Supreme Court rules on respite under the Specific Relief Act

Supreme Court rules on respite under the Specific Relief Act

The bench observed that the suit was filed just before the expiry of the period of limitation

The Supreme Court has 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 the date of decree), he was ready and willing to perform his part of the contract.

A division bench of Justice Indira Banerjee and Justice Hrishikesh Roy stated that it was necessary for the court to consider the conduct of the plaintiff prior to and subsequent to filing the suit for specific performance.

The court was hearing an appeal challenging a decision of the Madras High Court, which passed an order for specific performance of an agreement for the sale of the suit property in favor of the respondents and against the appellants.

The facts were about a case wherein in May 1984 the father of the appellant executed a will bequeathing the suit property to the defendant. After the death of his father, the defendant became the absolute owner of the property.

But in November 2002, while the appellant was getting the suit property whitewashed, a real estate agent N Anjappa approached him with an offer to arrange the sale of the property at a good price. The appellant agreed to sell it to the respondents, in the presence of the witnesses, including N Anjappa.

The proposed sale was for Rs.15,10,000, out of which a sum of Rs.10,001 was paid by the respondent to the appellant in advance. The parties agreed that the respondent would get the sale deed registered on or before 15 March 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, the appellant kept postponing the execution of the sale deed on some pretext or the other.

Thereafter, in February 2003, the respondent issued a notice to the appellant asking him to execute the sale deed. However, the appellant denied having entered into any sale agreement for the property.

In October 2005, the respondent filed a suit, but the appellant denied the execution of any agreement for the sale of the property.

The trial court found that the respondent was ready and willing to perform his part of the contract, and was entitled to the relief of specific performance.

Aggrieved, the appellant approached the high court, which upheld the trial court's verdict. The appellant then filed the present appeal before the Supreme Court.

Appearing on behalf of the appellant, Senior Advocate Krishnan Venugopal argued that the respondent had not adduced any evidence to demonstrate continuous "readiness and willingness", which he was required to show. He contended that the lower court should have taken judicial notice of the steep rise in the price of the real estate, before granting the discretionary relief to the respondent.

Appearing for the respondent Advocate NDB Raju 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?

The court analyzed the Specific Relief Act 1963 that bars the relief of specific performance of a contract in favor of a person, who fails to aver and prove his readiness and willingness to perform his part of the contract.

It noted that to show a 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 the availability of funds to make payment in terms of the contract in time.

The top court added that in the present 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 the NP Thirugnanam vs Dr. R Jagan Mohan Rao case, the court noted that it was necessary to consider the conduct of the respondent prior to and subsequent to filing the suit for specific performance.

It took note of the phenomenal rise in the real estate price of the place where the property was located. And also the fact that the respondent had only paid an amount of Rs.10,001 as an advance when the consideration was Rs.15,10,000.

The court held that since only an insignificant amount was paid as an advance, the respondent was not entitled to the discretionary equitable relief of specific performance. It ruled that the fact that the suit was filed after three years, just before the expiry of the period of limitation, was also a ground to decline the respondent the relief of specific performance for purchase of the immovable property.

It, therefore, set aside the decisions of the trial court and the high court.