Specific Performance Of Agreement To Sell Can Be Denied If There Is Long Time Lapse : Supreme Court

The Supreme Court has reiterated that a decree for specific performance of an agreement to sell is not an automatic consequence of a valid contract and can be refused if the purchaser fails to continuously demonstrate readiness and willingness to perform the contract throughout the litigation. The Court also held that a long lapse of time between the agreement and the final adjudication is a relevant factor that may disentitle a party from obtaining the equitable relief of specific performance.

A Bench of Justice Prashant Kumar Mishra and Justice Anjaria made the observations while allowing appeals filed by a property owner against a Madras High Court judgment which had directed specific performance of a 2004 agreement to sell. The Court restored the trial court's decree refusing specific performance and instead directed refund of the advance amount with interest.

The dispute arose out of an agreement dated April 1, 2004, under which the appellant agreed to sell a property in Udhagamandalam for ₹2.25 crore. While the trial court held that the purchasers had paid an advance of ₹85 lakh, it refused the discretionary relief of specific performance. The Madras High Court reversed that finding and ordered execution of the sale deed.

Allowing the appeals, the Supreme Court held that the purchasers had failed to establish the statutory requirement of continuous readiness and willingness to perform their part of the contract.

Rejecting the High Court's reliance on a demand draft for ₹1.40 crore produced during the appellate proceedings in 2011, the Bench stressed that readiness and willingness must exist continuously from the date of the agreement until the decree.

"In the suit for specific performance, the plaintiffs had to show their means i.e., availability of funds and readiness and willingness continuously at all material points of time i.e., soon after the agreement till the execution of the decree."

The Court held that merely producing funds years later during the appeal could not establish continuous financial readiness.

Examining the evidence, the Bench found that the purchasers had failed to prove that they possessed sufficient funds when the suit was filed. It noted that the Memorandum of Understanding relied upon by them for raising funds was neither referred to in their legal notice nor in the plaint, and did not demonstrate that money had actually been received by them.

The Court further noted that two cheques issued by the purchasers towards the sale consideration, one for ₹25 lakh and another for ₹5 lakh, had been dishonoured due to insufficient funds.

"The fact remains that the plaintiffs had no funds in their bank account leading to dishonour of cheques," the Court observed.

The Bench also pointed out that the purchasers eventually sold their Chennai properties only in May 2006, whereas the suit had already been instituted in September 2005, demonstrating that they did not possess the necessary funds at the relevant time.

Relying on earlier precedents including N.P. Thirugnanam v. Dr. R. Jagan Mohan Rao, Janardan Das and Others vs. Durga Prasad Agarwalla and Others (2024), the Court reiterated that continuous readiness and willingness is a condition precedent for grant of specific performance and has to be assessed with reference to the conduct of the plaintiff throughout the period from execution of the agreement till the decree.

Apart from the lack of continuous readiness, the Supreme Court held that the purchasers' conduct also disentitled them to equitable relief. It noted that one of the purchasers had lodged a criminal complaint seeking recovery of the advance amount while simultaneously pursuing specific performance in the civil suit, thereby taking inconsistent stands. The Court also referred to contradictory positions adopted by the purchasers regarding assignment of contractual rights to a third party.

The Bench further held that the passage of more than two decades since the agreement was an independent factor militating against grant of specific performance.

"Moreover, we cannot ignore the fact that over two decades have passed since the Agreement to Sell was concluded," the Court observed, referring to its earlier decisions in Saradamani Kandappan and Nanjappan, which held that long lapse of time is a relevant consideration while exercising discretion in suits for specific performance.

"we cannot ignore the fact that over two decades have passed since the Agreement to Sell was concluded. In decisions like Mrs. Saradamani Kandappan vs. Mrs. S. Rajalakshmi & Ors.16 and Nanjappan (supra), this Court has held such long lapse of time militates against granting the relief of specific performance. Defendant No. 1 is today a man of highly advanced age and Plaintiff No. 2 has passed away. To compel the transfer of immovable property under these circumstances would not, in our opinion, be equitable. As held in Kamal Kumar (supra), hardship to the defendant is also a recognised factor in the exercise of discretion under Section 20 of the Specific Relief Act, 1963. Justice here requires that we restore and leave the parties where they stood before the transaction."

Accordingly, the Supreme Court restored the trial court's decree directing refund of ₹85 lakh with interest and permitted the purchasers to withdraw the ₹1.40 crore deposited pursuant to the High Court's decree, together with accrued interest.

Headnote

Specific Relief Act, 1963 — Section 16(c) & Section 20 — Specific Performance — Continuous Readiness and Willingness — Inconsistent Conduct & Clean Hands — Discretionary Relief - Continuous Readiness & Willingness - The remedy for specific performance is an equitable and discretionary relief under Section 20 of the Specific Relief Act, 1963 - Under Section 16(c), the plaintiff must plead and prove continuous readiness and willingness to perform their part of the contract from the date of the execution of the agreement till the date of the decree - A mere production of funds/demand draft at the appellate stage is insufficient to establish continuous readiness when the plaintiff lacked funds at the time of institution of the suit and had instances of dishonoured cheques during the transaction. [Paras 38 - 41]

Locus Standi & Non-Examination of Vendee - Suppressio Veri & Unclean Hands - Where the power-of-attorney holder (husband of the vendee) lodges a criminal complaint seeking refund/recovery of advance money alleging fraud by the vendor, and the named vendee (wife) neither steps into the witness box to clarify her stance nor disowns the criminal complaint, the plaintiffs cannot be allowed to "blow hot and cold" by simultaneously seeking refund in criminal proceedings and specific performance in civil proceedings - A plaintiff who approaches the court with unclean hands by adopting inconsistent positions (such as alleging an assignment of rights to a third party in one proceeding while denying it in the main suit) and by withholding material documents/MoUs from the plaint is disentitled from claiming the equitable relief of specific performance - A long lapse of time (over two decades) during which the dynamics between the parties have materially altered, coupled with the advanced age of the defendant/vendor, constitutes a significant hardship factor under Section 20 of the Specific Relief Act, militating against the grant of specific performance. [Paras 28-51]

Code of Civil Procedure, 1908 — Order XLI Rule 22 — Challenge to Adverse Findings without Cross-Objections - A respondent who supports the ultimate decree passed by the trial court is entitled to impugn an adverse finding recorded against him by the trial court without filing cross-objections or a separate appeal under Order XLI Rule 22 CPC, provided he does not seek any additional relief beyond sustaining the decree. [Paras 31-35]

Specific Performance — Termination of Agreement — Maintainability of Suit without Declaratory Relief - Where an agreement to sell does not confer any explicit contractual right on the vendor to unilaterally terminate the agreement, a unilateral cancellation constitutes a breach by repudiation - The aggrieved vendee can treat the contract as subsisting and maintain a suit for specific performance without seeking a formal declaratory relief that the unilateral termination is bad in law, provided the issue of maintainability/validity of termination is adjudicated by the trial court. [Relied on Muddam Raju Yadav v. B. Raja Shanker (D) Through LRs & Ors., 2026 INSC 214; Janardan Das and Others v. Durga Prasad Agarwalla and Others, 2024 SCC OnLine 2937; Major Gen. Darshan Singh (D) By LRs & Anr. v. Brij Bhushan Chaudhary (D) By LRs, 2024 INSC 157; Paras 36, 37]

Case :  V.N.A.S Chandran v S Venila and others

Citation : 2026 LiveLaw (SC) 758

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