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Case Name: R. Kandasamy (Since Dead) & Ors. vs. T.R.K. Saraswathi & Anr.

Case No.: Civil Appeal Nos. 3015 and 3016 of 2013

Quorum: Dipankar Datta and Sanjay Karol, JJ.

Date: November 21, 2024

 

FACTS OF THE CASE

The case emanates from an agreement for sale executed on January 20, 2005, between the appellants-the sellers-and the respondent-the buyer-concerning a tenanted property for ₹2.3 crore. The advance of ₹10 lakh was paid by the buyer with a commitment to pay the balance within four months. In turn, the sellers promised to vacate the tenants and deliver vacant possession. The buyer made part payments but failed to consummate the transaction on or before May 19, 2005. There was a dispute over encumbrance certificate and title deeds, which the sellers were bound to deliver to the buyer. On February 23, 2006, the sellers rescinded their agreement, refunded the advance, and subsequently sold the property to a third party. The buyer filed a suit for specific performance or refund of the advance, which the trial court dismissed. However, the High Court reversed this, granting specific performance, leading to the present appeals.

 

ISSUES OF THE CASE

1.Whether time was the essence of the contract by the terms of the contract and conduct of the parties.

2.Whether the buyer was ready and willing to fulfill her part of the contract, including the balance consideration and execution of the sale deed.

3.Whether the sellers failed to perform their obligations under the contract reciprocally, for example, failing to deliver vacant possession and obtain needed documents.

 

LEGAL PROVISIONS OF THE CASE

1.Specific Relief Act, 1963:

Section 10: Specific performance enforceability.

Section 16(c): Continuous readiness and willingness to perform obligations

Section 20: Lecherousness or discretion with regard to specific performance relief.

 

2.Indian Contract Act, 1872:

Section 51: Reciprocal promises and performance

Section 54: Effect of non-performance of reciprocal promises.

 

CONTENTIONS OF THE APPELLANT

The appellants stated that time was of essence in the agreement as will be evident from the terms containing and the buyer has not complied within these 4 months prescribed. They highlighted that any action of the buyer amounting to repeated delay, false claims of unavailability, raising demands for an encumbrance certificate and so on favored a finding of her unwillingness to perform. They also alleged that the buyer was not financially ready since they said that they did not have enough money. As prayed, as a result of the significant increase in property value and the buyer’s unclean hands, they asserted specific performance as inequitable and pray the court to reinstate the trial court’s dismissal of the suit.

 

CONTENTIONS OF THE RESPONDENT

The respondent also denied a lack of time consciousness because the sellers offered to accept payments after the due date and even agreed to extension. She stated that the sellers had not provided the s.123 particulars as required by precedent in exchange for reciprocal obligations; specifically, the eviction of tenants and production of original title deeds for her to verify, thus she could not perform those obligations. The buyer insisted that she was always prepared and willing to perform the purchase but get hindered by the sellers’ actions. She applied for an order of specific performance as the equitable relief with basis on her continuous attempt to fix the situation and to conform to the agreed and signed contractual agreement.

JUDGMENT AND ANALYSIS

The Supreme Court was equally impressed that time was not of the essence given that the sellers allowed the buyers to pay for goods, which were delivered, very much later or offered them leniency by extending the delivery dates. However, the buyer was not ready and willing to perform, she made unnecessary demands, delayed actions and had insufficient funds. Clean hands and consistent conduct were stated as the two principles the court used when granting an equitable relief known as a specific performance. Since the buyer exhibits ambivalent behavior and lack of willingness to proceed with the contract, the court recalled the dismissal of the trial suit but allowed the dismissal of the suit with the sellers’ obligation to refund ₹ 25 Lakh advance payment with interest in case it was not already refunded.

 

CONCLUSION

In conclusion, the Supreme Court re-emphasized standard law based on the proposition that specific performance is an equitable remedy that is subject to the discretion of the court where the plaintiff was to show continuing preparedness and willingness to perform the contractual terms agreed upon. Their conduct and the buyer’s inability to finance such relief eliminated them from such relief. That judgment affirmed the trial court’s ruling: to do justice & purge any procedural lapse, the defendant was directed to pay back the advance with interest if it was not already refunded.

 

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WRITTEN BY : PAYAL DEVNANI