2025 INSC 450
SUPREME COURT
OF INDIA
(HONBLE DIPANKAR
DATTA, J. AND HONBLE MANMOHAN, JJ.)
SANGITA
SINHA
Appellant
VERSUS
BHAWANA BHARDWAJ AND ORS.
Respondent
Civil Appeal No. 4972 OF
2025 (Arising out of Special Leave Petition (C) No.28460 of 2024)-Decided on
04-04-2025
Civil, Specific
Performance
(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)
JUDGMENT
Manmohan, J. :- Leave granted.
2. The primary issue that
arises for consideration in the present civil appeal is 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?
3. Brief facts leading to
the present appeal are as under:-
3.1.
Late Kushum Kumari ("original defendant" / "seller") was
allotted the subject property by the People's Cooperative House Construction
Society Limited ("Society") vide a registered sub-lease dated 2nd
April 1968.
3.2. On
25th January 2008, an unregistered Agreement to Sell with respect to the
subject property was executed between the "Respondent
No.1-buyer"-plaintiff and the seller for a total sale consideration of Rs.
25,00,000/- (Rupees Twenty Five Lakhs). At the time of the execution of the
Agreement to Sell, the Respondent No. 1- buyer paid a sum of Rs.2,51,000/-
(Rupees Two Lakh Fifty One Thousand) in cash to the seller and issued three
post-dated cheques worth Rs.7,50,000/- (Rupees Seven Lakh Fifty Thousand).
3.3. It
is the case of Respondent No. 1-buyer that when she visited the subject
property along with her husband on 11th February 2008, the tenants of the
seller created a scuffle and forced them to return. In the circumstance, the
Respondent No. 1-buyer issued legal notices dated 23rd February 2008 and 23rd
April 2008, expressing her intention to pay the balance sale consideration and
to get the property registered in her favour.
3.4. Upon
the failure of the seller to execute the sale deed, Respondent No. 1-buyer
filed a suit before the Trial Court, Sub Judge-IV, Patna under the Specific
Performance Act, 1963 ("Act, 1963)" seeking specific performance of
the Agreement to Sell dated 25th January 2008 and the same was registered as
Title Suit No. TS/176/2008 ("subject suit").
3.5. The
subject suit was contested by the seller by filing a written statement, stating
therein that she came to know about the Agreement to Sell dated 25th January
2008 on 5th February 2008 and immediately thereafter, made a complaint dated
6th February 2008 with the Inspector of Police-cum-Station House Officer,
Kankarbagh Police Station, Patna stating that her signatures had been
fraudulently taken on the Agreement to Sell dated 25th January 2008. It was
further stated that the seller issued a letter dated 7th January 2008
cancelling the Agreement to Sell dated 25th January 2008 and refunded
Rs.2,11,000/- (Rupees Two Lakh Eleven Thousand) through five demand drafts
dated 7th February 2008 in lieu of the cash and returned two of the three
post-dated cheques of Rs.2,50,000/-(Rupees Two Lakh Fifty Thousand) each, which
were issued by the seller. Vide Order dated 16th December 2008, issues were
framed by the Trial Court.
3.7. Upon
the demise of the seller, the Respondent No.3 herein, who is the step grandson
of the seller, was impleaded as substituted defendant no. 1 and the appellant
herein was impleaded as defendant no. 3 as the subject property had been
bequeathed in her favour by way of a Will dated 23rd September 2002 executed by
the original owner/seller.
3.8. After
consideration of the depositions of PW-1 (Respondent No. 1 herein) and her
husband, PW-2, the Trial Court framed three additional issues vide order dated
21st January 2013. The issues were framed once again on 27th April 2018, and a
judgment was passed in favour of Respondent No. 1-buyer on the same date. The
judgment dated 27th April 2018 and the decree dated 10th May 2018 were
challenged by the appellant herein in First Appeal No. 83 of 2018. The said
appeal was dismissed by the Patna High Court vide the impugned Judgment dated
9th May 2024.
3.9.
Upon the present Special Leave Petition being filed, this Court, while issuing
notice, had directed parties to maintain status quo with respect to the
possession on 20th August 2024.
SUBMISSIONS ON BEHALF OF THE
APPELLANT
4. Shri S.B. Upadhyay,
learned senior counsel for the appellant, stated that the signatures of the
seller on the Agreement to Sell dated 25th January 2008 had been fraudulently
obtained by Respondent No.3 herein. He stated that the seller-defendant signed
some blank papers believing the same to be related to the Will that she had
executed in favour of the appellant on 23rd September 2002.
5. He stated that upon the
discovery of the Agreement to Sell dated 25th January 2008 on 5th February
2008, the seller made a criminal complaint dated 6th February 2008 with the
Inspector of Police-cum-Station House Officer, Kankarbagh, Patna that her
signatures had been fraudulently obtained on the Agreement to Sell dated 25th
January 2008.
6. He stated that on 7th
February 2008, the seller wrote a letter to Respondent No.1-buyer cancelling
the Agreement to Sell dated 25th January 2008 enclosing therewith five demand
drafts dated 7th February 2008 amounting to Rs. 2,11,000/- (Rupees Two Lakh Eleven
Thousand) in lieu of the cash and two of the three post-dated cheques of
Rs.2,50,000/- (Rupees Two Lakh Fifty Thousand) each, which were issued by the
Respondent No. 1-buyer.
7. He pointed out that the
Respondent No.1-buyer as well as her husband-PW2, in their depositions, have
admitted that they had received five demand drafts dated 7th February 2008
amounting to Rs. 2,11,000/- (Rupees Two Lakh Eleven Thousand) in lieu of the
cash and also received two of the three post-dated cheques of Rs.2,50,000/- (Rupees
Two Lakh Fifty Thousand) along with the letter cancelling the Agreement to Sell
dated 25th January 2008 in March 2008. He explained that five demand drafts
dated 7th February 2008 of Rs.2,11,000/- (Rupees Two Lakh Eleven Thousand) were
encashed by the Respondent No. 1 -buyer in July 2008, after institution of the
subject suit on 5th May 2008. He submitted that the encashment of the demand
drafts amounted to revocation of the Agreement to Sell dated 25th January 2008.
He contended that the subject suit was filed by the Respondent No.1-buyer after
revocation of the Agreement to Sell dated 25th January 2008, without seeking
any relief against the revocation and without disclosing that she was in
receipt of the demand drafts and postdated cheques.
8. He contended that the
subject suit was filed on the basis of an Agreement to Sell which stood
cancelled and as such, the same was not maintainable. He submitted that
existence of a valid agreement is sine qua non for grant of relief of specific
performance. He pointed out that, in similar circumstances, this Court in R.
Kandasamy (Since Dead) & Ors. vs. T.R.K. Sarawathy & Anr. (Civil Appeal
No. 3015 of 2013 decided on 21st November 2024), had set aside the judgment and
decree passed in favour of the Respondent No.1-buyer inter alia on the ground
that a non existent Agreement to Sell cannot be enforced by a Court of law.
9. Even otherwise, he
contended that the Respondent No.1-buyer was not ready and willing to perform
the Agreement to Sell dated 25th January 2008. He stated that a mere averment
that the Respondent No.1-buyer is ready and willing to perform the contract
will not suffice as readiness and willingness must be inferred in overall
circumstances of the case, including the conduct of the Respondent No. 1-buyer
prior and subsequent to the filing of the suit.
10. He pointed out that the
Respondent No.1-buyer in her cross- examination, had admitted that at the time
of execution of the agreement, she was not aware of the balance in her bank
account and at the time when the three post-dated cheques for Rs.2,50,000/-
(Rupees Two Lakh Fifty Thousand) were issued, there was no sufficient balance
in her account. He contended that the conduct of the Respondent No. 1-buyer in
encashing the demand drafts proved that she was not ready or willing to perform
the contract. In support of his contentions, he relied upon the judgments of
this Court in Mehboob-Ur-Rehman (Dead) through Legal Representatives vs.
AhsanulGhani, (2019) 19SCC415and C.S. Venkatesh vs. A.S.C. Murthy (Dead) by
Legal Representatives and Ors., (2020) 3 SCC280.
SUBMISSIONS ON BEHALF OF
RESPONDENT NO. 1
11. Per contra, Mr.
Mungeshwar Sahoo, learned senior counsel for the Respondent No.1-buyer stated
that the suit had been decreed in favour of the Respondent No. 1-buyer by the
Trial Court after rightly appreciating the evidence and a sale deed had been
executed subsequently in favour of the Respondent No.1-buyer upon deposit of
Rs. 24,61,000/- (Rupees Twenty Four Lakh Sixty One Thousand) before the Trial
Court. He contended that the judgment and decree passed by the Trial Court had
been rightly upheld by the High Court. He stated that the entire case of the
appellant in the present proceedings is based upon reappreciation of evidence
and the same cannot be permitted at this stage.
12. He stated that the
entire earnest money/advance consideration had not been refunded/returned by
the seller. He stated that the Respondent No. 1-buyer had paid Rs.2,51,000/-
(Rupees Two Lakh Fifty One Thousand) in cash to the seller against which the
seller had refunded Rs.2,11,000/- (Rupees Two Lakh Eleven Thousand) through
five demand drafts dated 7th February 2008. Therefore, according to him, an
amount of Rs. 40,000/- (Rupees Forty Thousand) remained with the seller as earnest
money/advance consideration. He contended that as the balance sale
consideration had been paid subsequently, the cancellation of the Agreement to
Sell dated 25th January 2008 was not valid.
13. Even otherwise, he
stated that a bilateral agreement cannot be unilaterally cancelled by a party
by returning the earnest money. According to him, a (bilateral) agreement can
only be cancelled by a Court of law or by executing a subsequent agreement,
cancelling the prior agreement. He stated that in the event parties are
permitted to unilaterally cancel the agreement, the purchaser will be left
remediless as any third party can intervene by offering a higher earnest money.
14. He contended that the
seller passed away before she could prove her defense by leading evidence. He
stated that neither the appellant nor the Respondent No.3 herein had deposed in
support of the written statement filed by the seller. He therefore stated that
the written statement of the seller had not been proved. He also contended that
the appellant did not have the locus to file the present appeal. According to
him, the appellant had no right, title or interest in the subject property and
the findings of the Trial Court or the High Court do not affect the appellant
in any manner.
COURT'S REASONING
RESPONDENT NO.1 WAS NOT
WILLING TO PERFORM THE AGREEMENT TO SELL
15. Having heard learned
senior counsel / learned counsel for the parties and having perused the paper
book, the admitted position that emerges is that Respondent No. 1-buyer had
paid Rs. 2,51,000/- (Rupees Two Lakh Fifty One Thousand) in cash and handed
over three post-dated cheques of Rs.2,50,000/- (Rupees Two Lakh Fifty Thousand)
each at the time of execution of the Agreement to Sell dated 25th January 2008.
It is also not disputed that the Respondent No. 1-buyer had subsequently
received a letter dated 7th February 2008 cancelling the Agreement to Sell
dated 25th January 2008 enclosing therewith five demand drafts dated 7th
February 2008 totaling to Rs.2,11,000/- (Rupees Two Lakh Eleven Thousand) (in
lieu of the cash paid by the Respondent No. 1-buyer) along with two of the
three post-dated cheques of Rs.2,50,000/- (Rupees Two Lakh Fifty Thousand)
each, which had been issued initially by the Respondent No. 1-buyer. Further, the
third post-dated cheque which was not returned to the Respondent No. 1-buyer
had not been encashed. The Respondent No.1- buyer has admitted that the letter
dated 7th February 2008 had been received prior to filing of the suit for
specific performance and five demand drafts dated 7th February 2008 totaling to
Rs.2,11,000/- (Rupees Two Lakh Eleven Thousand) had been encashed in July, 2008
after institution of the subject suit on 5th May 2008, without raising any
objection with respect to the difference in the cash amount and the demand
drafts furnished by the seller.
16. It is settled law that
under the Act, 1963, prior to the 2018 Amendment, specific performance was a
discretionary and equitable relief.
In Kamal Kumar vs. Premlata
Joshi and Ors., (2019) 3 SCC 704, which has been followed in P. Daivasigamani
vs. S. Sambandan, (2022) 14 SCC 793, this Court framed material questions which
require consideration prior to grant of relief of specific performance. The
relevant portion of the judgment in Kamal Kumar (supra) is reproduced herein below:
"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;
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. "
17. It is trite law 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.
18. 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. This Court in various
judicial pronouncements has held that 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. A few of the said
judgments are reproduced herein below:-
A. In
Gomathinayagam Pillai and Ors. vs. Palaniswami Nadar, (1967) 1 SCR 227, it has
been held as under:-
"6.
But the respondent has claimed a decree for specific performance and it is for
him to establish that he was, since the date of the contract, continuously
ready and willing to perform his part of the contract. If he fails to do so,
his claim for specific performance must fail. As observed by the Judicial
Committee of the Privy Council in Ardeshir Mama v. Flora Sassoon 1928 SCC
OnLine PC 43:
"In
a suit for specific performance, on the other hand, he treated and was required
by the Court to treat the contract as still subsisting. He had in that suit to
allege, and if the fact was traversed, he was 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. Failure to make good that
averment brought with it the inevitable dismissal of his suit."
The
respondent must in a suit for specific performance of an agreement plead and
prove that he was ready and willing to perform his part of the contract
continuously between the date of the contract and the date of hearing of the
suit ."
(emphasis supplied)
B. In
Vijay Kumar and Others vs. Om Par kash, 2018 SCC OnLine SC1913, it has been
held as under:-
"6.
In order to obtain a decree for specific performance, the plaintiff has to
prove his readiness and willingness to perform his part of the contract and the
readiness and willingness has to be shown throughout and has to be established
by the plaintiff . "
(emphasis supplied)
C. In
J.P.Builders and Another vs. A. Ramadas Rao and Another, (2011) 1 SCC 429, it
has been held as under:-
"27.
It is settled law that even in the absence of specific plea by the opposite
party, it is the mandate of the statute that the plaintiff has to comply with
Section 16(c) of the Specific Relief Act and when there is non-compliance with
this statutory mandate, the court is not bound to grant specific performance
and is left with no other alternative but to dismiss the suit. It is also clear
that readiness to perform must be established throughout the relevant points of
time. "Readiness and willingness" to perform the part of the contract
has to be determined/ascertained from the conduct of the parties."
(emphasis supplied)
D. In
Umabai and Another vs. Nilkanth Dhondiba Chavan (Dead) ByLRs. and Another,
(2005) 6 SCC 243, it has been held as under:-
"30.
It is now well settled that the conduct of the parties, with a view to arrive
at a finding as to whether the plaintiff-respondents were all along and still
are ready and willing to perform their part of contract as is mandatorily
required under Section 16 (c) of the Specific Relief Act must be determined
having regard to the entire attending circumstances. A bare averment in the
plaint or a statement made in the examination-in- chief would not suffice. The
conduct of the plaintiff- respondents must be judged having regard to the
entirety of the pleadings as also the evidence brought on records."
(emphasis supplied)
E. In
Mehboob-Ur-Rehman (Dead) through Legal Representatives v. Ahsanul Ghani
(supra), it has been held as under:-
"16.
Such a requirement, of necessary averment in the plaint, that he has already
performed or has always been ready and willing to perform the essential terms
of the contract which are to be performed by him being on the plaintiff, mere
want of objection by the defendant in the written statement is hardly of any
effect or consequence. The essential question to be addressed to by the Court
in such a matter has always been as to whether, by taking the pleading and the
evidence on record as a whole, the plaintiff has established that he has
performed his part of the contract or has always been ready and willing to do
so... "
(emphasis supplied)
F. In
C.S. Venkatesh v. A.S.C. Murthy (Dead) by Legal Representatives & Ors.
(supra), it has been held as under:-
"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 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.
17. In
N.P. Thirugnanam v. R. Jagan Mohan Rao [N.P. Thirugnanam v. R. Jagan Mohan Rao,
(1995) 5 SCC 115], it was held that continuous readiness and willingness on the
part of the plaintiff is a condition precedent to grant of 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 to 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 necessarily be proved to be available.
18. In
Pushparani S. Sundaram v. Pauline Manomani James [Pushparani S. Sundaram v.
Pauline Manomani James, (2002) 9 SCC 582], this Court has held that inference
of readiness and willingness could be drawn from the conduct of the plaintiff
and the totality of circumstances in a particular case. It was held thus: (SCC
p. 584, para 5)
"5.
... So far these 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."
(emphasis supplied)
19. Consequently, the
readiness and willingness of the buyer to go ahead with the sale of the
property at the time of the institution of the suit loses its relevance, if the
Respondent No. 1-buyer is unable to establish that the readiness and
willingness has continued throughout the pendency of the suit.
20. After examination of the
pleadings and evidence in the present suit as well as the conduct of the
Respondent No. 1-buyer, this Court is unable to agree with Respondent No.
1-buyer that she was willing to perform the Agreement to Sell dated 25th
January, 2008 and go ahead with the purchase of the property. This Court says
so because admittedly, as noted above, the five demand drafts dated 7th
February 2008 for Rs. 2,11,000/- (Rupees Two Lakh Eleven Thousand) 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.
Consequently, 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 AGREEMENT TO SELL DATED
25TH JANUARY 2008 STOOD CANCELLED / TERMINATED.
21. This Court is also of
the view that 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.
22. The contention of the
learned counsel for the Respondent No. 1- buyer that the Agreement to Sell
dated 25th January 2008 could not have been cancelled unilaterally is contrary
to facts as the letter dated 07th February 2008 along with the refund of the
demand drafts and two post dated cheques was nothing but repudiation of the
Agreement to Sell dated 25th January 2008 by the seller and the encashment of
the demand drafts was acceptance of such repudiation by the Respondent No.
1-buyer, leading to cancellation of the Agreement to Sell dated 25th January
2008.
23. The contention that the
demand drafts were encashed under protest is misconceived on facts as there is
nothing on record to show that the demand drafts were encashed under protest.
In fact, PW-2, who is the husband of the Respondent No. 1-buyer, has deposed
that upon receipt of the demand drafts and cheques, the Respondent No. 1-buyer
had not issued any letter to the seller stating that the amounts received by
them were less than the earnest money paid by them.
ABSENT A PRAYER FOR
DECLARATORY RELIEF THAT CANCELLATION OF THE AGREEMENT IS BAD IN LA W, A SUIT
FOR SPECIFIC PERFORMANCE IS NOT MAINTAINABLE
24. This Court further finds
that the 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 this Court is of the view that 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.
25. This Court in I.S.
Sikandar (Dead) By LRs. v. K. Subramani and Others, (2013) 15 SCC 27 has held
that in absence of a prayer for a declaratory relief that the termination of
the agreement is bad in law, the suit for specific performance of that
agreement is not maintainable. Though subsequently, this Court in A. Kanthamani
Vs. Nasreen Ahmed, (2017) 4 SCC 654 has held that the declaration of law in
I.S. Sikander (Dead) By LRs. v. K. Subramani (supra) regarding
non-maintainability of the suit in the absence of a challenge to letter of
termination is confined to the facts of the said case, yet the aforesaid issue
has been recently considered in R. Kandasamy (Since Dead) & Ors. v. T.R.K.
Sarawathy & Anr. (supra) authored by brother Justice Dipankar Datta and the
conflict between the judgment of I.S. Sikander (Dead) By LRs. v. K. Subramani
(supra) and A. Kanthamani Vs. Nasreen Ahmed (supra) has been deliberated upon.
In R. Kandasamy (Since Dead) & Ors. v. T.R.K. Sarawathy & Anr. (supra),
it has been clarified that the appellate court would not be precluded from
examining whether the jurisdictional fact exists for grant of relief of
specific performance, notwithstanding the fact that the trial Court omitted or
failed to frame an issue on maintainability of the suit. The relevant portion
of the judgment in R. Kandasamy (Since Dead) & Ors. v. T.R.K. Sarawathy
& Anr. (supra) is reproduced hereinbelow:
"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.
xxx
xxx xxx xxx
43.
In Shrisht Dhawan (Smt) v. Shaw Bros., (1992) 1 SCC 534, an interesting
discussion on 'jurisdictional fact' is found in the concurring opinion ofHon
'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)
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 jurisdictionalfact. 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 'sprima facie
opinion of nonexistent 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 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. "
26. 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.
27. Consequently, this Court
is of the opinion 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.
APPELLANT HAS THE LOCUS
STANDI TO FILE THE APPEAL
28. The 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 is 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.
SUPPRESSION OF MATERIAL
FACTS DISENTITLES THE BUYER FROM THE EQUITABLE AND DISCRETIONARY RELIEF OF
SPECIFIC PERFORMANCE
29. A perusal of the record
shows that 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. This Court in Citadel Fine
Pharmaceuticals v. Ramaniyam Real Estates Private Limited and Another, (2011) 9
SCC147 has held as under:
"57.
There is another aspect of the matter also. In the instant case by asking for
specific performance of the contract, the plaintiff purchaser is praying for a
discretionary remedy. It is axiomatic that when a discretionary remedy is
prayed for by a party, such party must come to court on proper disclosure of
facts. The plaint which it filed before the court in such cases must state all
the facts with sufficient candour and clarity. In the instant case the
plaintiff purchaser made an averment in the plaint that the defendant vendor be
directed to return the advance amount ofRs 10,00,000 with interest at the rate
of 24% from the date of payment of the said amount till the realisation and an
alternative prayer to that effect was also made in the prayer clause (c).
58.
However, the fact remains that prior to the filing of the suit the defendant
vendor returned the said amount of Rs 10,00,000 by its letter dated 4-9-1996 by
an account payee cheque in favour of the plaintiff and the same was sent to the
plaintiff under registered post which was refused by the plaintiff on 6-9-1996.
The plaintiff suppressed this fact in the plaint and filed the suit on 9-9-1996
with a totally contrary representation before the court as if the amount had
not been returned to it by the vendor. This is suppression of a material fact,
and disentitles the plaintiff purchaser from getting any discretionary relief
of specific performance by the court.
59. In
this connection we may refer to the Principle of Equitable Remedies by I.C.F.
Spry, (4th Edn., Sweet & Maxwell, 1990). Dealing with the question of
"clean hands " the learned author opined that where the plaintiff is
shown to have materially misled the court or to have abused its process, or to
have attempted to do so, the discretionary relief of specific performance can
be denied to him. In laying down this principle, the learned author relied on a
decision of the English Court in Armstrong v. Sheppard & Short Ltd. [(1959)
2 QB 384 : (1959) 3 WLR 84 : (1959) 2 All ER 651 (CA)] , QB at p. 397. (See
Spry, Equitable Remedies, p. 243.)
60. This
Court has also taken the same view in Arunima Baruah v. Union of India [(2007)
6 SCC 120] . At p. 125, para 12 of the Report, this Court held that it is trite
law that to enable the court to refuse to exercise its discretionary
jurisdiction suppression must be of a material fact. This Court, of course,
held that what is a material fact, suppression whereof would disentitle the
suitor to obtain a discretionary relief, would depend upon the facts and
circumstances of each case. However, by way of guidance this Court held that a
material fact would mean that fact which is material for the purpose of
determination of the lis.
61. Following
the aforesaid tests, this Court is of the opinion that the suppression of the
fact that the plaintiff refused to accept the cheque ofRs 10 lakhs sent to it
by the defendant under registered post with acknowledgment due in terms of
Clause 9 of the contract is a material fact. So on that ground the plaintiff
purchaser is not entitled to any relief in its suit for specific
performance."
CONCLUSION
30. Keeping in view the
aforesaid findings, this Court is of the view that the Agreement to Sell cannot
be specifically enforced. Accordingly, the present appeal is allowed and the
impugned Judgment dated 27th April, 2018 as well as decrees dated 10th May,
2018 and 09th May, 2024 are 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/- (Rupees Twenty Four Lakh Sixty One
Thousand) deposited by Respondent No. 1-buyer in pursuance to the impugned
judgment and decrees.
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