The Supreme Court has held that the agreement to sell cannot be specifically enforced in a case where there is suppression of material fact and absence of a prayer for declaratory relief that termination/cancellation of the agreement is bad in law.

The Apex Court was considering a property dispute matter where an appeal was filed against the judgment passed in favour of the respondent-buyer.

The Division Bench of Justice Dipankar Datta and Justice Manmohan observed, “Consequently, this Court is of the opinion that absent a prayer for declaratory relief that termination/cancellation of the agreement is bad in law, a suit for specific performance is not maintainable”.

Senior Advocate S. B. Upadhyay represented the Appellant while Senior Advocate Ardhendumauli Kumar Prasad represented the Respondent.

Factual Background

The original defendant/seller, Late Kushum Kumari, was allotted the subject property by the People's Cooperative House Construction Society Limited (Society) vide a registered sub-lease. In the year 2008, an unregistered Agreement to Sell concerning the subject property was executed between the Respondent -buyer-plaintiff and the seller for a total sale consideration of Rs 25 lakh. At the time of the execution of the Agreement to Sell, the first Respondent buyer paid a sum of Rs.2,51,000 in cash to the seller and issued three post-dated cheques worth Rs.7,50,000. When the Respondent buyer visited the subject property along with her husband, the tenants of the seller created a scuffle and forced them to return.

Upon the failure of the seller to execute the sale deed, the Respondent buyer filed a suit before the Trial Court under the Specific Performance Act, 1963, seeking specific performance of the Agreement to Sell. Issues were framed, and a judgment was passed in favour of the first Respondent-buyer on the same date. The Appellant’s appeal was dismissed by the Patna High Court. Aggrieved thereby, the appellant approached the Apex Court.

Reasoning

Highlighting the difference between ‘readiness’ and ‘willingness’ to perform a contract, the Bench explained that continuous readiness and willingness on the part of the Respondent -buyer /purchaser from the date of execution of Agreement to Sell till the date of the decree, is a condition precedent for grant of relief of specific performance. It was also reaffirmed that it is not enough to show the readiness and willingness up to the date of the plaint as the conduct must be such as to disclose readiness and willingness.

As per the Bench, the readiness and willingness of the buyer to go ahead with the sale of the property at the time of the institution of the suit loses its relevance if the Respondent-buyer is unable to establish that the readiness and willingness has continued throughout the pendency of the suit.

The Court was unable to agree that the Respondent buyer was willing to perform the Agreement to Sell and go ahead with the purchase of the property and held that the conduct of the Respondent -buyer in encashing the demand drafts established beyond doubt that she was not willing to perform her part of the Agreement to Sell and proceed with execution of the sale deed. If the buyer was willing to perform the contract she would not have encashed the demand drafts.

Moreover, the act of the Respondent-buyer in encashing the demand drafts led to an irresistible conclusion that the agreement in question stood cancelled. As the seller had issued a letter cancelling the agreement to sell before the institution of the suit, the Bench held that the same constituted a jurisdictional fact as till the said cancellation was set aside, the respondent was not entitled to the relief of specific performance.

The Bench held, “A perusal of the record shows that not only did the Respondent No. 1-buyer fail to seek a declaratory relief, but also it failed to disclose in the plaint that the seller had issued the cancellation letter dated 7th February 2008 enclosing therewith the demand drafts dated 7th February 2008 and two of the three post-dated cheques. The failure of the Respondent No. 1- buyer to disclose the same in her plaint amounts to suppression of material fact, disentitling her from the discretionary relief of specific performance.”

Thus, allowing the appeal, the Bench declared the sale deed executed in favour of the Respondent-buyer as null and void. “...appellant is directed to refund the balance sale consideration amount of Rs.24,61,000/- (Rupees Twenty Four Lakh Sixty One Thousand) deposited by Respondent No.1-buyer in pursuance to the impugned judgment and decrees”, it concluded.

Cause Title: Sangita Sinha v. Bhawana Bhardwaj and Ors. (Neutral Citation: 2025 INSC 450)

Appearance:

Appellant: Senior Advocate S. B. Upadhyay, AOR Rajiv Kumar Sinha, Advocates Raj Kumar, Dr. Shilpa Bagade, Indu Kaul

Respondent: Senior Advocate Ardhendumauli Kumar Prasad, Advocates Samrendra Kumar, Vivek Kumar Srivastava, Ravi Bhutan Upadhyay, AOR Pawan Kumar, Advocate Vishal Arun Mishra, AOR Ramesh Kumar Mishra, Advocates Shivam Tiwary, Anusha Rathore, Shivank S Singh

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Justice Dipankar DattaJustice Manmohan

Tulip Kanth

Assistant Editor

Tulip Kanth is an Assistant Editor at Verdictum having over 5 years of experience in the field of legal journalism and editing. She extensively covers judgments of the Supreme Court, High Courts as well as Tribunals. She has previously worked with a legal publishing website where she oversaw the work of other editors and has also created updates on notifications of different Government Ministries. She holds an English Honours Degree from SGTB Khalsa College, Delhi University and has completed her LLB course with specialisation in Corporate Law from Amity University.