U.N. KRISHNAMURTHY (SINCE DECEASED) THR. LRS. versus A. M. KRISHNAMURTHY
[2022] 13 S.C.R. 250, Supreme Court of India, 2022
Outcome: Appeal(s) allowed (Granted)
Segment: Ratio
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SUPREME COURT REPORTS
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U.N. KRISHNAMURTHY (SINCE DECEASED) THR. LRS.
v.
A. M. KRISHNAMURTHY
(Civil Appeal No. 4703 of 2022)
JULY 12, 2022
[INDIRA BANERJEE AND HRISHIKESH ROY, JJ.]
Specific Relief Act, 1963 – s.16 (prior to amendment w.e.f
1.10.2018) – Readiness and willingness to perform – Both
ingredients necessary for the relief of specific performance – Suit
for specific performance of an agreement for sale – Certain amount
paid in advance, failure to pay balance within stipulated time –
Grant of relief – Not justified – Held: There is a distinction between
readiness and willingness to perform the contract and both
ingredients are necessary for the relief of Specific Performance –
Plaintiff has to prove that all along and till the final decision of the
suit, he was ready and willing to perform his part of the contract –
Mere statement or averment in plaint of readiness and willingness
would not suffice – In the present case, the respondent-plaintiff
failed to prove his readiness to perform his part of contract from
the date of execution of the agreement till date of decree, a condition
precedent for grant of relief of specific performance – Respondent
deposited the balance sale consideration in the court seven years
after the date by which the sale had to be concluded – He did not
have sufficient funds to discharge his part of contract – No evidence
was adduced as to how he was in a position to pay or make
arrangements for payment of
the balance sale consideration within
time – Making subsequent deposit of balance consideration after
lapse of seven years would not establish the respondent’s readiness
to discharge his part of contract – Respondent was not entitled to
the relief of specific performance as he was not ready with funds
though may have been willing to perform his part of contract –
Impugned judgment of High Court and the decree of Trial court set
aside – Appellants-defendant to return the earnest money to the
respondent with interest @ 7% p.a from the date of deposit of the
same, till the date of refund.
[2022] 13 S.C.R. 250
250
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Suit – For specific performance of an agreement – Certain
amount paid in advance, balance to be paid within a stipulated
time – Held: In a suit for Specific Performance of an agreement, it
is for the Plaintiff to prove his readiness and willingness to perform
his obligations under the agreement – Where a certain amount has
been paid in advance and the balance is required to be paid within
a stipulated time, it is for the Plaintiff to show that he was in a
position to pay the balance money – Plaintiff has to prove that he
has the money or has alternatively made necessary arrangements
to get the money.
Suit – For specific performance– Continuous readiness and
willingness of plaintiff – Held: Even in a first appeal, the first
Appellate Court is duty bound to examine whether there was
continuous readiness and willingness on the part of the Plaintiff to
perform the contract.
Allowing the appeal, the Court
HELD: 1.1 The primary question for determination is
whether the Respondent Plaintiff has proved his readiness and
willingness to perform his part of the contract or not? In a suit
for Specific Performance of an agreement, it is for the Plaintiff to
prove his readiness and willingness to perform his obligations
under the agreement. Where a certain amount has been paid in
advance and the balance is required to be paid within a stipulated
time, it is for the Plaintiff to show that he was in a position to pay
the balance money. The Plaintiff has to prove that he
has the
money or has alternatively made necessary arrangements to get
the money. In this case, the Original Defendant/Appellants have
all along contended that the Plaintiff Respondent neither offered
to pay nor was in a position to pay the balance consideration of
Rs.15,00,000/-. [Paras 21, 22][260-F-H]
1.2 Section 16 (c) of the Specific Relief Act, 1963 bars the
relief of specific performance of a contract in favour of a person,
who fails to aver and prove his readiness and willingness to
perform his part of contract. In view of Explanation (i) to clause
(c) of Section 16, it may not be essential for the plaintiff to actually
tender money to the defendant or to deposit money in Court,
U.N. KRISHNAMURTHY (SINCE DECEASED) THR. LRS. v.
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except when so directed by the Court, to prove readiness and
willingness to perform the essential terms of a contract, which
involves payment of money. However, explanation (ii) says the
plaintiff must aver performance or readiness and willingness to
perform the contract according to its true construction. 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.
[Paras 24, 25][261-F-H; 262-A-C]
1.3 In a suit for Specific Performance of a contract, the Court
is required to pose unto itself the following questions, namely:-
(i) Whether there is a valid agreement of
sale binding on both
the vendor and the vendee and (ii)
Whether the Plaintiff has all
along been and still is ready and willing to perform his part of the
contract as envisaged under Section 16(c) of the Specific Relief
Act, 1963. There is a distinction between readiness and
willingness to perform the contract and both ingredients are
necessary for the relief of Specific Performance. Even in a first
appeal, the first Appellate Court is duty bound to examine whether
there was continuous readiness and willingness on the part of
the Plaintiff to perform the contract. [Paras 33-35][265-B-E]
1.4 In this case, the suit property is located in the industrial
town of Hosur located about 30/40 kms. from Bengaluru. The
Court is obliged to take judicial notice of the phenomenal rise in
the price of real estate in Hosur. It was argued that the Plaintiff
had only paid an insignificant amount of Rs.10,001/- as advance
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when the consideration was Rs.15,10,000/-. Having paid an
insignificant amount the Plaintiff was not entitled to discretionary
equitable relief of Specific Performance. The fact that the suit
had been filed after three years, just before expiry of the period
of limitation, was also a ground to decline the Respondent Plaintiff
the equitable relief of Specific Performance for purchase of
immovable property. The Respondent Plaintiff has relied upon
the notice dated 13.02.2003 and evidences of PW2 & PW3 to
prove that he was always ready and willing to perform his part of
the contract. Even though it may be true that the Respondent
Plaintiff had deposited the balance sale consideration in court on
06.04.2010, it cannot be ignored that such deposit was made by
him seven years after 15.3.2003, being the date by which the
sale had to be concluded. No evidence has been adduced on behalf
of the Respondent Plaintiff as to how the Respondent Plaintiff
was in a position to pay or make arrangements for payment of the
balance sale consideration within time. The Courts below also
erred in not adjudicating upon this vital issue except to make a
sweeping observation that, given that the Respondent Plaintiff
was a businessman he had sources to arrange the balance funds.
Careful study of balance sheet dated 31.03.2003 of the
Respondent Plaintiff would demonstrate that he did not have
sufficient funds to discharge his part of contract. [Paras 38-40,
45][267-C-E; 268-E]
1.5
For relief of specific performance, the Plaintiff has to
prove that all along and till the final decision of the suit, he was
ready and willing to perform his part of the contract. It is the
bounden duty of the Plaintiff to prove his readiness and
willingness by adducing evidence. This crucial facet has to be
determined by considering all circumstances including availability
of funds and mere statement or averment in plaint of readiness
and willingness, would not suffice. In this case, the Respondent
Plaintiff has failed to discharge his duty to prove his readiness as
well as willingness to perform his part of the contract, by adducing
cogent evidence. Acceptable evidence has not been placed on
record to prove his readiness and willingness. Further, it is clear
from the Respondent Plaintiff’s balance sheet that he did not have
sufficient funds to discharge his part of contract in March 2003.
Making subsequent deposit of balance consideration after lapse
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of seven years would not establish the Respondent Plaintiff’s
readiness to discharge his part of contract. The Respondent
Plaintiff has failed to prove his readiness to perform his part of
contract from the date of execution of the agreement till date of
decree, which is a condition precedent for grant of relief of specific
performance. The Respondent Plaintiff was not entitled to the
relief of specific performance. The Respondent Plaintiff may have
been willing to perform his part of contract. It however appears
that he was not ready with funds. He was possibly trying to buy
time to discharge his part of contract. The Respondent Plaintiff
was not entitled to the relief of specific performance. The Trial
Court and the High Court erred both in law and on facts in granting
such relief. The impugned judgment of the High Court and the
judgment and decree of Trial court are set aside. The Appellants
shall return the earnest money to the Respondent Plaintiff, within
4 weeks from today with interest at the rate of 7% per annum
from the date of deposit of the same, till the date of refund. It will
also be open to the Respondent Plaintiff to withdraw the deposit
if any of the balance consideration in Court. [Paras 46-49, 51 and
52][271-D-G; 272-B-C, G]
Bhavyanath v. K. V. Balan (2020) 11 SCC 790 – held
inapplicable.
Man Kaur v. Hartar Singh Sangha (2010) 10 SCC 512
: [2010] 12 SCR 515; In Pt. Prem Raj v. D.L.F. Housing
and
Construction (Private) Ltd. And Anr. AIR 1968 SC
1355 : [1968] 3 SCR 648; N. P. Thirugnanam v.
Dr. R. Jagan Mohan Rao and Ors (1995) 5 SCC 115 :
[1995] 2 Suppl. SCR 53; Umabai v. Nilkanth Dhondiba
Chavan (2005) 6 SCC 243 : [2005] 3 SCR 521; K.S.
Vidyanadam v. Vairavan (1997) 3 SCC 1 : [1997] 1
SCR 993; His Holiness Acharya Swami Ganesh Dassji
v. Sita Ram Thapar (1996) 4 SCC 526 : [1996] 2 Suppl.
SCR 111; Kalawati v. Rakesh Kumar (2018) 3 SCC
658 : [2018] 1 SCR 482; Balraj Taneja v. Sunil Madan
(1999) 8 SCC 396 : [1999] 2 Suppl. SCR 258; H.P.
Pyarejan v. Dasappa (2006) 2 SCC 496 : [2006] 2
SCR 120; Malluru Mallappa v. Kuruvathappa (2020)
4 SCC 313; Saradamani Kandappan v. S. Rajalakshmi
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(2011) 12 SCC 18 : [2011] 8 SCR 874; P.R. Deb and
Associates v. Sunanda Roy (1997) 3 SCC 1; Manjunath
Anandappa v. Tammanasa (2003) 10 SCC 390 : [2003]
2 SCR 1068; Azhar Sultana v. B. Rajamani (2009) 17
SCC 27 : [2009] 2 SCR 537; Atma Ram v. Charanjit
Singh (2020) 3 SCC 311 : [2020] 3 SCR 697 – relied
on.
Ardeshir Mama v. Flora Sassoon 55 IA 300, at pg. 372
: AIR 1928 PC 208; Cort v. Ambergate etc. and Rly. Co
(1851) 117 ER 1229 – referred to.
Case Law Reference
[2010] 12 SCR 515
relied on
Para 26
[1968] 3 SCR 648
relied on
Para 27
[1995] 2 Suppl. SCR 53 
relied on
Para 29
[2005] 3 SCR 521
relied on
Para 31
[1997] 1 SCR 993
relied on
Para 32
[1996] 2 Suppl. SCR 111
relied on
Para 34
[2018] 1 SCR 482
relied on
Para 34
[1999] 2 Suppl. SCR 258
relied on
Para 35
[2006] 2 SCR 120
relied on
Para 36
[2011] 8 SCR 874
relied on
Para 39
[2003] 2 SCR 1068
relied on
Para 40
[2009] 2 SCR 537
relied on
Para 40
[2020] 3 SCR 697 
relied on
Para 44
(2020) 11 SCC 790
held inapplicable Para 50
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4703
of 2022.
From the Judgment and Order dated 30.10.2017 of the High Court
of Judicature at Madras in Appeal Suit No. 262 of 2011.
Krishnan Venugopal, Shashikiran Shetty, Sr. Advs., Mahesh Thakur,
Ms. Vipasha Singh, Advs. for the Appellants.
U.N. KRISHNAMURTHY (SINCE DECEASED) THR. LRS. v.
A. M. KRISHNAMURTHY
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N. D. B. Raju, M. A. Chinnasamy, Ms. C. Rubavathi, Ch. Leela
Sarveswar, T. Meikandan, P. Rajaram, V. Senthil Kumar, Advs. for the
Respondent.
The Judgment of the Court was delivered by
INDIRA BANERJEE, J.
Leave granted.
2. Heard Mr. Krishnan Venugopal learned Senior Advocate
appearing with Mr. Mahesh Thakur, AOR on behalf of Appellants and
Mr. N.D.B Raju, learned Advocate appearing with Mr. M.A.
Chinnasamy, AOR on behalf of Respondent.
3. This Appeal is against a final judgment and decree dated
30th October 2017 passed by the High Court of Judicature at Madras,
dismissing the Appeal Suit No. 262 of 2011 filed by the Appellants and
confirming a judgment and order and decree dated 30th November 2010
passed by the Principal District Judge, Krishnagiri, hereinafter referred
to as “the Trial Court” in Original Suit No. 30 of 2005 filed by the
Respondent Plaintiff, for specific performance of an agreement for sale
of the suit property.
4. In the plaint, it is pleaded that the original Defendant U.N.
Krishnamurthy’s father, U.R. Narasaiah had executed a will on or about
9th May 1984, bequeathing the suit property to the original Defendant,
U.N. Krishnamurthy (since deceased).  After the death of his father,
U.R. Narasaiah, on 25th April 1987, the original Defendant U. N.
Krishnamurthy became the absolute owner of the suit property.
5. It is the case of the Appellants that on 11th November 2002,
while the original Defendant
was getting the suit property whitewashed,
a real estate agent Mr. N. Anjappa approached the original Defendant
with an offer to arrange the sale of the suit property at a good price.
6. As per the pleadings in the plaint, the original Defendant agreed
to sell the suit property to the Respondent Plaintiff, in the presence of
Mr. N. Anjappa, Mr. S.A. Muralidharan and Mr. M. Murali Reddy. The
terms and conditions of the agreement for sale of the suit property were
recorded by the original Defendant U.N. Krishnamurthy in his own
handwriting in a letter dated 11th November 2002 given by the original
Defendant to the Respondent Plaintiff.
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7. It is the case of the Respondent Plaintiff that the original
Defendant agreed to sell the suit property to the Respondent Plaintiff
for a consideration of Rs.15,10,000/-, out of which sum of Rs.10,001/-
was paid by the Respondent Plaintiff to the original Defendant in advance.
It was further agreed between the parties, that the Respondent Plaintiff
would get the sale deed registered on or before 15th March 2003, upon
payment of the full sale consideration. The agreement was allegedly
witnessed by the real estate agent, Mr. N. Anjappa.
8. According to the Respondent Plaintiff, the Respondent Plaintiff
approached the original Defendant with the balance consideration several
times and requested the original Defendant to execute the sale deed in
his favour, but the original Defendant kept postponing execution of the
sale deed on one pretext or the other.
9. On or about 13th February 2003, the Respondent Plaintiff issued
a legal notice to the original Defendant through his lawyer stating that
the Respondent Plaintiff is ever ready and willing to perform his part of
the contract and called upon the original Defendant to execute the sale
deed in favour of Respondent Plaintiff after receiving the balance
consideration. By a letter dated 10th March 2003 sent in response to the
aforesaid legal notice, the original Defendant denied having entered into
any oral sale agreement for sale of the suit property.
10. On 8th October 2005, the Respondent Plaintiff
allegedly
approached the original Defendant with a request to receive the balance
consideration and to execute the sale deed in favour of the Respondent
Plaintiff. It is alleged that the original Defendant went back upon his
promise and refused to accede to the request made by the Respondent
Plaintiff.
11. In the circumstances, on or about 17th October 2005, the
Respondent Plaintiff filed the suit. The original Defendant filed a written
statement denying the allegations in the plaint. In the written statement,
the original Defendant denied the execution of any agreement for sale
of the suit property for consideration of Rs.15,10,000/- as alleged.
12. The original Defendant has categorically stated that he did
not agree to sell the suit property to the Respondent Plaintiff as alleged
and that he did not receive any advance on 11th November 2002 as
alleged or on any other date. It is the case of the Appellants that there
was no concluded contract to sell the suit property. In the written
U.N. KRISHNAMURTHY (SINCE DECEASED) THR. LRS. v.
A. M. KRISHNAMURTHY [INDIRA BANERJEE, J.]
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statement it is also pleaded that in any case, the Respondent Plaintiff
was never ready or willing to perform his part of the contract.
13. The Trial Court framed the following issues:-
“1. Whether the oral agreement of sale in the 1st week of
November, 2002 is true?
2. Whether the alleged confirmation letter dated 11.11.2002
is true and valid?
3. Whether there is no concluded contract between the plaintiff
and defendant is true?
4. Whether the plaintiff always ready and willing to perform
his part of contract?
5. Whether the plaintiff is entitled to get the relief of specific
performance and possession?
6. To what relief the plaintiff is entitled to?”
14. The Respondent Plaintiff examined three witnesses and the
original Defendant deposed as witness on his own behalf. By a judgment
and order dated 30th November 2010, the Trial Court decreed the suit
and directed the original Defendant to receive the balance sale
consideration of Rs.15 lakhs and execute the sale deed in favour of the
Respondent Plaintiff.
15. All the issues framed by the Trial Court were answered in
favour of the Respondent Plaintiff. The Trial Court found that the
Respondent Plaintiff was ready and willing to perform his part of the
contract, and thus entitled to the relief of specific performance. The
relevant part of judgment of the Trial Court is set out hereinbelow:-
“21. But I already discussed that the plaintiff is a businessman
and he is
having sufficient means to pay the amount to the
defendant Rs.15,00,000/- also deposited into court. The
amount has not shown in Ex. A4 to A6 is not the ground for
denying the prayer. The plaintiff is also ready and willing to
perform his contract and in view of the above discussions,
the plaintiff is entitled the relief of Specific performance and
possession of schedule property. Accordingly, I answered the
Issues Nos.4 and 5.”
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16. By the impugned judgment and order dated 30th October 2017,
the High Court upheld the judgment and decree passed by the Trial
Court, holding that the Respondent Plaintiff had always been ready and
wiling to perform his part of the contract. The relevant part of the
impugned judgment and order reads:-
“18. The letter dated 11.11.2002 has been marked as Ex. A-
1. In Ex. A1 period has been fixed for execution of a registered
sale deed. The consistent case of the plaintiff is that despite
of repeated demands, the defendant has not come forward to
execute a sale deed in favour of the plaintiff and therefore, a
legal notice has been issued. Ex.A2 is a copy of the legal
notice dated 13.02.2003 and the same has also been received
by the defendant. After receipt of the same he has given a
false reply notice dated 10.03.2003. Since on the side of the
plaintiff, necessary documentary and oral evidence have been
let in, it is easily discernible that the plaintiff has always been
ready and willing to perform his part of the contract.
Therefore, the fourth contention put forth on the side of the
appellants/defendant[s] also goes out without merit.
...
20. It has already been discussed in detail that the suit property
is the absolute property of the defendant. From the evidence
given by the defendant [D.W.1], the Court can very well come
to conclusion that the entire transaction is based upon on
oral sale agreement emerged between the plaintiff and
defendant.
Further, the plaintiff has shown his readiness and
willingness to perform his part of the contract. Therefore,
viewing from any angle, the contentions put forth on the side
of the appellants /defendants[s] cannot be accepted.”
17. Mr. Krishnan Venugopal, learned Senior Counsel appearing
on behalf of the Appellants argued that both the Trial Court and the High
Court committed an error on facts and also in law. According to him the
issue relating to “readiness and willingness” on the part of the Respondent
Plaintiff, had not been properly appreciated by the Courts below.
Emphasizing on Section 16(c) of the Specific Relief Act, 1963,
Mr. Venugopal submitted that the Respondent Plaintiff had not adduced
any evidence to demonstrate continuous “readiness and willingness”
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which the Respondent Plaintiff was required to prove, regardless of any
default by the original Defendant. Mr. Venugopal also argued that the
Court should also take judicial notice of the steep rise in the price of real
estate, before granting the discretionary relief of specific performance.
18. Mr. N.D.B. Raju appearing on behalf of the Respondent
Plaintiff submitted that the issues framed by the Trial Court of whether
there was a concluded contract between the Plaintiff and the Defendant,
and whether the Plaintiff was always ready and willing to perform his
part of the contract were factual issues determinable on evidence.
19. Mr. Raju argued that this Court should not disturb the
concurrent factual findings of the Trial Court and the High Court of
readiness and willingness of the Respondent Plaintiff to perform his part
of the contract.
20. Mr. Raju has emphatically argued that the Respondent Plaintiff
was ever ready and willing to perform his part of the contract and that
the original Defendant had been delaying the execution of the sale deed.
To prove readiness and willingness of the Respondent Plaintiff, Mr. Raju
referred to the testimony of the Plaintiff’s witnesses, N. Anjappa (PW
2) and S.A. Muralidharan (PW3) who have stated that the Respondent
Plaintiff had on multiple occasions, before the cut-off date of 15.03.2003
approached the original Defendant for execution of the sale deed, but
the original
Defendant delayed the execution of the sale deed.
21. It is well settled that, in a suit for Specific Performance of an
agreement, it is for the Plaintiff to prove his readiness and willingness to
perform his obligations under the agreement. Where a certain amount
has been paid in advance and the balance is required to be paid within a
stipulated time, it is for the Plaintiff to show that he was in a position to
pay the balance money. The Plaintiff has to prove that he has the money
or has alternatively made necessary arrangements to get the money. In
this case, the Original Defendant/Appellants have all along contended
that the Plaintiff Respondent neither offered to pay nor was in a position
to pay the balance consideration of Rs.15,00,000/-.
22. The primary question for determination is whether the
Respondent Plaintiff has proved his readiness and willingness to perform
his part of the contract or not?
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23. Section 16 of the Specific Relief Act, 1963, as it stood at the
material time (prior to amendment with effect from 1.10.2018), inter
alia, provides:-
“16. Personal bars to relief.—Specific performance of a
contract cannot be enforced in favour of a person—
(a) who would not be entitled to recover compensation for
its breach; or
(b) who has become incapable of performing, or violates
any essential term of, the contract that on his part remains
to be performed, or acts in fraud of the contract, or wilfully
acts at variance with, or in subversion of, the relation
intended to be established by the contract; or
(c) who fails to aver and prove that he has 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 terms the performance of which has been
prevented or waived by the defendant.
Explanation. —For the purposes of clause (c), —
(i) where a contract involves the payment of money, it is not
essential for the plaintiff to actually tender to the defendant
or to deposit in court any money except when so directed by
the court;
(ii) the plaintiff must aver performance of, or readiness and
willingness to perform, the contract according to its true
construction.”
24. Section 16 (c) of the Specific Relief Act, 1963 bars the relief
of specific performance of a contract in favour of a person, who fails to
aver and prove his readiness and willingness to perform his part of
contract.
In view of Explanation (i) to clause (c) of Section 16, it may
not be essential for the plaintiff to actually tender money to the defendant
or to deposit money in Court, except when so directed by the Court, to
prove readiness and willingness to perform the essential terms of a
contract, which involves payment of money. However, explanation (ii)
says the plaintiff must aver performance or readiness and willingness to
perform the contract according to its true construction.
U.N. KRISHNAMURTHY (SINCE DECEASED) THR. LRS. v.
A. M. KRISHNAMURTHY [INDIRA BANERJEE, J.]
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25. 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.
26. In Man Kaur v. Hartar Singh Sangha1, this Court held that:
“40. …..A person who fails to aver and prove that he has
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 the terms the performance of which has
been prevented or waived by the defendant) is barred from
claiming specific performance. Therefore, even assuming that
the defendant had committed breach, if the plaintiff fails to
aver in the plaint or prove that
he was always ready and
willing to perform the essential terms of contract which are
required to be performed by him (other than the terms the
performance of which has been prevented or waived by the
plaintiff), there is a bar to specific performance in his favour.
Therefore, the assumption of the respondent that readiness
and willingness on the part of the plaintiff is something which
need not be proved, if the plaintiff is able to establish that the
defendant refused to execute the sale deed and thereby
committed breach, is not correct. Let us give an example. Take
a case where there is a contract for sale for a consideration
of Rs. 10 lakhs and earnest money of Rs. 1 lakh was paid
and the vendor wrongly refuses to execute the sale deed unless
the purchaser is ready to pay Rs. 15 lakhs. In such a case
there is a clear breach by the defendant. But in that case, if
the plaintiff did not have the balance Rs. 9 lakhs (and the
1 (2010) 10 SCC 512
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money required for stamp duty and registration) or the capacity
to arrange and pay such money, when the contract had to be
performed, the plaintiff will not be entitled to specific
performance, even if he proves breach by the defendant, as
he was not “ready and willing” to perform his obligations.”
27. In Pt. Prem Raj v. D.L.F. Housing and Construction
(Private) Ltd. And Anr.2 cited by Mr. Venugopal, this Court speaking
through Ramaswamy J. held that “it is well-settled that in a suit for
specific performance the plaintiff should allege that he is ready
and willing to perform his part of the contract…..” and if the fact is
traversed, he is required to prove a continuous readiness and willingness
from the date of the contract to the time of the hearing, to perform the
contract on his part. For such conclusion the learned Judge relied upon
the opinion of Lord Blanesburgh, in Ardeshir Mama v. Flora Sassoon3.
28. In D.L.F. Housing and Construction (Pvt.) Ltd. (supra), in
the absence of an averment on the part of the Plaintiff in the plaint, that
he was ready and willing to perform his part of the contract, it was held
that the Plaintiff had no cause of action so far as the relief for Specific
Performance was concerned. In this case, of course, there is an averment
in the plaint that the Respondent Plaintiff was all along ready and willing
to perform his obligations under the contract. The question is whether
the Respondent Plaintiff had proved his readiness
and willingness to
perform his obligations under the contract.
29. In N.P. Thirugnanam v. Dr. R. Jagan Mohan Rao and
Ors.4, this Court reiterated that Section 16(c) of the Specific Relief Act,
1963 envisages that the 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 were to be performed by him other than
those terms, the performance of which has been prevented or waived
by the Defendant. In N.P. Thirugnanam (supra) this Court said that
the continuous readiness and willingness on the part of the Plaintiff was
a condition precedent for grant of the relief of Specific Performance.
30. This Court, in effect, held that for determining whether the
Plaintiff was ready and willing to perform his part of the agreement it is
2 AIR 1968 SC 1355
3 55 IA 300, at pg. 372:AIR 1928 PC 208
4 (1995) 5 SCC 115
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necessary for the Court to consider the conduct of the Plaintiff prior and
subsequent to filing the suit for specific performance. The relevant part
of the judgment is extracted hereinbelow:–
“5. …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 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…”
31. In Umabai v. Nilkanth Dhondiba Chavan5, this Court held
that a finding as to whether the Plaintiffs were all along and still ready
and willing to perform their part of the contract, was a mandatory
requirement under Section 16(c) of the Specific Relief Act. The Court
would necessarily have to arrive at the finding that the Plaintiff all along
were, and still are ready and also willing to perform their part of the
contract, taking into account the entirety of the pleadings as also the
evidence brought on record. To quote this Court:-
“So far there being a plea that they were ready and willing to
perform their part of the contract is there in the
pleading, we
have no hesitation to conclude, that this by itself is not
sufficient to hold that the appellants were ready and willing
in terms of Section 16(c) of the Specific Relief Act. This requires
not only such plea but also proof of the same. Now examining
the first of the two circumstances, how could mere filing of this
suit, after exemption was granted be a circumstance about
willingness or readiness of the plaintiff. This at the most could be
the desire of the plaintiff to have this property. It may be for such
a desire this suit was filed raising such a plea. But Section 16(c)
of the said Act makes it clear that mere plea is not sufficient, it
has to be proved.”
32. In K.S. Vidyanadam v. Vairavan6, Justice B.P. Jeevan Reddy
said that grant of the relief of specific performance is discretionary and
5 (2005) 6 SCC 243
6 (1997) 3 SCC 1
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the Court is not bound to grant it. This Court further held that though
time is not of essence to a contract relating to transfer of property, such
contracts need to be completed within a reasonable time period. Thus
the time element cannot be completely ignored.
33. In a suit for Specific Performance of a contract, the Court is
required to pose unto itself the following questions, namely:-
(i) Whether there is a valid agreement of sale binding on both
the vendor and the vendee and
(ii) Whether the Plaintiff has all along been and still is ready and
willing to perform his part of the contract as envisaged under
Section 16(c) of the Specific Relief Act, 1963.
34. There is a distinction between readiness and willingness to
perform the contract and both ingredients are necessary for the relief of
Specific Performance. In His Holiness Acharya Swami Ganesh Dassji
v. Sita Ram Thapar7 cited by Mr. Venugopal, this Court said that there
was a difference between readiness and willingness to perform a contract.
While readiness means the capacity of the Plaintiff to perform the
contract which would include his financial position, willingness relates to
the conduct of the Plaintiff. The same view was taken by this Court in
Kalawati v. Rakesh Kumar8.
35. Even in a first appeal, the first Appellate Court is duty bound
to examine whether there was continuous readiness and willingness on
the part of the Plaintiff to perform the contract. This proposition finds
support
from Balraj Taneja v. Sunil Madan9, and H.P. Pyarejan v.
Dasappa10 where this Court approved the views taken by the Privy
Council in Ardeshir Mama v. Flora Sassoon11.
36. In Malluru Mallappa v. Kuruvathappa12, this Court
observed and held:-
“13. It is a settled position of law that an appeal is a
continuation of the proceedings of the original court.
Ordinarily, the appellate jurisdiction involves a rehearing on
7 (1996) 4 SCC 526
8 (2018) 3 SCC 658
9 (1999) 8 SCC 396
10 (2006) 2 SCC 496
11 AIR 1928 PC 208
12 (2020) 4 SCC 313
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law as well as on fact and is invoked by an aggrieved person.
The first appeal is a valuable right of the appellant and therein
all questions of fact and law decided by the trial court are
open for reconsideration. Therefore, the first appellate court
is required to address itself to all the issues and decide the
case by giving reasons. The court of first appeal must record
its findings only after dealing with all issues of law as well as
fact and with the evidence, oral as well as documentary, led
by the parties. The judgment of the first appellate court must
display conscious application of mind and record findings
supported by reasons on all issues and contentions [see :
Santosh Hazari v. Purushottam Tiwari [Santosh Hazari v.
Purushottam Tiwari, (2001) 3 SCC 179], Madhukar v.
Sangram [Madhukar v. Sangram, (2001) 4 SCC 756], B.M.
Narayana Gowda v. Shanthamma [B.M. Narayana
Gowda v. Shanthamma, (2011) 15 SCC 476 : (2014) 2 SCC
(Civ) 619], H.K.N. Swami v. Irshad Basith [H.K.N. Swami v.
Irshad Basith, (2005) 10 SCC 243] and Sri Raja Lakshmi
Dyeing Works v. Rangaswamy Chettiar [Sri Raja Lakshmi
Dyeing Works v. Rangaswamy, (1980) 4 SCC 259]]
14. A first appeal under Section 96 CPC is entirely different
from a second appeal under Section 100. Section 100
expressly bars second appeal unless a question of law is
involved in a case and the question of law so involved is
substantial in nature.
***
18. It is clear from the
above provisions and the decisions of
this Court that the judgment of the first appellate court has to
set out points for determination, record the decision thereon
and give its own reasons. Even when the first appellate court
affirms the judgment of the trial court, it is required to comply
with the requirement of Order 41 Rule 31 and non-observance
of this requirement leads to infirmity in the judgment of the
first appellate court. No doubt, when the appellate court
agrees with the views of the trial court on evidence, it need
not restate effect of evidence or reiterate reasons given by
the trial court. Expression of a general agreement with the
reasons given by the trial court would ordinarily suffice.
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37. In H.P. Pyarejan v. Dasappa (supra), Justice Arijit Pasayat
speaking for this Court reversed the judgment of the High Court holding
that High Court did not provide reasoning for its conclusion that Plaintiff
was ready and willing to perform his part of contract. To arrive at such
conclusion the Court had relied upon Cort v. Ambergate etc. and Rly.
Co13 where Lord Campbell observed that in common sense, the meaning
of such an averment of readiness and willingness must be that the non-
completion of contract was not the fault of the Plaintiff.
38. In this case, we cannot overlook the fact that the suit property
is located in the industrial town of Hosur located about 30/40 kms. from
Bengaluru. The Court is obliged to take judicial notice of the phenomenal
rise in the price of real estate in Hosur. The proposition finds support
from case reported in K.S. Vidyanadam v. Vairavan (supra). To quote
this Court “we cannot be oblivious to reality – and the reality is
constant and continuous rise in the values of urban properties -
fuelled by large scale migration of people from rural areas to urban
centres and by inflation.”
39. Mr. Venugopal argued that the Plaintiff had only paid an
insignificant amount of Rs.10,001/- as advance when the consideration
was Rs.15,10,000/-. Having paid an insignificant amount the Plaintiff
was not entitled to discretionary equitable relief of Specific Performance,
as observed by this Court in Saradamani Kandappan v. S.
Rajalakshmi14. The relevant paragraph of the judgment of this Court is
set out hereinbelow:-
“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 of contracts relating
to immovable property, to cover his delays, laches, breaches
and “non-readiness”. The precedents from an era, when high
inflation was unknown, holding that time is not of the essence
13 (1851) 117 ER 1229
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of the contract in regard to immovable properties, may no
longer apply, not because the principle laid down therein is
unsound or erroneous, but the circumstances that existed when
the said principle was evolved, no longer exist. In these days
of galloping increases in prices of immovable properties, to
hold that a vendor who took an earnest money of say about
10% of the sale price and agreed for three months or four
months as the period for performance, did not intend that
time should be the essence, will be a cruel joke on him, and
will result in injustice. Adding to the misery is the delay in
disposal of cases relating to specific performance, as suits
and appeals therefrom routinely take two to three decades to
attain finality. As a result, an owner agreeing to sell a property
for rupees one lakh and receiving rupees ten thousand as
advance may be required to execute a sale deed a quarter
century later by receiving the remaining rupees ninety
thousand, when the property value has risen to a crore of
rupees.”
40. As argued by Mr. Venugopal, the fact that the suit had been
filed after three years, just before expiry of the period of limitation, was
also a ground to decline the Respondent Plaintiff the equitable relief of
Specific Performance for purchase of immovable property.
Mr. Venugopal’s argument finds support from the judgments of this Court
in P.R. Deb and Associates v. Sunanda Roy15; K.S. Vidyanadam v.
Vairavan16; Manjunath Anandappa v. Tammanasa17, Azhar Sultana
v. B. Rajamani18; Saradamani Kandappan v. S. Rajalakshmi19.
41. In K.S. Vidyanadam v. Vairavan (supra) this Court held:
“10. It has been consistently held by the courts in India,
following certain early English decisions, that in the case
of agreement of sale relating to immovable property, time
is not of the essence of the contract unless specifically
provided to that effect. The period of limitation prescribed
by the Limitation Act for filing a suit is three years. From
15 (1996) 4 SCC 423
16 (1997) 3 SCC 1
17 (2003) 10 SCC 390
18 (2009) 17 SCC 27
19 (2011) 12 SCC 18
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these two circumstances, it does not follow that any and
every suit for specific performance of the agreement (which
does not provide specifically that time is of the essence of
the contract) should be decreed provided it is filed within
the period of limitation notwithstanding the time-limits
stipulated in the agreement for doing one or the other thing
by one or the other party. That would amount to saying
that the time-limits prescribed by the parties in the agreement
have no significance or value and that they mean nothing.
Would it be reasonable to say that because time is not made
the essence of the contract, the time-limit(s) specified in
the agreement have no relevance and can be ignored with
impunity? It would also mean denying the discretion vested
in the court by both Sections 10 and 20. As held by a
Constitution Bench of this Court in Chand Rani v. Kamal
Rani [(1993) 1 SCC 519] : (SCC p. 528, para 25)
“… 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 (evident?): (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.”
In other words, the court should look at all the relevant
circumstances including the
time-limit(s) specified in the
agreement and determine whether its discretion to grant
specific performance should be exercised...”
42. In Azhar Sultana v. B. Rajamani (supra) this Court held:-
“28. …The court, keeping in view the fact that it exercises a
discretionary jurisdiction, would be entitled to take into
consideration as to whether the suit had been filed within a
reasonable time. What would be a reasonable time would,
however, depend upon the facts and circumstances of each
case. No hard-and-fast law can be laid down therefor. The
conduct of the parties in this behalf would also assume
significance.
***
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35. We, therefore, are of the opinion that interest of justice
would be subserved if this Court refuses to exercise its
discretionary jurisdiction in terms of Section 20 of the Act,
directing the defendant to pay a sum of Rs. 60,000 to the
plaintiff which sum would include the amount of advance paid
by her.”
43. In Saradamani Kandappan (supra) this Court reiterated that
(i) while exercising discretion in suits for Specific Performance, the Courts
should bear in mind that when the parties prescribed a time 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 purchaser was ready and willing to perform his part of the
contract and (iii) every suit for Specific Performance need not be decreed
merely because it is filed within the period of limitation, by ignoring 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 a purchaser can wait for one
or two years to file a suit and obtain Specific Performance. The three
year period is intended to assist the purchaser 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.
44. In Atma Ram v. Charanjit Singh20 Justice V.
Ramasubramanian speaking for this Court made the following pertinent
observation:-
“9... No explanation was forthcoming from the petitioner for
the long delay of three years, in filing the suit (on 13.10.1999)
after issuing a legal notice on 12.11.1996. The conduct of a
plaintiff is very crucial in a suit for specific performance. A
person who issues a legal notice on 12.11.1996 claiming
readiness and willingness, but who institutes a suit only on
13.10.1999 and that too only with a prayer for a mandatory
injunction carrying a fixed court fee relatable only to the
said relief, will not be entitled to the discretionary relief of
specific performance.”
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45. The Respondent Plaintiff has relied upon the notice dated
13.02.2003 and evidences of PW2 & PW3 to prove that he was always
ready and willing to perform his part of the contract. Even though it may
be true that the Respondent Plaintiff had deposited the balance sale
consideration in court on 06.04.2010, it cannot be ignored that such deposit
was made by him seven years after 15.3.2003, being the date by which
the sale had to be concluded. No evidence has been adduced on behalf
of the Respondent Plaintiff as to how the Respondent Plaintiff was in a
position to pay or make arrangements for payment of the balance sale
consideration within time. The Courts below also erred in not adjudicating
upon this vital issue except to make a sweeping observation that, given
that the Respondent Plaintiff was a businessman he had sources to
arrange the balance funds. Careful study of balance sheet dated
31.03.2003 of the Respondent Plaintiff would demonstrate that he did
not have sufficient funds to discharge his part of contract.
46. It is settled law that for relief of specific performance, the
Plaintiff has to prove that all along and till the final decision of the suit,
he was ready and willing to perform his part of the contract. It is the
bounden duty of the Plaintiff to prove his readiness and willingness by
adducing evidence. This crucial facet has to be determined by considering
all circumstances including availability of funds and mere statement or
averment
in plaint of readiness and willingness, would not suffice.
47.  In this case, the Respondent Plaintiff has failed to discharge
his duty to prove his readiness as well as willingness to perform his part
of the contract, by adducing cogent evidence. Acceptable evidence has
not been placed on record to prove his readiness and willingness. Further,
it is clear from the Respondent Plaintiff’s balance sheet that he did not
have sufficient funds to discharge his part of contract in March 2003.
Making subsequent deposit of balance consideration after lapse of seven
years would not establish the Respondent Plaintiff’s readiness to
discharge his part of contract. Reliance may be placed on Umabai v.
Nilkanth Dhondiba Chavan (supra) where this Court speaking through
Justice SB Sinha held that deposit of amount in court is not enough to
arrive at conclusion that Plaintiff was ready and willing to perform his
part of contract. Deposit in court would not establish Plaintiff’s readiness
and willingness within meaning of section 16(c) of Specific Relief Act.
The relevant part of the judgment is reproduced below: -
U.N. KRISHNAMURTHY (SINCE DECEASED) THR. LRS. v.
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“45. …Deposit of any amount in the court at the appellate
stage by the plaintiffs by itself would not establish their
readiness and willingness to perform their part of the contract
within the meaning of Section 16(c) of the Specific Relief
Act…”
48. It is, therefore, patently clear that the Respondent Plaintiff
has failed to prove his readiness to perform his part of contract from the
date of execution of the agreement till date of decree, which is a condition
precedent for grant of relief of specific performance. This Court finds
that the Respondent Plaintiff was not entitled to the relief of specific
performance.
49. The Respondent Plaintiff may have been willing to perform
his part of contract. It however appears that he was not ready with
funds. He was possibly trying to buy time to discharge his part of contract.
50. In Bhavyanath v. K.V. Balan21 cited by Mr. Raju to contend
that the Respondent Plaintiff was entitled to relief of specific performance
and the courts had rightly granted such relief, the Plaintiff had filed the
suit for specific performance three days after the last day for execution
of the sale deed. In this case however, the Respondent Plaintiff waited
for nearly 3 years and filed the suit for specific performance just before
expiry of the limitation period. Furthermore, in Bhavyanath v. K.V. Balan
(supra) the Plaintiff had adduced cogent evidence to prove his readiness
and willingness to
discharge his part of the contract and to prove that he
had sufficient funds to discharge his obligation. No such evidence has
been adduced by the Respondent Plaintiff in this case either to show his
readiness or to prove that sufficient funds were available with him to
enable him to discharge his part of contract. Therefore, Bhavyanath v.
K.V. Balan (supra) is of no assistance to the Respondent Plaintiff.
51. In view of foregoing, this Court is of the considered opinion
that the Respondent Plaintiff was not entitled to the relief of specific
performance. The Trial Court and the High Court erred both in law and
on facts in granting such relief.
52. The appeal is accordingly allowed. The impugned judgment
of the High Court and the judgment and decree of Trial court are
accordingly set aside. The Appellants shall return the earnest money to
21 (2020) 11 SCC 790

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the Respondent Plaintiff, within 4 weeks from today with interest at the
rate of 7% per annum from the date of deposit of the same, till the date
of refund. It will also be open to the Respondent Plaintiff to withdraw
the deposit if any of the balance consideration in Court. Parties to bear
their own costs.
Divya Pandey
Appeal allowed.
(Assisted by : Deepak Panwar, LCRA)
U.N. KRISHNAMURTHY (SINCE DECEASED) THR. LRS. v.
A. M. KRISHNAMURTHY [INDIRA BANERJEE, J.]