Summary
A purchaser sued for specific performance of an agreement to buy a house in Hosur for Rs 15,10,000, of which Rs 10,001 was paid in advance, the sale deed to be registered by 15.03.2003. The vendor denied any concluded contract. The trial court decreed the suit, and the Madras High Court affirmed. The Supreme Court reversed. Under Section 16(c) of the Specific Relief Act the plaintiff must plead and prove continuous readiness and willingness from agreement to decree; readiness means financial capacity, willingness means conduct. He led no evidence of how he could pay or arrange the balance in time, his balance sheet of 31.03.2003 showed he lacked the funds, and depositing the balance in court seven years late did not establish readiness. Suing nearly three years after the breach, amid steeply rising property prices, also weighed against the discretionary relief.
Issues
- Whether the plaintiff proved continuous readiness and willingness under Section 16(c) of the Specific Relief Act, 1963 when he adduced no evidence of funds or arrangements to pay the balance consideration of Rs 15 lakh by the stipulated date and his balance sheet showed insufficient funds.
- Whether deposit of the balance consideration in court seven years after the stipulated date establishes readiness.
- Whether delay of nearly three years in filing the suit, and the steep rise in real-estate prices, are relevant to the discretionary relief of specific performance.
Provisions considered
- Section 16(c) with Explanations (i) and (ii), as it stood before the 2018 amendment, Specific Relief Act, 1963Specific performance is barred in favour of one who fails to aver and prove that he has always been ready and willing to perform his part. Though actual tender or deposit is not essential, the plaintiff must plead and prove by evidence that he had sufficient funds, or had made arrangements to raise them, in time; a mere averment in the plaint does not suffice. (¶¶ 23, 24, 25, 46)
- Sections 10 and 20 (discretion to grant specific performance), Specific Relief Act, 1963The relief is discretionary. Time-limits fixed by the parties cannot be ignored merely because time is not of the essence for immovable property; courts frown on suits not filed promptly after breach and take judicial notice of steep rises in property prices, applying K.S. Vidyanadam, Saradamani Kandappan and Azhar Sultana. (¶¶ 32, 38, 39, 40, 41, 42, 43, 44)
- Section 96 and Order XLI Rule 31, Code of Civil Procedure, 1908A first appellate court must itself examine whether there was continuous readiness and willingness, recording findings with reasons on all issues of fact and law. (¶¶ 35, 36)
Held
- In a suit for specific performance the plaintiff must prove readiness and willingness; where an advance is paid and the balance is payable within a stipulated time, he must show he was in a position to pay it, by proving that he had the money or had made arrangements, for instance with a financier, to get it. If he lacks the funds he must specifically plead how they would be available. (¶¶ 21, 25)
- Readiness and willingness are distinct and both are necessary: readiness means the plaintiff's capacity, including his financial position, while willingness relates to his conduct. Continuous readiness and willingness from the date of the contract to the hearing is a condition precedent, and the court must consider the plaintiff's conduct before and after the suit. (¶¶ 27, 29, 30, 31, 34)
- The plaintiff relied only on his legal notice and two witnesses who said he had approached the vendor before 15.03.2003; no evidence showed how he could pay or arrange Rs 15 lakh in time, his balance sheet of 31.03.2003 showed he did not have the funds, and the courts below erred in disposing of this vital issue with the sweeping observation that a businessman had sources. Deposit of the balance in court on 06.04.2010, seven years late, did not establish readiness (Umabai). He may have been willing but was not ready, and was possibly buying time. (¶¶ 45, 47, 48, 49)
- The suit filed nearly three years after the vendor's denial in March 2003, just before limitation expired, and the phenomenal rise in real-estate prices in Hosur near Bengaluru, of which judicial notice must be taken, were further grounds to decline the equitable relief; Bhavyanath v. K.V. Balan, where the suit was filed three days after the due date and funds were proved, was distinguishable. (¶¶ 38, 40, 43, 44, 50)
Result
Appeal allowed; the Madras High Court's judgment of 30.10.2017 and the trial court's decree set aside. The appellants to refund the earnest money within four weeks with interest at 7% per annum from the date of deposit; the plaintiff free to withdraw any balance consideration deposited in court. Parties to bear their own costs.