasanthi) on 17.08.2010, before termination. The appellant filed suit O.S. No. 73 of 2010 for specific performance. Vasanthi filed a separate suit O.S. No. 32 of 2011 (renumbered 60 of 2012) seeking declaration and injunction, claiming to be a bona fide purchaser. The trial court dismissed the specific performance suit, holding the agreement was a loan security document, plaintiff was not ready and willing, and time was the essence of the contract. Vasanthi's suit was decreed. The first appellate court reversed, finding the agreement genuine, the additional payment proved, and the plaintiff ready and willing. It also held Vasanthi was not a bona fide purchaser. The High Court in second appeal set aside the decree for specific performance, finding no evidence of possession, no steps taken within six months, and the endorsement of additional payment suspicious. It directed refund of earnest money with interest. The appellant approached the Supreme Court, contending that the first appellate court's findings were based on evidence and did not raise a substantial question of law warranting interference under Section 100 CPC. The respondents argued the appellant set up a false case of possession and fabricated the additional payment endorsement, failed to act within six months, and the suit was not maintainable without challenging the termination notice. The Supreme Court framed three issues for determination: (a) whether the High Court erred in rejecting the proof of additional payment and whether that affected readiness and willingness; (b) maintainability of the specific performance suit without a declaration that termination was invalid; (c) entitlement to discretionary relief of specific performance. The Court proceeded to hear the parties.
Issue of Consideration
A. Whether the High Court was justified in interfering with the finding of the first appellate court qua payment of additional amount of Rs. 1,95,000 by the plaintiff-appellant? If receipt of additional payment by D-1 and D-2 is proved, as found by the first appellate court, whether it could be held that plaintiff was not ready and willing to perform its part under the contract? B. Whether the suit for specific performance was maintainable without seeking a declaration that termination of the agreement was invalid in law? C. Whether in the facts of the case the plaintiff was entitled to the discretionary relief of specific performance?
Law Points
- time not ordinarily essence in sale of immovable property
- readiness and willingness
- Section 100 CPC - substantial question of law
- discretionary relief under Specific Relief Act
- bona fide purchaser for value
- maintainability of specific performance suit after contract termination
- proof of additional consideration
- endorsement on agreement
Case Details
2025 LawText (SC) (10) 95
Civil Appeal Arising out of SLP (C) Nos. 26848-26849 of 2018
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Nature of Litigation
Civil suit for specific performance of agreement for sale of immovable property, and related suit for declaration and injunction by subsequent purchaser.
Remedy Sought
Appellant sought specific performance of agreement for sale dated 08.01.2010, and later challenged High Court's reversal decree.
Filing Reason
Plaintiff (appellant) claimed that defendants agreed to sell suit property for Rs.4,80,000, received Rs.4,70,000 advance, later received additional Rs.1,95,000, but defendants terminated contract and sold property to third party.
Previous Decisions
Trial court dismissed suit for specific performance and decreed suit of subsequent purchaser; first appellate court reversed and decreed specific performance and dismissed subsequent purchaser's suit; High Court in second appeal set aside specific performance and directed refund of earnest money.
Issues
A. Whether the High Court was justified in interfering with the finding of the first appellate court qua payment of additional amount of Rs. 1,95,000 by the plaintiff-appellant? If receipt of additional payment by D-1 and D-2 is proved, as found by the first appellate court, whether it could be held that plaintiff was not ready and willing to perform its part under the contract?
B. Whether the suit for specific performance was maintainable without seeking a declaration that termination of the agreement was invalid in law?
C. Whether in the facts of the case the plaintiff was entitled to the discretionary relief of specific performance?
Submissions/Arguments
Appellant argued that findings of first appellate court on execution of agreement, payment of advance including additional amount, and plaintiff's readiness and willingness were based on evidence and not perverse; time was not essence of the contract for sale of immovable property; payment of over 90% consideration showed readiness; acceptance of additional amount after six months precluded termination.
Respondents submitted that appellant set up false case of possession and fabricated additional payment endorsement; appellant took no steps within six months to seek execution, thus not ready and willing; suit for specific performance was not maintainable without challenging validity of termination notice.
Judgment Excerpts
the agreement for sale, dated 08.01.2010, was one to secure loan since it is unbelievable that after having paid Rs.4,70,000 out of a total consideration of Rs.4,80,000, a person would wait for six months for execution of sale deed
notice dated 20.08.2010 (Exb. A-4), sent on behalf of D-1 and D-2, acknowledges existence of the agreement for sale as well as receipt of advance consideration of Rs. 4,70,000
Whether the High Court was justified in interfering with the finding of the first appellate court qua payment of additional amount of Rs. 1,95,000 by the plaintiff - appellant ? If receipt of additional payment by D-1 and D-2 is proved, as found by the first appellate court, whether it could be held that plaintiff was not ready and willing to perform its part under the contract ?
Procedural History
Appellant filed O.S. No. 73 of 2010 for specific performance of agreement for sale dated 08.01.2010. Vasanthi filed O.S. No. 32 of 2011 (renumbered O.S. No. 60 of 2012) for declaration and injunction. Trial court consolidated suits; dismissed O.S. No. 73 of 2010 and decreed O.S. No. 60 of 2012. First appellate court allowed appeals, decreed O.S. No. 73 of 2010 and dismissed O.S. No. 60 of 2012. High Court allowed second appeals, set aside decree for specific performance and directed refund of earnest money with interest. Appellant filed SLP before Supreme Court, leave granted and converted to Civil Appeal.
Acts & Sections
- Code of Civil Procedure, 1908: Section 100
- Specific Relief Act, 1963:
