A two-judge bench comprising of Justice Dr. D.Y. Chandrachud and Justice A.S. Bopanna, observed that the conduct of the plaintiff, in a suit of specific performance related to the transfer of immovable property, was crucial and critical. It was further asserted that through the conduct of Plaintiff, the readiness and willingness to perform the obligations under a contract could be determined.

Senior Counsel, Ms. V Mohana appeared on behalf of the Appellants while Counsel, Mr. Siddharth Naidu appeared for the Respondent before the Supreme Court.

In this case, the Appellants entered an agreement with the Respondent to sell their property for a consideration of Rs. 1,25,000. An advance amount of Rs. 25,000 was paid with the promise of the balance consideration to be paid within six months. A further sum of Rs. 10,000 was received from the Respondent. The Appellants sent a legal notice to the Respondents on December 19, 1990, calling upon him to pay the balance amount and perform his obligations under the agreement to sell. Furthermore, the Appellants rescinded the contract on the ground that the Respondent was not 'ready and willing' to perform his obligations.

The Respondent instituted a suit before the Principal District Munsif, Coimbatore seeking a permanent injunction restraining the Appellants to create an encumbrance. An ad-interim injunction was granted. The Respondent further instituted a suit for specific performance and in the alternative, contended the refund of the advance amount of Rs. 35000 along with an interest rate of 24%. The Trial Court decreed the suit in favor of the Respondent and directed the Respondent to deposit the balance consideration of Rs. 90,000 and instructed the Appellants to execute the sale deed accordingly. The Appellants first appealed before the Principal District Judge, Coimbatore which was dismissed. A second appeal was preferred before the Madras High Court which was also dismissed. The Appellants preferred an appeal before Supreme Court against this impugned judgment.

The primary issue in this case was –

  • Whether the Respondent had performed or had always been 'ready and willing' to perform his obligations under the contract?

It was contended by the Appellants that only after the legal notice was served on the Respondent by the Appellants, the Respondent had filed a suit for permanent injunction and not a suit for specific performance which indicated that the Respondent was not ready to perform the contract. Moreover, it was claimed that the Respondent had filed the suit for specific performance on June 17, 1993, and the remaining consideration of Rs. 90,000 was deposited on November 15, 1996. In 2001, this amount was withdrawn. Thus, the conduct of the Respondent did not indicate that he was 'ready and willing' to perform the contract. Additionally, it was argued that until the Appellants issued a notice to the Respondent informing him about the rescission of the contract, there was no communication from the Respondent to seek performance of the agreement by the Appellants.

The above claims were opposed by the Respondent who contended that in his reply dated 26 December 1990, he had specifically stated that he was ready and willing to pay the balance consideration and get the sale deed executed, provided the mortgage was discharged. Moreover, it was argued that the Respondent had sufficient means to purchase the suit property and was ready and willing to perform his part of the contract.

The Supreme Court referred to the case of J.P. Builders v. A Ramdas Rao, to observe the compliance with Section 16(c) of the Specific Relief Act, 1963, which mandated the 'readiness and willingness' of the plaintiff, as a condition precedent to obtain the relief of specific performance. The Court asserted that 'readiness' referred to the financial capacity and 'willingness' referred to the conduct of the plaintiff wanting the performance.

The Apex Court even referred to the judgment in the case of Atma Ram v. Chiranjit Singh, to hold that delay in filing a suit, specifically one for mandatory injunction, indicated the inconsistent behavior of the Plaintiff. The failure of the trial court to frame an issue related to the readiness and willingness of the plaintiff to perform the contract was also critical in declining the remedy of specific performance.

The Supreme Court opined, "The foundation of a suit for specific performance lies in ascertaining whether the plaintiff has come to the court with clean hands and has, through his conduct, demonstrated that he has always been willing to perform the contract. There is a conspicuous absence in judgment of the trial court of any reference to evidence led by the respondent to indicate his willingness to perform the contract. The trial court merely adverted to "document produced on behalf of the plaintiff" and concluded that he had sufficient means to purchase the suit property. Apart from this observation, the judgment fails to analyse the terms of the agreement, the obligations of the parties and the conduct of the respondent or the appellant."

The Court observed, "It is an established principle of law that the plaintiff must prove that he is ready and willing to perform the contract. The burden lies on the plaintiff."

The Respondent had failed to provide any documents or communication which would indicate that he had called upon the Appellants to perform their obligations or discharge the mortgage within the time period stipulated in the contract. It was only in response to the Appellant's legal notice that the Respondent had demanded performance of their obligations. Moreover, a mandatory injunction suit was instituted rather than a suit for specific performance of the contract. According to the Court, the inconsistency in the Respondent's conduct, the lack of communication with the Appellants urging them to discharge the mortgage and showing his willingness to pay the balance consideration, and the delay of about three years from the date fixed for performance of the contract in filing a suit, were indicative of the Respondent's lack of will to perform the contract. Hence, according to the Court, the Respondent (i.e. the Plaintiff before the Subordinate Courts) had not proved his readiness and willingness to perform the contract.

Additionally, the Bench held, "The courts must be cognizant of the conduct of the parties, the escalation of the price of the suit property, and whether one party will unfairly benefit from the decree. The remedy provided must not cause injustice to a party, specifically when they are not at fault. In the present case, three decades have passed since the agreement to sell was entered into between the parties. The price of the suit property would undoubtedly have escalated. Given the blemished conduct of the respondent-plaintiff in indicating his willingness to perform the contract, we decline in any event to grant the remedy of specific performance of the contract."

Accordingly, the Apex Court allowed the appeal and set-aside the judgment of the Madras High Court. The Court further directed the Appellants to refund the advance amount of Rs. 35,000 with an interest rate of 6% which was received from the Respondent.

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