SUPREME COURT HOLDS THAT IN A SPECIFIC PERFORMANCE SUIT ONUS IS ON PLAINTIFF TO SHOW READINESS FOR PERFORMANCE

In a recent Special Leave Petition (Civil), a two Judge Bench of the Supreme Court, comprising of Justice Indira Banerjee and Justice Hrishikesh Roy passed an Order and Judgement dated 12.07.2022 in ‘U.N. Krishnamurthy (Since Deceased) through Lrs. V. A. M. Krishnamurthy, Special Leave Petition (Civil) No. 19463 of 2018’ and set aside the Order and Judgement dated 30.03.2017 passed by the High Court of Madras, and held that it is for the Plaintiff to prove his readiness and willingness to perform his obligations under the agreement in a suit for specific performance of contract.

In this case, one, late U.R. Narasaiah, father of U.N. Krishnamurthy (Appellant/ Defendant), had executed a will on or about 09.05.1984, bequeathing his property (suit property) to U.N. Krishnamurthy. After the death of his father, U.R. Narasaiah, on 25.04.1987, U.N. Krishnamurthy became the absolute owner of the suit property. On 11.11.2002, when the Appellant was getting the suit property whitewashed, a real estate agent Mr. N. Anjappa approached the Appellant with an offer to arrange the sale of the suit property at a good price. The Appellant agreed to sell the suit property to the Respondent/ Plaintiff. The terms and conditions of the agreement for sale of the suit property were allegedly recorded by the Appellant U.N. Krishnamurthy in his own handwriting in a letter dated 11.11.2002, given by the Appellant to the Respondent/ Plaintiff.

The Respondent alleged that the Appellant agreed to sell the suit property to him for a consideration of Rs.15,10,000/-, out of which sum of Rs.10,001/- was paid by the Respondent to the Appellant in advance. It was further agreed between the parties, that the Respondent would get the sale deed registered on or before 15.03.2003, upon payment of the full sale consideration. According to the Respondent, he approached the Appellant with the balance consideration several times and requested him to execute the sale deed in his favour, but the Appellant kept postponing execution of the sale deed on one pretext or the other. On 13.02.2003, the Respondent sent a legal notice to the Appellant stating that the Respondent is ever ready and willing to perform his part of the contract and called upon the Appellant to execute the sale deed in favour of Respondent after receiving the balance consideration. Subsequently, by a letter dated 10.03.2003, the Appellant sent in response to the legal notice and denied having entered into any oral sale agreement for sale of the suit property.

On 17.10.2005, the Respondent filed a suit at the Court of Principal District Judge, Krishnagiri (Trial Court), for specific performance of an agreement for sale of the suit property. The Appellant contended that he did not agree to sell the suit property to the Respondent. The Trial Court by Order dated 30.11.2010 held that Respondent was ready and willing to perform his part of the contract, and thus entitled to the relief of specific performance.

The Appellant filed an Appeal in the High Court of Madras against this Order of the Trial Court challenging the Order on the ground that the Respondent was not ready with money and not in the position to perform his part of the contract and that he should not be allowed to get a decree for specific performance. The High Court by Order and Judgement dated 30.10.2017 upheld the Order dated 30.11.2010, passed by the Trial Court. The Appellant aggrieved by this Order filed an Appeal before the Supreme Court.

The Apex Court observed that in a suit for Specific Performance of an agreement, it is for the Plaintiff to prove his readiness and willingness to perform his obligations under the agreement. Where a certain amount has been paid in advance and the balance is required to be paid within a stipulated time, it is for the Plaintiff to show that he was in a position to pay the balance money. The Plaintiff has to prove that
he has the money or has alternatively made necessary arrangements to get the money. In this case, the Original Defendant/Appellants have all along contended that the Plaintiff Respondent neither offered to pay nor was in a position to pay the balance consideration of Rs.15,00,000/-.

The Supreme Court observed that Section 16 (c) of the Specific Relief Act, 1963 bars the relief of specific performance of a contract in favour of a person, who fails to aver and prove his readiness and willingness to perform his part of contract. The Apex Court further observed that “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.”

The Apex Court, further, after considering relevant case-laws and facts of the present case observed that in the present case the Respondent Plaintiff has failed to discharge his duty to prove his readiness as well as willingness to perform his part of the contract, by adducing cogent evidence. The Court held that acceptable evidence had not been placed on record to prove his readiness and willingness. Further, it was clear from the Respondent Plaintiff’s balance sheet that he did not have sufficient funds to discharge his part of contract in March 2003. The Supreme Court held that the Respondent were not entitled for specific performance and the Trial Court and High Court erred in granting the relief of specific performance to the Respondent.

The Apex Court, thus allowed the Special Leave Petition and set aside the Order of the High Court dated 30.10.2017.

Anuradha Kumari

Associate

The Indian Lawyer & Allied Services

Edited by

Sushila Ram Varma

Chief Consultant and Editor

The Indian Lawyer & Allied Services