The Supreme Court has ruled that a valid agreement to sell does not automatically entitle a purchaser to specific performance, particularly where continuous readiness and willingness to perform the contract is not established.
Supreme Court Restores Trial Court’s Decision
The Supreme Court has restored a trial court’s judgment refusing specific performance of a property sale agreement executed in 2004, holding that equitable relief cannot be granted merely because a valid contract exists.
Instead of directing execution of the sale deed, the Court ordered refund of the advance amount along with applicable interest.
The judgment was delivered by a Bench comprising Justice Prashant Kumar Mishra and Justice R. Mahadevan Anjaria.
Continuous Readiness Is Mandatory
The Court reiterated that a purchaser seeking specific performance must continuously demonstrate readiness and willingness to fulfil contractual obligations from the date of the agreement until the final decree.
According to the Bench, producing proof of financial capacity at a later stage of litigation cannot compensate for the absence of readiness during the relevant period.
The Court observed that this requirement is a statutory condition and remains central to granting equitable relief.
Purchasers Failed to Prove Financial Readiness
After examining the evidence, the Court found that the purchasers had failed to establish that they possessed sufficient funds when the suit was instituted.
The Bench noted that two cheques issued towards the sale consideration had been dishonoured due to insufficient funds.
It also observed that properties relied upon by the purchasers for arranging finances were sold only after the suit had already been filed, indicating that adequate financial resources were unavailable at the relevant time.
Conduct of Purchasers Also Considered
Apart from financial readiness, the Supreme Court examined the overall conduct of the purchasers throughout the litigation.
The Court noted that they had simultaneously pursued recovery of the advance amount through criminal proceedings while continuing to seek specific performance before the civil court.
According to the Bench, such inconsistent positions weakened their claim for an equitable remedy.
Two-Decade Delay Weighed Against Specific Performance
The Supreme Court further held that the passage of more than twenty years since the execution of the agreement was itself a significant factor while exercising discretion under the Specific Relief Act.
The Court observed that compelling transfer of immovable property after such an extraordinary lapse of time would not be equitable, particularly considering the changed circumstances of the parties.
It reiterated that courts must balance contractual rights with fairness while granting discretionary relief.
Refund Ordered Instead of Sale Deed
Allowing the appeals, the Supreme Court set aside the Madras High Court’s judgment directing execution of the sale deed and restored the trial court’s decree.
The purchasers were held entitled to refund of the ₹85 lakh advance amount together with interest.
The Court also permitted withdrawal of the amount deposited pursuant to the High Court’s earlier order, along with accrued interest.
Key Takeaways
- Supreme Court held that specific performance is not an automatic consequence of a valid sale agreement.
- Continuous readiness and willingness must be proved throughout the litigation.
- Dishonoured cheques and lack of financial capacity weighed against the purchasers.
- Inconsistent conduct of the purchasers was also considered by the Court.
- A delay of over twenty years was held to be a relevant equitable consideration.
- The Court ordered refund of the advance amount with interest instead of enforcing the sale agreement.
Case Details
Case Title: V.N.A.S. Chandran v. S. Venila & Others
Court: Supreme Court of India
Bench: Justice Prashant Kumar Mishra and Justice R. Mahadevan Anjaria
