Supreme Court: Plea Regarding Maintainability Of Suit Can Be Raised In Appeal Even If Not Raised In Written Statement When No New Facts Or Evidence Required

The Supreme Court clarified that a plea regarding maintainability of the suit can be raised in Appeal, even if not raised in Written Statement, particularly when no new facts or evidence is required to address the same.

The Court clarified thus in Civil Appeals arising from two Suits instituted for specific performance of agreement for sale.

The two-Judge Bench comprising Justice J.B. Pardiwala and Justice Manoj Misra observed, “… though a plea regarding maintainability of the suit, even if not raised in written statement, may be raised in appeal, particularly when no new facts or evidence is required to address the same, the issue whether a declaratory relief is essential or not would have to be addressed on the facts of each case.”

The Bench said that a declaratory relief would be required where a doubt or a cloud is there on the right of the Plaintiff and grant of relief to the Plaintiff is dependent on removal of that doubt or cloud.

AOR M.P. Parthiban represented the Appellant, while AOR Priya Aristotle represented the Respondents.

Brief Facts

Two Suits were instituted by the Appellant/Plaintiff against three persons i.e., Defendants/Respondents, for specific performance of agreement for sale, which was instituted by first Respondent against the Appellant for declaration as well as injunction qua the property which was subject matter of the sale agreement. The Trial Court consolidated the said Suits and decided them by a common Judgment, by which 2010 Suit was dismissed and 2012 Suit was decreed.

Being aggrieved, the Appellant filed two First Appeals and the First Appellate Court allowed the same by decreeing the 2010 Suit and dismissing the 2012 Suit. Against this, two Second Appeals were filed by the Respondent before the Madras High Court and the same were allowed. As a result, the decree of specific performance of the agreement was set aside and the Defendants were directed to refund the earnest money along with interest. Challenging the High Court’s decision, the Appeals were filed before the Apex Court.

Court’s Observations

The Supreme Court in view of the above facts, reiterated, “Generally, time is presumed not to be the essence of the contract relating to immovable property. Therefore, onus to plead and prove that time was the essence of the contract is on the person alleging it. In cases where notice is given treating time as the essence of the contract, it is duty of the court to examine the real intention of the party giving such notice by looking at the facts and circumstances of each case.”

The Court remarked that non-issuance of notice by the Plaintiff, requesting performance within six months, would not be fatal to the suit for specific performance and, likewise, it would not be determinative of whether the Plaintiff was ready and willing to perform its part under the contract.

“Consequently, if the first appellate court held that the plaintiff was ready and willing to perform its part under the contract, no fault can be found with its view. In our view, the High Court exceeded its jurisdiction under Section 100 CPC by interfering with the finding(s) of the first appellate court regarding (a) payment of additional Rs.1,95,000 by plaintiff to D-1 and D-2 and (b) plaintiff being ready and willing to perform its part under the contract. Issue A is decided in the aforesaid terms”, it added.

When a declaratory relief is essential:

The Court noted that a declaratory relief seeks to clear what is doubtful, and which is necessary to make it clear and if there is a doubt on the right of a Plaintiff, and without the doubt being cleared no further relief can be granted, a declaratory relief becomes essential because without such a declaration the consequential relief may not be available to the Plaintiff.

“When a document is void ab initio, a decree for setting aside the same is not necessary as the same is non est in the eye of law, being a nullity. Therefore, in such a case, if plaintiff is in possession of the property which is subject matter of such a void instrument, he may seek a declaration that the instrument is not binding on him. However, if he is not in possession, he may sue for possession and the limitation period applicable would be that as applicable under Article 65 of the Limitation Act, 1963 on a suit for possession”, it observed.

The Court said that a void instrument/transaction can be ignored by a Court while granting the main relief based on a subsisting right but, where the Plaintiff’s right falls under a cloud, then a declaration affirming the right of the Plaintiff may be necessary for grant of a consequential relief, however, whether such a declaration is required for the consequential relief sought is to be assessed on a case-to-case basis, dependent on its facts.

“In a case where the contract between the parties confers a right on a party to the contract to unilaterally terminate the contract in certain circumstances, and the contract is terminated exercising that right, a mere suit for specific performance without seeking a declaration that such termination is invalid may not be maintainable. This is so, because a doubt /cloud on subsistence of the contract is created which needs to be cleared before grant of a decree enforcing contractual obligations of the parties to the contract”, it explained.

The Court was of the view that whether there is a doubt or cloud on the right of the Plaintiff to seek consequential relief, the same is to be determined on the facts of each case.

“For example, a contract may give right to the parties, or any one of the parties, to terminate the contract on existence of certain conditions. In terms thereof, the contract is terminated, a doubt over subsistence of the contract is created and, therefore, without seeking a declaration that termination is bad in law, a decree for specific performance may not be available. However, where there is no such right conferred on any party to terminate the contract, or the right so conferred is waived, yet the contract is terminated unilaterally, such termination may be taken as a breach of contract by repudiation and the party aggrieved may, by treating the contract as subsisting, sue for specific performance without seeking a declaratory relief qua validity of such termination”, it emphasised.

Coming to the facts of the case, the Court said that the Plaintiff had an option to treat the contract as subsisting and sue for specific performance more so when termination was a void act, no longer permissible under the varied contract, and, therefore, the suit for specific performance was maintainable even without seeking a declaration that termination of the contract was invalid in law.

Conclusion

Furthermore, the Court clarified, “In Katta Sujatha Reddy v. Siddamsetty Infra Projects (P) Ltd., this Court held that 2018 Amendment to the 1963 Act is prospective and cannot apply to those transactions that took place prior to its coming into force. No doubt, this decision was reviewed and recalled in Siddamsetty Infra Projects (P) Ltd. v. Katta Sujatha Reddy but in the review order/ judgment this Court did not specifically hold that the amended provisions would govern suits instituted prior to the 2018 Amendment (see paragraph 32 of the review judgment). Rather, in review, this Court proceeded to decide the matter by assuming that the grant of specific performance continued to be discretionary to a suit instituted before the date of the amendment.”

The Court also held that the High Court’s conclusion that Plaintiff had set up a false case of additional payment is unsustainable and, therefore, cannot be a ground to decline discretionary relief of specific performance.

“We are, therefore, of the firm view that this was not a fit case where discretionary relief of specific performance should have been denied. … the High Court erred in law by interfering with the decree of specific performance passed by the first appellate court”, it concluded.

Accordingly, the Apex Court allowed the Appeals, set aside the High Court’s Judgment, restored that of the First Appellate Court, and directed the Appellant to deposit the balance amount in the Execution Court within one month.

Cause Title- Annamalai v. Vasanthi and Others (Neutral Citation: 2025 INSC 1267)

Appearance:

Appellant: AOR M.P. Parthiban and Advocate S. Parthasarathi.

Respondents: AOR Priya Aristotle, Advocates Naveen Nagarjuna, and B Lekshmi.

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