# R. Kandasamy (Since Dead) & Ors v. T.R.K. Sarawathy & Anr

- **Citation:** 2024 INSC 884
- **Court:** Supreme Court of India
- **Decided:** 2024-11-21
- **Case number:** Civil Appeal No. 3015 of 2013
- **Bench:** Dipankar Datta, Sanjay Karol
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/r-kandasamy-since-dead-ors-v-t-r-k-sarawathy-anr-37643
- **Pages:** 31

## Headnote

Trial Court dismissed the suit for specific performance of an
agreement for sale by the buyer. High Court allowed the appeal
thereagainst and granted decree for specific performance. Whether
the impugned judgment of the High Court warrants any interdiction
in exercise of the appellate jurisdiction. Whether an omission on
the part of the trial court to frame an issue on maintainability of
a suit touching jurisdictional fact by itself takes away the powers
of the higher court to examine whether the jurisdictional fact did
exist for grant of relief as claimed.
Headnotes†
Specific performance - Suit for specific performance - Time
when not the essence of the contract - Readiness and
willingness not proved - High Court decreed the buyer's suit
for specific performance holding that time was not of essence
as the sellers had received payments, without protest, even
after the final date fixed for the performance of the agreement
and that the buyer was ready and willing to perform her part
of the contract - Challenge to:
Held: Time was not the essence though the Agreement provided
that "time mentioned in this agreement shall be of the essence" -
On a bare reading of the two clauses of the Agreement, it cannot
be said that the latter clause destroys the effect of the former
clause altogether so much so that it has to be discarded - On
the contrary, 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
*Author
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regard to the intent of the parties that is discernible - Further,
on facts, the buyer was not ready and willing to have the terms
agreed by and between the parties to be performed - There was
no readiness and willingness on the buyer's part to pay the balance
sale consideration and get the sale deed executed despite multiple
reminders - Also, admittedly the buyer did not have enough fund
in either of her bank accounts to pay the balance sale price - First
appellate judgment and decree of the High Court set aside - Decree
of the Trial Court restored - Suit filed by the buyer dismissed.
[Paras 31, 33, 35, 36, 48]
Code of Civil Procedure, 1908 - Suit - Maintainability,
'jurisdictional fact' - Failure of the trial court to frame an issue
on maintainability of suit touching jurisdictional fact, if takes
away the powers of the higher court to examine whether the
jurisdictional fact did exist for grant of relief as claimed:
Held: No - I.S. Sikandar v. K. Subramani [2013] 17 SCR 24 held
that in absence of a prayer for declaratory relief that termination
of the agreement is bad in law, a suit for specific performance is
not maintainable - However, A. Kanthamani v. Nasreen Ahmed
[2017] 2 SCR 610 distinguished the aforesaid case and held 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 -
Kanthamani though did not deal with the effect of non-existence
of a jurisdictional fact i.e., what would be its effect on the right
to relief claimed by the plaintiff in a suit for specific performance
of contract - Clarified - Omission on the part of the trial court to
frame an issue on maintainability of a suit touching jurisdictional
fact does not by itself take away 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. [Paras 22, 24, 46]
Suit for specific performance - Law as regards the principles
governing - Discussed.

## Text

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[2024] 11 S.C.R. 1099 : 2024 INSC 884
R. Kandasamy (Since Dead) & Ors.
v.
T.R.K. Sarawathy & Anr.
(Civil Appeal No. 3015 of 2013)
21 November 2024
[Dipankar Datta* and Sanjay Karol, JJ.]
Issue for Consideration
Trial Court dismissed the suit for specific performance of an
agreement for sale by the buyer. High Court allowed the appeal
thereagainst and granted decree for specific performance. Whether
the impugned judgment of the High Court warrants any interdiction
in exercise of the appellate jurisdiction. Whether an omission on
the part of the trial court to frame an issue on maintainability of
a suit touching jurisdictional fact by itself takes away the powers
of the higher court to examine whether the jurisdictional fact did
exist for grant of relief as claimed.
Headnotes†
Specific performance - Suit for specific performance - Time
when not the essence of the contract - Readiness and
willingness not proved - High Court decreed the buyer's suit
for specific performance holding that time was not of essence
as the sellers had received payments, without protest, even
after the final date fixed for the performance of the agreement
and that the buyer was ready and willing to perform her part
of the contract - Challenge to:
Held: Time was not the essence though the Agreement provided
that "time mentioned in this agreement shall be of the essence" -
On a bare reading of the two clauses of the Agreement, it cannot
be said that the latter clause destroys the effect of the former
clause altogether so much so that it has to be discarded - On
the contrary, 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
*Author
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regard to the intent of the parties that is discernible - Further,
on facts, the buyer was not ready and willing to have the terms
agreed by and between the parties to be performed - There was
no readiness and willingness on the buyer's part to pay the balance
sale consideration and get the sale deed executed despite multiple
reminders - Also, admittedly the buyer did not have enough fund
in either of her bank accounts to pay the balance sale price - First
appellate judgment and decree of the High Court set aside - Decree
of the Trial Court restored - Suit filed by the buyer dismissed.
[Paras 31, 33, 35, 36, 48]
Code of Civil Procedure, 1908 - Suit - Maintainability,
'jurisdictional fact' - Failure of the trial court to frame an issue
on maintainability of suit touching jurisdictional fact, if takes
away the powers of the higher court to examine whether the
jurisdictional fact did exist for grant of relief as claimed:
Held: No - I.S. Sikandar v. K. Subramani [2013] 17 SCR 24 held
that in absence of a prayer for declaratory relief that termination
of the agreement is bad in law, a suit for specific performance is
not maintainable - However, A. Kanthamani v. Nasreen Ahmed
[2017] 2 SCR 610 distinguished the aforesaid case and held 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 -
Kanthamani though did not deal with the effect of non-existence
of a jurisdictional fact i.e., what would be its effect on the right
to relief claimed by the plaintiff in a suit for specific performance
of contract - Clarified - Omission on the part of the trial court to
frame an issue on maintainability of a suit touching jurisdictional
fact does not by itself take away 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. [Paras 22, 24, 46]
Suit for specific performance - Law as regards the principles
governing - Discussed.
Case Law Cited
I.S. Sikandar v. K. Subramani [2013] 17 SCR 24 : (2013) 15 SCC
27; A. Kanthamani v. Nasreen Ahmed [2017] 2 SCR 610 : (2017)
4 SCC 654 - Clarified.
[2024] 11 S.C.R.
1101
R. Kandasamy (Since Dead) & Ors. v. T.R.K. Sarawathy & Anr.
Ferrodous Estates (P) Ltd v P. Gopirathnam [2020] 13 SCR 673 :
2020 SCC Online 825; Chand Rani v. Kamal Rani [1992] Supp.
3 SCR 798 : (1993) 1 SCC 519; Saradamani Kandappan v. S.
Rajalakshmi [2011] 8 SCR 874 : (2011) 12 SCC 18; Prakash
Chandra v. Angadlal (1979) 4 SCC 393; N.P. Thirugnanam v. R.
Jagan Mohan Rao (Dr) [1995] Supp. 2 SCR 53 : (1995) 5 SCC
115; Nirmala Anand v. Advent Corpn. (P) Ltd. [2002] Supp. 2 SCR
706 : (2002) 8 SCC 146; Kamal Kumar v. Premlata Joshi [2019] 1
SCR 54 : (2019) 3 SCC 793; P. Daivasigamani v. S. Sambandan
[2022] 18 SCR 199 : (2022) 14 SCC 793; C.S. Venkatesh vs. A.S.C.
Murthy [2020] 2 SCR 676 : (2020) 3 SCC 280; U.N. Krishnamurthy
v. A.M. Krishnamurthy [2022] 13 SCR 250 : (2023) 11 SCC 775;
Mohinder Kaur v. Sant Paul Singh (2019) 9 SCC 358; Forbes v.
Git [1922] 1 A.C. 256; Radha Sundar Dutta v. Mohd. Jahadur
Rahim [1959] 1 SCR 1309 : AIR 1959 SC 24; Bharat Sher Singh
Kalsia v. State of Bihar [2024] 1 SCR 1165 : (2024) 4 SCC 318;
Shrisht Dhawan (Smt) v. Shaw Bros. [1991] Supp. 3 SCR 446 :
(1992) 1 SCC 534 - referred to.
List of Acts
Specific Relief Act, 1963.
List of Keywords
Suit for specific performance; Agreement for sale; Maintainability
of a suit; Jurisdictional fact; Time not the essence of the contract;
Seller; Buyer; Readiness and willingness not proved; Balance sale
consideration/price; Sale deed; Financial incapacity; Encumbrance
certificate; Demand draft; Inconsistent clauses in an agreement;
Discretionary relief of specific performance; Higher court; Appellate
court.
Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3015 of 2013
From the Judgment and Order dated 21.10.2011 of the High Court
of Madras in AS No. 811 of 2008
With
Civil Appeal No. 3016 of 2013
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Appearances for Parties
Rana Mukerjee, Rakesh Diwedi, Mrs. V. Mohana, Guru Krishna
Kumar, Sr. Advs., B Ragunath, Mrs. NC Kavitha, Vijay Kumar, R
Venkatraman, N Sridhar, Arunmozhi, S Padmanaban, Mrs. Bhavya
Pandey, Gokul Athiya, Sriram P., E.R. Kumar, Ms. Swati Bhardwaj,
Ms. Pratyusha Priyadarshini, Ms. Aadya Malik (for M/s. Parekh &
Co.), Ms. Movita, Advs. for the appearing parties.
Judgment / Order of the Supreme Court
Judgment
Dipankar Datta, J.
The Appeals
1.
The appellants1 in Civil Appeal No.3015 / 2013 were the defendants
in a suit2 for specific performance of an agreement for sale3 instituted
by the first respondent as the plaintiff,4 in respect of land together
with a tenanted building.5 The suit was dismissed by the Trial Court
vide judgment and decree dated 17th December, 2007. Upon a first
appeal6 being carried under section 96 of the Code of Civil Procedure,
19087 by the buyer before the High Court of Judicature at Madras,8
the same succeeded vide judgment and decree dated 21st October,
2011.9 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 special leave, granted on 5th April, 2013.
2.
Civil Appeal No.3016 / 2013 is also an appeal against the impugned
judgment, special leave wherefor was also granted on 5th April, 2013.
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
9
impugned judgment, hereafter
[2024] 11 S.C.R.
1103
R. Kandasamy (Since Dead) & Ors. v. T.R.K. Sarawathy & Anr.
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
dated 20th 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 19th 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. 5 lakh, Rs. 4 lakh, Rs. 1 lakh and Rs. 5 lakh on 2nd February,
24th February, 5th June, and 24th 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
10
subsequent purchaser, hereafter
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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 reply letter dated 24th 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 letter dated 23rd February, 2006 and the pay
order of Rs. 25 lakh was returned.
e.
Despite the letter dated 23rd February, 2006 whereby the sellers
cancelled the Agreement (reiterated vide letter dated 2nd March,
2006), the sellers vide a telegram dated 11th 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 complete the sale before 24th March, 2006.
f.
The buyer, claiming that she was out of station, sent a letter on
18th 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.
g.
The sellers then sent a letter dated 23rd 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
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
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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 buyer responded vide reply notice dated 29th March, 2006
and enclosed with it a draft sale deed and also demanded the
sellers to hand over the encumbrance certificate.
i.
The sellers responded vide letter dated 6th 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 dated 22nd 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 inspect the original parent documents (vide letter dated 6th
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,.
l.
Thereafter, vide letter dated 10th 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
her letter dated 10th August, 2006 and sent it to the sellers who,
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vide letter dated 14th 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:
6.1 Whether the agreement for sale dated 20th 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.
11
Trial Court, hereafter
[2024] 11 S.C.R.
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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 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 such
Agreement, i.e., 20th 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
23rd 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."
In reply to the above, the buyer sent a letter dated 24th February,
2006 to the sellers. Nowhere in this reply letter did the buyer
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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.
8.3. Thirdly, Mr. Dwivedi asserted that vide telegram dated 11th
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 present in Coimbatore, falsely represented in her reply
dated 18th 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 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 the property by the last remaining tenant.
Vide telegram dated 11th 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 willingness. Again, vide
letter dated 23rd 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 finally had to cancel the Agreement vide letter dated 26th
April, 2006. Thereafter, the buyer maintained silence for four
months. There is no reasonable justification for such silence.
[2024] 11 S.C.R.
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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.
However, in her letter dated 18th 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:
".....................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 16th 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
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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.
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.
[2024] 11 S.C.R.
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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 performance of the Agreement, i.e. 19th May 2005;
ii.
even though they purportedly cancelled the Agreement
vide telegram dated 11th March 2006, in their subsequent
letters dated 23rd March 2006, 24th March 2006 and 6th
April 2006, 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:
i.
vide their letter dated 23rd 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 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.
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Mr. Kumar cited the decision of this Court in Ferrodous Estates
(P) Ltd v P. Gopirathnam12 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
deeds which was refused by the sellers vide their letter dated
26th 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
12
[2020] 13 SCR 673 : 2020 SCC Online 825
[2024] 11 S.C.R.
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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
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. A Constitution Bench of this Court in Chand Rani v. Kamal Rani13
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."
13
[1992] Supp. 3 SCR 798 : (1993) 1 SCC 519
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14. An instructive discussion is found in Saradamani Kandappan v. S.
Rajalakshmi14 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 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 nonperformance. A purchaser can no longer take shelter under
the principle that time is not of essence in performance
14
[2011] 8 SCR 874 : (2011) 12 SCC 18
[2024] 11 S.C.R.
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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 Rani2 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 timelimits 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
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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 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. Angadlal15
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. This Court in N.P. Thirugnanam v. R. Jagan Mohan Rao (Dr)16
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
15
(1979) 4 SCC 393
16
[1995] Supp. 2 SCR 53 : (1995) 5 SCC 115
[2024] 11 S.C.R.
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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 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
17
[2002] Supp. 2 SCR 706 : (2002) 8 SCC 146
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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.