Supreme Court of India
R. KANDASAMY (SINCE DEAD) & ORS.versusT.R.K. SARAWATHY & ANR.
- Citation
- 2024 INSC 884
- Decided
- 21 November 2024
- Disposal
- Appeal(s) allowed
- Bench
- DIPANKAR DATTA
Holding
The Supreme Court held that time was not of the essence, the buyer was not ready and willing to perform, and the appeal was allowed, restoring the trial court’s dismissal of the specific performance suit.
Summary
The buyer sued the sellers for specific performance of a 2005 agreement for sale of land and a tenanted building. The trial court dismissed the suit, finding the buyer was not ready and willing to pay the balance price, while the High Court reversed that decision, holding that time was not of the essence and granting specific performance. The Supreme Court examined whether the contract’s time‑of‑essence clause was overridden by a vacancy clause, and whether the buyer had demonstrated readiness and willingness to perform. It held that the two clauses must be read together, that time was not of the essence, and that the buyer lacked the financial capacity and willingness to complete the purchase. Consequently, the Court restored the trial court’s dismissal and ordered the sellers to return the advance amount. The appeal was allowed, and the High Court’s decree was set aside.
Issues considered
- The contract’s clause that "time is of the essence" versus the clause conditioning performance on vacant possession – which governs?
- Whether the buyer was ready and willing to perform her part of the contract, including payment of the balance price.
- Whether a suit for specific performance is maintainable when the plaintiff does not pray for declaratory relief that the cancellation of the agreement is bad in law.
- Whether the trial court’s failure to frame an issue on the maintainability of the suit (a jurisdictional fact) bars the appellate court from examining that fact.
- Interpretation of inconsistent clauses in a deed and the rule that earlier clauses prevail over later repugnant ones.
Legislation cited
- Code of Civil Procedure, 1908s. 9, s. Order 14 Rule 2, s. Order VII Rule 1, s. Order VII Rule 11(d)
- Specific Relief Act, 1963s. 10, s. 16, s. 20, s. 21, s. 22, s. 23
Headnote
Issue for Consideration Trial Court dismissed the suit for specific performance of an agreement for sale by the buyer. High Court allowed the appeal thereagainst and granted decree for specific performance. Whether the impugned judgment of the High Court warrants any interdiction in exercise of Whether an omission on the part of the trial court to frame an issue on maintainability of a suit touching jurisdictional fact by itself takes away the powers of the higher court to examine whether the jurisdictional fact did exist for grant of relief as claimed. Headnotes† Specific
Subjects
Suit for specific performanceAgreement for saleMaintainability of a suitJurisdictional factTime not the essence of the contractSellerBuyerReadiness and willingness not provedBalance sale considerationSale deedFinancial incapacityEncumbrance certificateInconsistent clauses in an agreementDiscretionary relief of specific performanceHigher courtAppellate court
Judgment
[2024] 11 S.C.R. 1099 : 2024 INSC 884
R. Kandasamy (Since Dead) & Ors.
v.
T.R.K. Sarawathy & Anr.
(Civil Appeal No. 3015 of 2013)
21 November 2024
[Dipankar Datta* and Sanjay Karol, JJ.]
Issue for Consideration
Trial Court dismissed the suit for specific performance of an
agreement for sale by the buyer. High Court allowed the appeal
thereagainst and granted decree for specific performance. Whether
the impugned judgment of the High Court warrants any interdiction
in exercise of the appellate jurisdiction. Whether an omission on
the part of the trial court to frame an issue on maintainability of
a suit touching jurisdictional fact by itself takes away the powers
of the higher court to examine whether the jurisdictional fact did
exist for grant of relief as claimed.
Headnotes†
Specific performance – Suit for specific performance – Time
when not the essence of the contract – Readiness and
willingness not proved – High Court decreed the buyer’s suit
for specific performance holding that time was not of essence
as the sellers had received payments, without protest, even
after the final date fixed for the performance of the agreement
and that the buyer was ready and willing to perform her part
of the contract – Challenge to:
Held: Time was not the essence though the Agreement provided
that “time mentioned in this agreement shall be of the essence” –
On a bare reading of the two clauses of the Agreement, it cannot
be said that the latter clause destroys the effect of the former
clause altogether so much so that it has to be discarded – On
the contrary, both the clauses were such that the same had to be
read together and given effect upon ascertaining the intention of
the parties as disclosed by the Agreement as a whole – The latter
clause could not have been read divorced from the former, having
*Author
1100 [2024] 11 S.C.R.
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regard to the intent of the parties that is discernible – Further,
on facts, the buyer was not ready and willing to have the terms
agreed by and between the parties to be performed – There was
no readiness and willingness on the buyer’s part to pay the balance
sale consideration and get the sale deed executed despite multiple
reminders – Also, admittedly the buyer did not have enough fund
in either of her bank accounts to pay the balance sale price – First
appellate judgment and decree of the High Court set aside – Decree
of the Trial Court restored – Suit filed by the buyer dismissed.
[Paras 31, 33, 35, 36, 48]
Code of Civil Procedure, 1908 – Suit – Maintainability,
‘jurisdictional fact’ – Failure of the trial court to frame an issue
on maintainability of suit touching jurisdictional fact, if takes
away the powers of the higher court to examine whether the
jurisdictional fact did exist for grant of relief as claimed:
Held: No – I.S. Sikandar v. K. Subramani [2013] 17 SCR 24 held
that in absence of a prayer for declaratory relief that termination
of the agreement is bad in law, a suit for specific performance is
not maintainable – However, A. Kanthamani v. Nasreen Ahmed
[2017] 2 SCR 610 distinguished the aforesaid case and held that
unless an issue as to maintainability is framed by the Trial Court,
the suit cannot be held to be not maintainable at the appellate stage
only because appropriate declaratory relief has not been prayed –
Kanthamani though did not deal with the effect of non-existence
of a jurisdictional fact i.e., what would be its effect on the right
to relief claimed by the plaintiff in a suit for specific performance
of contract – Clarified – Omission on the part of the trial court to
frame an issue on maintainability of a suit touching jurisdictional
fact does not by itself take away the powers of the higher court to
examine whether the jurisdictional fact did exist for grant of relief
as claimed, provided no new facts were required to be pleaded
and no new evidence led. [Paras 22, 24, 46]
Suit for specific performance – Law as regards the principles
governing – Discussed.
Case Law Cited
I.S. Sikandar v. K. Subramani [2013] 17 SCR 24 : (2013) 15 SCC
27; A. Kanthamani v. Nasreen Ahmed [2017] 2 SCR 610 : (2017)
4 SCC 654 – Clarified.
[2024] 11 S.C.R. 1101
R. Kandasamy (Since Dead) & Ors. v. T.R.K. Sarawathy & Anr.
Ferrodous Estates (P) Ltd v P. Gopirathnam [2020] 13 SCR 673 :
2020 SCC Online 825; Chand Rani v. Kamal Rani [1992] Supp.
3 SCR 798 : (1993) 1 SCC 519; Saradamani Kandappan v. S.
Rajalakshmi [2011] 8 SCR 874 : (2011) 12 SCC 18; Prakash
Chandra v. Angadlal (1979) 4 SCC 393; N.P. Thirugnanam v. R.
Jagan Mohan Rao (Dr) [1995] Supp. 2 SCR 53 : (1995) 5 SCC
115; Nirmala Anand v. Advent Corpn. (P) Ltd. [2002] Supp. 2 SCR
706 : (2002) 8 SCC 146; Kamal Kumar v. Premlata Joshi [2019] 1
SCR 54 : (2019) 3 SCC 793; P. Daivasigamani v. S. Sambandan
[2022] 18 SCR 199 : (2022) 14 SCC 793; C.S. Venkatesh vs. A.S.C.
Murthy [2020] 2 SCR 676 : (2020) 3 SCC 280; U.N. Krishnamurthy
v. A.M. Krishnamurthy [2022] 13 SCR 250 : (2023) 11 SCC 775;
Mohinder Kaur v. Sant Paul Singh (2019) 9 SCC 358; Forbes v.
Git [1922] 1 A.C. 256; Radha Sundar Dutta v. Mohd. Jahadur
Rahim [1959] 1 SCR 1309 : AIR 1959 SC 24; Bharat Sher Singh
Kalsia v. State of Bihar [2024] 1 SCR 1165 : (2024) 4 SCC 318;
Shrisht Dhawan (Smt) v. Shaw Bros. [1991] Supp. 3 SCR 446 :
(1992) 1 SCC 534 – referred to.
List of Acts
Specific Relief Act, 1963.
List of Keywords
Suit for specific performance; Agreement for sale; Maintainability
of a suit; Jurisdictional fact; Time not the essence of the contract;
Seller; Buyer; Readiness and willingness not proved; Balance sale
consideration/price; Sale deed; Financial incapacity; Encumbrance
certificate; Demand draft; Inconsistent clauses in an agreement;
Discretionary relief of specific performance; Higher court; Appellate
court.
Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3015 of 2013
From the Judgment and Order dated 21.10.2011 of the High Court
of Madras in AS No. 811 of 2008
With
Civil Appeal No. 3016 of 2013
1102 [2024] 11 S.C.R.
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Appearances for Parties
Rana Mukerjee, Rakesh Diwedi, Mrs. V. Mohana, Guru Krishna
Kumar, Sr. Advs., B Ragunath, Mrs. NC Kavitha, Vijay Kumar, R
Venkatraman, N Sridhar, Arunmozhi, S Padmanaban, Mrs. Bhavya
Pandey, Gokul Athiya, Sriram P., E.R. Kumar, Ms. Swati Bhardwaj,
Ms. Pratyusha Priyadarshini, Ms. Aadya Malik (for M/s. Parekh &
Co.), Ms. Movita, Advs. for the appearing parties.
Judgment / Order of the Supreme Court
Judgment
Dipankar Datta, J.
The Appeals
1. The appellants1 in Civil Appeal No.3015 / 2013 were the defendants
in a suit2 for specific performance of an agreement for sale3 instituted
by the first respondent as the plaintiff,4 in respect of land together
with a tenanted building.5 The suit was dismissed by the Trial Court
vide judgment and decree dated 17th December, 2007. Upon a first
appeal6 being carried under section 96 of the Code of Civil Procedure,
19087 by the buyer before the High Court of Judicature at Madras,8
the same succeeded vide judgment and decree dated 21st October,
2011.9 The High Court reversed the judgment and decree of dismissal
of the suit and granted decree for specific performance. The sellers
have taken exception to the first appellate judgment and decree in
this appeal by special leave, granted on 5th April, 2013.
2. Civil Appeal No.3016 / 2013 is also an appeal against the impugned
judgment, special leave wherefor was also granted on 5th April, 2013.
1 sellers, hereafter
2 O.S. 420 of 2006
3 Agreement, hereafter
4 buyer, hereafter
5 property, hereafter
6 A.S.811 of 2008
7 CPC, hereafter
8 High Court, hereafter
9 impugned judgment, hereafter
[2024] 11 S.C.R. 1103
R. Kandasamy (Since Dead) & Ors. v. T.R.K. Sarawathy & Anr.
It is at the instance of a company10 who had purchased the property,
forming the subject of the Agreement, from the sellers when the
first appeal was pending before the High Court without any order
restraining the sellers to alienate the same. Upon such purchase,
the subsequent purchaser derived knowledge of pendency of the
first appeal; thus, it applied for and was impleaded as the eight
respondent therein.
Resume of Facts
3. Although the facts leading to institution of the suit by the buyer and
the defence raised by the sellers are captured in the decisions of the
Trial Court as well as the High Court, for the sake of completeness,
we consider it appropriate to briefly refer to the same hereunder:
a. The parties, on mutually agreed terms, executed the Agreement
dated 20th January, 2005 for sale of the property. Towards
consideration, the buyer agreed to pay Rs. 2.3 crore to the
sellers. Other noticeable features of the Agreement are:
i. A sum of Rs. 10 lakh was paid by the buyer as an advance.
ii. The buyer had to pay the balance sale consideration within
four months from the date of the Agreement (the period
ending on 19th May, 2005).
iii. On the date of the Agreement, the property was occupied
by tenants and the sellers agreed that they will have the
tenants vacate the property and deliver vacant possession
thereof to the buyer at the time of sale.
iv. Time shall be of the essence.
b. The buyer started effecting payments in instalments. She paid
Rs. 5 lakh, Rs. 4 lakh, Rs. 1 lakh and Rs. 5 lakh on 2nd February,
24th February, 5th June, and 24th July, 2005, respectively, totalling
to Rs. 15 lakh. Taking into consideration Rs.10 lakh paid in
advance, the buyer paid in all Rs. 19 lakh prior to 19th May,
2005 and Rs. 6 lakh beyond that date.
c. The sellers vide letter dated 23rd February, 2006 cancelled the
Agreement and returned the sum of Rs. 25 lakh claiming that
10 subsequent purchaser, hereafter
1104 [2024] 11 S.C.R.
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the said period of 4 (four) months had expired and that the
buyer had not shown interest to complete the deal. However,
the buyer vide reply letter dated 24th February, 2006 refuted
the contents of the letter and emphasized that the sellers were
bound to have the property vacated and the sale deed had to
be executed only after all the tenants had vacated the property.
It is noted that the last of the tenants vacated the property on
2nd February, 2006.
d. The sellers vide letter dated 2nd March, 2006 asserted that the
buyer has no right to claim purchase of the property as the
Agreement had already been cancelled. The sellers reiterated
that time is not the essence of the contract; the said period of
4 (four) months had expired; the fact of vacation of property
by tenants was duly conveyed to the buyer multiple times; and
despite multiple requests, the buyer did not come forward to
execute the sale deed. For these reasons, the Agreement was
cancelled vide letter dated 23rd February, 2006 and the pay
order of Rs. 25 lakh was returned.
e. Despite the letter dated 23rd February, 2006 whereby the sellers
cancelled the Agreement (reiterated vide letter dated 2nd March,
2006), the sellers vide a telegram dated 11th March, 2006 again
expressed interest to sell the property and conveyed that they
were ready to sell it; consequently, the buyer was called upon
to complete the sale before 24th March, 2006.
f. The buyer, claiming that she was out of station, sent a letter on
18th March, 2006. She asserted that as per the Agreement, she
had four months’ time from the date of vacating of the property
by all the tenants. A request was made calling upon the sellers
to bring the original documents and ‘encumbrance certificate
for 30 years’ to enable her advocate prepare the sale deed.
g. The sellers then sent a letter dated 23rd March, 2006 asserting
therein that the period of four months is to be counted from
the date of the Agreement, and the demand for encumbrance
certificate was not tenable as the buyer had already obtained
encumbrance certificate from the sellers prior to entering into the
Agreement and had also assured that she herself would verify
the said certificate from the date of Agreement till date of sale.
The sellers further stated that irrespective of the above, they have
[2024] 11 S.C.R. 1105
R. Kandasamy (Since Dead) & Ors. v. T.R.K. Sarawathy & Anr.
applied for encumbrance certificate and requested the buyer to
execute the sale deed within a week from receipt of encumbrance
certificate, failing which, the Agreement would stand cancelled.
h. On 25th March, 2006, the sellers called upon the buyer to pay
the sale consideration of Rs. 2.3 crore within 7 (seven) days.
The buyer responded vide reply notice dated 29th March, 2006
and enclosed with it a draft sale deed and also demanded the
sellers to hand over the encumbrance certificate.
i. The sellers responded vide letter dated 6 th April, 2006
and reiterated that photostat copies of the title deeds and
encumbrance certificate up to the date of Agreement was already
furnished to, and verified by the buyer before entering into the
Agreement and that although it was not possible for them to
deliver the original documents, they were ready to let the buyer
verify the original documents. They also made a request to the
buyer to pay the sale consideration within 5 (five) days from
receipt of the letter.
j. The sellers had not handed over the “original parent documents”
for perusal of the buyer; hence, the buyer directly spoke to
one of the sellers (the fourth defendant) asking him to bring
the “original parent documents” for inspection. The buyer also
sent a notice dated 22nd April, 2006 to the counsel of the sellers
requesting him to advise the sellers to bring the documents for
the buyer’s verification.
k. Vide letter dated 26th April 2006, the sellers deplored the buyer’s
dilatory tactic of conjuring new demands at the eleventh hour.
Despite this, the sellers said, that they attempted their best to
satisfy the buyer’s demand and offered the buyer the chance
to inspect the original parent documents (vide letter dated 6th
April,2006), which offer the buyer showed no interest in availing.
In view of the buyer’s failure to perform her part of the bargain
despite multiple opportunities being given, the sellers declared
that the Agreement finally stood cancelled,.
l. Thereafter, vide letter dated 10th August, 2006, the buyer called
upon the sellers to collect the pay order dated 11th February,
2006 for Rs. 25 lakh from the buyer’s office, but the sellers did
not collect the same. The buyer then enclosed the pay order with
her letter dated 10th August, 2006 and sent it to the sellers who,
1106 [2024] 11 S.C.R.
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vide letter dated 14th August, 2006 replied that the Agreement
had already been cancelled and that the buyer, who earlier was
not ready and willing, is now trying to grab the property as the
value of the property has gone up multiple times.
4. It is in this factual background that litigation between the buyer
and the seller commenced with institution of the suit by the buyer
before the Court of the District Judge of Coimbatore. The suit was
later transferred by the District Judge to the Court of the Additional
District Judge (Fast Track Court I).11 Based on the averments in the
plaint, which refer to more or less what we have narrated above in
paragraph 3, relief was claimed in the following terms:
a. To pass a decree for specific performance of the Agreement
dated 20th January, 2005 or in the alternate a decree for refund
of advance amount of Rs. 25 lakh with 18% interest p.a. from
the date of Agreement till realization.
b. For permanent injunction restraining the sellers from alienating
or encumbering the property.
c. To direct the sellers to pay the costs of the suit.
d. Any other relief that the court deems fit.
5. The sellers in their written statement refuted all the contentions
raised in the plaint and pleaded that the buyer was never ready
and willing to purchase the property and alleged that the buyer
filed the suit with the intention to take benefit of the increase in
price of the property by projecting a theory that time is not of the
essence.
Verdicts of the Trial Court and the High Court
6. The Trial Court framed and answered the issues as follows:
6.1 Whether the agreement for sale dated 20th January, 2005, is
true, valid and legally enforceable? Answered in the affirmative.
6.2 Whether as per the agreement for sale, the plaintiff was ready
and willing to pay the balance sale consideration and get the
sale deed executed? Answered in the negative.
11 Trial Court, hereafter
[2024] 11 S.C.R. 1107
R. Kandasamy (Since Dead) & Ors. v. T.R.K. Sarawathy & Anr.
6.3 Whether the plaintiff is entitled for a decree directing the
defendants to receive the balance sale consideration and
execute the sale deed? Answered in the negative.
6.4 Whether the plaintiff is entitled to the alternative relief of refund
of Rs.25,00,000 with 18% interest p.a. from the defendants?
Answered in the negative.
7. As has been noticed above, the fortune of the parties changed
before the Trial Court and the High Court. High Court, in appeal,
decreed the suit of the buyer. High Court observed that time was not
of essence as the sellers had received payments, without protest,
even after the final date fixed for the performance of the Agreement.
After analysing the documents on record, the High Court observed
that the buyer was ready and willing and found no reason which
disentitled her from the discretionary relief of specific performance.
Arguments
8. Mr. Dwivedi, learned senior counsel for the sellers, argued that the
impugned judgment is completely flawed and hence, the appeal
deserves interference.
8.1. Firstly, Mr. Dwivedi contended that the terms of the Agreement
clearly provided that leaving aside the sum paid as advance, the
time period for making payment of the balance sale consideration
would be four months commencing from the date of such
Agreement, i.e., 20th January, 2005. Admittedly, the buyer did
not make the payment as agreed by and between the parties
and time being the essence of the contract, the Trial Court
was justified in dismissing the suit (although on the point of
time being the essence of the contract, it had held otherwise).
8.2. Secondly, Mr. Dwivedi invited our attention to the letter dated
23rd February, 2006 sent by the sellers to the buyer whereby
the sellers cancelled the Agreement and refunded the advance
amount. The relevant part of the said letter is reproduced below:
“…….You failed to pay the balance sale consideration
within the period of 4 months and get the sale deed
executed.”
In reply to the above, the buyer sent a letter dated 24th February,
2006 to the sellers. Nowhere in this reply letter did the buyer
1108 [2024] 11 S.C.R.
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expressly mention that the period of four months is to be counted
from the date of vacation of the property by the tenants. Hence,
the assertion that the period of four months was to be counted
from the date of vacation is merely an afterthought.
8.3. Thirdly, Mr. Dwivedi asserted that vide telegram dated 11th
March, 2006, the sellers gave one last opportunity to the buyer
to pay the balance amount and register the sale deed before
24th March, 2006. It has come on record that the buyer, despite
being present in Coimbatore, falsely represented in her reply
dated 18th March, 2006 that she was out of station and, hence,
was disabled to respond immediately. The conduct of the buyer,
therefore, does not inspire confidence and certainly such conduct
was sufficient to deny her equitable relief.
8.4. Fourthly, Mr. Dwivedi contended that the buyer was never ready
and willing to perform her part of the bargain and hence she
was not entitled to the relief of specific performance. To show
the reluctance of the buyer to go ahead with the transaction,
various communications by and between the parties were
referred to. The reply dated 24th February, 2006 was first referred
wherefrom it would be evident that the buyer was aware of the
fact of vacation of the property by the last remaining tenant.
Vide telegram dated 11th March, 2006, the sellers called upon
the buyer to hand over the pay order and gave time till 24th
March, 2006 to pay the balance sale amount and register the
sale deed. Despite this, the buyer did not initiate any positive
action as evidence of her readiness and willingness. Again, vide
letter dated 23rd March, 2006, the sellers informed the buyer that
they had applied for the encumbrance certificate, even though
provision of such certificate was not a term of the Agreement.
The sellers again called upon the buyer to execute the sale deed
within 7 (seven) days from the date of receipt of the certificate.
Even then, the buyer did not take steps to complete the sale.
The sellers sent the encumbrance certificate as requested vide
letter dated 06th April, 2006, and asked the buyer to execute the
sale deed within 5 (five) days; however, even then, the buyer
did not do the needful. Ultimately, having no other option, the
sellers finally had to cancel the Agreement vide letter dated 26th
April, 2006. Thereafter, the buyer maintained silence for four
months. There is no reasonable justification for such silence.
[2024] 11 S.C.R. 1109
R. Kandasamy (Since Dead) & Ors. v. T.R.K. Sarawathy & Anr.
8.5. Fifthly, Mr. Dwivedi submitted that the buyer has nowhere
pleaded that she had purchased the stamp papers for execution
of the sale deed. This further suggests that the buyer was not
ready and willing to perform her part of the obligations under
the Agreement.
8.6. Sixthly, Mr. Dwivedi argued that the buyer had taken prevaricating
stands and, therefore, is not entitled to the discretionary relief of
specific performance. He drew our attention to the letter dated
24th February, 2006 wherein the buyer stated:
“It appears that only few days ago, the tenant has
vacated and the portion is kept under lock and key.”
This shows that the buyer was aware of the fact of vacation of
the property by the last tenant days prior to 24th February, 2006.
However, in her letter dated 18th March, 2006, she stated that:
“You have vacated all the tenants only on 02.02.2006
and it has been officially intimated to me only on
04.03.2006 by your letter dated 02.03.2006”.
To show the alleged wrongful conduct of the buyer, our attention
was drawn to another instance. In her reply dated 18th March
2006 to the telegram, the buyer stated:
“…………………I am in receipt of your telegram dated
11.03.2006 which has been received by my office and
due to my non-availability in the town I could not take
immediate action in this……………….”
However, when the buyer was confronted with Exs. B1 and B2
being news items appearing in Tamil dailies dated 15th March
and 16th March, 2006 (wherein the buyer was seen receiving
an award at Coimbatore), she admitted that between 11th March
and 18th March, 2006 she was coming to and going out of
Coimbatore. This fact was neither mentioned in her plaint nor
in her sworn affidavit before the High Court. Having come with
unclean hands by suppressing such material facts, the buyer
disentitled herself to the relief of specific performance.
8.7. Seventhly, Mr. Dwivedi urged that the Agreement having stood
cancelled at the instance of the sellers, not once but twice, it was
necessary for the buyer to seek declaration that the cancellation
1110 [2024] 11 S.C.R.
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was bad and not operative and binding qua her and in the
absence of such a prayer, the suit itself was not maintainable in
law. However, Mr. Dwivedi fairly pointed out that no such point
having been raised by the sellers in their written statement, the
Trial Court did not frame an issue on such aspect. Nevertheless,
it was argued that this was a substantial point of law concerning
the Court’s very jurisdiction, which ought to weigh in the mind of
the Court while considering whether, at all, the relief of specific
performance could be granted in favour of the buyer on the face
of her omission/neglect to claim appropriate relief.
8.8. Eighthly, while inviting our attention to several documents on
record, more particularly the cross-examination of the buyer
wherein she admitted that she did not have enough money in
either of her bank accounts to pay the balance sale price and
asserted that she had the money in cash, Mr. Dwivedi contended
that the buyer did not have the capacity to go ahead with the
sale transaction.
8.9. Ninthly, it was the submission of Mr. Dwivedi that the property
was sold by the sellers to the subsequent purchaser after stay,
prayed in connection with the first appeal of the buyer, was
refused by the High Court. A property which was being sold for
Rs.2.3 crore had fetched a price of Rs.8 crore and that relief
of specific performance being an equitable relief, the facts and
circumstances were not such so as to decree the suit of the
buyer particularly having regard to her conduct.
8.10. Finally, Mr. Dwivedi appealed that it was a fit and proper case
where the impugned judgment of the High Court ought to be
reversed and that of the Trial Court restored.
9. Mr. Rana Mukherjee, learned senior counsel for the subsequent
purchaser adopted the submissions of Mr. Dwivedi and submitted
that that the conduct of the buyer disentitles her from claiming
the relief of specific performance; therefore, the Trial Court rightly
dismissed the suit. That apart, the subsequent purchaser being a
bona fide purchaser of the property for value, this Court may not
disturb the status quo.
10. Mr. Guru Krishna Kumar, learned senior counsel for the buyer, argued
that the view taken by the High Court is correct, well-reasoned, not
perverse and a plausible view; hence, it does not warrant interference.
[2024] 11 S.C.R. 1111
R. Kandasamy (Since Dead) & Ors. v. T.R.K. Sarawathy & Anr.
10.1. First, Mr. Kumar contended that both the Trial Court and High
Court have concurrently found that time is not the essence of
the contract. While inviting our attention to several documents on
record, Mr. Kumar contended that the following conduct of the
sellers itself evinced that for them, time was not of the essence:
i. the sellers received payments on 5th June 2004 and 24th
July 2005, which is after the final date that they say was
fixed for performance of the Agreement, i.e. 19th May 2005;
ii. even though they purportedly cancelled the Agreement
vide telegram dated 11th March 2006, in their subsequent
letters dated 23rd March 2006, 24th March 2006 and 6th
April 2006, they have given extensions to the buyer in a
piecemeal manner;
iii. and the sale deed could not have been executed by
the sellers unless they evicted all tenants. Since such
eviction is an uncertain event, time could not have been
of the essence.
10.2. Secondly, Mr. Kumar submitted that the sellers have delineated
a conduct full of blemishes, elaborated below, which disentitles
them from discretionary relief of specific performance:
i. vide their letter dated 23 rd February 2006, sellers
purportedly cancelled the Agreement, then taking a
volte face, vide letter dated 11th March 2006, the sellers
conveyed that they were ready to sell the property;
ii. the sellers never furnished the original title deeds for
inspection by the buyer;
iii. though the sellers returned the pay order of Rs. 25 lakh
vide letter dated 11th February 2006, it was sent to a
wrong address;
iv. and the sellers never obtained and produced any
document from their bank, viz. M/s Vijaya Bank, showing
the status of the pay order issued by the buyer, even
though the same could have been obtained by them and
this they did deliberately, so that the court can conclude
that either the buyer has encashed the same or that the
buyer never returned the same to sellers.
1112 [2024] 11 S.C.R.
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Mr. Kumar cited the decision of this Court in Ferrodous Estates
(P) Ltd v P. Gopirathnam12 and relied on the following paragraph:
“54. ...As has been found earlier in this judgment, the
Sellers were held to have taken up dishonest pleas
and also held to have been in breach of a solemn
agreement in which they were to obtain the Urban
Land Ceiling permission which, if not obtained, would,
under the agreement itself, not stand in the way of
the specific performance of the agreement between
the parties. He who asks for equity must do equity.
Given the conduct of the defendants in this case,
as contrasted with the conduct of the appellant who
is ready and willing throughout to perform its part
of the bargain. We think this is a fit case in which
the Division Bench judgment should be set aside.
As a result, the decree passed by the Single Judge
is restored. Since the appellant itself offered a sum
of Rs. 1.25 crores to the Division Bench, it must be
made to pay this amount to the respondents within a
period of eight weeks from the date of this judgment.”
(emphasis supplied)
10.3. Thirdly, Mr. Kumar asserted that the buyer was always ready
and willing to perform her part of the bargain. In fact, the
buyer’s obligation to pay the balance consideration was to
be fulfilled only after the sellers had performed their part of
the bargain, which was to be ready to hand over the vacant
possession of the property by evicting the tenants. Hence,
without first performing their reciprocal promises, the sellers
could not have called upon the buyer to pay the balance sale
consideration. On the contrary, it was the sellers who were not
ready to perform their part. Vide letter dated 22nd April 2006,
the buyer demanded the sellers to produce the original title
deeds which was refused by the sellers vide their letter dated
26th April 2006. Even though there was no express condition
in the Agreement for production of original title deeds, but
such condition is implied in the Agreement. Hence, without
12 [2020] 13 SCR 673 : 2020 SCC Online 825
[2024] 11 S.C.R. 1113
R. Kandasamy (Since Dead) & Ors. v. T.R.K. Sarawathy & Anr.
the sellers having first complied with their promise, they could
not have called upon the buyer to perform her part and later
claim that the buyer was not ready and willing.
10.4. Taking the above into consideration, Mr. Kumar submitted,
that the High Court has rightly granted the discretionary relief
of specific performance in favour of the buyer.
Question
11. The sole question that we are tasked to decide is, whether the
impugned judgment of the High Court warrants any interdiction in
exercise of our appellate jurisdiction.
Judicial Precedents
12. Before embarking on the aforesaid task, it would only be just and
proper to remind ourselves of certain well-settled principles that
have evolved through judicial precedents laid down by this Court on
certain points which invariably arise in specific performance suits and
which are relevant for the purpose of a decision on these appeals.
On whether time is the essence of the contract:
13. A Constitution Bench of this Court in Chand Rani v. Kamal Rani13
surveyed previous decisions on the question as to whether or not time
is the essence of the contract in transactions of sale of immovable
properties and appears to have made a slight departure from earlier
principles by ruling as under:
“25. From an analysis of the above case-law it is clear
that in the case of sale of immovable property there is no
presumption as to time being the essence of the contract.
Even if it is not of the essence of the contract the Court
may infer that it is to be performed in a reasonable time
if the conditions are:
1. from the express terms of the contract;
2. from the nature of the property; and
3. from the surrounding circumstances, for
example: the object of making the contract.”
13 [1992] Supp. 3 SCR 798 : (1993) 1 SCC 519
1114 [2024] 11 S.C.R.
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14. An instructive discussion is found in Saradamani Kandappan v. S.
Rajalakshmi14 of how the principle of time not being the essence of
the contract in transactions relating to sale of immovable properties
took shape and how with changing times, the outlook of the courts
in pleas claiming specific performance should be. We consider it
appropriate to reproduce the same hereunder:
“36. The principle that time is not of the essence of
contracts relating to immovable properties took shape
in an era when market values of immovable properties
were stable and did not undergo any marked change
even over a few years (followed mechanically, even
when value ceased to be stable)…..This principle made
sense during the first half of the twentieth century, when
there was comparatively very little inflation, in India. The
third quarter of the twentieth century saw a very slow but
steady increase in prices. But a drastic change occurred
from the beginning of the last quarter of the twentieth
century. There has been a galloping inflation and prices
of immovable properties have increased steeply, by
leaps and bounds. Market values of properties are no
longer stable or steady. We can take judicial notice of
the comparative purchase power of a rupee in the year
1975 and now, as also the steep increase in the value
of the immovable properties between then and now. It
is no exaggeration to say that properties in cities, worth
a lakh or so in or about 1975 to 1980, may cost a crore
or more now.
37. The reality arising from this economic change cannot
continue to be ignored in deciding cases relating to
specific performance. The steep increase in prices is a
circumstance which makes it inequitable to grant the relief
of specific performance where the purchaser does not take
steps to complete the sale within the agreed period, and
the vendor has not been responsible for any delay or non-
performance. A purchaser can no longer take shelter under
the principle that time is not of essence in performance
14 [2011] 8 SCR 874 : (2011) 12 SCC 18
[2024] 11 S.C.R. 1115
R. Kandasamy (Since Dead) & Ors. v. T.R.K. Sarawathy & Anr.
of contracts relating to immovable property, to cover his
delays, laches, breaches and ‘non-readiness’.……………
***
42. Therefore there is an urgent need to revisit the
principle that time is not of the essence in contracts
relating to immovable properties and also explain the
current position of law with regard to contracts relating
to immovable property made after 1975, in view of the
changed circumstances arising from inflation and steep
increase in prices. We do not propose to undertake that
exercise in this case, nor referring the matter to a larger
Bench as we have held on facts in this case that time is
the essence of the contract, even with reference to the
principles in Chand Rani2 and other cases. Be that as it
may.
43. Till the issue is considered in an appropriate case,
we can only reiterate what has been suggested in K.S.
Vidyanadam:
(i) The courts, while exercising discretion in suits
for specific performance, should bear in mind
that when the parties prescribe a time/period,
for taking certain steps or for completion of the
transaction, that must have some significance
and therefore time/period prescribed cannot
be ignored.
(ii) The courts will apply greater scrutiny and
strictness when considering whether the
purchaser was ‘ready and willing’ to perform
his part of the contract.
(iii) Every suit for specific performance need not
be decreed merely because it is filed within
the period of limitation by ignoring the time-
limits stipulated in the agreement. The courts
will also ‘frown’ upon suits which are not filed
immediately after the breach/refusal. The fact
that limitation is three years does not mean that
1116 [2024] 11 S.C.R.
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a purchaser can wait for 1 or 2 years to file a suit
and obtain specific performance. The three-year
period is intended to assist the purchasers in
special cases, as for example, where the major
part of the consideration has been paid to the
vendor and possession has been delivered in
part-performance, where equity shifts in favour
of the purchaser.”
(emphasis supplied)
Considerations in grant or refusal:
15. A three-Judge Bench of this Court in Prakash Chandra v. Angadlal15
held, the ordinary rule is that specific performance should be granted.
It ought to be denied only when equitable considerations point to its
refusal and the circumstances show that damages would constitute
an adequate relief.
16. This Court in N.P. Thirugnanam v. R. Jagan Mohan Rao (Dr)16
while reiterating that the remedy of specific performance is equitable
in nature and that granting or refusing specific performance is within
the discretion of the court, had the occasion to observe:
“5. It is settled law that remedy for specific performance is
an equitable remedy and is in the discretion of the court,
which discretion requires to be exercised according to
settled principles of law and not arbitrarily as adumbrated
under Section 20 of the Specific Relief Act, 1963 (for short
‘the Act’). Under Section 20, the court is not bound to
grant the relief just because there was a valid agreement
of sale. Section 16(c) of the Act envisages that plaintiff
must plead and prove that he had performed or has always
been ready and willing to perform the essential terms of
the contract which are to be performed by him, other than
those terms the performance of which has been prevented
or waived by the defendant. The continuous readiness
and willingness on the part of the plaintiff is a condition
15 (1979) 4 SCC 393
16 [1995] Supp. 2 SCR 53 : (1995) 5 SCC 115
[2024] 11 S.C.R. 1117
R. Kandasamy (Since Dead) & Ors. v. T.R.K. Sarawathy & Anr.
precedent to grant the relief of specific performance. This
circumstance is material and relevant and is required to
be considered by the court while granting or refusing to
grant the relief. If the plaintiff fails to either aver or prove
the same, he must fail. To adjudge whether the plaintiff
is ready and willing to perform his part of the contract,
the court must take into consideration the conduct of
the plaintiff prior and subsequent to the filing of the suit
along with other attending circumstances. The amount
of consideration which he has to pay to the defendant
must of necessity be proved to be available. Right from
the date of the execution till date of the decree he must
prove that he is ready and has always been willing to
perform his part of the contract. As stated, the factum of
his readiness and willingness to perform his part of the
contract is to be adjudged with reference to the conduct
of the party and the attending circumstances. The court
may infer from the facts and circumstances whether the
plaintiff was ready and was always ready and willing to
perform his part of the contract.”
(emphasis supplied)
17. In Nirmala Anand v. Advent Corpn. (P) Ltd.,17 a Bench of three
Judges of this Court discussed what are the considerations that need
to be kept in view while considering grant or refusal of a decree of
specific performance in the following words:
“6. It is true that grant of decree of specific performance
lies in the discretion of the court and it is also well
settled that it is not always necessary to grant specific
performance simply for the reason that it is legal to do so.
It is further well settled that the court in its discretion can
impose any reasonable condition including payment of an
additional amount by one party to the other while granting
or refusing decree of specific performance. Whether the
purchaser shall be directed to pay an additional amount
to the seller or converse would depend upon the facts
17 [2002] Supp. 2 SCR 706 : (2002) 8 SCC 146
1118 [2024] 11 S.C.R.
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and circumstances of a case. Ordinarily, the plaintiff is
not to be denied the relief of specific performance only
on account of the phenomenal increase of price during
the pendency of litigation. That may be, in a given case,
one of the considerations besides many others to be
taken into consideration for refusing the decree of specific
performance. As a general rule, it cannot be held that
ordinarily the plaintiff cannot be allowed to have, for her
alone, the entire benefit of phenomenal increase of the
value of the property during the pendency of the litigation.
While balancing the equities, one of the considerations to
be kept in view is as to who is the defaulting party. It is also
to be borne in mind whether a party is trying to take undue
advantage over the other as also the hardship that may be
caused to the defendant by directing specific performance.
There may be other circumstances on which parties may
not have any control. The totality of the circumstances is
required to be seen.”
18. In Kamal Kumar v. Premlata Joshi, 18 one finds the following
instructive passage:
“7. It is a settled principle of law that the grant of relief of
specific performance is a discretionary and equitable relief.
The material questions, which are required to be gone into
for grant of the relief of specific performance, are:
7.1. First, whether there exists a valid and concluded
contract between the parties for sale/purchase of the suit
property.
7.2. Second, whether the plaintiff has been ready and
willing to perform his part of contract and whether he is
still ready and willing to perform his part as mentioned in
the contract.
7.3. Third, whether the plaintiff has, in fact, performed
his part of the contract and, if so, how and to what extent
and in what manner he has performed and whether such
performance was in conformity with the terms of the
contract;
18 [2019] 1 SCR 54 : (2019) 3 SCC 793
[2024] 11 S.C.R. 1119
R. Kandasamy (Since Dead) & Ors. v. T.R.K. Sarawathy & Anr.
7.4. Fourth, whether it will be equitable to grant the
relief of specific performance to the plaintiff against the
defendant in relation to suit property or it will cause any
kind of hardship to the defendant and, if so, how and in
what manner and the extent if such relief is eventually
granted to the plaintiff;
7.5. Lastly, whether the plaintiff is entitled for grant of any
other alternative relief, namely, refund of earnest money,
etc. and, if so, on what grounds.
8. In our opinion, the aforementioned questions are part
of the statutory requirements [See Sections 16(c), 20, 21,
22, 23 of the Specific Relief Act, 1963 and Forms 47/48 of
Appendices A to C of the Code of Civil Procedure]. These
requirements have to be properly pleaded by the parties
in their respective pleadings and proved with the aid of
evidence in accordance with law. It is only then the Court
is entitled to exercise its discretion and accordingly grant
or refuse the relief of specific performance depending upon
the case made out by the parties on facts.”
19. Quite recently, Kamal Kumar (supra) has been followed in
P. Daivasigamani v. S. Sambandan.19
Who can be said to be ‘ready and willing’?
20. In C.S. Venkatesh vs. A.S.C. Murthy,20 this Court on consideration
of various decisions culled out what is implied by the words “ready
and willing”. It was held:
“16. The words ‘ready and willing’ imply that the plaintiff was
prepared to carry out those parts of the contract to their
logical end so far as they depend upon his performance.
The continuous readiness and willingness on the part of
the plaintiff is a condition precedent to grant the relief of
performance. If the plaintiff fails to either aver or prove the
same, he must fail. To adjudge whether the plaintiff is ready
and willing to perform his part of contract, the court must
19 [2022] 18 SCR 199 : (2022) 14 SCC 793
20 [2020] 2 SCR 676 : (2020) 3 SCC 280
1120 [2024] 11 S.C.R.
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take into consideration the conduct of the plaintiff prior, and
subsequent to the filing of the suit along with other attending
circumstances. The amount which he has to pay the
defendant must be of necessity to be proved to be available.
Right from the date of the execution of the contract till the
date of decree, he must prove that he is ready and willing
to perform his part of the contract. The court may infer from
the facts and circumstances whether the plaintiff was ready
and was always ready to perform his contract.
21. Requisite pleadings and proof that are required of a plaintiff to
succeed in a suit for specific performance are succinctly captured
in this Court’s decision of recent origin in U.N. Krishnamurthy v.
A.M. Krishnamurthy.21 The relevant passage reads:
“24. 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. To cite an example,
the plaintiff may aver and prove, by adducing evidence, an
arrangement with a financier for disbursement of adequate
funds for timely compliance with the terms and conditions
of a contract involving payment of money.”
Absent a prayer for declaratory relief that termination of the
agreement is bad in law, whether a suit for specific performance
is maintainable?
22. This question has been considered by this Court in I.S. Sikandar v.
K. Subramani22 and answered in the following words:
21 [2022] 13 SCR 250 : (2023) 11 SCC 775
22 [2013] 17 SCR 24 : (2013) 15 SCC 27
[2024] 11 S.C.R. 1121
R. Kandasamy (Since Dead) & Ors. v. T.R.K. Sarawathy & Anr.
“37. As could be seen from the prayer sought for in the
original suit, the plaintiff has not sought for declaratory
relief to declare the termination of agreement of sale as
bad in law. In the absence of such prayer by the plaintiff
the original suit filed by him before the trial court for grant
of decree for specific performance in respect of the suit
schedule property on the basis of agreement of sale and
consequential relief of decree for permanent injunction is
not maintainable in law.”
23. I.S. Sikandar (supra) was followed by this Court in Mohinder
Kaur v. Sant Paul Singh23 where, on facts, it was also held that
the relief of specific performance being discretionary in nature, the
respondent cannot be held to have established his case for grant
of such relief.
24. However, in the interregnum, I.S. Sikandar (supra) was also
considered by this Court in A. Kanthamani v. Nasreen Ahmed24
and it was held that the former decision turns on the facts involved
therein and is, thus, distinguishable. In the latter decision, this Court
also held that it is a well-settled principle of law that the plea regarding
the maintainability of suit is required to be raised in the first instance
in the pleading (written statement) and then only such plea can be
adjudicated by the Trial Court on its merits as a preliminary issue
under Order 14 Rule 2 CPC. Once a finding is rendered on the plea,
the same can then be examined by the first or/and second appellate
court. It is only in appropriate cases, where the court prima facie
finds by mere perusal of plaint allegations that the suit is barred by
any express provision of law or is not legally maintainable due to
any legal provision, a judicial notice can be taken to avoid abuse
of judicial process in prosecuting such suit. However, such was not
the case therein.
25. What follows from A. Kanthamani (supra) is that unless an issue
as to maintainability is framed by the Trial Court, the suit cannot
be held to be not maintainable at the appellate stage only because
appropriate declaratory relief has not been prayed.
23 (2019) 9 SCC 358
24 [2017] 2 SCR 610 : (2017) 4 SCC 654
1122 [2024] 11 S.C.R.
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On inconsistent clauses in an agreement
26. It is not an infrequent happening that two or more clauses in a
contract could, in some measure, be inconsistent with each other, -
the inconsistency arising because the clauses cannot sensibly be
read together. Lord Wrenbury in Forbes v. Git 25 applied the following
principle:
“The principle of law to be applied may be stated in a few
words. If in a deed an earlier clause is followed by a later
clause which destroys altogether the obligation created
by the earlier clause, the later clause is to be rejected as
repugnant and the earlier clause prevails. In this case the
two clauses cannot be reconciled and the earlier provision
in the deed prevails over the later. Thus if A covenants to
pay … 100 and the deed subsequently provides that he
shall not be liable under this covenant, that later provision
is to be rejected as repugnant and void, for it altogether
destroys the covenant. But if the later clause does not
destroy but only qualifies the earlier, then the two are to
be read together and effect is to be given to the intention
of the parties as disclosed by the deed as a whole. Thus
if A covenants to pay … 100 and the deed subsequently
provides that he shall be liable to pay only at a future
named date or in a future defined event or if at the due
date of payment he holds a defined office, then the absolute
covenant to pay is controlled by the words qualifying the
obligation in manner described.”
27. The aforesaid principle of law was approved by this Court in Radha
Sundar Dutta v. Mohd. Jahadur Rahim,26 where a bench of three
Judges held that it is a settled rule of interpretation that if there be
admissible two constructions of a document, one of which will give
effect to all the clauses therein while the other will render one or
more of them nugatory, it is the former that should be adopted on
the principle expressed in the maxim “ut res magis valeat quam
pereat”. Following it up, it was also observed that if, in fact, there is
25 [1922] 1 A.C. 256
26 [1959] 1 SCR 1309 : AIR 1959 SC 24
[2024] 11 S.C.R. 1123
R. Kandasamy (Since Dead) & Ors. v. T.R.K. Sarawathy & Anr.
a conflict between the earlier clause and the later clauses and it is
not possible to give effect to all of them, then the rule of construction
is well established that it is the earlier clause that must override the
later clauses and not vice versa.
28. A decision of recent origin of this Court in Bharat Sher Singh
Kalsia v. State of Bihar27 having taken note of the aforesaid decisions,
proceeded to hold:
“32. We are of the considered opinion that all three clauses
are capable of being construed in such a manner that they
operate in their own fields and are not rendered nugatory.
That apart, we are mindful that even if we had perceived
a conflict between Clauses 3 and 11, on the one hand,
and Clause 15 on the other, we would have to conclude
that Clauses 3 and 11 would prevail over Clause 15 as
when the same cannot be reconciled, the earlier clause(s)
would prevail over the latter clause(s), when construing
a deed or a contract. Reference for such proposition is
traceable to Forbes v. Git as approvingly taken note of
by a three-Judge Bench of this Court in Radha Sundar
Dutta v. Mohd. Jahadur Rahim. However, we have been
able, as noted above, to reconcile the three clauses in the
current scenario.”
Analysis And Reasons
29. A suit for specific performance of a contract for sale, normally, is
premised on a written agreement between the contracting parties,
signifying a meeting of minds of two persons or more. Terms of the
agreement, which are reasonably ascertainable from the written
document, assume extreme relevance. After all, compliance with
other requisites takes the shape of a concluded contract and should
there be no vitiating factor, the parties are bound thereby.
30. The first point that we need to examine is the effect of the two clauses
of the Agreement and to apply the law laid down by this Court in
Radha Sundar Dutta (supra) and Bharat Sher Singh Kalsia (supra).
The said clauses read as follows:
27 [2024] 1 SCR 1165 : (2024) 4 SCC 318
1124 [2024] 11 S.C.R.
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“The Second party will have to pay the balance sale price
within four months from today and obtain a sale deed
either in his name or in the name of persons nominated
by him at his own expense.”
“There are tenants in the property described below at
present. The First Parties agree to vacate the tenants and
hand over vacant possession to the Second Party at the
time of obtaining the sale.”
31. On a bare reading of the aforesaid clauses, we do not find that the
latter clause destroys the effect of the former clause altogether so
much so that it has to be discarded. On the contrary, in this case,
both the clauses were such that the same had to be read together
and given effect upon ascertaining the intention of the parties as
disclosed by the Agreement as a whole. The latter clause could not
have been read divorced from the former, having regard to the intent
of the parties that is discernible. The latter qualified the former in the
sense that although it was obligatory for the buyer to pay the balance
price within 19th May, 2005 and “obtain the sale deed”, this was on
the assumption that the property would be made free of tenants by
the sellers by that time. However, the situation therefor did not arise
on 19th May, 2005 since the tenant, who vacated the property last, did
so sometime on 2nd February, 2006. Going by the latter clause, the
buyer had time till 1st June, 2006 to complete the deal (four months
of vacating of the property by all the tenants to enable the sellers to
hand over vacant possession to the buyer). In our understanding, the
Trial Court and the High Court were right in concluding that time was
not the essence though the Agreement provided that “time mentioned
in this agreement shall be of the essence.”
32. We now turn our attention to the next point, which should clinch the
issue between the parties. It is, whether or not the buyer demonstrated
readiness and willingness to perform her part of the contract and
even if she did, is she entitled to the discretionary and equitable
relief of specific performance on facts and in the circumstances.
33. For tracing an answer, one would necessarily have to bear in mind
sections 10, 16 and (unamended) section 20 of the Act. Scanning
of the evidence on record unmistakably points to the conclusion that
the buyer was not ready and willing to have the terms agreed by
and between the parties to be performed.
[2024] 11 S.C.R. 1125
R. Kandasamy (Since Dead) & Ors. v. T.R.K. Sarawathy & Anr.
34. First, the conduct of the buyer does not inspire confidence in view of
the fact that despite being aware in February, 2006 of the property
having been vacated by all the tenants, she started raising the bogey
of failure of the sellers to share with her the ‘encumbrance certificate’.
Importantly, the Agreement did not record that the sellers were under
any obligation to share such certificate. Thus, in the absence of such
obligation, one has to presume that the buyer was duly satisfied with
the sellers’ title to the property and as such did not, consciously,
insist on making such obligation a part of the Agreement of sharing
of the ‘encumbrance certificate’ prior to performance of the agreed
terms. It is common knowledge that none interested in buying an
expensive property would agree to terms leaving himself/herself at a
potential risk of facing litigation in future. Even in the absence of an
express term and if it were accepted that the obligation is an implied
requirement of the Agreement, the buyer would have done well to
close the deal if the sellers were taking advantage of the omission
in the Agreement, particularly when at the time she raised such
objection the entire money received in advance had been returned
by the sellers to her. This is one aspect of the matter.
35. The other aspect is this. From the documents on record, it is clear that
there was no readiness and willingness on the buyer’s part to pay the
balance sale consideration and get the sale deed executed. The buyer,
despite multiple reminders, did not come forward for execution of the
sale deed. Vide letters dated 11th March, 2006, 23rd March, 2006,
06th April, 2006, the buyer was given a deadline of 13 (thirteen), 7
(seven) (counted from the date of receipt of ‘encumbrance certificate’)
and 5 (five) days respectively; however, the buyer did not comply
with any of these. It is to be noted that the above communications
are subsequent to the reply letter dated 24th February, 2006 by the
buyer wherein she admitted her knowledge of the property having
been vacated by the last of the tenants. Hence, the conduct of the
buyer in not doing the needful, especially even after the property
became free of tenants, demonstrates her reluctance and diffidence
to perform the contract.
36. Moving further, a perusal of the buyer’s cross-examination reveals
her admission of not having enough fund in either of her bank
accounts to pay the balance sale price. This, in our opinion, is
sufficient proof of her financial incapacity to perform her part of the
contract. The husband of the buyer could be a wealthy man having
1126 [2024] 11 S.C.R.
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sufficient balance in his bank account but having perused the credit
and debit entries, we have significant doubts in respect thereof which
we need not dilate here in the absence of him being a party to the
proceedings. Suffice is to observe, the transactions evident from the
bank accounts of the buyer’s husband do little to impress us that the
buyer had demonstrated her financial capacity to make payment of
the balance sale price and close the deal.
37. Imperative and interesting it is to note, the buyer sought to return
the demand draft to the sellers on the last day of its validity. As
discussed above, along with letter dated 23rd February 2006 of the
sellers cancelling the Agreement, they returned the advance amount
received from the buyer vide demand draft dated 11th February 2006.
This draft was retained by the buyer and returned as late as 10th
August, 2006 vide letter of even date (and not along with any of her
previous letters). However, the demand draft dated 11th February,
2006 being valid only for a period of 6 (six) months, i.e., 10th August
2006, it has intrigued us as to why the buyer would hold on to the
demand draft and not return it earlier if she was genuinely interested
in purchasing the property.
38. Such conduct of the buyer, seen cumulatively, does not inspire
confidence in granting her the discretionary relief of specific
performance.
39. The question posed for an answer is, thus, decided against the buyer.
40. Having held thus, allowing the appeal is the inevitable result. However,
before we part, there seems to be a discordant note struck by the
decision in A. Kanthamani (supra) while distinguishing I.S. Sikandar
(supra), which could create uncertainty and confusion. It is, therefore,
considered worthwhile to attempt and clear the same.
41. A comprehensive reading of the two decisions reveals that in a fact
scenario where the vendor unliterally cancels an agreement for sale,
the vendee who is seeking specific performance of such agreement
ought to seek declaratory relief to the effect that the cancellation is
bad and not binding on the vendee. This is because an agreement,
which has been cancelled, would be rendered non-existent in the
eyes of law and such a non-existent agreement could not possibly
be enforced before a court of law. Both the decisions cited above
are unanimous in their approval of such legal principle. However,
[2024] 11 S.C.R. 1127
R. Kandasamy (Since Dead) & Ors. v. T.R.K. Sarawathy & Anr.
as clarified in Kanthamani (supra), it is imperative that an issue be
framed with respect to maintainability of the suit on such ground,
before the court of first instance, as it is only when a finding on the
issue of maintainability is rendered by trial court that the same can
be examined by the first or/and second appellate court. In other
words, if maintainability were not an issue before the trial court or
the appellate court, a suit cannot be dismissed as not maintainable.
This is what Kanthamani (supra) holds.
42. The aforesaid two views of this Court, expressed by coordinate
benches, demand deference. However, it is noticed that this Court
in Kanthamani (supra) had not been addressed on the effect of
non-existence of a jurisdictional fact (the existence whereof would
clothe the trial court with jurisdiction to try a suit and consider granting
relief), i.e., what would be its effect on the right to relief claimed by
the plaintiff in a suit for specific performance of contract.
43. In Shrisht Dhawan (Smt) v. Shaw Bros.,28 an interesting discussion
on ‘jurisdictional fact’ is found in the concurring opinion of Hon’ble
R. M. Sahai, J. (as His Lordship then was). It reads:
“19. *** What, then, is an error in respect of jurisdictional
fact? A jurisdictional fact is one on existence or non-
existence of which depends assumption or refusal to
assume jurisdiction by a court, tribunal or an authority. In
Black’s Legal Dictionary it is explained as a fact which must
exist before a court can properly assume jurisdiction of a
particular case. Mistake of fact in relation to jurisdiction
is an error of jurisdictional fact. No statutory authority or
tribunal can assume jurisdiction in respect of subject matter
which the statute does not confer on it and if by deciding
erroneously the fact on which jurisdiction depends the
court or tribunal exercises the jurisdiction then the order
is vitiated. Error of jurisdictional fact renders the order
ultra vires and bad (Wade, Administrative Law. In Raza
Textiles [(1973) 1 SCC 633] it was held that a court or
tribunal cannot confer jurisdiction on itself by deciding a
jurisdictional fact wrongly. ***”
(emphasis supplied)
28 [1991] Supp. 3 SCR 446 : (1992) 1 SCC 534
1128 [2024] 11 S.C.R.
Digital Supreme Court Reports
44. Borrowing wisdom from the aforesaid passage, our deduction is
this. An issue of maintainability of a suit strikes at the root of the
proceedings initiated by filing of the plaint as per requirements of
Order VII Rule 1, CPC. If a suit is barred by law, the trial court has
absolutely no jurisdiction to entertain and try it. However, even though
a given case might not attract the bar envisaged by section 9, CPC,
it is obligatory for a trial court seized of a suit to inquire and ascertain
whether the jurisdictional fact does, in fact, exist to enable it (the trial
court) to proceed to trial and consider granting relief to the plaintiff as
claimed. No higher court, much less the Supreme Court, should feel
constrained to interfere with a decree granting relief on the specious
ground that the parties were not put specifically on notice in respect
of a particular line of attack/defence on which success/failure of the
suit depends, more particularly an issue touching the authority of
the trial court to grant relief if the ‘jurisdictional fact’ imperative for
granting relief had not been satisfied. It is fundamental, as held in
Shrisht Dhawan (supra), that assumption of jurisdiction/refusal to
assume jurisdiction would depend on existence of the jurisdictional
fact. Irrespective of whether the parties have raised the contention,
it is for the trial court to satisfy itself that adequate evidence has
been led and all facts including the jurisdictional fact stand proved
for relief to be granted and the suit to succeed. This is a duty the
trial court has to discharge in its pursuit for rendering substantive
justice to the parties, irrespective of whether any party to the lis has
raised or not. If the jurisdictional fact does not exist, at the time of
settling the issues, notice of the parties must be invited to the trial
court’s prima facie opinion of non-existent jurisdictional fact touching
its jurisdiction. However, failure to determine the jurisdictional fact,
or erroneously determining it leading to conferment of jurisdiction,
would amount to wrongful assumption of jurisdiction and the resultant
order liable to be branded as ultra vires and bad.
45. Should the trial court not satisfy itself that the jurisdictional fact for grant
of relief does exist, nothing prevents the court higher in the hierarchy
from so satisfying itself. It is true that the point of maintainability of
a suit has to looked only through the prism of section 9, CPC, and
the court can rule on such point either upon framing of an issue or
even prior thereto if Order VII Rule 11 (d) thereof is applicable. In
a fit and proper case, notwithstanding omission of the trial court to
frame an issue touching jurisdictional fact, the higher court would be
[2024] 11 S.C.R. 1129
R. Kandasamy (Since Dead) & Ors. v. T.R.K. Sarawathy & Anr.
justified in pronouncing its verdict upon application of the test laid
down in Shrisht Dhawan (supra).
46. In this case, even though no issue as to maintainability of the suit
had been framed in course of proceedings before the Trial Court,
there was an issue as to whether the Agreement is true, valid and
enforceable which was answered against the sellers. Obviously, owing
to dismissal of the suit, the sellers did not appeal. Nevertheless,
having regard to our findings on the point as to whether the buyer
was ‘ready and willing’, we do not see the necessity of proceeding
with any further discussion on the point of jurisdictional fact here.
47. However, we clarify that any failure or omission on the part of the
trial court to frame an issue on maintainability of a suit touching
jurisdictional fact by itself cannot trim the powers of the higher court
to examine whether the jurisdictional fact did exist for grant of relief
as claimed, provided no new facts were required to be pleaded and
no new evidence led.
Conclusion
48. For the foregoing reasons, the appeals merit success and the same
are allowed. We set aside the first appellate judgment and decree
of the High Court and restore that of the Trial Court with the result
that the suit instituted by the buyer shall stand dismissed.
49. It is made clear that the buyer shall be entitled to return of the
advance sum of Rs.25 lakh by the sellers. If not already returned,
the sellers shall take steps in this behalf within a month from date.
If the buyer has made any deposit pursuant to any order of court,
the same shall also be returned to her with accrued interest, if any.
Result of the case: Appeals allowed.
†
Headnotes prepared by: Divya Pandey
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