Civil appeal concerning the specific performance of an Agreement to Sell. The primary issue addressed is whether such a suit can be decreed if the buyer accepted a refund of most of the earnest money during the litigation. The court meticulously examines the buyer’s continuous readiness and willingness to fulfil the contract, concluding that the encashment of refunded funds indicated a lack of willingness to proceed with the property purchase. Furthermore, the ruling establishes that the agreement was effectively cancelled and that the buyer’s failure to seek a declaratory relief against this cancellation rendered the specific performance suit unsustainable. Consequently, the court allowed the appeal, nullifying previous judgments and the sale deed, while ordering a refund to the buyer.
(A) Specific Relief Act, 1963, Section 16(c) – Specific Performance – ‘Readiness’ and ‘willingness’ – Agreement of sale – Whether a suit for specific performance of an Agreement to Sell is liable to be decreed if the buyer had accepted the refund of majority of the earnest money deposit/advance consideration, during the pendency of the civil suit? – Admittedly the five demand drafts dated 7th February 2008 for Rs. 2,11,000/- were encashed by the Respondent No. 1-buyer in July, 2008 – The conduct of the Respondent No. 1-buyer in encashing the demand drafts establishes beyond doubt that the Respondent No. 1-buyer was not willing to perform her part of the Agreement to Sell and proceed with execution of the sale deed; for the Respondent No. 1-buyer would not have encashed the demand drafts if she was indeed willing to perform the contract and have a sale deed executed – Held that once it is established that the Respondent No. 1-buyer is not willing to perform the contract, the fact that the entire advance consideration/earnest money had not been returned to Respondent No. 1-buyer is irrelevant and immaterial – The act of the Respondent No.1- buyer in encashing the demand drafts leads to an irresistible conclusion that the agreement in question stood cancelled – Agreement to Sell cannot be specifically enforced – Impugned Judgment as well as decrees liable to be set aside – Further, the sale deed executed in favour of Respondent No. 1-buyer in pursuance of the impugned judgments is declared as null and void and the Appellant is directed to refund the balance sale consideration amount of Rs.24,61,000/- deposited by Respondent No. 1-buyer in pursuance to the impugned judgment and decrees.
(Para 20 to 22 and 30)
(B) Specific Relief Act, 1963, Section 16(c) – Specific Performance – Agreement of sale – ‘Readiness’ and ‘willingness’ – Held that ‘readiness’ and ‘willingness’ are not one but two separate elements – ‘Readiness’ means the capacity of the Respondent No. 1- buyer to perform the contract, which would include the financial position to pay the sale consideration – ‘ Willingness’ refers to the intention of the Respondent No. 1-buyer as a purchaser to perform his part of the contract, which is inferred by scrutinising the conduct of the Respondent No. 1-buyer /purchaser, including attending circumstances – Continuous readiness and willingness on the part of the Respondent No. 1-buyer /purchaser from the date of execution of Agreement to Sell till the date of the decree, is a condition precedent for grant of relief of specific performance – It is not enough to show the readiness and willingness up to the date of the plaint as the conduct must be such as to disclose readiness and willingness at all times from the date of the contract and throughout the pendency of the suit up to the decree.
(Para 17 and 18)
(C) Specific Relief Act, 1963, Section 16(c) – Specific performance – Cancellation of agreement – Suit maintainability – Seller had admittedly issued a letter dated 7th February 2008 cancelling the Agreement to Sell dated 25th January 2008, prior to the filing of the subject suit on 5th May 2008 – Even though the demand drafts enclosed with the letter dated 07th February, 2008 were subsequently encashed in July, 2008, yet it was incumbent upon the Respondent No. 1-buyer to seek a declaratory relief that the said cancellation is bad in law and not binding on parties for the reason that existence of a valid agreement is sine qua non for the grant of relief of specific performance – Since in the present case, the seller had issued a letter dated 07th February, 2008 cancelling the agreement to sell prior to the institution of the suit, the same constitutes a jurisdictional fact as till the said cancellation is set aside, the respondent is not entitled to the relief of specific performance – Held that absent a prayer for declaratory relief that termination/cancellation of the agreement is bad in law, a suit for specific performance is not maintainable.
(Para 24 to 27)
(D) Specific Relief Act, 1963, Section 16(c) – Agreement of sale – ‘Readiness’ and ‘willingness’ – Specific performance – Locus standi to file appeal – Preliminary objection raised by the Respondent No. 1 -buyer that the issue of her readiness and willingness should not be examined by this Court as the appellant lacked the locus standi to file the present appeal as she did not have any right, interest or title over the subject property repelled being misconceived on facts – The appellant was impleaded as defendant no. 3 in the subject suit as she is a beneficiary under the Will dated 23rd September 2002 executed by the original owner/seller, whereby the subject property has been bequeathed in her favour – Consequently, the appellant, being a necessary and interested party to the lis, has the locus to file the present appeal – Further, the onus to establish readiness and willingness is on the Respondent No. 1-buyer and the failure to establish the same disentitles the Respondent No. 1-buyer from the equitable and discretionary relief of specific performance.
(Para 28)
(E) Specific Relief Act, 1963, Section 16(c) – Agreement of sale – ‘Readiness’ and ‘willingness’ – Specific performance – Suppression of material facts – Not only did the Respondent No. 1-buyer fail to seek a declaratory relief, but also it failed to disclose in the plaint that the seller had issued the cancellation letter dated 7th February 2008 enclosing therewith the demand drafts dated 7th February 2008 and two of the three post-dated cheques – The failure of the Respondent No. 1-buyer to disclose the same in her plaint amounts to suppression of material fact, disentitling her from the discretionary relief of specific performance.
(Para 29)
Sangita Sinha V. Bhawana Bhardwaj And Ors.
Supreme Court: 2025 INSC 450: (DoJ 04-04-2025)
